Home > Uncategorized > Utopia and the economics of control

Utopia and the economics of control

from David Ruccio

I have often argued—in lectures, talks, and publications—that every economic theory has a utopian dimension. Economists don’t explicitly talk about utopia but, my argument goes, they can’t do what they do without some utopian horizon.

The issue of utopia is there, at least in the background, in every area of economics—perhaps especially on the topic of control.

Consider, for example, the theory of the firm (which I have written about many times over the years), which is the focus of University of Chicago finance professor Luigi Zingales’s lecture honoring Oliver Hart, winner of the 2016 Nobel Prize for economics, at this year’s Allied Social Science Association meeting.

One of the many merits of Oliver’s contribution is to have brought back the concept of power inside economics. This is a concept pervasive in political science and sociology, and pervasive in Marxian economics, but completely absent from neoclassical economics. In fact, Oliver’s view of the firm is very reminiscent of the Marxian view, but where Marx sees exploitation, Oliver sees an efficient allocation.

Zingales is right: Hart’s neoclassical treatment of control informs a theory of the firm that stands diametrically opposed to a Marxian theory of the firm. And those contrasting theories of the firm are both conditions and consequences of different utopian horizons. Thus, Hart both envisions and looks to move toward an efficient use of control within the firm such that—through a combination of incentives and monitoring—agents (workers) can be made to work hard to fulfill the goal set by the principal (capitalists). Marxists, on the other hand, see the firm as a site of exploitation—capitalists extracting surplus-value from the workers they hire—and look to create the economic and social conditions whereby exploitation is eliminated.

In my view, those are very different utopias—the efficient allocation of resources versus the absence of exploitation—that both inform and are informed by quite different theories of the firm.

As is turns out, the issue of control—and, with it, utopia—comes up in another, quite different context. As George DeMartino and Deidre McCloskey explain, in their rejoinder to Anne Krueger’s attack on their recent edited volume, The Oxford Handbook of Professional Economic Ethics,

When you have influence over others you take on ethical burdens. Think of your responsibilities to, say, your family or friends. And when you fail to confront those burdens openly, honestly, and courageously you are apt to make mistakes. As professional economists we have influence, and we do develop conversations about how we operate. Yet there is no serious, critical, scholarly conversation about professional economic ethics—never has been. That’s not good.

While the DeMartino and McCloskey volume includes contributions from both mainstream and heterodox economists (a point that Krueger overlooks in her review), it is still the case that the discipline of economics, dominated as it has been by mainstream economics, has never had a serious, sustained conversation about ethics.

Consider this: it is possible to get a degree in economics—at any level, undergraduate, Master’s, or doctorate—without a single reading or lecture, much less an entire course, on ethics. And yet economists do exercise a great deal of power over others: over other economists (through hiring, research funding, and publishing venues), their students (in terms of what can and cannot be said, talked about, and theorized in their courses), and the wider society (through the dissemination of particular theories of the economy as well as the policies they advocate to governments and multilateral institutions). In fact, they also exercise power over themselves, in true panopticon fashion, as they seek to adhere to and reinforce certain disciplinary protocols and procedures.

Economics is saturated with power, and thus replete with ethical moments.

Once again, the issue of control is bound up with different utopian horizons. Most economists—certainly most mainstream economists—are not comfortable with and have no use for discussions of ethics. That’s because, in their view, economists adhere to a code of objectivity and scientificity and an epistemology of absolute truth. So, there’s no room for an ethics associated with “influence over others.” That’s their utopia: a free-market of ideas in which the “truth,” of theory and policy, is revealed.

Other economists have a quite different view. They see a world of unequal power, including within the discipline of economics. And the existence of that unequal power demands a conversation about ethics in order to reveal the conditions and especially the consequences of different ways of doing economics. If there is no single-t, absolute truth—and thus no single standard of objectivity and scientificity—within economics, then the use of one theory instead of another has particular effects on the world within which that theorizing takes place. Here, the utopian horizon is not a free market of ideas, but instead a reimagining of the discipline of economics as an agonistic field of incommensurable discourses.

And, from a specifically Marxian perspective, the utopian moment is to create the conditions whereby the critique of political economy renders itself no longer useful. Marxists recognize that they may not be able to control the path to such an outcome but it is their goal—their ethical stance, their utopian horizon.

  1. February 9, 2018 at 1:54 am

    A marxist analysis of launching a car into space would today be heavily involved in expropriated labor serving corrupt egomania as Earth burns.

  2. February 9, 2018 at 10:07 am

    A nice text. But it should not end when it starts to get even more interesting, i.e. with the last paragraph. Should the critique – being useless – really ever end? Is the processing of contradictions the same thing as to recognize that there is only a ‘may be’ of successful control to achieve progress? Instead of such a weak turn of the argument, I would rather insist on the dynamic character of the progressive utopia. Even the method to develop it, i.e. dialectical reasing, will progress over time. The only place for ethics is (and always was) to help as a shortcut, a blind guess, for relations we do not fully understand yet. It is a transitory necessity, the remainder of religion, but not suitable as utopia.

  3. February 10, 2018 at 11:36 am

    Yes, a nice text, but the issue of control was put more clearly by Turnip Townsend likening economics to control of goat populations by dogs preying on on the goats (see Polanyi’s Great Transformation p.118), typically by picking off the kids and those otherwise vulnerable. Ethics (as against Hume’s “morals”: practices acceptable in particular societies) is about parents instinctively taking responsibility for looking after their children. This applies just as much to the predators as to herbivores, but the morals of the predators (in economics the speculators in finance and business) are quite different from those of their prey.

    The issue comes down to whether humans are either meat eaters or vegetarians – or all the same: both vegerarians and meat eaters. If the latter then, as humans, we should not be preying on each other. Even preying on vegetation, we should be farming it responsibly.

    Those who have learned about Utopia from Thomas More – particularly via the Burnes Oates edition rather than Marx’s deriding of Robert Owen’s exemplary practices – was about so-called Christian England having (in fact) become a land in which “sheep eat men”, when even the morality of pagans (figuratively drawn from the newly-discovered so not yet Christian island of Utopia) showed up the irrationality of that.

    • February 10, 2018 at 11:47 am

      Apologies. The last para has become somewhat garbled by a phrase lost during editing or transit. After “exemplary practices -” read “will have realised it [was about etc]”..

  4. Rob Reno
    February 11, 2018 at 8:16 am

    Economic disruption has real human costs which economists so easily dismiss, ignore, or explain away with empty euphemisms, mere transition costs of moving from one state of economy to another. What kind of ethical moment does it take to put a human face in disruption?

    • Craig
      February 11, 2018 at 6:27 pm

      @Rob Reno
      “What kind of ethical moment does it take to put a human face in disruption?”

      One that recognizes that money is the means of freedom in a monetary economy and that has discovered the singular time and place where the micro-economy integrates and aggregates with the macro-economy for any and all agents….and then initiating monetary policy at that point…and any necessary regulation that aligns with that freeing policy.

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