Provocation # 32. Economics as insulated From the larger system.
To speak of economics or economy is to accept the separation of a system of stuff from the rest, separating “economy” from politics, society, nature, and the reality that you and me affect each other.
Schumpeter is representative when he writes on Adam Smith and others, “they failed to see that their ethical philosophical and political doctrines were logically irrelevant for the explanation of economic reality as it is.”
Because of this it is hard to speak holistically of a society that contains a complex web of material transactions among people and things because the economists have split off parts as if the economy is self contained and analyzable as a system without political, social or philosophical (theology, ontological, epistemological or ethics) connections.
Francois Quesnay in about 1750 thinks that “economy” can be separated from political and social thinking, and as such can then be compared to the natural harmony of the universe and should not be disturbed. Activities in society such as making, selling, lending, are isolated as economics, and then assimilated to then current ideas about the newtonian universe, and declared off limits to change (Quesnay went on to admire the China of the time, as timeless, stable, and to propose oriental despotism, as a better solution to Europe. *)
The idea that there can be new economic thinking without there being new political, social or philosophical thinking may be an illusion.
The economy is owned by a few and the rest of us are allowed in either as workers or buyers. Both have to leave the premises when our business is complete.
A few, called entrepreneurs (from french, to take from within by hand) can migrate from the outside to the inside.
Many people are marginalized through unemployment, regional isolation, or evictions and are no longer considered as part of society.
* As we shift opinions we try to hold on to old assumptions. The idea that the sun moves around the earth was replaced with the idea that the earth moves around the sun, an idea most of us believe to be “true.” But in fact, following Newton, the sun is also in motion around the center of gravity of the solar system, and hence also moves. The modern popular belief that the earth moves but the sun does not hints at how desperate we are to hold on to something being stable and claim we are modern.
Michael Sandel, is also provocative.,, focussing on the technocratic isolation of economics from society. In this morning’s New Statesman.
MS Social democracy is in desperate need of reinvigoration, because it has over the past several decades lost its moral and civic energy and purpose. It’s become a largely managerial and technocratic orientation to politics. It’s lost its ability to inspire working people, and its vision, its moral and civic vision, has faltered. So for two generations after the Second World War, social democracy did have an animating vision, which was to create and to deepen and to articulate welfare states, and to moderate and provide a counterbalance to the power of unfettered market capitalism.
This was the raison d’être of social democracy, and it was connected to a larger purpose, which was to empower those who were not at the top of the class system, to empower working people and ordinary men and women, and also to nurture a sense of solidarity and an understanding of citizenship that enabled the entire society to say we are all in this together. But over the past, well, three or four decades, this sense of purpose has been lost, and I think it begins with the Ronald Reagan/Margaret Thatcher era.
But even when Reagan and Thatcher passed from the political scene, and were succeeded by the centre-left political leaders – Bill Clinton in the US, Tony Blair in Britain, Gerhard Schröder in Germany – these leaders did not challenge the fundamental assumption underlying the market faith of the Reagan/Thatcher years. They moderated, but consolidated the faith, the assumption that markets are the primary instrument for achieving the public good. And as a result, the centre left managed to regain political office but failed to reimagine the mission and purpose of social democracy, which became empty and obsolete. This remains an unfinished project.
The only way of reining in the uncritical embrace of markets is to revitalise public discourse by engaging in questions of values more directly. Social democracy has to become less managerial and technocratic and has to return to its roots in a kind of moral and civic critique of the excesses of capitalism. At the level of public philosophy or ideology it has to work out a conception of a just society, it has to work out a conception of the common good, it has to work out a conception of moral and civic education as it relates to democracy and empowerment. That’s a big project and it hasn’t yet been realised by any contemporary social-democratic party.
A revitalised social-democratic response to the power of markets would also try to come up with institutions for meaningful self-government – forms of participatory democracy in an age of globalisation, where power seems to flow to transnational institutions and forms of association. It’s important also to find ways to promote participatory democracy. This requires political imagination and political courage. It’s a long-term project that remains as a challenge, but until we make some progress in that bigger challenge, I think that democratic politics will still be vulnerable to the backlash that we’re witnessing, with Brexit in Britain, some of the populist political movements in Europe, and Trump in the United States.
There is an alternative – but the alternative is to go beyond the managerial, technocratic approach to politics that has characterised the established parties and the elites, to reconnect with big questions that people care about.
So I am arguing that is is hard for economics because it is defined as separate from politics and society. It is treated as an autonomous self regulating mode of being independent of society.