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Thoughts on Ecological Social Democracy

There is the old joke of one person asking another for directions: the other replies, with a chuckle, “I wouldn’t want to start from here!” This is the essential problem that Tim Hollo of The Green Institute opens with in his Towards Ecological Democracy. Ecological Democracy is

a radical political vision of deep interconnection and interdependence and of resilience in diversity. It is an enabling and nurturing politics for people and the planet, supporting people and communities to find their own way together. It rejects capitalism’s hyper-individualism, growth fetish, and celebration of greed. It is beyond socialism while proudly of the left. It is intrinsically intersectional, and embedded in nature.

I endorse this goal wholeheartedly. However, as in the joke, Hollo acknowledges that the current state of our politics limits the politically imaginable options to three paths forward: “a swing to the extreme right, a reinvigoration of social democracy, and, in the middle, a clinging to centrist liberalism”. He rejects these three paths: “the first of these is utterly repugnant, the second insufficient, and the third naïve”. I wholeheartedly agree with his judgement on the first and third paths. It is the second – the prospects of social democracy – that I wish to explore, and for which I want to provide a qualified defence. “Social democracy,” Hollo admits, “is absolutely part of the answer. But it’s not the full answer – certainly not as presented by its current leaders.” This is surely correct. What I want to explore here is why social democracy is part of the answer – to examine what it uniquely contributes, and why it provides conditions essential to the solving of key obstacles on the road to an ecological democracy. In other words, I want to explore the possibility of an Ecological Social Democracy. In particular, I want to focus on the what we might call the “psycho-social” effects of social democracy – their record in promoting certain dispositions in their citizenry that are key to achieving the further goals of ecological democracy.

Let’s start with egalitarianism more broadly. Research over the last decade, most prominently that of Richard Wilkinson and Kate Pickett, has drawn attention to correlations between domestic wealth and income inequality, and a variety of domestic social dysfunctions, including: health – morbidity and mortality, obesity, teenage birth rates, and mental illness; social relations – trust, homicide rates, lost social capital, hostility, racism, and prevalence of wasteful status-competitive consumption; educational performance; incarceration rates; and poor social mobility.[1] Egalitarian societies reduce these social ills in ways that promote positive dispositions to this within that society; simultaneously, those dispositions contribute to the continuing support of the institutions that promote those dispositions, in a virtuous cycle. Such dispositions are essential for the kinds of experimentation and risk-taking that societies will need to undertake in order to find a path forward toward an ecological democracy.

Positive dispositions towards one’s fellow citizens are, then, essential for ecological democratic goals and various forms of egalitarianism promote these dispositions. But they are also insufficient: problems like climate change demand certain dispositions towards those in other societies. Climate change – the ultimate commons problem – is global, and how we act towards those in other societies – how we share the sacrifices and manage the changes internationally – will be critical to how we address this problem. I will explore the matter of external dispositions by examining records of foreign aid contributions. Let’s stick with broad egalitarianism for a moment (bear with me!). Wilkinson and Picket, and others, point out that egalitarian societies are considerably more generous with foreign aid to poor countries.[2] Government foreign aid constitutes around one-tenth of a percent of GDP in the US (consistently the least egalitarian of wealthy nations), rising to about a quarter of a percent when private contributions are included; the governments of Denmark, Sweden, and the Netherlands (each among the most egalitarian wealthy nations) each contribute around one percent of GDP, rising to nearly two percent with private contributions. Furthermore, egalitarian countries tend to direct aid on the basis of objective recipient need, targeting the least developed countries, and are more likely to provide aid in the form of unconditional grants; conversely, inegalitarian individualist countries tend to be motivated by trade, security, and other national strategic interests, tend to target middle-income countries, and are more likely to attach conditions to aid in the form of loans that need to be repaid, or require that recipients spend aid on export goods from the donor country.[3]

These findings, as I have so far presented them, apply to egalitarian societies generally. And not all egalitarian societies are social democratic societies – Japan, for instance, achieves relatively high egalitarian outcomes with very different institutions. So what makes social democracy special? Here, I draw on research by Alain Noël and Jean-Philippe Thérien.[4] They find that while foreign aid performance has a modest correlation with domestic egalitarian outcomes, a stronger correlation emerges when examining the specific institutions that promote these egalitarian outcomes. They apply Gøsta Esping-Anderson’s classification of national welfare systems as being either conservative, liberal, or socialist.[5] Broadly speaking, “socialist” systems are “universalist”, extending democratic principles to social benefits, providing benefits such as universal healthcare, education, and pensions to all citizens – all of which promote domestic equality. Conservative and liberal states tend to link social benefits to employment or social status, providing means-tested social benefits for those unable to acquire them through private means. (Australia, the US, and the UK are somewhere between liberal and conservative by these definitions). Noël and Thérien find that conservative and liberal nations tend to contribute less to foreign aid, while universalist nations are more generous with foreign aid. Universalism, in the sense used here, is the sine qua non of social democracy, and unsurprisingly it is the northern European social democratic countries that are identified by this classification scheme.

This relationship between social democratic universalist institutions and relative generosity towards the world’s worst-off is symptomatic of a more general disposition towards others. It is not identical to the internal disposition of burden and benefit sharing, but it does flow from it. This phenomenon is undoubtedly complex, but I want to draw attention to one part of its explanation – how universalist frameworks relate to personal economic security. In a straightforward way, a person with $100 and strong economic security is more likely to be generous than someone with $100 who does not know where their bread will come from in a week or month. If I might need that money for an unexpected emergency I will sit tightly on it in a way that I might not if I did not bear that personal risk. Universalist welfare systems guarantee unemployment insurance, healthcare, and so on by dispersing those risks across society. In doing so, they remove or greatly reduce concerns about future-risk, thereby increasing individual economic security. In fact, the effect appears to go deeper than this. Economic insecurity may also have a subjective effect on how we perceive our moral duties. Wilkinson and Pickett’s research pointed to correlations between inequality, trust, hostility, and racism, and incarceration rates. Research in the United States by Michael Hogan and his colleagues also points to a correlation between economic insecurity and punitive attitudes.[6] This translates in the obvious way into higher incarceration rates of criminals. But such attitudes also appear to spread further afield. Punitive attitudes also produce “resentment of immigrants, welfare recipients, and the ‘beneficiaries’ of affirmative action”, and negative attitudes toward the “undeserving poor”. “What these targets of resentment may have in common,” Hogan et al. argue, “is that in the eyes of some, they may be seen as ‘getting something for nothing’ at a time when some many are either insecure in their positions or are working harder for less”.

It is not hard to see how this might translate into attitudes towards foreign aid and to those in other countries more generally. Suspicion of those in need may reinforce in people’s minds the view that foreign-aid charity is supererogatory rather than a duty. The economically insecure are more likely to believe that victims are responsible for their situation (and perhaps also that the states in which victims live are “corrupt” and, therefore, that aid is futile). This inhibits individual charity, but such attitudes can also feed into the political process, producing governments that are also less charitable, and providing dubious “cultural capital” on which less scrupulous politicians can draw.

Economic insecurity forces individuals to focus on their own most pressing problems, eroding our capacity to sympathise with others. When our own situation appears to us to be so bad, so precarious, the badness of others’ situations can become invisible. So too may be our ability to empathise with others, and to see what we have in common. In short, economic insecurity can shorten our “personal horizon”, greatly narrowing the scope of who we class as “insiders”: even those within our “inside” group may be cast as “outsiders”. From this perspective the turn toward extreme-right politics in the most individualist neoliberal countries should come as no great surprise: neoliberalism not only locates all choice in the individual, but also the bearing of all risks, even those that are socially generated. Economic insecurity narrows our moral horizon, both within out society and beyond it.

The same affects apply to situation other than foreign aid. The effects of universalist institutions and their absence can be seen internationally in whether a country enters into climate-change treaties in good faith, or in search of self-interest, or in whether they enter at all. It can be seen domestically in how easily non-universalist societies frame ecological and social progress as trade-offs with jobs and personal security.

Tim Hollo emphasises that ecological democracy “must put equity, universalism and pluralism at its core”. I have addressed the first and second of these – equity and universalism are closely related, and are both reflected and motivated in how we structure our societies. The third – pluralism – I can only address briefly here. It is a common cliché that the Scandinavian social democracies are deeply homogenous. I believe that their ethnic homogeneity is exaggerated and, in any case, evolving.[7] The social democracies of northern Europe have been at the forefront of advancing gender equality, and social rights for LGBT and other groups. Social democracy’s “strong tendencies towards centralised control”, which Hollo objects to, are a problem – it is the same problem faced in all societies today, with the scale running not from centralised to decentralised but from state-centralised to private-centralised. Some centralisation is, of course, necessary for social democracy to create the social guarantees that it does (this is not to say that it cannot be accountable or dispersed in implementation). And while much of the existing centralisation follows from the history of their labour movements, it is also the case that in both Sweden and the Netherlands much of the agricultural sector has long been and remains owned by cooperatives.[8] Likewise, social democracy’s relation to the natural world is mixed (again, like all societies). They have admirable records in domestic emission reductions and high levels of innovation on that front.

I do not want to romanticise the social democratic countries: they are not without contradiction – Norway, for instance, funds a large part of its social state from the sale of off-shore oil, even if (unlike the more neoliberal countries) these funds are used to create durable social infrastructure, and in common with other countries they all import many of their goods from polluting countries, in effect exporting their production emissions. Nevertheless, the social democratic countries continue to show themselves social innovators and experimenters: in managing to adapt if not admirably then at least adequately to neoliberalism, preserving to a considerable degree their core values; in Sweden recently reducing labour hours, simultaneously anticipating the threat of automation and asserting social values other than labour; in Finland restructuring its education system, again to promote values other than employability; and in Finland, again, experimenting with basic income (for which the current spate of obituaries are misleading) – (and who isn’t looking to northern Europe to show the way on basic income?). Their capacity to innovate and experiment is underpinned by their social guarantees which act to disperse both the risks and the gains.

In Towards Ecological Democracy, Tim Hollo puts forward a formidable and admirable goal. It is also a demanding goal, requiring significant changes not just in institutions but also in attitudes. Where parts of his vision are already in existence they remain fragile islands in a contrary sea, nestled mostly within societies that promote opposing dispositions to those which I have advocated. Here in Australia (which I hesitate to describe as “post-neoliberal” – neoliberalism loves a good crisis), and I dare say in every other society at present we are ill-placed to move towards his goal – we would most certainly not want to start from here. But here is where we are. I have argued that the social democratic countries are at least a bit closer to that goal than are our individualistic neoliberal societies. Their structures create a social space within which experimentation and change can take place, and that all can buy into. They offer us a model (however imperfect in practice) of how we might begin to get there. We can learn much from their experience (and, of course, their mistakes). Their core social structure embodies the “interconnection and interdependence” that Hollo seeks, at least at the human level. From that human foundation a fuller realisation of our interconnection and interdependence with our world can begin to grow. From social democracy we can hope that an ecological social democracy might begin. Contemporary social democracy may not be our ultimate destination, but it is at least worth stopping in on the way to take a closer look.

 

[1] Wilkinson, R. & Pickett, K., 2010. The Spirit Level – Why Equality is Better for Everyone. London: Penguin Group; Wilkinson, R. G. & Pickett, K. E., 2007. The problems of relative deprivate: What some societies do better than others. Social Science & Medicine, 65(1), pp. 1965-1978; Wilkinson, R. G. & Pickett, K. E., 2009. Income Inequality and Social Dysfunction. Annual Review of Sociology, 35(1), pp. 493-511.

[2] Wilkinson, R. & Pickett, K., The Spirit Level; See also Chong, A. & Gradstein, M., 2008. What determines foreign aid? The donors’ perspective. Journal of Developmental Economics, 87(1), pp. 1-13

[3] Tingley, D., 2010. Donors and domestic politics: Political influences on foreign aid effort. The Quarterly Review of Economics and Finance, 50(1), pp. 40-4; Brech, V. & Potrafke, N., 2014. Donor ideology and types of foreign aid. Journal of Comparative Economics, 42(1), pp. 61-75

[4] Noël, A. & Thérien, J.-P., 1995. From domestic to international justice: the welfare state and foreign aid. International Organization, 49(3), pp. 523-553

[5] Esping-Anderson, G., 1990. The Three Worlds of Welfare Capitalism. Cambridge: Polity Press

[6] Hogan, M. J., Chiricos, T. & Gertz, M., 2005. Economic Insecurity. Blame, and Punitive Attitudes. Justice Quarterly, 22(3), pp. 392-412

[7] See Chapter 5 of Hilson, M., 2008. The Nordic Model – Scandinavia Since 1945. London: Reaktion Books

[8] Restakis, J., 2010. Humanizing the Economy: Co-operatives in the Age of Capital. Gabriola Island: New Society Publishers

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Categories: Politics

Historical Justice in the Future

November 9, 2017 Leave a comment

Hi everyone!

As many of you know, I’ve spent the last 4 years doing a degree in Politics, Philosophy, and Economics. This year I did Honours. As part of that, I wrote a thesis which I now share with you: HistoricalJusticeInTheFuture.pdf

In many ways, this is the culmination of the decade or so I have spent arguing with libertarianism. The thesis is an academic philosophy work so it won’t be for everyone, but a few of you might find it of value. I argue that the strong property rights inherent in (right) libertarianism isn’t compatible with productive automation. The argument is directed at Robert Nozick’s Anarchy, State, and Utopia. I don’t talk much directly about modern capitalism, but Nozick can be taken as a proxy for right-wing free-market fundamentalism, and so this argument applies in large parts to some of the most fundamental political and economic assumptions that have dominated over the last four decades. This is not a perfect work – it was done with tight time and word constraints. The word limit particularly constraints what I was able to do in the last couple of chapters. Nevertheless, I hope some of you enjoy it, and find it interesting and challenging. I’m more than happy to answer any questions you might have, or discuss any of the points in this thesis, or about the subject matter more broadly.

Tim.

Categories: Politics

Beyond Identity Politics

January 22, 2017 Leave a comment

In my last blog I made a passing comment about how embracing identity politics had been one of two big errors committed by left and progressive movements. There is a big debate right now between groups arguing that identity politics is more important than ever and those arguing that it has been a mistake. Because of this, and because of the large potential for misunderstanding here, I want to expand on and clarify my own views on this. I’ll say this upfront: I am less sure about the role of identity politics than I am about the causes and consequences of inequality in how we got here. There is considerable room for contestation about this and there are important points to be heard on both side of this debate. But debate we must, and it should be done openly and honestly. Its importance to where we have been, where we are, and where we are heading makes this essential. What follows, then, however inadequate, are my two cents…

In my last years in London I was having a drink with a former colleague who was from an Indian family. I made the observation to him that a lot of Indians were Conservative party supporters. He agreed that this was the case (he himself was not), and asked me why I thought that was. The reason I gave was that as marginalised groups attain a level of acceptance and success they tend to become conservative. Because their new-found security is tenuous, the best strategy to protect themselves is to redirect attention to other vulnerable groups. It is, metaphorically, to close the door behind them, or to kick away the ladder. I suggested in that conversation that in a generation or two we’d see gay people and other groups voting for right-wing parties for the same reason.

In a society where issue politics are fragmented, where the perception is that there is a limited space for them to be resolved and that group claims are competing claims, this strategy of turning to the right makes sense. Such is the logic of scarcity, rational self-interest, and the zero-sum game. This is what makes it identity politics, where politics is understood as collective judgements in the presence of scarcity. What we end up with is Hobbes’s war of all against all.

I want to try now to outline why I think identity politics has played into the hands of the right, and now the far-right, and how the perception of a zero-sum game is false. If I can, I’ll say a little about what I think needs to be done.

Identity politics can boast of many real and important successes. The lives of many African Americans is better for it. Women in many countries have more and better opportunities than in former ages. People of all kinds can now marry in many places. These gains are at best partial and, as I will argue, insecure. But whatever the extent of these gains, they have come at a cost.

First, and most importantly in our current context, the practice of identity politics has accustomed people to think about politics in terms of membership, of groups that they are in and – critically – groups that they are not in. Progressivism has transitioned from a single, majoritarian working class politics (not to be romanticised, of course) into a fragmented and divisive identity politics, losing its unifying characteristic. By their nature, identity groups are numerical minorities (with the possible exception of women). This has left progressivism without a coherent majority.

Second, specific policies like preferential hiring have reinforced the perception of zero-sum politics, that a gain for some group entails a loss for others (even when the actual problems these other groups face are in fact rooted in unrelated causes). (To be clear, I support policies like preferential hiring for many reasons, but as a policy it cannot exist in isolation without further policies that protect the security of other vulnerable groups. This is for another day…)

Together, these problems are mutually reinforcing, leaving the constituents of modern progressivism divided and, under the assumption of zero-sum politics, mutually antagonistic. This renders the real gains both fragile and vulnerable to the politics of the right.

It is a standard strategy of the right, and a defining feature of the far right, to divide people into groups and set them against each other. Divide and conquer is a tactic with ancient pedigree, and history tells us of its remarkable successes. It has been deployed throughout the neoliberal age: us versus them, workers versus parasites, rich versus poor, immigrants versus citizens versus refugees, black versus white, black versus Latino, East versus West, religious group versus religious group, old versus young, and thanks to the magic of the market, worker versus worker.

This is how the practice of identity politics has played into the hands of the right (and now the far right). It has left a fractionalised polity while conveniently leaving the right with a number of self-identifying discrete groups that can be set against each other. Each group can be marginalised, peeled off (or worse yet, bought out) and everyone ultimately loses.

It has even led to paradoxical results. Over the last year I’ve had many conversations where someone would say something like “Trump is wrong on group x and group y, but I really admire his stance on group z”, where the person was in fact a member of group x or y. While Trump’s scattershot strategy of attacking so many disparate groups appears random and clumsy, it is not so hard, I think, to see how this strategy worked and was so successful for him: it is well noted, for instance, how many white women voted for him, despite his obvious misogyny. So long as people feel passionately opposed to one or more of his targets it matters less to them that they were another of his targets. Their need for a target for their outrage combines with a false sense of membership to vote against their own group. In effect, identity politics have divided, and the Trumps of the world have conquered. What we are left with is the danger warned of in Martin Niemöller’s immortal poem.

One might (plausibly) object that, where the far right identifies groups in order to marginalise them, progressives have identified groups to help them. This is true, to a point. But it is not my point. I don’t question the motivations of identity politics, nor the serious issues they embody. My point is that these groups have fundamental important commonalities that have been lost through the practice of identity politics.

At one level, identity groups represent different problems and claims. Their historic sources differ, and the ways to address the problems may also differ. However, at a deeper level they share a common basic foundation: they have much more in common than they are different. Each group represents opposition to bullying, injustice, narrowness. Once we recognise this fundamental commonality, the illusion of zero-sum politics dissolves and the strategy of kicking away the ladder appears for what it is: a self-destructive act.

The point is this: these are not separate issues – they are the same issue. Rather than be for one cause or another, we must be against bullying, against injustice, against narrowness, for this is what unites the perpetrators of each of these issues. If progressive politics is going to survive the next few years it needs a different approach, one that can celebrate difference, but is grounded in our commonality. Yes, we need to respect and understand the specificity of individual causes: we need to push for justice for African Americans, for indigenous groups, for gender equality, for LGBT rights, and for all the other causes. But we cannot achieve justice for any group in isolation exclusively. We must do it together and do it broadly. We must fight for, and with, each other, not against each other. We need to be clear they these are not competing claims where a win for some causes necessitates a loss for others. The growingly numerous Trumps of the world will only be defeated when disparate groups recognise their underlying shared cause, and where these Trumps are presented with a unified opposition. We must move beyond identity politics into a fuller, more potent, humanist politics. This will require that we not only change the way we think about each other but also the way that we think about politics.

I am deeply conscious that as I write these words millions of people around the world are marching in protests for women’s rights following the inauguration of now President Trump. I am also thinking about the protests of the Black Lives Matter movement. So, given what I’ve said above, do I oppose these actions? Am I one of those All Lives Matters guys? Do I want to retort that women matter as much as men? Absolutely not, on all counts. First, these movements involve many people who are not part of the identity group named. This is encouraging. It is still important that groups like this exist, that they raise consciousness of important parts of the broader picture. Single issue activism can act as an anchor around which a broader movement can form. In many respects the civil rights movement had this characteristic (and Martin Luther King understood this need for broad based coalitions that stretch beyond the initial issue). Perhaps the women’s rights protests have that potential. My hope is that these movements will converge and become something new, something that can break the cycle of division. Only by doing so can we begin to hope.

Categories: Politics

2016, In Memoriam

December 26, 2016 1 comment

As a lover of film and music, this year has been a deeply sad one, as the pantheon has been decimated. But for me as a political animal 2016 has been disastrous. It has left me drained, rattled, angry, doubtful and uncharacteristically speechless. I have been trying to write much of what follows below since the US election but the magnitude of it all has had a paralysing effect on me. But here goes…

The events of the year defy cataloguing, but a short list must include the Brexit referendum (and the subsequent and ongoing state of uncertainty that has followed), the US election which was not only a resounding victory for populism but also sees the Republican party seize control of every lever of government including the Supreme Court, a narrowly avoided election of a far-right president in Austria (twice!), rapidly growing discontent across Europe, the related growth in popularity of politically extreme parties and candidates globally, and increasingly unstable political situations in many other places.

In 2016 we entered the full-on Bizarro world of “post-truth politics” and fake news (rapidly weaponised as fake fake news, the next great escalation). Welcome to the cacophony of tomorrow’s social Pravda, wherein facts are privatised and democratised – he who shouts loudest shouts last, and Orwell wept. Reason redefined to make room for its opposite while squeezing out the original; toleration contorted to justify bigotry and silence compassion; being a “social justice warrior” becomes the far-right’s favourite term of condemnation and contempt, as if caring about anyone but yourself, just on the basis of their humanity, were a cardinal moral failure. There is nothing new in this, of course. Media and interested parties have thrived on misleading for as long as they have existed. Some have suggested that post-truthhood is just what we used to call lying. There is something to that. But this misses its main characteristic: beyond the mere purveyance of falsehood, post-truthhood is about receptiveness to the falsehoods, a deep desire to make facts conform to one’s mood, reversing the immortal relationship between world and person. And it’s here that the real danger lies. People want to feel strong, even if it means embracing lies, even if it means embracing monsters.

Progressivism lies in ruins, and much of it is their own fault. After the US election I noted that the Democrats had died from their own smugness. The party elites’ support of Clinton in the primaries, and their incomprehension of the forces driving the election highlights the cognitive distance between the political class and their constituents. And not just the Democrats – there is a malady of elitist incomprehension that pervades modern self-described progressive parties (I’m talking to you, New Labour, but this applies equally in many countries, like my own). For forty years, the political left has failed their constituencies in too many ways, of which I will mention just two. First, they capitulated fully to conservative economic thinking and bought wholesale into the corrosive narrative of free markets and the trickle-down effect (the financial collapse of 2008 was as much a product of decisions by progressive politicians as of the conservatives who they emulated). Second, having lost the unifying body of the working class, they engaged in the divisive and polarising pursuit of identity politics. This is not to say that the various issues of identity politics aren’t important – of course they are. But by focussing on small specific groups, the left has failed to bring it all together into a unifying and inclusive vision. This has made them vulnerable and ineffective, and instead we now face the prospect of a very different and dangerous kind of unified society. The task facing progressive politics is immense.

Through all this, I’ve watched the theory that I’ve been engaged with for so long fail to find a response. For much of this I have watched the political science department at my university look bamboozled by the various outcomes – this just does not make sense, with a quizzical look. They managed to somehow miss the central point: politics is not driven by rational choice – it is driven by emotion, never more so than in times like these. The dominance of rational choice theory is undone, even though it will likely dominate thinking for many years to come (see the failure of economists to adapt, post 2008). Political scientists, like the economists they emulate, are too chained to the mathematical tractability that comes from rationality models. Such are Kuhnian paradigms. More’s the pity, especially if, like me, you view this as an abdication of social responsibility. Meanwhile, well-meaning and intelligent theorists have responded to the year by resurrecting arguments from as far back as Plato to show the impossibility of democracy. Liberal staples such as free speech, especially in forms such as that propounded by John Stuart Mill, are similarly the subject of retreat. These are not unreasonable responses under the circumstances, but I reject their conclusions. In both cases, as I’ve argued for years now, their success is a problem of background conditions – democracy and free speech are only as good as the societies that feature in them. This has been, and remains, the bedrock of my egalitarianism.

All in all, then, a pretty appalling state of affairs. It is a natural emotional response to want to bracket these happenings to the year, and hope for it all to go away as soon as January clocks in. But, of course, political events do not recognise the arbitrary boundaries of the calendar. While the absolute best we can hope for is that 2016 is remembered as an exceptionally bad year for the world, it is more realistic to understand the year as the start of a very bad period (and even as the next evolution of an ongoing period including, at the least, 2008). In any case the year will be remembered in history as a turning point for the worse, with all its attendant historical déjà vu. I’m not a fortune teller but there are some predictions I feel comfortable (even while alarmed) in making. The world is now a much less safe place than it has been in decades. The momentum of the far-right will certainly continue, as it gains courage from its successes. Critical elections next year will decide the future of Europe. Small but dramatic events can easily tip the balance. The world will become, for the time being, a narrower, less open, less tolerant, and more hostile place, and the most vulnerable will bear the worst of this. Fighting back will be harder than ever. We have to struggle with this new reality in which the space of possibility has dramatically contracted. We need to find new ways to move forward.

Which brings me to me. For the better part of a decade, I have engaged deeply with political thought, philosophy, and history. Two things have driven me down this path. The first is the strong suspicion that the economic and social structures that the world has embraced for four decades contains the potential to produce a very ugly and dangerous kind of politics, reminiscent, however different in detail, to world of the 1930s. Those who forget the past etc. Seeing the sharp movements in this direction over the last year has brought me no comfort – and I have to confess here to having thought such things were a long way in the future, an attitude that now seems hopelessly naïve. The second is the belief that reasoned, fact-respecting argument can make a contribution, however small, to averting this future. This belief has taken a firm beating this year as I have had to accept the realities that the post-truth world presents. I am less confident that argumentative rigour will be at all effective in the days to come, and the focus on avoiding the worst no longer feels relevant. Part of me wonders whether the world need to go through the crucible of whatever is to come, however awful it will be, however many people will suffer, in order to find a new and better place to start again (if is that even a possible outcome). But against this is the belief that bad things happen when good people stand on the sidelines. So I will continue doing what I have been doing, no matter how futile, and I will search for new ways to work in this changed world. What else is there?

Categories: Politics

Populism versus the Experts

A couple of weeks ago I wrote about the relationship between contradictions within liberalism and the current rise of populism, with an emphasis on the recent Brexit referendum. I want to focus here on a specific aspect of this – the role of experts, in particular social scientists.

Anti-intellectualism, or the rejection of expertise, is the eternal partner of extreme populism. It is something that featured heavily in the Brexit discourse. Responding to expert views of the economic problems predicted to follow from a British secession from the EU, senior Tory politician and Leave campaigner Michael Gove expressed the popular view that people have “had enough” of experts. This anti-expert mood is described by scientist and promoter of science, Brian Cox, as “the road back to the cave”. And he’s surely right. Not all opinions are created equally, nor do they deserve equal respect and attention. There are excellent reasons to respect the views of someone who has committed large parts of their life to understanding something over someone who has put in little effort or is passing on received ideas as truths. Populism rejects this basic truth and opens the door to the contest of crude opinions rather than deep thought.

And yet, there is something plausible about the scepticism directed towards expertise, at least where political economy is concerned. The experts, nearly to a person, failed to predict the economic crisis of 2008. Experts have failed to create durable and broadly acceptable solutions in the post-crisis period. And experts were instrumental in promoting the socially corrosive economic policies of neoliberalism that I have related to the current rise of populism. So why should we trust these experts? This is a huge question that I cannot exhaust. But I want to draw attention to the problem of objectivity in the social sciences.

This is essentially a problem of ethics in the social sciences. At first glance the problem appears to be one of the ethics of applied social science: how should the findings of social science be used by practitioners in, say, government or industry? In this understanding, the ethical problem in the social sciences is analogous to those in the natural sciences. Just as we may ask whether atomic physics should be used to make a bomb we might ask whether, say, a particular economic model should be pursued in policy. But this misreads the problem. The difficulty for the social sciences is a deeper one than that faced in the natural sciences: method and application are not so easily separated. There are two related components: first, how far social science has (or can) isolate itself from ideological and moral concerns; and second, how far social science can isolate themselves from the subject of their study.

I will dispatch with the first problem very briefly. There are underlying and unstated philosophical and ideological beliefs that inform the social sciences. Some have plausibly argued that economics is highly political and ideological (see e.g. (Chang, p. 451)). All sciences simplify in order to create manageable models of the world. But ideological predispositions can affect what the modeller chooses to include and to ignore, greatly affecting the outcome (wealth distribution is one commonly ignored in economic models).

It may be, as I think it is the case, that moral aspects are inherent in the very nature of what the social sciences study. This is not a problem in itself: it is simply part of the problem that these fields address. It raises questions as to the scientific credentials of these fields of study – perhaps they are more like philosophy than natural science? This is important but I set this matter aside. Where it is a problem is when the moral assumptions are tacit, hidden deep beneath the graphs and numbers. This renders the assumptions not only unquestioned but unquestionable. To assess their findings the moral assumptions need to be explicit and widely understood. Only then can we reasonably hope to evaluate the contents of this type of expertise.

The second component is more serious. Economics and political science materially affect the systems that they measure in ways that natural sciences do not. This can be simply understood. Physicists may describe gravity accurately, inaccurately, or simply wrongly. They may even “explain” it. A scientific model of gravity is good insofar as the effects of gravity accord with it. But whatever is the case, gravity gives not a single damn. Whether physicists are right or wrong (whatever that may mean in the context of physics), gravity will do what gravity does – it will never seek the guidance of physicists before dropping that apple to the ground. More formally, the link between the material world and the hard sciences is unidirectional: science observes the world, the world does not watch back.

This is not the case in the most important social sciences. Economists and political scientists are themselves actors in the system they monitor. They are voters, citizens, workers, and consumers. They act closely with the system’s primary actors who consult the scientists and their work for guidance on how to act. In a very real sense, the social sciences have a capacity to shape the societies that they describe. Karl Polanyi, in a little known paper from the 1940s, described this problem: “the social sciences may have enhanced man’s ability to attain his ends”, but, he argues, “they certainly diminished his faculty of knowing what they are”. The social sciences “have a massive influence on man’s wishes and purposes”, and “some assertions tended to be actually question begging in a rather unexpected way, by creating the very phenomena on the existence of which they were insisting” (Polanyi, 2014, pp. 114-5). Assumptions about how people are lead to the creation of institutions that reflect those assumptions, in turn inducing the very behaviour predicted.

Economics is, in this sense, performative. It permeates politic practice (rapidly, and often recklessly). The simplifying assumption that people are rational choice machines leads to the adoption of institutions that suit rational choice machines, creating incentives that cause people to act in accordance with them, and thus validating the original assumption. This drives out other behaviours. Neoliberalism, guided by the advice of economists, has introduced market mechanisms into many areas of life previously governed by non-market norms. This has, in turn, replaced those norms, transforming the interactions of people and the containing cultures alike (Sandel, p. 48; Satz, p. 99). Michael Sandel gives a curious example of one manifestation of this effect. He records the number of times that the word “incentivize” appears in major newspapers over the period of time when governments actively began integrating employing economic “incentivization” into their policies (Sandel, p. 87):

Period Instances
1980s 48
1990s 449
2000s 6159
2010-11 5885

The economist Adair Turner reminds us that:

Ideas matter. They strongly influence the assumptions with which policymakers approach practical policy choices. They define other areas as unsound, not worth considering, taboo. (Turner, 2016, p. 242)

Social science, and economics particularly, are the source of many of these ideas. Definitions of welfare, measured in monetary terms, hide other important human relationships. A deeply-held preference in economics for the logic of “Pareto efficiency” – that a social change can be measured by whether some benefit while others are no worse off – submerges vital discussion about distribution. A fetish for constant exponential economic growth avoids distributional considerations and important questions about work and social roles.

Political scientists have, to a large extent, adopted the methods (and with these, the assumptions) of economists. To give one example, rational choice theory leads to models such as the so-called “median voter theorem” – the idea that politicians will move to the centre of the political spectrum in order to capture the largest number of votes. Vote-seeking politicians, in turn, have taken this as instructive and moved to the centre. It should be unsurprising, therefore, that so many politicians appear identical in policy terms. This, in turn, reduces voting to a beauty contest. Worse, it leaves wholly unexplained where the centre is, or whether it is in a healthy state.

These examples illustrate the broader problem of scientific detachment in the social sciences. These “subject-polluting” effects are hard to reconcile with the social sciences’ self-image as hard objective empirical sciences. Social scientists are left with a possibly intractable task: to identify and employ ways of controlling for their own presence in society. When unexpected consequences occur, such as voter apathy or, as is currently happening, a sharp lurch to the far-right, social science is left without the tools to analyse these new emergent problems.

Social scientists can, then, influence their subject. Likewise, the subject can influence the science. In the social sciences, experts disagree, sometimes enormously. Political and economic opportunism frequently clouds this fact: powerful actors routinely select and promote the experts that suit their already formed views, and public discourse frequently prejudices the matter in favour of the loudest voices. When research itself is held to the test of commercial applicability, the case is prejudged in favour of views that internalise market assumptions. Research in paradigms that suit particular interests can be encouraged and actively promoted in the public discourse while less agreeable insights are neglected. And this, in turn, creates social resources enabling the “successful” actors to further their views. To be sure, this dynamic occurs in the hard sciences too. But it is impossible to understate the impact when this happens in the social sciences.

The problem of political and economic expertise is a huge one. I don’t claim to have any definitive solutions. But a few tentative observatory conclusions are due.

First, it cannot be stated strongly enough that populism is absolutely not a solution, nor will it ever be. Populism is not a constructive force. It is the rule of the mob – a fact that has been argued against democracy for as long as the notion has existed, even as mobs flatter themselves as being “democratic”. But make no mistake – mob-rule is every bit as destructive, and may be more so, than technocracy, the rule of experts.

The astute reader will have noted that in criticising experts I have made reference to other experts. This is important. The way we respond to expertise matters a great deal, and not any old argument will do. It is not sufficient to claim revelation, or to appeal to the number of people that believe otherwise. Expertise matters. It is essential to the social division of labour. How we relate to it is the key issue.

We cannot all be experts, but we can develop our own tools that enable us to both reject charlatanism and assess the merits and demerits of competing arguments. To deal with experts we must simultaneously move towards them while understanding the full nature of their positions – their underlying assumptions and so forth. Something like this is a necessary requirement in healthy democracies. We must account not only our own direct knowledge, but also the sources of our information: the press is particularly important and has a distinct responsibility in this respect (recent events are testimony to what can happen when they do their job poorly). I am not saying we should assess every argument. The peril of populism is that the argument space is flooded with many more bad ideas than good: learning to distinguish between these without being drawn into foolish debates is perhaps the most important skill. More than anything, we need to be aware of disagreements between experts. Experts are not gods, nor are they devils – we should not regard them as such. We should recognise their limitations and come to understand the histories and underlying moralities of their positions. Only then can we reap the benefits of their expertise in the worthy context of democratic participation.

 

Works Cited

Chang, H.-J., 2014. Economics: The User’s Guide. London: Penguin Group.

Polanyi, K., 2014. How to Make Use of the Social Sciences. In: G. Resta & M. Catanzariti, eds. For A New West: Essays, 1919-1958. Cambridge: Polity Press, pp. 109-118.

Sandel, M. J., 2012. What Money Can’t Buy: The Moral Limits of Markets. London: Allen Lane.

Satz, D., 2010. Why Some Things Should Not Be For Sale – The Moral Limits of Markets. New York: Oxford University Press.

Turner, A., 2016. Between Debt and the Devil. Princeton: Princeton University Press.

 

 

Categories: Politics

Living in the Last Days of Liberalism

July 4, 2016 1 comment

2016 will go down in history as a major turning point for humanity. And not, I fear, for the better. It is the year that many a chicken has come home to roost. The future, as always, is opaque, but the signs are far from encouraging and there is a good chance that we are entering a dark phase of history. The recently unthinkable is not only now being thought, but is being enacted by opportunists, and cheered on by many, many more. Not in seven decades has there been so much dry tinder in the world: a spark could easily set off a conflagration that will be out of our control. At this moment dozen of major problems are at breaking point, each with the potential to catalyse the others, setting off unpredictable chain reactions. Parties of the far-right are growing in popularity in the UK, US, and in many parts of Europe, while the leader of Russia, nostalgic for the good old days of Pravda and the KGB, looks on in delight. History is absolutely clear on where all of this leads. Pure emotion is driving a lot of the politics right now, and reason is not the currency of discourse. Nevertheless, it is important to try to understand where we are, how we got here, and to look at some of the places current events may take us.

Whatever else they may be, the events of this year represent a long-developing crisis of liberalism. Liberalism means many things – it means human rights, democracy, tolerance, freedom of choice, autonomy, and peaceful cooperation through shared institutions. It has also come to mean free trade, global capitalism, privatisation, deregulation and corporatism. This latter set is seen by its advocates as the perfect manifestation of freedom of choice and autonomy, a moralised vision of markets that free people from the tyranny of government, harking back to liberalism’s Lockean anti-monarchic origins. This strain of liberalism – neoliberalism, or classical liberalism – was strong in the US and UK in the 19th century, diminished in the twentieth century, and has resurged to become globally dominant again since the mid-1970s. Between these visions of liberalism – human rights, tolerance and democracy on the one hand, and capitalism on the other – lie deep contradictions.

The resolution of these contradictions has been in favour of the neoliberal vision. The consequences have been social upheaval, disintegration of communities, economic insecurity, the neutering of democracy, and a massive rise in inequality. Human rights have suffered under the bonfire of deregulation as they came to be seen as intrusions into the rights of property holders, and whose provisions have increasingly been privatised or made subject to voluntarism. Democracy, likewise, has come to be seen as an unwarranted intrusion by the tyranny of the majority on the rights of individuals and the spontaneous free order of the market: nowhere is this clearer than in the current negotiations to institute international trade agreements that give multinational corporations the right to sue governments for any regulations that may harm their business interests.

The most significant effect of the neoliberal era is the extraordinary growth in inequality. Accompanying the anti-government tendencies of neoliberalism is a belief that these inequalities are morally unimportant and that the incentives they create benefit everyone: among the most devout advocates, these inequalities mark out the worthy from the unworthy. The “trickle-down effect” – that unbridled benefits to the best off produce benefits for everyone else – is held as dogma, despite all evidence to the contrary: median wages have remained stagnant where neoliberal policies were most aggressively pursued, with the gains being concentrated in a very small number of hands. These inequalities have translated into democratic inequalities, granting inordinate influence to large corporations and wealthy individuals on regulation which has only served to reinforce both their position and the neoliberal movement itself. Inequality directly undermines democratic decision making while simultaneously transforming citizens into customers of government. It also undermines the underlying conditions of democracy. As Jean-Jacques Rousseau fruitfully observed two-and-a-half centuries ago, inequalities – of power, of opportunities, of resources – breed domination. People who are dominated by forces they feel powerless against redirect their anger against those they can reach, kicking down against those weaker than themselves, ossifying the hierarchy of domination by oppressing the most vulnerable. This creates immediate costs to individuals. They are driven to protect their relative position while at the same time to actively harm others in attempting to do the same in a game where no one, or at best a tiny few, can win. Insecurity, fear, and the fruitless quest for the unobtainable create the conditions for populism and demagoguery to emerge, and for unscrupulous leaders to feed – and feed off – the dissatisfaction of the masses. The individual desire to feel some power results in coalitions that transpose their fears onto other groups: it doesn’t matter much who is in that group – a religious group, or an ethnic group, or a foreign country – just so long as they are more or less powerless to respond. Such a situation, Rousseau predicted, will likely produce war. With the inequalities produced by the market, the twin liberal goals of democracy and tolerance die.

This dynamic that translates economic insecurity into populism played out in Europe in the events leading to the Second World War. The economic sanctions following the First World War created the social conditions for Nazism to rise (so admirably predicted by Keynes). The great depression (that grand failure of the earlier neoliberal experiment) reinforced this, while creating similar conditions in other countries. The result was a war that engulfed the entire world, with tens of millions of deaths and unprecedented suffering.

The astute observer might see a very similar dynamic at play today. Four decades of neoliberal policy culminated in the financial crisis of 2008, plunging the world into economic recession. Nothing substantial has been done to address that crisis, and in many ways it is ongoing. What little has been done has been to the benefit of the best off, with the rest subject to harsh “austerity” programs. We are not yet near war and we may still avoid it. But the stage of populism and demagoguery is very much upon us. In the US, Trump has run a remarkably successful presidential primary campaign based on populist fears and fabrications. Far-right parties are growing rapidly across Europe. Austria very nearly elected a far-right president just weeks ago, and may still do so as the original result has been annulled, requiring the election to be re-run.

A stark example of the Rousseauean dynamic was given a little over a week ago by the UK’s referendum decision to leave the European Union. That the EU is in need of serious reform is undeniable and I return to this below. But for the moment I want to focus on how the UK’s decision played out. The “Brexit” vote has had significant immediate implications. The UK has been hit by economic turmoil with sharp implications for other countries, both major political parties in the UK are engaging in the most Machiavellian kind of politics leaving the country leaderless, there has been a stark increase in racial hate crimes, the UK itself stands in danger of dissolving, and extremists across Europe are using the vote result as rallying cry. The referendum was “advisory” rather than binding on the government and it remains an open question as to whether it will come to pass (not carrying the vote through carries its own set of social dangers). But whether it does so is not the main issue. What matters is what is tells us about the world today.

The UK could have had a serious debate about European reform, and thus led the way. This is not what they did. What in fact happened was a combination of political opportunism by self-interested politicians looking to gain advantage, a fanatical and fact-free campaign, and a press dominated by an oligopoly. When I left the UK three years ago, the government was actively engaged in a rhetoric of divisive scapegoating, at that time of the poor and the unemployed, cheered on by much of the press in what often crossed the line into hate speech – this was one reason I left. The quality of public discourse in the Brexit debate makes that time look like sunshine and goodness. Campaigners on both sides opted instead to simply fabricate facts. In the Remain camp, rather than explain the importance of Europe, they chose to focus on the negative consequences of leaving (some was fantasy but, in fact, many of these predictions now look to be understatements). On the Leave side, the campaign was largely focussed on scapegoating immigrants on the one hand, and appealing to a narrow notion of patriotism on the other. The issues involved are complex and people voted for diverse reasons, but two headline issues were the focus of by the Leave campaign: national sovereignty and immigration. I’ll talk a bit about these.

Reclaiming sovereignty was one major theme in the referendum. This is, at least at first glance, a legitimate concern. But to locate the source of the loss of local control within the EU is a serious mistake. The foundation of the present woes of many Brits is to be found not in Brussels but in Westminster. It is the consequence of deliberate domestic policy over the last four decades. Thatcher’s proclamation that “there is no such thing as society” was less a description than an ambition, one that has been largely realised today, as attested to by the divisions revealed by the referendum. The UK was always a leader on the matter of free trade, deregulation, and privatisation. The neoliberal zeal that is now omnipresent finds its roots there (and in the US): the contagion spread to Europe from the UK, and not the other way around. The Leavers may have reclaimed a limited sort of formal, hollow sovereignty. The UK may be once again be politically autonomous, in a very limited sort of way. But for most people, this just means that they have passed control to a more local group of elites, no more accountable, and perhaps less so, than those they believe they have rejected. The sovereignty they have reclaimed is a hereditary monarchy, an unelected upper house, and a lower house run by Etonians, all of this within a class system that has resurged under neoliberalism’s lead. National sovereignty under these conditions cannot give the personal control over their lives that people desire. It will not give personal security or flourishing. The material and democratic sovereignty that they yearn for was privatised and sold off four decades ago to the lowest bidder, a process that has been enthusiastically reinforced by subsequent governments. With the EU and its pesky and “onerous” regulations out of the way (including worker protections, and protections of human rights), Thatcher’s destructive project can now move to completion.

The jingoistic nationalism pales into insignificance compared to the Leave campaign’s focus on immigration. While obviously many who voted to leave were not driven by racism, the Leave campaign deliberately chose to make this a central issue, tapping into social fears that, one suspects, they barely understood the force of. Whatever may be said of the voters, the campaign itself was overtly racist. It relied heavily on scaremongering about a Muslim invasion coming in from Turkey (which is never going to happen), combined with vibrant imagery of EU citizens, particularly eastern Europeans, queueing up at the border to take away jobs. Never let the facts get in the way of a good story, it is said. This is likely to have serious ongoing consequences – for the safety of many people in the UK itself, but also for the ongoing quality of discourse. The demographic breakdown of the vote tells a fascinating story on immigration. Those who voted to leave consistently come from low immigration areas, while remain voters were largely from higher immigration areas. Moreover, UK immigration is relatively low compared to other OECD countries. On the other hand, leave voters were predominantly from areas with economic deprivation and unemployment, residents of those parts of England that were allowed to fall into decay from the 1980s onwards. It is here that we find our story – the disenfranchised who have been subjected to forces outside of their control, and furious at whoever presents a target.

So while the referendum was superficially about issues of immigration and sovereignty, it is clear that these concerns are distracting surface symptoms rather than the underlying problem. Like Trump’s rise in the US, and Austria’s yet-to-be-determined presidential election, the referendum is, more than anything else, a measure of disenfranchisement and dissatisfaction with the status quo. It was a referendum where one question was asked and a set of very different ones answered. A marginalised and voiceless people, finally offered a chance to speak, but with a vocabulary of only two words, spoke with a terrifying roar. The phenomenon of “regrexit”, where people who voted to leave didn’t believe it would happen and used the referendum as a form of protest, attests to the limited voice that people believe they have.

What then of the EU? The union is facing serious existential problems. The Euro currency has been a disaster for many member countries, removing from their control the ability to address their domestic economic problems through interest rates and debt. The fundamental (and very neoliberal) mistake is in failing to recognise that economies are political units. The European Central Bank is loathed by many: a wholly unaccountable body that sets the baseline of so much European interaction (central bank independence being another neoliberal legacy). The lack of fiscal policy to manage differentials between the countries and compensate for the lack of domestic fiscal authority lies at the heart of many of the problems in Europe. Should we conclude that the EU is over? For centuries, Europe was the bloodiest and most bellicose place on Earth. The monarchical and imperial wars of earlier centuries mutated into the most deadly nationalistic wars of the twentieth century. The EU and its predecessor’s first goal was to prevent that ever happening again. Through interdependence would come peace – a very liberal goal. Measured by enduring peace, the European Union has been a remarkable success. Seven decades without war in core Europe, France and Germany coexisting on good terms, and the European satellites of the Soviet Union more recently integrated. But with that peace has come forgetfulness. With forgetfulness has come a yearning for a return to a Europe of petty nationalism, and a return to the risks of the past. It is a serious prospect now that countries like France and Austria might leave the union, and may do so under far-right governments. No sane person would accept this as a desirable outcome. Europe needs serious reform. It needs to resolve its internal liberal contradictions. It was built on states that, with the fresh memory of war and its causes, created social structures to protect the most vulnerable. These structures have been undermined by the overlaying of neoliberalism onto Europe. Political accountability needs urgent attention, done in a way that properly unifies Europe with a true democracy that recognises the voices of the weaker states as much as those of the stronger ones. It needs to become a proper federation and not just another glorified neoliberal trade agreement. The stakes are too high for anything else.

Where to next? The best possible outcome right now is that, free of Britain’s fanatical neoliberal influence, Europe will wake up and embrace the necessary progressive social reforms, reconstructing the essential social frameworks that have been eroded, and move forth in a new chapter of the European project. This seems to me hopelessly unrealistic at the moment. The task of a political reform that accounts for more than individualistic economic concerns is made immeasurably more difficult by the current emotional mood. The cancer of neoliberalism has deep roots in the European establishment. The worst case is that countries like France, Austria, the Netherlands, and Germany hand over their democracies to their far-right politicians, Europe returns to the petty and vicious nationalisms of the past with all the trailing consequences that this implies, and the rest of the world follows down this dark pit. If so, then we are truly living in the last days of liberalism. We cannot predict the future but we should have absolutely no doubt as to where we are right now. The shit, as the saying goes, just got real.

Categories: Politics

Positive and Normative Economics

March 11, 2014 Leave a comment

Hi all,

I have not written here for a long time. Long story short, I have left London to return to Australia, and have started a university degree in politics. This piece is addresses to the students in the introductory microeconomics class that I am taking. But it may be of interest to anyone who is concerned with economics or is affected by the way that economics is taught (that would be all of you)…

I would like to say a few words about something that has been bothering me through these early weeks of the Microeconomics 1 course. This is the distinction between positive and normative economics. This was touched on briefly in the first week and then swiftly left behind which I think is unfortunate as many of the claims in the lectures and the textbooks that appear on the surface to be positive would also appear to have rich normative content. It may also be the case, as I hope to show, that some claims that are labelled “normative” can be subject to positive methods. The ability to distinguish between positive and normative claims, and detect when one is submerged in, or disguised as, the other is one of the most important critical tools in we have in the social sciences. I am not here arguing that any given norm is right or wrong. Indeed, we cannot even begin to approach such questions until the norms are explicit. While I understand that this is an introductory course, the ideas that we are taught at this stage are internalised and can colour the way we see things going forward. If we do not develop critical skills from the first day we may never do so. We may get good grades by memorising the claims, but we risk becoming bad economists. And I fear that the world has enough of these already. I personally don’t want to be an economist but I do want to live in societies where I can trust those that are to do the job. One of the many critiques to emerge after 2008 is the observation that economics as a profession has been quite poor at making this positive / normative distinction. (Another is that economics had become obsessed with its models to the detriment of dealing with the world as it is, further undermining positive claims). These criticisms have come from notable economists as well as many standing on the outside looking in.

The given distinction between positive and normative economics is roughly that between descriptive “is” claims (empirical claims that can, in principle, be tested against the real world) and prescriptive “should” claims (value based and inherently untestable). Of course, making claims with the word “is” is an insufficient condition for positivity (and this is at the heart of my problem with what we are taught). I could say that “economic claims are 90% normative and 10% positive” – this is probably a normative claim rather than the positive claim that is appears to be (I can think of no way to test it, even if I might feel it to be true). We need to develop a richer feeling for this distinction than a simplistic is/ought dichotomy provides. It helps to have a few (non-exhaustive) examples of similar claims to highlight the difficulties.

In one of the textbooks there is a statement about taxation “distorting” incentives. This appears as a positive claim. This really stood out for me, coming so soon after the brief coverage in the text of positive and normative claims. It seems to me that there are many normative implications hidden in this: what sorts of incentives are acceptable? Why is it a “distortion”? This has a value-loaded tone, and has a well-defined meaning implying a negative change away from a given norm (that word again!). (I would consider it a more positive claim if it stated that taxation alters or modifies or affects incentives, which is uncontroversial but inconclusive as taxation can be used as a positive incentive against certain undesirable behaviours). But more than that, this is quite possibly empirically false. Plausible arguments exist that suggest that, at least at higher income levels where material well-being is increasingly irrelevant, incomes are viewed comparatively against a person’s peers as a kind of score-card and that higher taxation rates do not effect incentives to any great degree. Where this becomes problematic is when different tax regimes compete for such people. But this is not a problem of taxation per se. This is to say nothing of zero-sum positional goods and the like. Another argument is that higher incomes are actually a disincentive (I’m thinking here of recent work by Daniel Pink and others) and that there is little correlation between pay and performance at very high levels. All of this is conceivably positively testable once we bring out the hidden normative content.

Another claim that has been made in both lectures and the texts is that higher productivity equates to higher social welfare. A bigger pie is a better pie. Intuitively we can see some immediate problems here. Part of the difficulty is, of course, that the pie is conventionally measured in money and money is not well-being (nor can it buy you love). I, being exceedingly rich compared to you, can bid you out of a market for something that you need and I merely fancy. This is economically efficient but is it really efficient, more broadly conceived? No amount of relativistic scepticism can remove this question. We might argue that “revealed preferences” are not interpersonally comparable, but using money as a proxy does nothing to alleviate this – it merely defers the problem. Common sense and appeals to norms may be useful in such cases. Measured in money, more bread/medical care/housing/etc provided to people can look less efficient than less of the same goods provided at much higher prices. Ability to buy may be as, or more, important than willingness for many goods. (Imagine the choice in a society of 100 people for the body of bakers – do they produce loaves for 100 able buyers at $1 per loaf, or for 50 willing buyers at $2.10 a loaf – a contrived example, to be sure, but one that has many real-world applications). Ignoring distribution is a common and well-documented problem with theories that are rooted in utilitarian and consequentialist approaches. As productivity continues to exceed need distribution becomes an increasingly important factor. The model of supply and demand profoundly shapes and is shaped by distribution. Beneath this ostensibly positive model lie assumptions and judgements about an underlying property model which is both deeply normative and contentious. Beyond this, there are plausible arguments being made that gains to general well-being diminish sharply with economic growth. This has led several prominent economists and social theorists to start asking what we should be measuring instead of the traditional national accounts. Among other accounts, the distribution of wealth is currently being cited as a possibly important factor. One commonly heard argument is that there is a trade-off between “equity” and “efficiency” where it is strongly implied that equity is a normative notion and efficiency is positive. (Closely related to this is the argument that there is a trade-off between liberty and equality, an argument that rests on strongly normative ideas about liberty). But this supposed trade-off has recently come into strong doubt. Economists such as Joseph Stiglitz, and more recently IMF economists, have suggested strong links between market efficiency and equality or equity. What was presented as a normative versus positive dichotomy appears to have a strong positive component, something that is missed when it is assumed that equity resides solely in the normative zone.

Yet another claim that we have heard, and my final example, is that trade is required for specialisation to work its magic. This is not the case if we are to use precise language. There are two distinctions here that are important. The first is between production and distribution, and the second is between free production and non-free production.

We have heard the examples of Robinson Crusoe and Man Friday on their island. They split the work by specialising according to comparative advantage and achieve significantly higher productivity, and hence welfare gains. Imagine instead that Crusoe arrives at the island with a pistol. He quickly figures out the comparative advantages of himself and Friday. He then commands production according to these comparative advantages. Friday must collect coconuts while Crusoe himself gathers fish (or vice versa). This would result in the same economic outcomes as would be the case had they agreed to produce according to comparative advantage. But this is a very different situation: it is now a command economy. Goods are not “traded” in the way that we conventionally understand the term – they are allocated through diktat. Production is the same, distribution differs. The social outcome is different in certain qualities even if not in quantities. It might (tentatively and with many qualifications that delve deep into norms) be the case that an agreement to divide the work up exhibits what I have called “free-production”. It is certainly the case that the command version of the story represents “unfree production”, at least for Friday. A utopian “Marxist” allocative process might involve people producing according to comparative advantage (from each according to their ability), pooling the output and taking what they need (to each according to their need). Or the pool might be divided, by common agreement, in equal portions. I’m not arguing that this would work well – I am simply trying to draw down the important distinction between production (where specialisation occurs) and distribution. This, again, differs from trade as conventionally understood. Stretching the term “trade” to include these scenarios (e.g. by describing these as “trade agreements”) would require us to describe the former Soviet Union as a predominantly market society. Aside from the ideological loss, we lose descriptive power and, with it, an understanding of what we are describing.

Command economies rely on specialisation at least as much as market economies. It might even be argued that they could, in principle, do so more effectively: imagine that a planning bureau (or whatever) had information about comparative advantage it could guarantee that people produced according to their comparative advantage (there is nothing in command economies that says they could not apply comparative advantage as a measure). Granted, missing the pricing mechanism, people may produce more things, but less of what is needed. Conversely, in a “free-market” people may choose not to engage in the activity that is their comparative advantage. They may prefer to pursue something they enjoy but are less comparatively good at, for example. Truly free choice can mean doing things that are not economically optimal. This may well produce sub-optimal (inefficient) market outcomes but may well produce more efficient social outcomes. In one of the textbooks is an example of a household of two people who divide the housework. The exercise is, of course, designed to demonstrate that they can do more by specialising which is unarguably true. But anyone who has lived with other people will know that this may produce a socially inefficient outcome and that letting people do at least something of which they like doing the most may lead to a happier household even if it the household is a bit messier. This can hold true at the societal level as much as that of the household. Perhaps this distinction is what is wrong in a command economy (and in a market economy where some people have few and unenviable choices): again, true choice can be sub-optimal. These are, to an extent, positive claims inasmuch as social welfare can be measured (and we generally know whether we are living in a happy household or not, even if this is trickier at a macro level). Interestingly, development economists sometimes describe comparative advantage as a trap: doing what I am good at now can preclude becoming better at things that will bring long-term advantages. We get better by doing, and we can only do so by at first doing it badly. Many countries have developed by deliberately choosing things that they were not comparatively good at. South Korea is a good example. Without their rejection of the logic of comparative advantage we would not have Samsung, LG, or Hyundai.

There are more examples that we have encountered, and undoubtedly many more to come. But without being alert to the hidden normative content of claims we are less able to draw out these sorts of implications. If we are aware that apparently positive claims can have some or much normative content and that apparently normative claims can be subject to positive methods then we can all be better economists, or at least better citizens.

 

Categories: Politics