ECONOMICS AS MYTH, ECONOMICSAS POWER: WHY MODERN ECONOMICSHAS FAILED AND HOW TO FIX ITDr. John BarryQueen’s University Belfast
Setting out....Economists are asked to comment in the media not because what they say about economics or the economy is true or even plausible.Economists are asked to comment ....because they are asked.Today, 9th November is anniversary of the fall of the Berlin wall in 1989, and triumph of capitalism over communism........so far..
The new common sense...Modern neo-classical economics as: the dominant meta-narrative ‘regime of truth’‘planetary vulgate’power/knowledge
The veto power ofcommonsense economics...“assertions about economics are used as a kind of veto to rule out new ideas and proposals without further discussion… veto economics rejects ideas and proposals with just one word, offering no further explanation. Favourite veto words include ‘inefficient’, ‘irrational’ and ‘anti- competitive…as a last resort there is always the plain but vacuous condemnation ‘uneconomic’”(Aldred, 2008: 3-4).
Technically CompetentBarbarians?Renowned holocaust scholar and former director of the International Research Institute at Yad Vashem, Yehud Bauer in an address to the German Bundestag, mused on the reasons how the evils of the Nazi regime gained intellectual and cultural acceptance within Germany.“The major role in this was played by the universities, the academics. I keep returning to the question of whether we have indeed learnt anything, whether we do not still keep producing technically competent barbarians in our universities” (Bauer, 1998; emphasis added).The ‘barbaric’ logic of modern neo-classical economics is destroying people and planet.
Ideology, silence, eloquenceand contentmentDominant ideology does not need to speakIf it does speak, it does not have to be either rational or eloquent (Hayek’s insight...and that of populist ideologues throughout recent history)Equally, the liberal dictum of ‘silence equates to contentment’ has been fully exploited under the modern regime of truthIn the sense of people being satisfied and silence (i.e. not politically active, interested) once ‘economic growth’, consumerism etc. were being delivered.
“there are no more ideologies in the authentic sense of false consciousness, only advertisements for the world through its duplication and the provocative lie which does not seek belief but commands silence’”(Adorno, 1981: 34; emphasis added).Silence and compliance are more important to supporting this view of the economy, since like in the story of the ‘Emperor’s new clothes’, it is uncritical silence which allows the fiction to exist, for the ‘lie’ to be real and the fiction to be real.
Hegemony and public silenceabout economics...One of the main achievements of the dominance of neo-classical economics is public silence (and hence compliance, lack of debate) about economicsEconomics is reduced to a ‘technical’ exercise in which only experts can participateBest seen in the movement of departments of economics into ‘management schools’ in our universities.
Myths to live (and die)by...In naturalising the economy and fetishising the market, neo-classical economics commands silence where there should be robust, public debate.In its naturalising impulses is revealed the essential mythic status of modern economics – rendering a human construction into a more than human almost ‘natural process’, and in so doing removing human agency from anything more than minor tinkering with the totem of the God-like ‘market’.How different is the advice of mainstream economists in their ‘predictions’ of what ‘the markets will bear’ from the advice of shamans and priests of old about what ‘the Gods need’?How different are budgets in all their public symbolism, theatre and predictable scripts from ancient propriation rites?Or talk of the ‘fundamentals being sound’, being that much different from ‘the gods are happy’?
“For Adorno and Horkheimer even the most modern forms of thinking are closer to mythical doctrines than such forms can admit. Present-day economics, for instance, embraces the calculus of rationality...Behind this calculus lurks the ‘barren wisdom’ of the mythical” (Short, 2011: 260)
The necessity of scarcityand insecurityThe mythic or cultural-psychological ‘fact’ of scarcity, and associated notions of insecurity (job, body image, status) and ‘status anxiety’ (amongst others), are necessary features for the modern growth economy.There is never ‘enough’, only constant gratification without satiationHence we have ‘perpetual scarcity’ in the midst of affluence and plentyScarcity as a master concept for neo-classical economics – how to organise human life between infinite wants and scarce means.
Neoliberal subjectivitiesEmergence of ‘entrepreneurial subject’ under its new regime of truth (Foucault).Creation and recreation of new, willing neoliberal subjectsThe emergence of a new self-sufficient subject, risk manger, life viewed from the point of view of a project manager,Freedom = consumer choice; education = an investment; creative labour = human capitalCompetition both coordinates human behaviour (MacDonlad, 2011: 321), but more importantly under ne0liberalism conditions it.
Insecurity and economicgrowth as a way of lifeEconomic growth as neoliberalism’s ‘one true social policy’ (Foucault, 2008: 144). )Undifferentiated orthodox economic growth coupled with differentiated individual consumptionGrowth bypasses claims for greater redistribution
The fincialisation of sociallife...From a Foucauldian perspective, neoliberal political economy creates a social order which not only makes ‘greed good’, ‘insecurity’ necessary, and ‘risk’ both individual and natural, but also ‘scarcity’ ever present even amidst affluence and plenty.It is not just that capitalism represents a ‘disembedding’ of the economy from society (Polanyi), but the insertion of prevailing economic (especially financial) norms within society and social relations themselves (Langley, 2008).As Panitch and Konings point out in relation to America, ‘neoliberalism....embedded financial forms and principles more deeply in the fabric of American society’ (2009: 68).
Private bankingfailure....public bailout(or the house always wins?Witness the successful, ideological and deliberately managed ‘sleight of hand’, which has seen a crisis of banking in the private sector become politically transformed into a crisis of public debt under the new ‘regime of austerity’ and welfare cuts.How did that happen?‘Bad capitalism driving out good capitalism’ (MacDonald, 2011: 326)Or…capitalism without capital?
Another trick...Securitising debt and thereby transforming ‘debt’ into an ‘asset’ on a massive scale is surely the modern equivalent of turning dross into gold.
Imagining an economics...andlife, beyond orthodox growth“questioning growth is deemed to be the act of lunatics, idealists and revolutionaries” (Jackson, 2009: 14).Criticising economic growth is tantamount to a fundamental act of betrayal in modern societies, a public act of disloyalty to the modern political economic order.....Almost as bad in terms of being a disloyal citizen, as questioning Ireland plc’s corporate commitment to low corporation tax regime
Rethinking economics – how not to do it...British Academy’s letter to the Queen‘A generation of bankers and financiers deceived themselves and those who thought that they were the pace-making engineers of advanced economies’ (British Academy, 2009: 2).Not a generation of economists and their models‘Given the forecasting failure at the heart of your enquiry, the British Academy is giving some thought to how your Crown servants in the Treasury, the Cabinet Office and the Department for Business, Innovation & Skills, as well as the Bank of England and the Financial Services Authority might develop a new, shared horizon- scanning capability so that you never need to ask your question again’ (British Academy, 2009: 3; emphasis added).
Translation.....We failed to predict this crisis, the bankers are to blame, but don’t worry, we are supremely confident that we are never again in this position, and will and can develop models that will predict all future economic crises. That the cause of the crash and failure to predict it might have something to do with the dominance of the economics profession by one model and form of economic thinking is not, unsurprisingly, considered.And thus we witness another missed opportunity for the reform of orthodox economics.
The return to politicaleconomy‘Fixing’ economics must begin from accepting the ideological/value and political character of ALL forms of ‘economics’Values matter and need to made explicit not smuggled in as axioms which become ‘facts’ ‘the truth’ as is the case with neo-classical economicsThere is no ‘value-free’, objective, neutral account of economics....Pluralism and debate about what sort of economy and economics we/the demos/people want for the type/s of societies we wish to live in.We live in societies with economies, not economies with societies
From ‘Buildings, Banks andBoutiques’ to ….?Calls for the return to an economic model based around ‘buildings, banks and boutiques’ (Colin Hines) (i.e. property, financial services and consumerism)It is worth remembering that (orthodox) economists are asked to answer questions, not because what they say is ‘true’ or even ‘scientific’ but simply because they are asked.We need to have a variety of ways of thinking about the economy and see what answers they provide as part of a discussion about different forms of political economy.We don’t accept one way for the organisation of the polity so why should it be any different with the economy?
To…Libraries, Laundromats andLight rail?Beyond ‘business as usual’ and preparing for ‘post- growth’ economics?Collectivisation of consumption (if not production)If we’re socialising risk (bank bailouts etc) why not socialise other aspects of the economy?Transition to a sustainable, green economy will be based on more shared forms of reduced consumptionAnd possibly more planning…but planning not for orthodox economic growth but for a different type of economy and society characterised byLow carbon, lower inequalities and maximising the energy/resource efficiency of human flourishing...with ‘in-build redundancy’ for resilience