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.