potlatch

Nylumni journal issue

Over the course of my PhD, I had the great pleasure of taking part in the NYLON network, organised by Craig Calhoun and Richard Sennett at NYU and LSE. And thanks to Melissa Aronczyk and Ailsa Craig, there was an excellent alumni meeting in Ottawa last year, with papers presented within the general theme of 'cultures of circulation'. We even got to use one of Carleton University's log cabins:

A selection of these papers has now appeared as a special issue of Poetics, introduced with a piece by Melissa and Ailsa, and featuring a number of really great papers.

My contribution is called Ways of Owning: towards an economic sociology of privatisation (open access pre-print here) looks at why economic sociology has been so preoccupied by the institution of markets, at the relative expense of property. My argument is, firstly, that it has inherited certain idioyncratic liberal preoccupations from the 19th century, of examining the separation of 'economy' from 'society', which can be interpreted as an effect of markets. But as a result, sociologists have implicitly bought into a worldview that believes goods spontaneously move around of their own accord, without recognising the huge amount of work that goes into facilitating this (or preventing it), in the form of property rights.

What I've tried to do - probably over-ambitiously - is to then set out a framework through which normative arguments over property can be analysed at work within the economy. Building on the pragmatic sociology of Boltanski, Thevenot et al, I identify three conflicting 'orders of appropriation': socialist (the critique of privatisation), neoliberal (the critique of socialisation) and liberal (justifying the separation of private and public). The point is to try and move away from the conceptual disagreements between scholars and theorists, and towards those going on 'in the wild' amongst economic actors themselves.

Hence, a single institution (e.g. an investment bank) might be riddled with its own conflicting philosophies of what does or does not constitute 'property'. For example, value is both a shared social asset within a firm (such as 'tacit knowledge'), but a private piece of 'property' to its shareholders; there is a necessary contradiction here. During the finanial crisis, the banks' capacity to shift from a rhetoric of neoliberalism (risks could and should be entirely privatised) to one of socialism (risks could and should be entirely socialised) represented a key political asset, as many have pointed out. I make the possibly implausible argument that bankers displayed a Marxist sensibility at the crucial moment. But this then leaves the question hanging of how we might restore a liberal critique, of separating what ought to be private risk from what ought to be public risk; this problem is unresolved.

why we need Foucault

After all, what would be the value of the passion for knowledge if it resulted only in a certain amount of knowledgeableness and not, in one way or another and to the extent possible, in the knower's straying afield of himself? There are times in life when the question of knowing if one can think differently than one thinks, and perceive differently than one sees, is absolutely necessary if one is to go on looking and reflecting at all. People will say, perhaps, that these games with oneself would better be left backstage; or, at best, that they might properly form part of those preliminary exercises that are forgotten once they have served their purpose. But, then, what is philosophy today - philosophical activity, I mean - if it is not the critical work that thought brings to bear on itself? In what does it consist, if not in the endeavour to know how and to what extent it might be possible to think differently, instead of legitimating what is already known? There is always something ludicrous in philosophical discourse when it tries, from the outside, to dictate to others, to tell them where their truth is and how to find it, or when it works up a case against them in the language of naive positivity. But it is entitled to explore what might be changed, in its own thought, through the practice of a knowledge that is foreign to it.

The Use of Pleasure: The History of Sexuality vol 2 (1984)

If only I'd had a T-shirt with that on it in 1997, to ward off the reactionary history students in my college bar, who were endlessly lauded by the University authorities on account of their ability to name all 15 of Henry IV's French sisters-in-law. Bitter? Yes. Still? You bet.

New paper on Europe and the neoliberal 'exception'

I've had an article accepted by Theory Culture & Society, entitled 'When is a market not a market?: 'Exemption', 'externality' and 'exception' in the case of European State Aid rules', which I've now uploaded a pre-print version of. This paper was originally something I prepared for a seminar last summer, as part of the Rising Powers network I took part in (and also wrote this paper [pdf] for).

The paper attempts to identify the various logics and justifications through which neoliberalism delineates the limits of the market, or rather, the limits of certain market-based forms of economic reasoning. Clearly, the assumption that any society allows markets or economic logic to determine everything is falsified by simply walking down the street or reading the newspaper. So the question (as posed by Karl Polanyi) is where and how to draw the line around market principles and values; Keynes famously said that this was what Hayek had no capacity to do, but pragmatically speaking, states do manage it. One way that these limits are codified is in EU State Aid rules, which is why I thought that would be an interesting empirical place to look.

I guess the contemporary pertinence of this paper, if there is any at all, is in how I've attempted to theorise the current condition of (European) neoliberalism as existing in a state of exception, in which market norms and techniques are constantly dependent on necessary forms of executive intervention for their survival. Hence, neoliberalism lives on, but only on the condition that it is in a possibly long-term state of emergency. This can be shown empirically via the shifting emphasis of the Commission, away from a logic of 'market failure' as a justification for state intervention, towards a logic of necessity, at least for a period of time.

Here are some of the paper's conclusions:

How long does this state of exception last and how far does it extend? One criterion by which Aid to banks would be considered compatible with State Aid rules was that it be reviewed at least every six months (EC, 2008b). In December 2008, the Commission announced a new ‘Temporary framework’ authorising necessary rescue packages in the ‘real economy’ (i.e. non-financial firms), such as loans and guarantees that the financial sector was itself unable to offer (EC, 2008c). This framework expired on 31^st December 2010, and subsequent communications were issued to provide guidance on the phasing out of Aid to financial institutions (EC, 2010). Statements made by the Commission therefore indicate a desire to terminate the formally recognised exception to market-based principles and techniques of valuation. But this doesn’t mean that these principles and techniques are now restored to the status of state-endorsed norms. On the contrary, the exception does not need to be legally validated or recognised to persist; that is its definition. From a Schmittian perspective, the legality of sovereign rule always tacitly allows for non-legal acts. But moments of rupture and publicly declared states of exception create the possibility of permanently exceptional states, in which executive political power acquires the legal right to act purely out of necessity, and without justification. Whether or not the European Commission recognises this as an accurate depiction of European neoliberalism post-2008, this may be what has emerged.

 There is an inherent conflict in the relationship between economics and sovereignty, as explored by Foucault, which shapes the unwieldy character of the neoliberal state. The Euro crisis of 2010 can be seen as a consequence of this, in which a transnational market logic was created in place of national sovereignty, but without any political sovereignty of its own. As Peck argues, “neo-liberalism’s curse has been that it can live neither with, nor without, the state” (Peck, 2008: 39). The European monetary crisis is serving up new attempted solutions to this contradiction. The appointment of economists as unelected Prime Ministers of Greece and Italy in 2011 takes the attempted synthesis of economics and sovereign power to unprecedented heights, and casts a thoroughly more Hobbesian light upon the possible ‘performativity’ of economics. Meanwhile, whatever imbalances of European national power may once have been concealed by the liberal rhetoric of a post-national European project, are now naked as the survival of the single currency becomes predicated upon the obedience of southern European citizens to the demands of German and French national leaders. In its apparent state of exception, the European project is one of discretion and political decision, as much as one of judicial rule...

In the years that have followed the rescue of European banks, a number of scholars have questioned whether neoliberalism is alive or dead, or in some type of ‘zombie’ state (Harman, 2009; Peck et al. 2010). The unfolding of the European sovereign debt crisis over the course of 2010 and 2011 has forced constant decisions and dilemmas upon state actors, who face repeatedly unprecedented situations in which the ‘normal’ market order faces an existential threat. Senior politicians and senior bankers now negotiate face to face, to try and identify shared interests. In answer to the question of whether neoliberalism is alive or dead, it seems entirely plausible to speak of an on-going or permanent state of neoliberal exception. Agamben identifies one case of exception in the Roman institution of iustitium, in which law would go on ‘holiday’ while the republic fought for its survival. Iustitium is neither legal nor illegal; in fact it is not a legal category at all, but a juridical vacuum. The present actions of European states and European Commission are perhaps neither compatible with market-based principles and techniques of valuation, nor contrary to them, but operating in a market vacuum.

Anyway, that's quite enough. It's a paper I feel quite proud of, as it knits together a number of theoretical and empirical interests of mine of the last few years, and hopefully casts some light on the present. Any thoughts very welcome. I can't say when it will appear in print.

how to restore pricelessness

The inestimable Simon Hoggart, parliamentary sketchwriter for The Guardian, has a neat test which he applies to political rhetoric, to check whether or not it means anything: if it's impossible to imagine anyone demanding the opposite of what is being argued for, then you know it's hot air. Hence, much of what Tony Blair claimed to stand for - 'more money in your pocket, less crime on the streets, better public services' - wasn't actually a set of policies or political values at all, seeing as nobody could sensibly disagree with any of it.

I feel that the same may be true of David Cameron's 'Big Society'. It's not that the idea is too bad to be helpful, but that it's too good to be helpful. Everybody already wants to live in neighbourhoods that are thriving, where people look after each other, where the state is not relied upon. There's nothing remotely controversial about this aspiration. It's why house prices in Stoke Newington are more than double what they are a few miles east in Leyton. Of course the state would rather let us look after one another, as would we. This doesn't go any way to explaining why it is that we don't.

I was minded of this when I saw this advert for the P&G Capital Cleanup on the tube earlier:

Down the right-hand side are the logos of various household cleaning product brands and Procter and Gamble itself. In case you can't read the text, it says the following:

You know when your mum's coming round to your flat and you give the place a quick tidy? Well that's exactly what we're doing. Except our "flat" is London and our "mum" is the rest of the world coming round. So we're cleaning London in time for the London 2012 Olympic Games. But that's a big job so we're asking people like you to lend us a hand. We have litter to pick [sic], graffiti to scrub, and flowers to plant. To help London look its best go to P&GCapitalcleanup.com. Come on. Make your mum proud.

This isn't going to turn into another curmudgeonly anti-Olympics rant (read this if that's what you're after). Nor do I have any objection whatsoever to people donating their time for free to cleaning up London, which strikes me as an excellent idea, rather like having "more money in your pocket, less crime on the streets, better public services". The problem with this advert is the huge vacuum of justification at its heart. When Procter & Gamble invites ordinary members of the public to clean up a viciously unequal financialised city, where services of this nature are typically outsourced to private contractors, to prepare the ground for a vast splurge of securitised and brand-controlled two-week corporate entertainment, we might be entitled to respond to our 'mum' with a somewhat adolescent response: why the hell should I?

This response is far from inevitable, universal or praise-worthy, but it has a logic to it in this context that shouldn't be ignored. If, for example, the advert had appeared without the very prominent backing of a large corporate sponsor, or was not linked directly to an extremely complex and expensive act of megaproject management, then it might appear merely as a 'nudge' towards greater public spiritedness. I'm always rather charmed by the ads that London buses have, in which a cartoon teenager says "I won't play my music loud" next to a cartoon old woman saying "and I won't put my bag on the seat", in an effort to encourage slightly greater conviviality on public transport. But the fact that those ads are innocent of any strategic economic interests (beyond the 'consumer satisfaction' of bus users), and are simply branded with the reassuring Edwardian logo of London Transport, surely contributes to their efficacy. By contrast, the P&G Capital Cleanup is demanding uncalculated acts of generosity in pursuit of private profit. This is clean-up work that would otherwise be paid for.

The central problem of voluntary or community action in a neoliberal society is this: it is far easier to move from the realm of gift exchange to the realm of calculated exchange than it is to do the opposite. Where calculation and a calculating mindset is pushed further into the realm of informal social relationships, via audit, managerialism and social media, it becomes extremely difficult to suddenly appeal to the power of 'society' to reverse this or alleviate its malign effects. Simply arguing that it would be nice for people to act decently and public-spiritedly is not enough of a response, to a 30-year policy and management project built specifically on the claim that people can not be trusted to act decently or public-spiritedly unless kept under audit and surveillance.

This isn't to say that economisation and calculation are inevitable, irreversible or irresistable. Relationships and exchange surely can be returned to the realm of uncalculated gift-giving. But this won't come about by simply demanding that we all stop counting the costs or calculating the price, especially not in a society where cost-counting and pricing are still such dominant forces in public life. Right now, being nice does not appear to pay, either in a monetary or a non-monetary sense. To change this requires some form of strategy, which must firstly be built on a more sophisticated understanding of the problem.

The economistic fallacy, which only dates back to the late 19th century and not the whole way back to Adam Smith, is that 'social' uncalculated exchange is a derivative or even deficient variety of 'economic' calculated exchange. This assumption is present in the term 'externality', as employed by welfare economists since Pigou (1912), which treats the public as an accidental side-effect of the market, rather than vice versa. Economic anthropologists, dating back to Marcel Mauss, have challenged this very successfully, by demonstrating that gift exchange is primary, and market exchange is secondary. Georges Bataille's work on 'general' and 'restricted' economy also explores it brilliantly, starting with the recognition that all value originates in the immeasurable force of the sun. The same critique of calculated exchange has been made more recently by David Graeber in relation to credit relations.

Neo-classical economics therefore turns the world upside down, by assuming that calculation is 'normal' and that altruism is unusual. Game theory develops this problem and tests it experimentally. But eventually, as I argued in relation to the riots last summer, this inverted worldview becomes realised as a normal way to think and to interpret relationships. Once prices have been put on certain goods, they cannot simply be removed simply because it would be nice to remove them. But that seems to be the extent of the Big Society's logic.

The only alternative is to develop new practices, norms and techniques of valuation, to replace those of price. Time-banking and alternative currencies are clear examples of this. New types of credit, which are not entirely fungible (in strong contrast to credit securitisation) can be developed, in which norms of reputation, trust and shame are actively involved in how they bind people. This needn't simply be a form of conservatism, if new instruments can be invented. There is both a modernising and a conserving spirit to how something like the Big Society might actually be pursued. 

Finally, this would also require the deliberate dismantling of corrupt forms of market exchange and calculation. If prices are to be removed from certain areas of public and social life, then there must be a clear political strategy to undermine those institutions which benefit from such pricing. This includes much of the current banking system. It also includes FTSE100 companies urging us to donate our time for the benefit of their media circus and shareholders.

Olympics as political bottleneck

Whatever the rights and wrongs of trade unions "targetting the Olympics", as suggested by Len McLuskey, it's possible to spot some rationality in what he suggests. Compare this suggestion to an observation in Timothy Mitchell's paper (aka the best piece of social science I've read in about two years) 'Carbon Democracy' (now developed into a book I've not yet read). Remarking on the rise of coal as a source of industrial power in the 19th century, Mitchell writes:

Great quantities of energy now flowed along very narrow channels. Large numbers of workers had to be concentrated at the main junctions of these channels. Their position and concentration gave them, at certain moments, a new kind of political power. The power derived not just from the organizations they formed, the ideas they began to share or the political alliances they built, but from the extraordinary concentrations of carbon energy whose flow they could now slow, disrupt or cut off. Coal-miners played a leading role in contesting labour regimes and the powers of employers in the labour activism and political mobilization of the 1880s onwards. Between 1881 and 1905, coal-miners in the United States went on strike at a rate about three times the average for workers in all major industries, and double the rate of the next highest industry, tobacco manufacturing... The militancy of the miners can be attributed in part to the fact that moving carbon stores from the coal seam to the surface created unusually autonomous places and methods of work.

By contrast, Mitchell sees oil as transforming labour relations in the post-1945 era:

The material qualities and physical locations of oil made things different from with coal. Since it comes to the surface driven by underground pressure, either from the water trapped beneath it or the gas above it, oil required a smaller workforce than coal in relation to the quantity of energy produced. Workers remained above ground, under the continuous supervision of managers. Since the carbon occurs in liquid form, pumping stations and pipelines could replace railways as a means of transporting energy from the site of production to the places where it was used or shipped abroad. Pipelines were vulnerable, as we will see, but not as easy to incapacitate through strike actions as were the railways that carried coal.

This politics of bottlenecks recurs in what McLuskey is proposing for the Olympics. 

Applied neoliberalism, in contrast to Hayek's imagined form, involves particular notions of national space and national public spheres. As David Harvey argues, and various critical geographers have explored, neoliberalism needs a form of nationalism and shared purpose in order to operate. It cannot only operate around logics of privatisation. And nowhere is this clearer than in its valorisation of competitive rituals and financial waste such as the Olympics. The Olympics, in Bataillian style, is the pressure valve for an otherwise entirely calculable, privatised worldview (needless to say, it is a carefully regulated, expertly governed pressure valve, and not a complete potlatch, although the money being wasted is akin to a form of wanton destruction). 

The Olympics requires high level political organisation and co-operation in order to be 'delivered'. It is a staged demonstration of who 'the British' collectively are, and how successfully we 'as a people' can manage projects. There is a crypto-socialism at work here, that is rather more explicit and popular than the crypto-socialism at work in (say) the public involvement in finance. While banks depend on the Treasury for bailouts and The Bank of England for occasional free money, they are relatively independent of the public sector for their day-to-day operation: Canary Wharf has private security, private drivers (or taxis) and quasi-private spaces. Finance depends on public support, but - like oil - it flows freely, liquidly between institutions, without there being bottlenecks that any of the rest of us can influence or disrupt (other than switching bank accounts). This makes it such an antidemocratic force in public life.

This is obviously not true of the Olympics, which as a form of public-economic good has properties closer to that of coal, in Mitchell's analysis. There is political and democratic risk attached, which creates some exotic forms of paranoia such as banning certain authors from libraries. Whether McLuskey is smart to be picking this fight is another matter; but opportunities to control a bottleneck in the modus operandi of neoliberalism do not come around every day, and it would be strange if unions didn't at least consider using that power, in the same as the coal-miners considered using their's in the 1880s and 90s.

Shame: a Durkheimian take

Psychology is often how societies avoid looking in the mirror. It is scarcely any surprise that we are increasingly obsessed with the micro-politics of nudging, mental activation and neuro-processes, when any honest account of our political economy and sociology might be devastating. In the context of an economic depression, we are just beginning to speak about 'capitalism', but only on the premise that a small minority has gone feral and that the rest of us are passive victims.

The reaction to Steve McQueen's appalling-yet-beautiful Shame has exhibited this in predictable and enfuriating ways. Since the outset, the film was trailed, reviewed and discussed as a portrait of 'sex addiction', despite the fact that there is no reference to this disorder at any point in the film. 'Sex addiction' is a disorder that was scarcely heard of ten years ago, but it has everything going for it as a 21st century explanatory trope. It is exotic, titilating, intriguing and irritating all at once; it winds up The Daily Mail; we can speculate as to who might really have it, and who just needs to pull themselves together. McQueen himself has played up the concept of sex addiction in interviews about the film, maybe because that's a marketing message that travels best.

The main character in Shame, Brandon (played by Michael Fassbender), is emotionally muted, teeming with a sorrowful rage and physically charismatic. He may be described as 'depressed' and refuses to speak about aspects of his past, but he shows no signs of suffering any clinical condition. One of the many brilliant devices used in the film is that there is no explanation or any hint as to why he may have developed into this type of adult man, creating a gap in the plot that makes the film all the more suffocating. He hasn't begun to 'deal with' his problems, and shows no sign of wanting to. Nor does the audience receive the psychological metanarrative that we assume as our right nowadays (e.g. David Cameron: "I love the NHS because it helped my sick child"... for which read, otherwise I'm just another selfish Tory). Instead, he just appears utterly stuck with himself.

In these respects, Brandon's character is entirely at odds with the therapy culture of New York, his home city. Perhaps he represents some form of resistance to the 'psych' sciences in this respect, though not a very appealing one. If the film is 'about' sex addiction, then its message is simple: this is what happens if you don't treat your psychological and emotional ailments. But in a sense, he does treat them through relentless self-gratification, including casual sex, pornography, masturbation, drugs and virtually anything that avoids intimacy or verbal honesty. The treatments offered by the streets and bars of New York, combined with the internet, become a way of lancing some boil that never stops filling up again with toxins. Towards the end of the film, a scene involving Brandon and two prostitutes portrays sexual desire as a form of filth, that is desparately scrubbed away at through the act of sex. The shame being depicted in Shame is that of someone who wants to escape their body altogether (placed alongside the grotesque Hunger, it seems that McQueen has a thing about this).  If Brandon really wants anything, it's to stop wanting so much.

And this is how the film becomes sociological and, more specifically, Durkheimian. What the psychological interpretation utterly fails to account for is the fact that Brandon lives in a culture organised around giving you exactly what you want. The film had to be set in New York, the only city in the world where you can specify what sort of sesame seed you want on your bagel in what precise pattern. A pivotal moment in the film occurs when Brandon's sister, Sissy (played by Carrie Mulligan), sings a slow, mournful rendition of 'New York New York' in a club, resulting in a single tear slowly rolling down Brandon's cheek. This is the closest he comes in the film to sharing an emotion. But why is he crying? Psychologically, the answer is deliberately with-held, both from the other characters and the viewer. But culturally, the moment feels like a requiem for New York City. Shame is never quite a satire, because it's too sad for that. Instead, it is an angry lament for a social and economic model that promised to satisfy every individual desire, and ended up with an economic and social crisis fuelled by taking this promise for granted. The decline of America, and one might even say the West, is tied up with its failure to discover a legitimate limit to egoism. As Keynes said of Hayek, he was unable to stipulate "where to draw the line".

Durkheim's Suicide, which I discussed here in relation to current communitarian politics in Britain, examines these same issues. The book begins by seeking to demonstrate statistically that there are aspects of suicide that cannot be reduced to purely psychological or economic explanations. For instance, suicide rates rise during times of rapid economic progress, as well as rapid economic decline. This is crucial for Durkheim, in establishing a separate field of sociology.

'Anomic suicide', which is the form which best diagnoses the modern condition, arises from an absence of mediating institutions, between self and society as a whole. The self suffers from a problem of excessive and arbitrary freedom, finding nothing beyond the ego to value. Psychologically, this becomes a form of depressive narcissism. The problem, as Brandon might understand, is that:

Inextinguishable thirst is constantly renewed torture. It has been claimed, indeed, that human activity naturally aspires beyond assignable limits and sets itself unattainable goals. But how can such an undetermined state be any more reconciled with the conditions of mental life than with the demands of physical life? All man's pleasure in acting, moving and exerting himself implies the sense that his efforts are not in vain and that by walking he has advanced. However, one does not advance when one walks toward no goal, or - which is the same thing - when his goal is infinity.

It's a shame that McQueen himself didn't nurture a little more ambivalence in the film's interpretations. To describe Brandon's character as a 'sex addict' ring-fences his malaise as a private one, maybe even a neuro-chemical one. To recognise that there is a gripping and disturbing sociology at work in Shame is not to say that sex addiction is a sham, or simply a medicalised version of a sociological disorder. I have no reason to believe that sex addiction is a 'fake' disorder; Brandon's character has evident emotional and psychological problems that cause misery.

But what is it about sociological interpretations and meta-narratives that eludes critics? Isn't it often more interesting to ask what is the malaise that we all share at this moment in time, than to pinpoint the weirdos, the disruptive neurons or the unruly chemicals that need targetting? Sure, Durkheim was a metaphysician, but then 'addiction' is an entirely metaphysical category in its own right (the entire notion of a compulsion implies higher order notions of a compeller, a rule and a punishment). The fact that 'addiction' is a clinical condition that is straying into more and more areas of life, is itself an interesting sociological phenomenon. It's not that the field of psychology does not or should not exist, but efforts to cram more and more into this field represents a form of societal dishonesty, to rival the psychic dishonesty of 'addicts' refusing to 'face up' to their condition.

 

See also: The Wire: A Weberian Take and Mad Men: A Foucaultian Take.

Uneconomics latest

The Uneconomics debate is now up and running (RSS feed), with excellent contributions from Judith Marquand, Oliver Huitson and Glen O'Hara. There'll be a typically biting piece from Phillip Mirowski next. Watch this space. And email me if you have ideas for contributions or contributors.

Uneconomics: new debate

I've launched a new debate or essay series at openDemocracy, under the title of 'Uneconomics'. Its purpose is twofold. Firstly, to criticise the monochrome economic world, as depicted by orthodox economists, which they increasingly assist in governing and shaping. And secondly, to bring alternative forms of economic analysis and depictions to light, which are too often marginalised within the academy, and virtually ignored by policy-makers and within the public sphere. I'm keen to hear from anyone who might want to contribute an article, especially if they have empirical research that challenges orthodox assumptions, might alter public understanding or the definition of policy problems, and therefore demands a broader readership than academic journals can achieve (email me). David Graeber, and especially his recent book on debt, is a model of what we should be aiming for. There will be contributions from Judith Marquand and Philip Mirowski in the next week or two, and I should have some other interesting contributions in the pipeline.

You can read my opening gambit here, which is a polemical attempt to define what's at stake:

It is time to acknowledge an uncomfortable truth about the public status of economics as an expert discipline: it has grown to be far more powerful as a tool of political rhetoric, blame avoidance and elite strategy than for the empirical representation of economic life. This is damaging to politics, for it enables value judgements and political agendas to be endlessly presented in ‘factual’ terms. But it is equally damaging to economics, which is losing the authority to describe reality in a credible, disinterested, Enlightenment fashion. 

The status of economists in public life has taken many twists and turns, since Adam Smith’s Wealth of Nations was published in 1776. The classical political economists, such as David Ricardo and John Stuart Mill, were engaged public intellectuals, whose analysis covered institutions, politics and morals. It was only after the ‘marginal revolution’ of the 1870s that economics reappeared in its neo-classical manifestation, the form with which we associate the term ‘economics’ today. In drastically delimiting the scope of economics to the study of rational decision-making by individuals, the marginalists withdrew from describing capitalism or society, creating space for rival social sciences to emerge for this purpose.

This has already attracted some scornful responses in the comments. This issue is clearly not new, but I thought it would be an opportune moment to revive some of these questions, alongside so much debate about the morality of capitalism.

article on ignorance and neoliberalism

My friend and former colleague, Linsey McGoey, has edited an excellent special issue of Economy & Society on the topic of 'ignorance', following a conference she organised on the topic at InSIS a couple of years ago. She and I have a co-authored piece, 'Rationalities of ignorance: on financial crisis and the ambivalence of neoliberal epistemology'. Here's the abstract:

The financial crisis of 2007–8 was experienced and reflected upon as a crisis of knowledge, the perennial question being why nobody accurately understood the risks that were being taken within the financial sector. In the wake of the crisis, there have been demands that rational economic knowledge be extended further and more vigorously, to prevent such ignorance being possible in future. At the same time, there have been demands for a new, softer rationalism, which factors in the possibility of errors and systemic complexities. What neither approach recognizes is that ignorance is not simply the absence of rational economic knowledge, but is a productive force in itself, something that is actively nurtured and exploited, both by neo-liberal theorists such as Hayek and by expert actors who have been implicated in the financial crisis. We explore how ignorance has been alternately an albatross [sic], a commodity and an institutional alibi to financial actors and the scholars who study them.

If you'd like a copy, email me.

capitalism as a policy problem

The current British policy and media vogue for debating 'capitalism' may well be unprecedented. There have long been rolling public debates about specific institutions and practices, such as banks, markets, debt, financial markets and trade. But to focus on capitalism implies a more political-economic perspective, which is alert to questions of hierachy, ownership, power and institutional evolution. At least it should do. Historically, the question of 'capitalism' has been more often debated by its critics (from Marx onwards), or else by those such as Milton Friedman who have used it to attack socialism. Even then, neoliberals have preferred to refer to 'markets', 'enterprise' and 'entrepreneurship' when providing the gloss to their economic argument.

The new debate is to be welcomed, but it is inevitably throwing up misunderstandings and strange representations. The Financial Times has been running a sophisticated series of op-eds on the crisis of capitalism, which only really hit the intellectual rocks with a piece published yesterday, entitled 'It's a crisis of confidence, not of capitalism' (the stupidity of the article's headline turned out to be well-matched to the identity of its author, the Chancellor of the Exchequer).

The first thing to note, as if it needed saying, is that of course capitalism is in crisis. The denial of this fact seems to go hand in hand with two intellectual errors. Firstly, it misunderstands the meaning of the word 'crisis', which it hears as equivalent to 'end' or 'death'. Nobody has yet plausibly suggested that capitalism is coming to an end. But quite clearly there is a crisis, in the literal sense of a judgement, turning point or critique. Capitalism is in a critical condition, which will determine what sort of future it has. This is what 'crisis' refers to. For evidence that it is in crisis, one need only point to the fact that policies which once alleviated its shortcomings, now appear only to exacerbate them. To his credit, Gordon Brown appears in this piece to grasp the historic importance of the current period that we're living through, and the vast scale of any potentially adequate political response.

Second, the crisis deniers get lost in is/ought distinctions. They seem to believe that announcing a 'crisis of capitalism' means advocating socialism. They then very swiftly fall into making abstract and irrelevant moral-psychological claims about how competition and self-interest are 'still' the only plausible bases for organising the economy. Take this Newsnight debate from last week for example. The inevitability of capitalism, in roughly its current form, is asserted on the back of a philosophical anthropology, which is derived from... well, the think tanks and ideologues whose job it is to defend the freedom of capital. Typically this freedom is also erroneously dressed up as the freedom of markets, with endless mis-readings (and more likely, non-readings) of Adam Smith to buttress it.

Yet the ideologues are partly responding to the way in which the question of 'capitalism' has been posed by politicians and pundits alike, which is in heavily moralistic terms. Nick Clegg, David Cameron and Ed Miliband are competing to find ways to attack the morally noxious bits of capitalism, and not merely the useless bits, though Miliband's notion of 'predatory capitalism' suggested that the two go hand in hand. I've heard it suggested that politicians' sudden obsession with the 'c' word may be a strategy to avoid talking about immoral 'business', which swiftly invites questions of which businesses in particular, the same questions which floored the entire shadow cabinet after Miliband's conference speech.

It seems that the main reason 'capitalism' has been put on the table as a policy problem is that this distinguishes the problem as a moral one of principles, not a utilitarian one of economics. British politics is suddenly experiencing a classically ordo-liberal moment, in the sense that economic 'right' and 'wrong' no longer map cleanly on to 'efficient' and 'inefficient'. This partly explains why the collapse of economic growth is having so little impact on the Conservative Party's poll-ratings: for the time being, debates have shifted on to liberal questions of form and structure, away from utilitarian questions of output. Other bizarrely non-utilitarian behaviours abound, such as governments and firms seeking to pay off debt at a time of negative real interest rates, producing a 'balance sheet recession'.

To this, some nuance could be added, by recognising that all capitalist crises are also moral crises, but in a very particular sense. From the 18th century onwards, liberalism has functioned on the basis of an illusory split (famously criticised by in Polanyi's Great Transformation) between the amoral realm of the 'economic' and the moral realm of the 'social', also represented as a dichotomy between the sphere of value and the sphere of values. This illusion is propped up by an associated split between economics (the study of rational choice) and sociology (the study of association and rules).

Ultimately this split is a useful fabrication or fantasy that serves policy-making, rather than one emanating from institutions or agents themselves. 'Economic' institutions (such as banks) are awash with moral judgements, rituals and norms; 'social' institutions (such as families) are equally awash with rational and monetary calculation. But the split does some work, in preventing us from subjecting everything to constant moral judgement, which would be hugely time-consuming and inefficient. Neoliberalism has frequently committed the opposite error of seeking to subject everything to rationalist audit, which turns out to be equally time-consuming and inefficient, though when the target is lefty professions and academics, that may be its underlying purpose.

Every stable era of capitalist development rests on its own distinctive way of separating economics from moral judgement (or 'efficiency' from 'equity', as welfare economists like to put it). The critique of capitalism involves challenging this split (for example, through arguing that labour markets are unjust regardless of their efficiency, or that GDP measures bad things) but these critics can typically be rebuffed for decades at a time. However, a crisis of capitalism, like the one we're living through, brings about a collapse in the liberal divide, from both sides at once, as it becomes unclear what is worth measuring and valuing in the first place. Once economics and economic institutions cease to work in a utilitarian sense, their supposed insulation from sociology, moral judgement and political economy fails too.

This is why crises are so exciting and frightening at the same time. They involve a fundamental uncertainty as to what is going on, how long it will take and what types of technologies, institutions and policies will bring it to an end. As I argued in this New Statesman piece, one feature of our current predicament is that we don't yet know what we've come to the end of precisely. A new fluidity opens up, between moral problems of values and economic ones of value, and we confront the strange truth that the entire realm of 'the economy' as a separate thing is really a fiction. This uncomfortable realism only be suppressed again once a new settlement is established, in which a new form of socio-economic division is established, which is both economically effective and morally acceptable.

If current questions of 'responsible' and 'popular' capitalism are to be posed seriously, then we need to be clear about how far moral critique can (and must) currently penetrate. During times of stability, businesses and politicians raise moral questions of values, almost as matters of consumer preference.* This is the function of corporate social responsibility, which is a form of self-regulation at best, and green-washing at worst. During times of crisis, things are far more profound. It is no long a question of what moral values are to be added to utilitarian economic structures, but what moral values are to constitute a future definition of economic value.

This is what I was trying to communicate in my recent paper on employee ownership. In arguing that 'wellbeing' and 'patience' must be central business 'values' of any post-crisis capitalism, I was not intending that these are somehow nice things, which we really ought to think about a bit more. More fundamentally, the fact that the previous model had failed to account adequately for human psychology on the one hand, and for long-term outcomes on the other, was actually at the heart of how and why the crisis occurred. It follows that any resolution of the crisis will necessarily rest on a new notion of economic value, which somehow factors in these moral values.

If the new public debates about capitalism are to be more than rhetorical, they will need to move beyond obviously moral issues, such as inequality and who 'deserves' what. The term 'fairness', like 'equity', keeps morality safely confined to certain classically moral issues, from where it is unlikely to interfere in the distribution of political power (as I argued in this openDemocracy piece. I was delighted to discover amongst The Browser's quotations yesterday Scott Adams' "fairness is a concept so dumb people could participate in arguments"). Instead, it needs to take on economic institutions of ownership, governance, democracy, valuation, audit and performance measurement. There are some encouraging signs that this might be beginning to happen.

 

* I once worked at a research consultancy which was in the process of re-branding itself, and wanted to engage its staff in identifying its core 'values'. This resulted in a hilarious, Python-esque all-staff meeting in which one individual would opine "I think 'trust' should be one of them", which would then be met with a response from elsewhere "'trust' is rubbish! 'Integrity' is far better!", which in turn would be shot down by "nonsense! 'Leadership' is clearly the best". And so on, depressingly confirming Milton Friedman's famous dictum that "over values, men can only fight".