The curious title which
the blog has had for the past year or so is a tribute to those who have managed
to escape a monoculture (or “tunnel vision”) - generally by having moved from
one territory to another; be that intellectual or geographical.
Being an outsider seems
to give one’s writing a bit of an edge – as I argued
earlier this year with some examples
Robert Skidelksy’s name
should probably be added to that list – it’s not just his family background (he
lived in China until he was almost 10) but the fact that he is both an historian and an economist.
I’ve been a fan of his
ever since I came across his Interests and Obsessions –
historical essays
(1994) in a second-hand bookshop a couple of years ago. It’s a delightful
collection of essays on different aspects of British life in the last century
or so – including quite a few profiles. He is the definitive biographer of
Keynes – his 3-volumes on the man come in at more than 1000 pages.
So I didn’t need a lot of
convincing to buy his Money and Government – a
challenge to mainstream economics (2018 – full access by clicking the title) even
although several chapters have short appendices of formulae (for me the ideal
place for them!)
David Graeber (another
excellent writer) has a long and very positive review from which I’ve taken
some excerpts at the end of the post
Before I get on to that
book, here’s an example of Skidelsky writing – from a book review he did a few
years ago for NYRB on
the impact of computerised systems
The aim of all control
systems is to control human behaviour, including the way we think. Priests and
political leaders have long used religion and ideology for this purpose, since
it economizes on the use of force and terror. But it is only in the last
hundred years or so that the attempt to control behaviour by controlling the
mind has achieved scientific status, largely through the explosion of
calculating power that computers have made possible. In one of his many
fascinating chapters, the author shows how CBS originated in the
needs of the military for battlefield control, before they were applied to the
needs of business.
Unlike the machine
assembly line for Ford cars, the human assembly lines in giant retail
organizations like Walmart and Amazon pose special problems. The stacking and
retrieving of customers’ orders requires the attention of a “panoptic
monitoring regime to pick up on…human waywardness [on the part of the employees]
and correct it without delay.” The model is that of Jeremy Bentham’s
Panopticon, the circular prison he designed with an inspection tower at its
centre, where a single watchman could observe the inmates without them being
able to tell if they are being watched. Bentham himself thought of the
Panopticon as an unprecedented way of obtaining power of mind over mind. What
has made computerized business systems universally applicable is the joining of
Taylorian scientific management (breaking down jobs into small tasks) with the
panoptical control made possible by digital technology.
In 2016 Skidelsky edited a
book with the fascinating title Who
Runs the Economy? The role of Power in economics from which, I suspect, this text is
taken
Adapting Steven Lukes
(1974), one may think of ideas as a form of ‘soft power’, which structures our
debates about reality. Alternatively, and more comprehensively, they may be
seen as shaping our consciousness –the way we interpret our world. But just
because ideas are produced in institutions, we cannot ignore questions about
the hard power behind the soft power. Who finances the institutions from which
ideas spring? Who finances the dissemination of ideas in popular form –media,
think tanks? What are the incentives facing the producers, disseminators, and
popularisers of ideas even in a society in which discussion is ‘free’? In
short, what is the agenda of business? It is reasonable to see business as the
hard power behind the soft power of ideas, not because the business community
speaks with one voice, or because there are no other centres of hard power
(e.g. government) but because it is the main source of the money without which
the intellectual estate would wither and die……
Assertion of the
independence of ideas is a necessary modification of crude Marxism, which I
dare say Marx himself would have accepted. Nevertheless, in the Marxist scheme,
the intellectual class, like the state, attains only ‘relative autonomy’; and
ideas rarely overturn the perception or promotion of self-interest, however
much they may modify its expression. Practical men like nothing better than to
have their prejudices dressed up in scientific language. Ultimately the ideas
in power serve the interests of the class in power; under capitalism, this is
the capitalist class.
Skidelsky is 85 but is
extraordinarily prolific – he has just produced What’s wrong with
economics – a primer for the perplexed 2020) and was an active
member last year of a small advisory group to the OECD Sec-Gen which helped
produce an amazing little document Beyond
Growth – towards a new economic approach; (OECD Sept 2019) which basically
questions the entire raison d’etre of the OECD for most of its existence!
But here’s what David Graeber
had to say about Money and
Government – a challenge to mainstream economics
What it reveals is an
endless war between two broad theoretical perspectives in which the same side
always seems to win—for reasons that rarely have anything to do with either
theoretical sophistication or greater predictive power. The crux of the
argument always seems to turn on the nature of money. Is money best conceived
of as a physical commodity, a precious substance used to facilitate exchange,
or is it better to see money primarily as a credit, a bookkeeping method or
circulating IOU—in any case, a social arrangement?
This is an argument that
has been going on in some form for thousands of years.
Technically, this comes
down to a choice between what are called exogenous and endogenous theories of
money. Should money be treated as an outside factor, like all those Spanish
dubloons supposedly sweeping into Antwerp, Dublin, and Genoa in the days of
Philip II, or should it be imagined primarily as a product of economic activity
itself, mined, minted, and put into circulation, or more often, created as credit
instruments such as loans, in order to meet a demand—which would, of course,
mean that the roots of inflation lie elsewhere?
To put it
bluntly: QTM is obviously wrong. Doubling the amount of gold in a
country will have no effect on the price of cheese if you give all the gold to
rich people and they just bury it in their yards, or use it to make gold-plated
submarines (this is, incidentally, why quantitative easing, the strategy of
buying long-term government bonds to put money into circulation, did not work
either). What actually matters is spending.
Nonetheless, from Bodin’s
time to the present, almost every time there was a major policy debate,
the QTM advocates won. In England, the pattern was set in 1696, just
after the creation of the Bank of England, with an argument over wartime
inflation between Treasury Secretary William Lowndes, Sir Isaac Newton (then
warden of the mint), and the philosopher John Locke.
Newton had agreed with the
Treasury that silver coins had to be officially devalued to prevent a
deflationary collapse; Locke took an extreme monetarist position, arguing that
the government should be limited to guaranteeing the value of property
(including coins) and that tinkering would confuse investors and defraud
creditors. Locke won. The result was deflationary collapse.
According to Skidelsky,
the pattern was to repeat itself again and again, in 1797, the 1840s, the
1890s, and, ultimately, the late 1970s and early 1980s, with Thatcher and
Reagan’s (in each case brief) adoption of monetarism.
Always we see the same
sequence of events:
(1) The government adopts
hard-money policies as a matter of principle.
(2) Disaster ensues.
(3) The government quietly
abandons hard-money policies.
(4) The economy recovers.
(5) Hard-money philosophy
nonetheless becomes, or is reinforced as, simple universal common sense.
How was it possible to
justify such a remarkable string of failures? Here a lot of the blame,
according to Skidelsky, can be laid at the feet of the Scottish philosopher
David Hume.
The one major exception to
this pattern was the mid-twentieth century, what has come to be remembered as
the Keynesian age. It was a period in which those running capitalist
democracies, spooked by the Russian Revolution and the prospect of the mass
rebellion of their own working classes, allowed unprecedented levels of
redistribution—which, in turn, led to the most generalized material prosperity
in human history. The story of the Keynesian revolution of the 1930s, and the
neoclassical counterrevolution of the 1970s, has been told innumerable times,
but Skidelsky gives the reader a fresh sense of the underlying conflict……
Economic theory as it
exists increasingly resembles a shed full of broken tools. This is not to say
there are no useful insights here, but fundamentally the existing discipline is
designed to solve another century’s problems. The problem of how to determine
the optimal distribution of work and resources to create high levels of
economic growth is simply not the same problem we are now facing: i.e., how to
deal with increasing technological productivity, decreasing real demand for
labor, and the effective management of care work, without also destroying the
Earth. This demands a different science. The “microfoundations” of current
economics are precisely what is standing in the way of this.
Any new, viable science
will either have to draw on the accumulated knowledge of feminism, behavioral
economics, psychology, and even anthropology to come up with theories based on
how people actually behave, or once again embrace the notion of emergent levels
of complexity—or, most likely, both.
Intellectually, this won’t
be easy. Politically, it will be even more difficult. Breaking through
neoclassical economics’ lock on major institutions, and its near-theological
hold over the media—not to mention all the subtle ways it has come to define
our conceptions of human motivations and the horizons of human possibility—is a
daunting prospect. Presumably, some kind of shock would be required. What might
it take? Another 2008-style collapse? Some radical political shift in a major
world government? A global youth rebellion? However it will come about, books
like this—and quite possibly this book—will play a crucial part.
