The economy is one of those things that is obvious until you think about it.
As soon as you do think about it, the questions rapidly multiply. Why are such a diverse array of processes of production, distribution and consumption lumped together? And how? And when did we start doing that? Do processes, many of which are intensely local, and others that are very far-flung really constitute a national entity? Do the 99% and the 1 % really add up to a meaningful whole? And what about those flows of money and resource that are offshore and yet onshore and then offshore again? And are we sure that we do in fact count everything that matters? And are we counting some things we shouldn’t?
All of those questions are on point and yet given the standing of the economy as an object of public concern and policy, they have about them the air of heresy.
In fact, how did the economy become an object of policy? What does it mean that some states of Ministries of Economic Affairs whereas the UK and the US have Treasuries. There is clearly an important history buried here, indexed in the shifting role and function of an entity like HM Treasury in the UK: once a royal Treasury, now a central hub of macroeconomic policy, or at least once it was.
This does not mean, however, that the idea of the national economy has gone unquestioned. Challenging the idea of a national economy is not new. It was controversial from the start.
If you start from a German (or American) perspective, the idea of a national economy was from the beginning polemical. The national economists in Germany in 19th century with Friedrich List as their champion set out to make explicit the hidden significance of the national dimension in economic affairs. They thought of themselves as engaged in intellectual and political battle with Anglo liberals.
As the notion of a national economy and national economics became more consolidated by the late 19th century it attracted critiques by second-wave Marxists. Rosa Luxemburg is devastating on the topic of “national economics”.
Lenin’s theory of imperialism was nothing if not a critique of how footloose capital instrumentalized nationalism and the nation state for its purposes. Left and right-wing within German Social Democracy engaged in fierce arguments about how to interpret not just trends in the Reich’s statistics, but the statistics themselves.
In mainstream circles too, the mode of solidifying the economy was anything but settled. In the 1920s the venerable Verein fuer Sozialpolitik devoted a conference to critiquing the idea of national income accounting as such. But those early critics stood in the path of a tidal wave of quantification that swept across the developed world, capitalist and communist, liberal, fascist and Soviet in the interwar years.
By the 1940s, capped by the popularization and bowdlerization of Keynesian macroeconomics, this gave a new solidity to the concept of the economy as an object of observation and government. It is this final moment which Tim Mitchell would emphasize in his rather Anglocentric account of the “fixing” of the economy. In fact, the UK and US came late to the party.
Another plug here for David Edgerton’s brilliant and provocative new book on the making of the British nation-sate and national economy in the mid twentieth century.
But once again, consolidation provoked critique. In the 1940s, precisely as a global matrix of economic metrication was being consolidated by the League of Nations and the UN, Karl Polanyi would publish his critique of the reification of market relations, the Great Transformation (1944). For all its many and obvious problems Polanyi’s (decidedly non-Marxist) book has probably had more impact than any other in keeping the idea of the constructedness and embeddedness of “the economy” in play amongst critical social scientists.
Alternatively, the 1930s and 1940s were also the moment of Hayek’s critique of scientism in economics. As Quinn Slobodian has shown in his insightful new book, Globalists, at its core, first wave Austria and German neoliberalism was a critique of the objectification of “the economic” as a realm of human affairs amenable to scientific study and thus also government.
Both Polanyi and Hayek, however, gained limited traction at the time. The 1950s and 1960s were the moment in which growthmanship really hit its stride. National economic growth was enshrined as the basic metric of modern history. The neoliberals embarked on their long-road through the right-wing undergrowth of the Atlantic world. Polanyi became more influential for his critiques of the notion of an ancient economy than his critique of Victorian liberalism.
It was in the 1970s that the intellectual critique of the economy truly revived. One could think of the critique of formality in development economics and anthropology. One could point to the revival of Chayanov in peasant studies. In 1978-1979 , Michel Foucault delivered his lecture course on governmentality and the Birth of Biopolitics at the College de France.
Once again Foucault’s lectures were somewhat out of time. Foucault on neoliberalism would have a far greater impact after an interval of 15-20 years than in 1978. At the time it was swamped by the intellectual shock unleashed by his History of Sexuality. In Focuault’s own thinking the link from the history of sexuality to the critique of the economy and biopolitics was organic. But that is not how the double-pronged intervention was received at the time.
Foucault offered his critique of neoliberalism in the 1970s against the backdrop of the turbulent collapse of Bretton Woods and what would turn out to be the swansong of the Trente Glorieuse. The unemployment crisis was the most vivid manifestation of this.
If one was trained in economics in the 1980s, the impact of this shock was dramatic. Basic macroeconomic concepts could no longer be taken for granted. What if, as the freshwater economists had it, the great depression was really the great vacation? What if there was no such thing as involuntary unemployment. What if the “Great Depression” was the “Great Vacation”. It’s a crazy idea. But it certainly challenges the way you think and places the constructedness of categories to the fore. So too does the insistence of rational expectations economics that the model that policy-makers have of the economy must be part of the models imputed to the economic actors that the policy-makers are trying to model.
Not surprisingly in the 1980s it was French economists, in conjunction with sociologists and statisticians who grasped the significance of this crisis most clearly. You could come at this via the French regulation school and if you read Marxism Today at the time you got a whiff of Aglietta et al.
But, the book that most affected me was L’invention du chômage by Robert Salais, Nicolas Baverez, Bénédicte Reynaud, which I read in my final year at Cambridge in 1988-1989.
It set me on a path that went by way of Bourdieu, Thévenot and Boltanski, “investissements de forme”, the anglo-Foucauldians of the 1990s, to Luhmann, Latour, Callon, and the Anglo-Latourians. Then all that converged with the constructivist work on national identity happening in cultural and political history in the 1990s. Out of this mix – plus some years in the archives – came an essay on the invention of the national economy, my first book on the history of German statistics (2001) and, eventually, the essay “Trouble with numbers” in the AHR.
At the same moment, traveling on a very different track, Tim Mitchell formulated his theoretically elaborated critique of how the economy was “fixed”. This has had a huge impact in critical theory and across the social sciences. Tim came straight out of discussions in critical anthropology and development studies and put these to work in his pathbreaking accounts of British policy in colonial Egypt and the significance of the economy as its anchoring term.
Since then critiques of globalization, the environment, the financial crisis, neoliberalism have made critical engagement with “the economy” into a boom area. Karl Polanyi has roared back, with mixed effects. Foucault on neoliberalism is de rigeur. A mass of PhDs and books have addressed the inventing the economy theme head on. There are several important academic monographs and PhDs, which I cant do justice to here. Daniel Speich Chassé’s book is one obvious instance.
But strikingly there have also been lighter works put out by nonacademic publishers aimed at the policy crowd. There are so many different angles of criticism: environmental accounting, happiness, heavy and light economy.
Diane Coyle’s book, for instance, stands out:
Indeed, by this point there are so many critiques that it is not obvious that the critique can any longer assume what critiques tend to assume, namely that the thing that they are critiquing is in fact the orthodoxy. Hasn’t the notion of the economy actually lost its obviousness? Indeed, as Slobodian has pointed out, weren’t the supposedly hegemonic neoliberals amongst its most profound critics?
Indeed, some are now asking whether the national economy might in fact need to be rehabilitated for progressive purposes? Back to the 1970s as both a political and intellectual project? There is nothing more fashionable right now in the history of international relations than the New International Economic Order.
In any case it is a boom industry. So much so that reviewing critiques of economy is an industry in its own right. In short succession I was asked to review Pilling, Mazzucato, Slobodian and Kuttner.
I’ll discuss the latter two in future blogs but the coincidence of Pilling and Mazzucato really forced me to go back to basics.
It is hard not to enjoy David Pilling’s highly entertaining tour through the world of economic statistics. It is written with the flair, imagination and eye for a good angle that is regularly on display in his writing for the FT. If you haven’t read his recent piece on Madagascar and Vanilla you are missing out. It is eye-opening and utterly shocking. The review finally came out in the Guardian last week.
Reading Pilling you really do learn a thing or two about how modern economic statistics get put together. He chases a good story in unlikely places. What he doesn’t do is offer a satisfactory history. And when it comes to the present, though this is clearly intended as a reformist, improving book, it runs up against a basic question. If we all agree that power and knowledge are interconnected, then if you are in the business of reform, you need to address not only the technical questions of knowledge that you want to fix. You also have to address the question of power. You can’t just offer good ideas. You need to elaborate how these relate to some set of social and political forces that will own them and force them into practice. Without doing that you fall short of your own critique. Having talked to statisticians all over the world as Pilling has, he knows the kind of obstacles that they face every day. No one has described them better.
This is a fair point to make against Pilling. He is unabashed in his reformism. But political radicalism is not the dominant tenor of the book, reportage and storytelling are to the fore. The opposite is the case in Mazzucato’s latest offering, which I was asked to review for the New Statesman.
I wanted to like this book. I am in basic sympathy with Mazzucato’s objectives. How can I take issue with someone wanting to promote the critique of political economy by way of the history of statistics? But, I found myself very disappointed. It reads like an awkward combination of lecture notes on the history of economic thought spliced together with some sensible, and common place objections to national accounting. But formal issues aside, what I thought were most pressing were the political questions. What purpose does this kind of critique serve?
This is a book with political aspirations and this makes the question of praxis acute. If you are going to get political, you have to really get political and realize the full implications of that move rather than just reveling in your pretensions to radicalism.
If you are going to announce that power and knowledge are inextricably interconnected, that is one thing. But what follows? There is no need to make a further step. To offer an analysis, to formulate a historical narrative, to reflect on the way in which your own position is conditioned, are all perfectly respectable contributions (I hope). But, if you then make the next step – an unforced move – which is to claim that by means of your intervention you mean to radically challenge and change that power-knowledge relationship, then you are raising the stakes. You are in fact claiming not just the attention of your well-disposed readers. You are in effect claiming power for yourself. Again, nothing wrong with that. All power to you! But you do then have to address the question of power head on. You have to specify your own position. You have to articulate who are your friends and enemies, what coalition it is you intend to build and your tactics and strategy of change. Otherwise, your politics and your radical pretension falls short of your diagnosis.
Obviously, making that next step, in our current conditions, is not easy to do. But then honesty surely demands that we acknowledge that impasse squarely and moderate the pretensions and expectations of our interventions. Above all let us not, in the face of massive obstructions to change, retreat to the idea that what really matters is “changing the discourse”. Lets face the impasse head on. The problem here is not that many people can’t think of better measures than GNP!
It goes without saying that I don’t have any patent answers to these questions. For what it is worth I gestured to two tactical responses in the reviews. The first is that to find real critical purchase we need to go beyond the general critique of categories and abstractions to capture specific moments of conflict and dissonance within the apparatus of power-knowledge. As I put it in an earlier piece, we need to “move from a generalized history of statistics as a form of governmental knowledge to a history of the construction and use of particular facts … If our aim is to de-reify the data and to demonstrate…the processes through which quantitative truth claims are made..then there is in fact no better way to do this than to focus … on the disputes that arise in relation to particular truth claims at moments of crisis”. Find moments of dissonance and exploit them for your own purposes.
In this respect Pilling is not just wonderfully readable and informative, he is genuinely insightful in focusing on moments where modern day statisticians, with the best will in the world, struggle to make things add up.
The other tactic, which follows from the first, is to be as alert as possible to moments of innovation in the power-knowledge apparatus and to realize as fully as possible their ambiguous implications. One of the things that makes me impatient with much “radical” political economy is that it falls so far behind the curve of what mainstream social scientists and economists are doing right now. To answer the present by monotonously reproducing the classics is to follow the inspiration of those great texts in the worst possible way. Working on Crashed I’ve been amazed by spectacular innovations in the modes of monitoring and analyzing the economy over the last 15 years. I chose to try to tease out some of the political implications of the new macrofinancial literature. About this more in another blog. But there are many, many other approaches – big data, granularity, huge historical data sets etc etc
Having established the point that what we take to be “the economy” is a historically constructed thing, it is time to appreciate the full force of history. In the twenty-first century “The economy” is changing before our very eyes. If our purpose is critical, the challenge is not to repeatedly assail a mid twentieth-century power complex, the challenge is to find some purchase on a reality that is changing with dramatic speed beneath our feet.