potlatch: new paper on 'externalities' and neoliberalism

Over the last year, I've been collaborating with my former supervisors, Scott Lash and Michael Keith, on an ESRC-sponsored network looking at 'rising powers' in the global economy, primarily China and India (building on their own research on China, which led to a forthcoming book). We held events in Beijing, Delhi and London with experts from all over the place.

The organising conceptual focus for the project was 'externalities', understood as the boundary between the 'economic' and 'social' realms, but also between economics and sociology, thereby allowing economists and sociologists to come together to explore how the distinction was manifest in different cities from around the world. Synthesising various themes, ideas and relevant literatures from this, I've published a working paper, The Politics of Externalities: Neo-liberalism, Rising Powers and Property Rights [pdf]. It's deliberately stuffed with references, as its partly a review of ideas and reading that occurred over the course of the three seminars and discussions.

The proposition in the paper is quite simple. Classical liberalism, of the 19th century variety, was predicated on a clear split between the 'economic' and the 'social', as Karl Polanyi bemoaned, in which markets are transparent, exact and autonomous, and the 'social' realm involves costs and benefits that are inexact, opaque and typically dependent on the state. This becomes the core disciplinary assumption of welfare economics, which is an effort to distinguish those parts of capitalism which do maximise utility, from those which do not ('market failures', 'externalities') and hence require some form of regulation or public provision. In that sense, contemporary public policy in Britain still operates with a liberal imaginary.

Neoliberalism and 'new economic sociology' each problematises this from opposite stand points. The former (in the tradition of Ronald Coase and Gary Becker) treats the 'social' as a cost that needs allocating or privatising more clearly, ideally via property rights. This is 'economic imperialism'. The latter (in the tradition of Harrison White and Marke Granovetter) treats the 'economic' realm as an institutional achievement of norms and networks. This is 'sociological imperialism'.

The question - and the relevance the 'rising powers' - is what alternatives to these might look like, after liberalism and neoliberalism, or in parallel to it. There are cases in both India and China of new, potentially more efficient, economic forms, which rest on ambiguous or hybrid property rights, either because trade exists outside of the clearly formal economy (see Ravi Sundaram's working paper [pdf]) or because new accomodations between the rural and urban economies are being invented (see especially Cui Zhiyuan's work on Chongqing, e.g. this interview [pdf]). Western neoliberalism's commitment to calculate every cost and benefit then becomes the basis of future competitive disadvantage.

Incidentally, Richard Bronk's The Romantic Economist points towards a similar critique, and draws inspiration from JS Mill to do so, as does Cui Zhiyuan's celebration of 'liberal socialism' in Chongqing.