by From Peter Radford Just a brief follow-on to my recent comments on the role of economics and its relationship with power and/or politics. I pulled out my old copy of Polanyi’s “The Great Transformation” to refresh my memory of his position on the topic. Recall that he talked about the way in which economic activity is embedded within the larger social and political fabric. Mainstream economists must shudder at such a thought. Isn’t economics superior and more “scientific” than politics? In any case, in his introduction to the edition I have, Joe Stiglitz made a very useful comment that is worth repeating. His words are: “… the very utopianism of market liberalism is a source of its extraordinary intellectual resilience … its theorists can always claim that any failures were not the
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from Peter Radford
Just a brief follow-on to my recent comments on the role of economics and its relationship with power and/or politics.
I pulled out my old copy of Polanyi’s “The Great Transformation” to refresh my memory of his position on the topic. Recall that he talked about the way in which economic activity is embedded within the larger social and political fabric. Mainstream economists must shudder at such a thought. Isn’t economics superior and more “scientific” than politics?
In any case, in his introduction to the edition I have, Joe Stiglitz made a very useful comment that is worth repeating. His words are:
“… the very utopianism of market liberalism is a source of its extraordinary intellectual resilience … its theorists can always claim that any failures were not the result of the design but of a lack of political will in its implementation.”
That is clearly true of all utopian or faith based arguments or theories. The purity necessary for such arguments or theories to represent reality is unattainable. Reality is riven through with all sorts of contradictions, uncertainties, and other vagaries such that any utopian vision cannot be fully realized. Thus a utopian theory is rendered immune to contradiction. How sneaky! The defenders of such theories can hide behind a convenience of their own making. The radical rationality of market liberalism is such a theory. Its proponents can point to any number of so-called failures that prevent its pristine wonders from occurring on earth. Inevitably those failures are described as being a problem of governance or, rather, government interference.
The obvious retort to such talk is simply to ask why it is that the theory describes a utopian world and not the one we all observe. To that the utopian theorists have no answer.
Why?
Because to provide a theory that accounts for the contradictions, uncertainties, and vagaries contradicts their ideological intent. They set out to prove the superiority of markets over other forms of resource allocation, and the only way of achieving that goal is to abstract away reality with all its inconvenient facts. However, markets, as Polanyi pointed out, are tainted by their continual co-existence and co-mingling with other forms of allocation and social activity. Telling the consequences of one set of causes from another is difficult to say the least. Economics can describe monopolies or rent seeking, but treats them as anomalies that sully the purity of a market. In reality they are the norm. Elites make them that way.
It is trivial to argue that perfect markets deliver perfect results. It is a great deal more difficult to make a real economy tractable to analysis. And the argument that we ought compare the pure version with reality to see where we could improve the real world is truly bizarre and pointless. Unless, of course, your agenda is not study but dictation.
In the context of my recent comments on power, the utopian nature of economics and its need to be other-worldly in order to arrive at its core conclusions, often renders it secondary or worse as a description of economic reality. The ebb and flow of inequality throughout history is a good example. Even though things like supply and demand may exist as forces in the allocation of resources and hence the level of inequality, they quite often are overwhelmed by other forces. Like elitist control of power for instance. Utopians will, as Stiglitz suggests, cry foul and argue that, “if only” such asymmetries as concentrations of power did not exist, the world would comply with their theory. But such asymmetries do exist.
They always have.