Can Economics change its Spots?

I’ve written fairly savagely about economists in the past – so it’s about time I recognised there are some in the new generation who are thinking differently. And I’m not talking about the behavioural economists who, for me, have little to offer – they’e just making minor adjustments to what remains a thoroughly complacent, arrogant and selfish view of human nature. The table which follows doesn’t do justice to the new wave of iconoclasts who are clamouring for our attention – but it’s a start

	Famous for	Key Books
Kate Rawarth	The concept of planetary limits	“Doughnut Economics”
Isabella Weber,	Questioning prevailing wisdom about inflation	“How China Escaped Shock Therapy”
Mariana Mazzacato	Exploding myths about corporations and the State	“The Entrepreneurial State” “The Vaklue of Everything” “Mission Economy”
Thomas Pikety	Exposing the scale of inequality	“The Economics of Inequality” “Capital” “Capital and Ideology”
Mark Blyth	Ruthless dissection of the politics behind the economics	“Austerity – the history of a dangerous idea” “Angronomics”
Yanis Varoufakis	Being the bad boy of the eurozone – but a great story-teller!	A textbook an autobiography “The Global Minotaur” “And the Weak Suffer What They Must?”

 
And, because I’m impatient to get this post – with all its usual hyperlinks – to my readers, 

let me finish with a great review of Thomas Pikety’s latest book “Time for Socialism” from 

what is rapidly becoming a never-to be-missed journal - Jacobin
 

The fact that a thinker with Piketty’s intellectual influence has embraced socialism is significant in itself, paving the way for greater numbers of people to begin envisioning a world beyond capitalism. But what should we make of his vision of socialist transformation?

Talk of a relatively gradual and already underway shift toward socialism will no doubt raise eyebrows among radicals trained to expect that a break with capitalism will necessarily require some form of revolutionary rupture in the state and economy. Yet this gradualist vision should not be dismissed out of hand.

The truth is that we have no way yet to precisely predict the form that a transition to socialism will take in an advanced capitalist democracy. Piketty’s insistence that the radical reforms he envisions will be won through struggle against (rather than accommodation to) corporate power is likely sufficient as a strategic horizon for the foreseeable future. Though a more rapid and less peaceful revolutionary break may eventually be put on the agenda in the face of minoritarian employer reaction, there’s no need nor any political benefit to project immediate revolution as the only possible path forward.

Some radicals may similarly frown upon Piketty’s insistence that the transition to socialism is already underway, as seen in the growth of the welfare state and related declines in economic inequality. Yet here too the author is onto something: the reforms won by socialists, organized labor, and social movements over the past century have made significant incursions into market relations.

Despite neoliberalism’s ravages, the welfare state has not been dismantled even in places like the United States and the UK — current and future struggles for decommodification are thus being waged on a significantly higher social baseline than they were in, say, the 1930s. As such, the most pertinent criticism of social democrats — one shared by Piketty — is not that they were gradualists, but rather that they eventually proved incapable of being effective gradualists. Instead of continuing to shift power and control toward working people, social democratic parties largely abandoned this project in the face of economic crisis, globalization, and employer resistance from the 1980s onward.

Nor does it make sense to criticize Piketty for omitting calls for the nationalization of the economy’s commanding heights. There’s a strong argument to be made that markets for private goods are fully compatible with (and arguably necessary for) a thriving socialist society — provided that the state radically undermines capitalist power and wealth, that firm-based economic democracy is expanded, and that robust welfare policies provide everybody with the essential services they need to survive. That said, Piketty’s case would have been strengthened had he engaged more with proposals for a complete democratization of firms, as famously envisioned by Sweden’s “Meidner plan.”

A more significant limitation is that Piketty says little in the book about the importance of rebuilding the power of organized labor. This question gets passing mentions in his admonitions to “rethink institutions and policies including public services, and in particular, education, labor law, and organizations and the tax system” and to “stop denigrating the role of trade unions, the minimum wage, and salary scales.” Yet the author’s relative inattention to organized labor today is somewhat surprising given his commendable focus on the urgency of bringing back working-class politics and his consistent acknowledgement of the historical importance of trade unions in reducing inequality.

Perhaps Piketty, with his expertise in leveraging data to identify historical trends and policy solutions, felt that it was best to leave it to others to flesh out the strategic lines of march necessary to win his proposed vision. But without a revitalized labor movement to change the balance of class power, the author’s most ambitious policy solutions are unlikely to pass — and some of his other proposals might not have their intended consequences. Employee comanagement, for example, generally can serve as a tool for increasing workers’ influence when paired with robust trade unions. But in the absence of the relatively favorable relationship of forces created by strong working-class organization and the credible threat of disruptive workplace action, comanagement plans risk becoming toothless at best and mechanisms of employer control at worst, pushing workers to rubber stamp bosses’ prerogatives.

Ignoring Psychology

I've just finished "The Act of Living – what the great psychologists can teach us about surviving discomfort in an Age of Anxiety" by Frank Tallis (2021) which is a lovely overview of key figures in that discipline. It also gives me an opportunity to correct an interesting mistake I made a few years back when one of my famous tables - purporting to show how each of the social sciences tried to make sense of the world - completely forgot to include psychology. Some, indeed, might call the mistake “Freudian”!!

The core assumptions of academic subjects (amended table)

Discipline	Core assumption	Most Famous exponents (not necessarily typical!)
Anthropology	shared meaning	B Malinowski, Evans-Pritchard, Claude Levi-Strauss, Margaret Mead, Mary Douglas, Chris Shore, David Graeber
Economics	Rational choice	Adam Smith, J Schumpeter, JM Keynes, P Samuelson, M Friedmann, J Stiglitz, Thomas Pikety, Ho-Joon Chang
Geography	the interaction of physical and cultural influences	Alexander von Humboldt, H Mackinder, David Harvey, Danny Dorling
Political economy	explores the role of political factors in economic outcomes.	JK Galbraith, Susan Strange, Mark Blyth, Wolfgang Streeck, Geoffrey Hodgson, Yanis Varoufakis,
Political science	Rational choice (at least since the 1970s)	Robert Dahl, Gabriel Almond, David Easton, S Wolin, Peter Hall, James Q Wilson, Bo Rothstein, Francis Fukuyama
Psychology	Maslow’s basic ones of survival	Sigmund Freud, Carl Jung, Erich Fromm. Bruno Bettelheim, Maslow, Howard Gardner,
Public management	mixed for traditional bodies - rational choice for New PM	Woodrow Wilson, Gerald Caiden, Chris Hood, Chris Pollitt, B Guy Peters, G Bouckaert,
Sociology	Struggle for power	Durkheim, Max Weber, Talcott Parsons, C Wright Mills, Robert Merton,  Herbert Simon, A Etzioni, Ralf Dahrendorf

And, indeed, there is something in my Presbyterian soul which probably disapproves of the idea of someone doing a quasi-Confessional on another human being. The intercession of a priest (or psychologist) is somehow not right!

And, yet, I have read psychology books with some pleasure and, indeed, edification – I thoroughly enjoyed the wry humour of Michael Foley’s The Age of Absurdity – why modern life makes it hard to be happy (2010) and learned much from "Life and how to survive it" by Robin Skynner and John Cleese (1993) - one of the clearest expositions I know of how the different stages of human development - at individual, organisational and societal levels and still in print after some 30 years. 

Such titles may focus on us as individuals rather than political creatures but I am a great believer in in the injunction to "Know Thyself”- if a bit slow in the actual practice. But psychological matters seem to have been pressing in on me recently – with posts last year such as Know Thyself, then one about the Johari Window and one actually entitled Mind Matters which brought together several books with a psychological perrspective

Managers take all

More than 60 years after I first started studying economics, I still find myself utterly confused about a subject I actually taught for a few years in 1968 until I realised my mistake. From time to time, posts share my confusion in the blog which has followed with interest the various attempts made in the new millennium to bring what is nothing else than a religious/metaphysical doctrine – kicking and screaming – into the modern world. Economics is abstract and boring for a reason – Economists simply don’t want you to know their dirty little secret; that it’s all constructed on sand…on a pile of debt (for which read, equally appropriately, another 4 letter word beginning with Sh) 

The proud Scottish tradition of Political Economy had been killed off only a few years after I left the University of Glasgow (proud home of Adam Smith) – to be replaced by the much more technocratic-sounding “Economic Science” which quickly threw over its flirtation with Keynesiasm and succumbed first to monetarism and then scientism. If only they had persevered with political economy, they would now belong to the new Brave Hearts who have recently hoisted once again the flag of Political Economy (such as Mark Blyth, Wolfgang Streeck, Yanis Varoufakis, Richard Wolff and Michael Hudson).

Such writers expose the fallacy of those who persevere with the nonsense that “the Market” gives us what Voltaire’s Candide more than 250 years ago satirically described the “best of all possible worlds”. Such writers like to set up 2 strawmen - “the market” and “the state” - with the former requiring a set of “heroic” assumptions such as “perfect competition” dependent on consumers having “perfect knowledge” and companies having free access to markets. In the real world, such conditions hardly ever exist. 

One thing which economists try to ignore is “power” – one of the main elements of the separate discipline of Political Economy. The can’t therefore fit “Monopolies” and “oligopolies” into their schema – which is a bit awkward as they are the basic reality in our globalised world – with innovative small companies increasingly swallowed up by multinationals owing allegiance only to shareholders of conglomerate Investment Funds interested only in short-term profit. The European Union still takes competition seriously – that was the point of its “Single Market” programme which was pushed so strongly (ironically by an acolyte of Margaret Thatcher). But, thanks to Bill Clinton and the Democrats, the United States stopped taking competition seriously some 30 years ago 

All this is by way of a preamble to an important book I’ve been reading these last couple of days - Winners Take All – the elite charade of changing the world by Anand Giridharadas (2018) and starts with a Leo Tolstoy quote which is a favourite of mine 

I sit on a man’s back choking him and making him carry me, and yet assure myself and others that I am sorry for him and wish to lighten his load by all means possible…except by getting off his back.

and goes on to argue that –

·       The image of the “market” is so powerful it has shaped our expectations of the state

·       The public sector now likes to pretend that it has “quasi-markets” which set bodies with public funding up against one another in mock competition

·       “Thought-leaders” receive great rewards from corporate leaders who want to hear positive stories of what can be done – not be cast down by the difficulties and problems presented by critical intellectuals

·       The tech sector now offers the promise of being able to solve problems which were previously seen as too difficult or impossible

·       Private companies are invited by the state to become involved in “Partnerships” which generally involve them pocketing profits and the state the sizeable losses

·       Global health and educational problems are increasingly the focus of significant philanthropic funding eg the Clinton Global Initiative

·       The key actors in such work are the managers of International Consultancies such as McKinsey

·       Who are looked to by both the public and private sector as saviours – with their “protocols” and smart advice

·       It was to McKinsey that Obama turned when he wanted to explore the future of democracy 

The book is a very easy read – from a journalist well-versed, I sensed, in the social sciences since he profiled very appropriately some of the books used for his argument eg “The Ideas Industry” by Daniel Drezler. And I liked the way he brought individuals in to illustrate the story – in the opening pages a young woman vacillating between the private or public sectors who chose McKinsey; in the middle a music student who went to live in Mongolia for 5 years, joined McKinsey and ultimately helped Soros set up his new Social Investment Fund; in the chapter on Philanthropy an older guy who dared to call out the hypocrisy of the rich; and, finally, Bill Clinton. 

When I think about change-agents, I’ve often wondered how we can distinguish the real deal from the fakes. But how do we ever know what’s in our hearts – and how we might change? Both the book’s sub-title and argument certainly made me think very seriously about this. As a middle-of-the-road sceptic and “mugwump”, I am myself at least potentially guilty of such charades. Also appropriately, the book includes this famous quotation from Lampedusa’s “The Leopard” which people often get wrong 

 “If we want things to stay as they are, things will have to change” (Falconeri)

Useful Reading

-       A thoughtful review from one of the book’s targets

-       and it seems to have hit home at the famous Wharton School of Management

-       this review briefly summarises each chapter and gives a good sense of the book

-       blog reviews are quite rare but can be quite deep – and this is a good example

-       The McKinsey Way; Ethan M Rasiel (1999) shows the nature of the beast

-       The McKinsey Mind; EM Rasiel and PN Friga (2002) reveals the dirty secrets

-       The LSE Book Review was very positive

https://www.theguardian.com/books/2019/feb/14/winners-take-all-by-anand-giridharadas-review

Words

I do understand that it is a bit perverse of me to try to communicate the essence of effective writing when the majority of my readers have English as their second language - particularly when I return fairly often to the subject. It was, for example, just 3 years ago when I commended almost 60 writers for the quality of their writing – although at least a dozen of them were bilingual (eg Svetlana Alexievich, Oriana Fallacia, Masha Gessen, Sebastian Haffner, Arthur Koestler and Joseph Roth)

But these efforts simply flagged up my preferences – they didn’t try to identify the features that gave the writing its impact. And that’s what I now want to attempt – building on the comment in the last post that “impact” has something to do with not only the style but also the character of the writer. Generally, of course, we are told to separate the two when we are considering creativity - but I think this is impossible 

Let’s start with character – as I survey the various lists I’ve made, what comes through is the breadth of their curiousity and the independence of their thought – indeed their downright obstinacy. They read voraciously across intellectual (and often national) boundaries – and don’t suffer fools gladly.

On style, they generally use short sentences and are constantly on their guard against the clichés and metaphors which so easily take over our minds. We should be in charge of language – not the other way around. George Orwell is the master of this – as his widow put it in her preface to the 2^nd volume of “Collected Essays, Journalism and Letters”, he was – 

one of the most honest and individual writers of this century -- a man who forged a unique literary manner from the process of thinking aloud, who possessed an unerring gift for going straight to the point, and who elevated political writing to an art. 

The very first essay in that second volume is on “New words” which anticipates the Newspeak his 1984 made famous 

When you are asked "Why do you do, or not do, so and so?" you are invariably aware that your real reason will not go into words, even when you have no wish to conceal it; consequently you rationalize your conduct, more or less dishonestly. I don't know whether everyone would admit this, and it is a fact that some people seem unaware of being influenced by their inner life, or even of having any inner life. 

For anyone who is not a considerable artist (possibly for them too) the lumpishness of words results in constant falsification…. A writer falsifies himself both intentionally and unintentionally. Intentionally, because the accidental qualities of words constantly tempt and frighten him away from his true meaning. He gets an idea, begins trying to express it, and then, in the frightful mess of words that generally results, a pattern begins to form itself more or less accidentally. It is not by any means the pattern he wants, but it is at any rate not vulgar or disagreeable; it is "good art". He takes it, because "good art" is a more or less mysterious gift from heaven, and it seems a pity to waste it when it presents itself. Is not anyone with any degree of mental honesty conscious of telling lies all day long, both in talking and writing, simply because lies will fall into artistic shape when truth will not?

In practice everyone recognizes the inadequacy of language -- consider such expressions as "Words fail", "It wasn't what he said, it was the way he said it", etc.) 

No wonder TS Eliot (who didn’t like Orwell!) wrote (in “Burnt Norton”) – 

Words strain,

Crack and sometimes break, under the burden,

Under the tension, slip, slide, perish,

decay with imprecision, will not stay in place

You can read the entire poem here and later (in East Coker) a section I use a lot – 

So here I am, in the middle way, having had twenty years

Trying to learn to use words, and every attempt

Is a wholly new start, and a different kind of failure

Because one has only learnt to get the better of words

Yanis Varoufakis has clearly read his “Politics and the English language” essay from 1946 and I tried recently to understand why Varoufakis writes so well – 

What makes Varoufakis' various books such excellent reading is the sheer originality of his prose –showing a mind at work which is constantly active…...rejecting dead phrases, clichés and jargon… helping us see thlngs in a different light..... using narrative and stories to keep the readers’ interest alive…He's in total command of the english language - rather than, as so usual, it in control of him.....

You don’t expect to find good prose in the “Further Reading” section of a book, but just see what Varoufakis does with the task…

 Inconclusion

As usual, words (and thoughts) have distracted me from the intention behind this post – namely to try to identify the characteristics of “writing which makes an impact”. To demonstrate the difficulty of such an endeavour, let me share with you 60 Words to describe Writing or Speaking Styles ….. 

articulate – able to express your thoughts, arguments, and ideas clearly and effectively; writing or speech is clear and easy to understand

chatty – a chatty writing style is friendly and informal

circuitous – taking a long time to say what you really mean when you are talking or writing about something

clean – clean language or humour does not offend people, especially because it does not involve sex

conversational – a conversational style of writing or speaking is informal, like a private conversation

crisp – crisp speech or writing is clear and effective

declamatory – expressing feelings or opinions with great force

diffuse – using too many words and not easy to understand

discursive – including information that is not relevant to the main subject

disputatious - an inclination to argue

economical – an economical way of speaking or writing does not use more words than are necessary

elliptical – suggesting what you mean rather than saying or writing it clearly

eloquent – expressing what you mean using clear and effective language

emphatic – making your meaning very clear because you have very strong feelings about a situation or subject

epigrammatic – expressing something such as a feeling or idea in a short and clever or funny way

epistolary – relating to the writing of letters

euphemistic – euphemistic expressions are used for talking about unpleasant or embarrassing subjects without mentioning the things themselves

flowery – flowery language or writing uses many complicated words that are intended to make it more attractive

fluent – expressing yourself in a clear and confident way, without seeming to make an effort

formal – correct or conservative in style, and suitable for official or serious situations or occasions

gossipy – a gossipy letter is lively and full of news about the writer of the letter and about other people

grandiloquent – expressed in extremely formal language in order to impress people, and often sounding silly because of this

idiomatic – expressing things in a way that sounds natural

inarticulate – not able to express clearly what you want to say; not spoken or pronounced clearly

incoherent – unable to express yourself clearly

informal – used about language or behaviour that is suitable for using with friends but not in formal situations

journalistic – similar in style to journalism

learned – a learned piece of writing shows great knowledge about a subject, especially an academic subject

literary – involving books or the activity of writing, reading, or studying books; relating to the kind of words that are used only in stories or poems, and not in normal writing or speech

lyric – using words to express feelings in the way that a song would

lyrical – having the qualities of music

ornate – using unusual words and complicated sentences

orotund – containing extremely formal and complicated language intended to impress people

parenthetical – not directly connected with what you are saying or writing

pejorative – a pejorative word, phrase etc expresses criticism or a bad opinion of someone or something

picturesque – picturesque language is unusual and interesting

pithy – a pithy statement or piece of writing is short and very effective

poetic – expressing ideas in a very sensitive way and with great beauty or imagination

polemical – using or supported by strong arguments

ponderous – ponderous writing or speech is serious and boring

portentous – trying to seem very serious and important, in order to impress people

prolix – using too many words and therefore boring

punchy – a punchy piece of writing such as a speech, report, or slogan is one that has a strong effect because it uses clear simple language and not many words

rambling – a rambling speech or piece of writing is long and confusing

readable – writing that is readable is clear and able to be read

rhetorical – relating to a style of speaking or writing that is effective or intended to influence people; written or spoken in a way that is impressive but is not honest

rhetorically – in a way that expects or wants no answer; using or relating to rhetoric

rough – a rough drawing or piece of writing is not completely finished

roundly– in a strong and clear way

sententious – expressing opinions about right and wrong behaviour in a way that is intended to impress people

sesquipedalian – using a lot of long words that most people do not understand

Shakespearean – using words in the way that is typical of Shakespeare’s writing

stylistic – relating to ways of creating effects, especially in language and literature

succinct – expressed in a very short but clear way

turgid – using language in a way that is complicated and difficult to understand

unprintable – used for describing writing or words that you think are offensive

vague – someone who is vague does not clearly or fully explain something

verbose – using more words than necessary, and therefore long and boring

well-turned – a well-turned phrase is one that is expressed well

wordy – using more words than are necessary, especially long or formal words

Fighting Fatalism

Hayek was bad enough – with his belief that markets would solve any problem. But the complexity theorists seem to have driven the last nail into the coffin of Free Will. John Urry was a much-lamented UK sociologist with a superb article here describing and analysing complexity theory about which he also wrote a book (“Global Complexity” 2005) 

My generation believed three things which kept its sanity –

-       Governments had effective machinery and tools at its disposal to deal with most problems

-       Political parties reflected public feelings and had some influence over governments formed from its leading members

-       Enough fuss and pressure from society – whether media, public opinion, voluntary organisations or trade unions – would get results

We no longer believe any of these things – indeed anyone who offers such judgements is seen as old-fashioned if not eccentric…..

A combination of globalisation, privatisation and neoliberalism has sucked the lifeblood not only from governments but from political parties – leaving social movements to perform as a colourful, pantomime distraction.

Fortunately, however, there are still a few voices left – bravely articulating detailed messages which point to a better way. People like Yanis Varoufakis and George Monbiot and, for those prepared to do some really serious reading, authors such as Mariana Mazzucato  - with her latest “Mission Economy – a moonshot guide to changing capitalism” to which the great blog Crooked Timber is devoting a discussion series from which I’ve taken an extract - 

She starts from the view that at present both capitalism and governments are dysfunctional. In Chapter 2 she identifies the four sources of the problems of capitalism as (1) the short-termism of the financial sector (including the deeply problematic issue that, given the role of financial institutions, its profits are privatized but its losses are socialized, as we saw in the 2008 financial crisis); (2) the financialization of business; (3) climate emergency and (4) slow or absent governments. 

In Chapter 3, Mazzucato points at New Public Management theory as the culprit for the widespread myth that failures of the public sector are more serious than failures of the private sector, which has been used to justify the massive increase in privatizations and outsourcing. And this, Mazzucato argues, has led to a reduction of the capabilities in the public sector, which in turn makes it harder to change weak or bad policies. The main problem with the government right now is not its size, but rather that its capacities, skills and expertise have been diminished, which has also demoralized public servants.

What we need instead, is ‘Moonshot thinking’, which entails that governments should have an ambition that is so inspiring and concrete, that it motivates all to contribute to reaching that goal; this is what Mazzucato calls ‘a public purpose’ – the most essential thing a government should have, and which will motivate its partnership with business. Innovation and commercial success will happen along the way. 

Chapter 4 describes the Apollo program in the 1960s as an example of what governments can accomplish if they have a clear mission that all are contributing to. At that time, the mission was “bring a man to the moon and safely back to earth” – in the historical context of the Cold War (not an unimportant detail, perhaps!). The Apollo program was driven by mission-oriented innovation, full with great risks and many failures from which lessons were learnt. At the early stages, poor communication within NASA seemed its weakest point; apparently this problem was addressed so successfully that the dynamic communications set-up within NASA was later copied by businesses. There were many other problems with the Apollo program, and Mazzucato argues that solutions were found by organizations and people willing to experiment, rather than picking supposedly good solutions in advance. Talented and hardworking people, risk taking and adapting, are key aspects of a successful mission. 

Chapter 5 explains how mission-oriented thinking looks like by applying it to several missions for our times: the Sustainable Development Goals, the American and European Green New Deals, accessible health, and narrowing the digital divide. In all of these missions, the aim is to catalyze collaboration between many different sectors, and to change our view of the government as regulating and correcting markets and being a lender of last resort to being the creator and shaper of markets, and an investor of first resort willing to take the high risks that are needed for long-term thinking, and who aims to crowd in private funding and collaborations. 

Chapter 6 sketches how the political economy of this capitalism-with-a-public-purpose would look like. Mazzucato writes that there are 7 pillars that a political economy that can guide a mission-oriented approach should have:

(1) a new approach to value;

(2) markets as being co-created and shaped by the government;

(3) organizations that have the capabilities to co-create for the public purpose, including taking risks, experimenting and learning;

(4) an approach to finance that does not start by asking what the budget is, but by “what needs to be done” and as a derivative question asks how to pay for it;

(5) fighting inequality not only be redistribution but first of all by predistribution;

(6) reimagine the relation between government and businesses as a partnership around a common goal; and

(7) new forms of participation, debate, discussion and consensus-building.

Three other relevant books are -

- Bill Mitchell’s Reclaiming the State – a progressive vision of sovereignty in a post neo-liberal world (2017) is from a leftist Australian economist. 

- Futures of Socialism – the COVID pandemic and post-Corbyn Era; ed Grace Blakely (2020) is a little book which contains short pieces from those sympathetic to the direction Corbyn was trying to take the Labour party.

- The Return of the State – restructuring Britain for the Common Good Ed P Allen et al (2021)

A book calling for a rethink on globalisation and the place of financial capital – with contributions from people such as Robert Skidelsky, Ann Pettifor and Stewart Lansley – questioning the role of financial capital.

https://newleftreview.org/issues/ii129/articles/javier-moreno-zacares-euphoria-of-the-rentier