Reflections: Perhaps we need to re-invent economics.
from Peter Radford
It is easy to be partisan. It is easy to believe in sweeping utopian solutions. It is easy to delude yourself that what you think is what everyone thinks, or, perhaps, what they ought to think. This is why I recoil from anyone offering definitive answers to complex questions. The truth is never so easily teased from reality. A healthy does of skepticism helps to keep us grounded. It seems we need that protection especially right now.
Because I feel we are going through a great transition during which much of what we know is quickly being made irrelevant by our changing environment.
The progressive wing in American politics suffered what appears to be an irreversible defeat back with the rise of Reagan. Of course it was not Reagan himself, after all he was a very narrow person and depended on image to project his message. It was the revolution in ideas that permeated society, his rise simply marked the triumph of those ideas. It was the same with Thatcher in the UK.
Looking back the so-called Reagan revolution was an attempt to contain the after effects of the progressive era immediately preceding his election. That progressive era itself was an attempt to bring alignment to a society that was trying to match its prosperity born of industrial prowess with its remaining and widespread inequities which were legacies of the pre-industrial era.
The early industrial inequity of class seemed to be fading away as the post-war boom saturated society with material wellbeing. Yes, in retrospect that conclusion was an error, I suppose it was inevitable that capital would find ways to fight back, but in the moment class issues had become decidedly old fashioned. Besides the existential threat posed by communism as represented by the Soviet Union provided a convenient backdrop against which class style confrontation could be characterized as unpatriotic. America had solved its class issues, not through politics, but through economics.
That the economics in question was deeply social in nature, being based on the reactions to the Great Depression and World War II, was not a contentious topic except in the margins of academia and business where resentment built steadily. The redistribution and high taxes needed to pay for it were easily painted as attacks on freedom by the likes of Hayek and Friedman, but their voices fell on deaf ears as long as the economic engine purred along.
That ended as we know in the mess of the 1970’s. Simultaneous high inflation and higher unemployment, two things that social economics told us were incompatible, undermined confidence in the post-war consensus and opens the door for right wing economists and big business to launch a counter attack. Hence Reagan.
Everything since can be interpreted within the context of this right wing attack on society and democracy. The unique qualities of the American political system allowed minorities to press their opinions and stymie the majority. The influence of money in politics allowed business to buy elections and elected officials producing one of the most corrupt political systems anywhere — except, of course, that Americans refuse to acknowledge this corruption. Business now owns the political system and its hold has been cemented by Supreme Court decisions like Citizens United. So it is unsurprising for us to see the steady roll back of the prosperity of the middle class, a class whose very existence depended on post-war social economics.
Economics itself, as I have argued for years, fell into disrepute as it purged itself of allegiance to democracy and embraced the extraordinarily narrow definition of freedom propagated by Hayek and Friedman. If you think I am exaggerating then study Public Choice theory which appears to be a specific renunciation of democracy. Or, at least it seems that way if we believe the old phrase “we the people” implies that government is by and for the people. Which even in an imperfect democracy it surely does.
As economics became obsessed with freedom and individuality and as it drove out theories of social action it aligned itself more and more with business interests. It became an apologist for capitalism rather than an objective study of it. Yes, of course, some individual economists appear to have fought against the consequences of the odd definition of freedom that permeated economics, but they have been ineffective. Indeed, even those few most often adhere to the technology of right wing economics. Most still advocate versions of paraphernalia like general equilibrium, rational choice, micro-foundations, and so on all of which are designed to justify the inevitability of economic relations sanitized of social actions and power relationships.
When even your erstwhile progressives are regressive or unwilling to present a thorough alternative it is unsurprising that whole swathes of society suffer.
So as just as society shifted its progressive aim towards racial and gender inequities, and as enormous amounts of political energy were spent on those issues, economics was reversing course and abandoning its own progress. It became a willing agent of revision.
Perhaps this is not news. Most of you either don’t care or disagree, but I mention it only because, as we enter the great transition from the industrial to one best described as digital, where manufacturing and agriculture occupy an ever smaller part of our overall economic activity, and where experiential and information infused products dominate, that revisionist anti-democratic economics is rapidly becoming less relevant.
Economics cannot seal itself off from society and pretend, as people like Hayek and Friedman did, that the definitions and social relations of the high industrial era can be carried across the boundary into a digital era needing no adjustment. They do. For one thing, not to sound boring, but the entire ontology of the enterprise need refreshment. What are the objects that comprise an economy in this new era?
Perhaps we need to reflect on this.
Perhaps we need to re-invent economics.
This time not as a deliberately anti-democratic effort, but, I hope, as something less socially unaware.