by From June Sekera The Denial Public non-market production makes up a quarter to a half or more of all economic activity among advanced democratic nation-states. Yet the public economy’s ability to function on behalf of the populace as a whole is seriously imperiled in many western democracies, and particularly jeopardized in the United States. The surging influence of mainstream economics has been a prime factor in the degradation of the public domain over the last several decades – a phenomenon that James Galbraith (2008) has called “the collapse of the public governing capacity.” Market advocates, exploiting neoclassical economic theory, have foisted market axioms and precepts onto government, intent on transforming public goods production in imitation of an idealized and idolized
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from June Sekera
The Denial
Public non-market production makes up a quarter to a half or more of all economic activity among advanced democratic nation-states. Yet the public economy’s ability to function on behalf of the populace as a whole is seriously imperiled in many western democracies, and particularly jeopardized in the United States. The surging influence of mainstream economics has been a prime factor in the degradation of the public domain over the last several decades – a phenomenon that James Galbraith (2008) has called “the collapse of the public governing capacity.” Market advocates, exploiting neoclassical economic theory, have foisted market axioms and precepts onto government, intent on transforming public goods production in imitation of an idealized and idolized market model. The ravaging of government in the interests of ideology and private profit has proceeded largely unhampered because we have no adequate theory to explain the nature and dynamics of the non-market public economy, no intellectual infrastructure to explain how its purposes and processes differ crucially from those of the market, and no effective explanatory model that shows why such differences matter substantially for democratic governance and the well-being of the populace. Government produces its outputs in a non-market environment. Its resource inputs are supplied collectively: from the authority of the people (their votes for elected representatives) and from their aggregate financing (taxes). The mission and the result of government’s distributed decision-making, collective-financing system of production is that goods, services, benefits, and protection are supplied for the wellbeing of the society as a whole, and can be accessed regardless of personal wealth because they are provided free or below cost at the point of usage. Economic theory today lacks any cogent theory of this non-market system.
Public choice theory, to which many contemporary economists default for a “public economics,” draws its lifeblood from market-centric ideology. The public choice school holds that the axioms and assertions of market-model economics apply to the public economy. Simply put, there are two fundamental problems with this school: 1) it fails to recognize that the public economy is non-market; and 2) many of the basic assumptions and assertions of market economics have been challenged and disproven by pluralist economists regarding their applicability to the market (e.g., see Fullbrook, 2007), nevermind the non-market.
A myopic market-centric view of the public economy prevails in textbooks, in university classrooms, in the documents and debates shaping public policy and in the current practice of public administration. As it stands now, students in university economics courses learn about the superiority of markets from a professoriate that transmits the reigning market-centric economics, that speaks regularly of government as little more than an impediment to “efficient markets,” and that understands public goods as a problem of “market failure.” In the United States, about 40% of college students take at least one economics course (Goodwin, 2014); after graduation, more than half of economics majors go to work in government (Kalambokidis, 2014).
My argument is that mainstream, market-centric economics has been broadly and dangerously transformative within government and public institutions. Market-centric economics is the smog that pervades the atmosphere of public policy and public administration, a smog that has at once caused and obscured many of the failures of what some say is a “broken government” (Schuck, 2014; Howard, 2014; T. Smith, 2014; Fahrenthold, 2014; Luntz, 2014). “Economic abstraction has been coupled with power to impose that abstraction throughout [the nation]. The result has been a political economy that generates the conditions for its own failure…”[1]
The Consequences
The consequences of the contrived and contorted imposition of market-model economics on the public domain range from the unfortunate to the disastrous. Agencies originally created to meet a public need are being warped into entities whose purpose is to generate revenue and deliver private profits at public expense. National parks are selling naming rights to corporations who will rebrand Yellowstone and Yosemite in their corporate images (Rein, 2016; Olorunnipa, 2016). The “policing-for-profit” model in criminal justice results in officers stopping motorists for minor infractions in order to make fee-and-fine quotas (U. S. Dept. of Justice, 2015; anon, Harvard Law Review 2015; Zapotosky, 2016). Public education – today being relabeled “government education” by those on the right – is being taken over by Wall Street, which has targeted “the education industry” as a new profit center through the spread of private “charter schools” funded by taxpayers, but shown in multiple studies to arrive at widely inferior results (Persson, 2015; Losen et al., 2016). Through “public-private-partnerships,” multinational corporations build toll roads that go bankrupt, leaving taxpayers holding the bag. Private collection companies, contracted by government agencies, are being granted the sovereign power of the state to garnish wages of students, the poor, and other citizens in order to collect overdue debt AND fees and fines imposed by the companies themselves (Choudhury, 2014; Edsall, 2014; Shapiro, 2014; Stillman, 2014). Privatizers are very close to turning the venerable Veterans Health Administration into an ATM for the private healthcare industry, despite studies that have consistently shown that the VHA provides health care superior to private care systems (Farmer et al., 2016; MITRE, 2015; Gordon, 2015; 2016; Mundy, 2016; Kime, 2016). The result is a subversion and erosion of the capabilities of the public system of production, such that it can no longer deliver its intended results. A mission-model economic system, in which meeting public needs was the guiding purpose, is being distorted into a faux market-model system, in which revenue-raising becomes the goal.
[1] Bowman et.al., 2014. The authors write principally about the UK, but their argument brilliantly captures the American reality too.
from
June Sekera, “Missing from the mainstream: the biophysical basis of production and the public economy”, real-world economics review, issue no. 81, 30 September 2017, pp. 27-41, http://www.paecon.net/PAEReview/issue81/Sekera81.pdf