Interview With Jamie Morgan
At a panel of the Union for Radical Political Economics last summer, several professors of economics talked about theories they are not allowed to teach. Obviously Marxist economics is taboo, but also institutionalist economics and varieties of Keynesianism as well. The degree of censorship they described (both institutional censorship and self-censorship by people who thought they'd lose their jobs) was reminiscent of the era of the Scopes trial, when creationist fanatics banned the teaching of evolution. Clearly, those who base policy on the neoliberal orthodoxy are threatened by the prospect of a free market for economic ideas.
You mention in your article the hierarchical organization of the economics profession, with heterodox economics at the its base, neoliberal economics at the top, and the most highly mathematicized neoliberal economics at its apex. But you didn't go into the context out of which neoliberalor neoclassicaleconomics emerged. Could you talk about the relationship between neoliberalism and neoclassical economics and the place of all this on the economics "family tree"?
The irony of course is that economics put aside history, culture, ethics and all the issues of indeterminacy, contingency and change to become the dominant science of human action. It became a science of human action that assumed away all the things that make us humans in the first place. What could be less real than that, what could be less scientific? And yet there is a great deal of authority and power in economics today as a science because it presents human problems as simply technical puzzles on a par with getting your car fixed. Think about that, poverty is a technical issue, to have and have not are technical issues, well-being is a technical issue (our satisfaction or utility).
This new economics was based in calculus and simultaneous equations pioneered by Stanley Jevons and Leon Walras in the 1870s but getting its big push in the late 19th century and early 20th century. The mathematics under basic assumptions about behaviour allowed the determination of market equilibriums or optimal outcomes from the interaction of supply and demand. The fatal move for economics as a discipline however was that innovations in the mathematical solutions to the model, rather than reconstructing economics to make it more realistic, useful etc., became the way to get ahead as an academic. As new kinds of mathematics like game theory and complex sets came along economists would make use of them to work on the problem of equilibrium.
After World War II with the publication of works by Paul Samuelson, Kenneth Arrow and others this concentration on mathematical proofs cranked up another gear and articles in economics became simply impossible to understand for the non-mathematician. So what you have is a field whose primary interest is not policy, not realism, not ethical debate about alternative ways of living, working and producing, its primary interest is solving mathematical proof problems it sets itself. At the same time economists are happy to give advice and their advice is sought. After all economics is supposed to be about the economy and somebody has to help us sort out how it works and it seems reasonable to assume that economists are well placed to be that somebody. They study the economy don't they? Well they don't, they study economics and sadly that is not the same thing at all.
This brings us to the relationship between neoliberalism and current mainstream economics (I dont want to say neo-classical economics because the problem is broader than that). On one level, there is no necessary relation between the feitishisation of pure economic modelling (what many economists now refer to as the problem of formalism) in economics and any particular policy position such as neoliberalism. For example, Keynesian economics of the 1950s and 1960s based in Hicks use of simultaneous equations in macroeconomics concentrated on problems of equilibrium proofs and yet did not support deregulation, privatisation etc. But it would be wrong to think of policy as simply an add-on an arbitrary opinion. Policy goes hand in hand with the assumptions that go into what is then modelled. Keynesianism never really sat that well with formalism because it was based in the basic uncertainty of human situations. There can be no elegant and definitive proofs for what is uncertain. Compromises like Hicks tended to cut the heart out of Keynes insights about uncertainty by allowing for determinate mathematical solutions where the relationships between unemployment, investment etc. could be calculated. But they too would never produce elegant models because they dealt in remainders, in impediments to complete solutions in macroeconomics. The point is that once the economic crisis of the 1970s came along it wasnt that difficult for economics as a discipline to tear itself away from traditional Keynesianism and embrace certain ideas that sat far more comfortably with formalism and with the new political forces of the day.
Those ideas are the kind I discuss in Upside Down and elsewhere. To add just a little, the basic neoliberal commitment of disintervention, deregulation, privatisation, and the minimal state are supported by various formalist models - neo-classical or Walrasian general equilibrium theory and, more contemporaneously, new classical monetarism and new Keynesian theory (not to be confused with Post-Keynesian and classical Keynesian theory of the heterodox tradition). New monetarism and new Keynesian theory use a strong rational expectations assumption to argue for instantaneous market clearing and adjustment (though the latter accepts that involuntary unemployment may persist) indicating that fiscal policy cannot be effective in shaping the economy. What is effective is leaving well alone and letting things work themselves out because thats what happens in the models. If you are going to intervene it should be in ways that make the world more like the models rather than the models more like the world such market conforming policies as the creation of flexible labour markets, human capital etc. Obviously this was an attractive position for neo-conservatives at the beginning of the 1980s faced with problems like the unions, tax levels on the wealthy and new corporate profit pressure brought about by previous oil cost rises. It was also attractive in terms of opening up new trade and production opportunities across the globe.
This is not to suggest an evil cabal of economists in collusion with politicians and capitalists who sat down to deliberately orchestrate the current situation. Certainly I think most economists have more integrity than that. Id tend to the position that the general development of economic theory has proved conducive to neoliberalism. From the economists side I think most are convinced that their models are broadly correct and that the policy advice on the basis of their modelling expertise and taking into account applied economic research is sound. It is not difficult to think in this way if you are socialised into mainstream economics and especially if you do pure economic modelling because the real world is an afterthought that you address from your models but which plays no direct role in reconstructing those models. Innovation and career advancement is based in mathematical ingenuity. Of course those models then form the broad framework of assumptions that are taught to anyone studying economics and to anyone going on to do various kinds of applied economics or professional economics. For this reason it would be hard to credit that economists at the IMF or the World Bank with its formal commitment to reducing world poverty deliberately set out to damage economic development and human flourishing.
Ask yourself where World Bank economists come from? The Bank employs over 800 economists, the majority whatever their nationality, receiving their postgraduate training in the US in a select few mainstream institutions. Recent research shows that 47% of US economics faculty were themselves awarded their PhD by one of the top 10 US university economics departments and that those top 10 schools provided 67% of the supervisors across the 47 most prominent economics departments in the country. Formalist modelling is therefore ingrained in the post-graduates from which the World Bank selects its staff. Most are seconded to the Bank as part of their training and are often headhunted thereafter. Moreover, the language of the Bank is English and its headquarters are in Washington. The culture of the Bank is thus situated to American media and views, which as we know are parochially neoliberal. Robert Wade, for one has written interesting stuff on this.
Im not of the opinion therefore, that Stanley Fischer, former chief economist of the World Bank and deputy managing director of the IMF (1994-2001), who had previously done important early work on the policy ineffectiveness thesis as an academic economist in the 1970s, secretly sees himself as a class warriora problem for the poor rather than part of the solution. Its really an important point that the failures of policy are not seen as failures of the fundamentals of the economics. They are seen as about politics and not the science. The economic scientist thinks of politics as well as history, culture, and ethics as issues for others. This raises the crucial question why and how an economics that is so fundamentally wrong continues to be reproduced by the discipline and how it continues to exclude heterodox alternatives? Ive been thinking about this for some time now and am currently working on the problem with Prof Heikki Patomaki of the University of Helsinki and the Network Institute for Global Democratization, who you may know of through his work on the Tobin Tax.
Confronting the private language/public vocabulary problem of mainstream economics means arming yourself with key counterarguments. There is an argument to be made in philosophy about how mainstream economics is irrealist. Tony Lawsons Economics & Reality is a good place to start in thinking about this. There is an argument to be made about how mainstream economics is not just uninterested in realism but is internally inconsistent. Its mathematics, for example, simply dont add up to the sum of its theoretical claims. Steve Keens Debunking Economics and his website Debunking-Economics are good places to start in thinking about this. There are arguments to be made about alternative forms of economic theory. Here, the post-autistic economics movement, the heterodox economists movement and the conference of socialist economists are all worth checking out. When people like Anatole Kaletsky (The Times May 1st 2003) say that global capitalism is the most benign and successful of all human creations, we need to be able to say why it is not. There are arguments to be made here about how neoliberal economic policy is a failure. Research at the Center for Economic Policy and Research website is worth checking out on this.
Which brings me to your question on ATTAC and the problem of the social consequences of everything being distorted through neoliberal language. If one of the key errors in mainstream economics is that it assumes away the things that make us human our ability to critically reappraise things, to act in different ways, to go against the grain, to change our minds then one thing that a more realistic view of economics and of people can confirm is that there is no need to be defeatist about the dominance of neoliberal logics and language. The thousands who protest against it and who participate at the World Social Forums are not exceptional people in the sense they have critical faculties that everyone else lacks. Were social animals not a herd animal. When something doesnt work we understand it doesnt work. Events, crisis and conscience activate our scepticism.
The broader problem is that the pervasiveness of the language of neoliberalism means that scepticism all too easily becomes cynicism. Opposing cynicism means forcefully articulating that another world is possible. This is often easier to do on a small scale over single concrete issues like the Tobin Tax. Heikki Patomaki and Lieven Denys, for example, have produced a draft treaty version of how the Tax might be implemented. Implementing it doesnt need all states to sign up at the same time it doesnt even need all the major economies to sign up at the same time. This is something do-able, something easily grasped, something that can start with the states that have the greatest vested interest in change like Brazil and Argentina and with the civil society movements that have the momentum to make them listen.
Of course theres not a lot we can do about the way the media represent things. Fortunately the mainstream media are not the only source of information out there. NGOs and political movements have in the past few years made good use of the potential of the Internet for example. Gloves Off, Sand in the Wheels, Focus on the Third World etc. can bypass the mainstream media. At the same time I dont want to have too high expectations of what that means. The Internet can foster a very low commitment form of participation and activism, it can be a tenuous form of connectivity. Passive almost. Signing up to a website is easy to do. It doesnt require you to go anywhere, its quick and its convenient. In a certain kind of irony it can easily become commodified politicisation. A lifestyle trapping or a kind of self-branding that says you care just enough about No Logoism. This should remind us that the problem really is capitalism, because capitalism creates forms of life that alienate us and split us apart even in our most political acts. Capitalism is a material power and overcoming it is about acting on ideas. Im not saying the Internet doesnt help us do that Im just saying that it comes with its own particular problems. The solution to that I suppose is threefold:
Isn't the first observationabout capitalism's selection mechanism for self-survivalthe place to begin answering that question? Capitalism needs ideologies that effectively mask its inner workings. It needs both science and myths that perpetuate the idea that capitalism isn't historically specific, that it's somehow eternal and that it follows human nature. It needs to promote the fiction that it can effectively allocate resources to create a classless society based on freedom, and not exploitation.
This isn't a new idea, of course. It's Marx's theory of the fetishism of commodities, the historical process driven by capitalist commodity exchange in which the source of the value of commoditiesthe human labor embedded in themis obscured. Capitalism in general, and not only neoliberalism, generates endless obscurantist stories about how the system really operates, so the project of de-fetishizing capitalism is every bit as urgent and relevant for us today as it was for Marx in the 19th century. Perhaps what economics needs today is less your Martin Lutherto translate the language of neoliberal cant and ritual into a common tonguethan a reinvigoration of Marx's ideas toward the project of defetishizing neoliberalism as the current manifestation of capitalism.
As for the explanatory links between capitalism and economics, its certainly the case that economics and the logic of capitalism are linked. If economics had nothing to offer then it would play no role outside the academy. The danger is taking a simply functional view of both the system of capitalism itself and of economics' relation to it. Ideology has to mean more than that. Selection is an umbrella term for what must be understood as a multifaceted and sophisticated relationship. It has to accommodate the fact that economics is understood as a science, producing both social facts and from the perspective of its adherents the best possible policy advice on the basis of its scientific claims. More importantly it must accommodate the sense of integrity that your average economist has. Economics is reproduced partly through its power in the world but also partly through its own internal tendencies or the trajectory of the development of economic knowledge. That economics has opted for mathematisation, for an ahistorical approach, for an ignorance of cultural factors of political intervention, and of so many other things cannot easily be explained as produced by the needs of capital to obscure its own relations. This is one of its outcomes but not the sole explanation of the development of economics unless we want to think of such elements of the superstructure as simply mirroring the base.
This of course is a matter of significant debate amongst Marxist theorists over the last hundred plus years. To be honest Im not aware of any one best answer on this problem. I certainly dont have one. Louis Althusser for example thought a lot about this problem but his basic approach had a lot of problems that as E. P. Thompson went on to show undermined his project. The inter-relationship of different structures within a sense of a complex system made up of human interactions is a difficult one. Rather than try to provide an answer here it might be better to provide a few quotes from Marx which frame the problem:
Jamie Morgan is on the editorial committee of the Journal of Critical Realism and has written many articles that popularize current events and the application of economics.
Jamie is also engaged in research on the application of the Tobin Tax with Heikki Patomaki and on development issues with Wendy Olsen.
He teaches at the Open University and is part of the Anti-Capitalist Research Organization at Lancaster University.
Recent writings include:
"How Reality Ate Itself: Orthodoxy, Economy and Trust"
"The Free Rider Principle: How Privilege Is Subsidised"
The Global Power of Orthodox Economics