Monday, June 26, 2017

David F. Ruccio — This is the end—or is it?

Where I think Mishra goes wrong is in arguing that “A new economic consensus is quickly replacing the neoliberal one to which Blair and Clinton, as well as Thatcher and Reagan, subscribed.” Yes, in both the United Kingdom and the United States—in the campaign rhetoric of Theresa May and Trump, and in the actual policy proposals of Corbyn and Sanders—neoliberalism has been challenged. But precisely because the existing framing of the questions has not changed, a new economic consensus—an alternative common sense—cannot be born.
To put it differently, the neoliberal frame has been discarded but the ongoing debate remains framed by the terms that gave rise to neoliberalism in the first place. What I mean by that is, while recent criticisms of neoliberalism have emphasized the myriad problems created by individualism and free markets, the current discussion forgets about or overlooks the even-deeper problems based on and associated with capitalism itself. So, once again, we’re caught in the pendulum swing between a more private, market-oriented form of capitalism and a more public, government-regulated form of capitalism. The former has failed—that era does seem to be crumbling—and so now we begin to turn (as we did during the last system-wide economic crisis) to the latter.**
However, the issue that keeps getting swept under the political rug is, how do we deal with the surplus? If the surplus is left largely in private hands, and the vast majority who produce it have no say in how it’s appropriated and distributed, it should come as no surprise that we continue to see a whole host of “morbid phenomena”—from toxic urban water and a burning tower block to a new wave of corporate concentration and still-escalating inequality.
As long as it is assumed that capital (ownership of means of production) must be favored over labor (people) and land (environment) because capital formation in the sine qua non of growth, then the frame remains it place.

A frame that integrates people, environment and productive capacity needs to be developed to replace the flawed frame, which can never work satisfactorily for all the factors. hence, will always lead to social and environmental problems if balance is not restored.
Questioning some dimensions of neoliberalism does not, in and of itself, constitute a new economic consensus. I’m willing to admit it is a start. But, as long as remain within the present framing of the issues, as long as we cannot show how unreasonable the existing reason is, we cannot say the existing era has actually come to an end and a new era is upon us.
For that we need a new common sense, one that identifies capitalism itself as the problem and imagines and enacts a different relationship to the surplus.
For this it is necessary to acknowledge that the problem is based on the expropriation of workers and the environment, which is not sustainable in the long run and leads to periodic breakdowns. Short term fixes just put off dealing with the causes.

Occasional Links & Commentary
This is the end—or is it?
David F. Ruccio | Professor of Economics, University of Notre Dame

15 comments:

Vincent said...

Good luck with that!

Certainly the US will not lead and do everything to impede and prevent. Imbecile in the White House, thugs in the House and Senate, and with the possibility of Justice Kennedy retiring with overwhelming odds to be replaced by a pro-business reactionary.

Maybe after the polar caps melt?

Tom Hickey said...

Maybe after the polar caps melt?

Right. Unlikely to happen without a sufficiently serious crisis to get a lot of people off their butts.

Even then, it is no sure thing. The problem will be to avoid disaster capitalism.

Another issue is that elites are on notice about the rabble getting restless and have already laid the foundation for a police state with total surveillance and militarization of domestic security.

Neil Wilson said...

Capitalism isn't the problem.

The problem, like nuclear power, is that we haven't quite got the containment system right. But that doesn't mean one can't be engineered.

Ownership isn't the problem. Control and power are the problems. "Who's in charge" is the question.



Bob said...

"Who's in charge" is the answer.

Matt Franko said...

"Who's in charge?" : Morons...

Vincent said...

Unlikely to happen without a sufficiently serious crisis to get a lot of people off their butts.

We just had one. Alas, Obama believed it was unacceptable for rich people to lose money.

Maybe there’s hope with the Millennials?

“Why Are So Many Young Voters Falling for Old Socialists?”
https://www.nytimes.com/2017/06/16/opinion/sunday/sanders-corbyn-socialsts.html

Tom Hickey said...

We just had one. Alas, Obama believed it was unacceptable for rich people to lose money..

Right and dissent (Occupy) was forcibly suppressed under the direction of DHS.

If Obama still had any credibility as a progressive with anyone at all, he lost it then.

Magpie said...

Capitalism isn't the problem.

The problem, like nuclear power, is that we haven't quite got the containment system right. But that doesn't mean one can't be engineered.

Ownership isn't the problem. Control and power are the problems. "Who's in charge" is the question.


Like my grandma used to say: There Are None So Blind As Those Who Will Not See.

It comes from the Good Book:

Hear now this, O foolish people, and without understanding; which have eyes, and see not; which have ears, and hear not. (Jeremiah 5:21 21 KJV)

Tom Hickey said...

Capitalism is about dominance. The underlying psychology is adolescent.

Magpie said...

Now that I am reminiscing, I quote from my grandpa, who was a tough-as-nails old bastard and proud owner of his house: My House, My Rules. It's always been like this, it will always be like this.

Get over it.

Neil Wilson said...

I'm not sure you can put all of capitalism in one pot.

There are strains of it and it can be selected against - like aggression in dogs.

We control the dominance and adolescence in sport to make sport worth watching.

Magpie said...

There are strains of it and it can be selected against - like aggression in dogs.

Selected!? Selected, by whom?

Surely not by me or by most of us.

Maybe you see yourself in that role. A kind of Capitalism Breeder, or rather Philosopher King; experience, however, teaches us something: it is the capitalists' prerogative to select how aggressive that dog is.

Capitalism is their house: we play by their rules.

Bob Roddis said...

As long as it is assumed that capital (ownership of means of production) must be favored over labor (people) and land (environment) because capital formation in the sine qua non of growth, then the frame remains it place.

Calling the current system “capitalism” is MMT and “progressive” FRAUD right out of the gate. The gist of Austrian analysis is how fiat money and creating money and credit out of thin air distorts capital formation in an unsustainable manner which can be kept going only with more and more artificial “stimulus”. Further, those people getting the new money first are stealing purchasing power from those who don’t. Don’t look so shocked when the result is more “inequality”. I still maintain that you people might engage Austrian analysis directly if you weren’t so afraid it might be right.

BTW, isn’t the essence of MMT the position that the present situation can be kept alive with more and more injections of either spending or funny money creation?

To put it differently, the neoliberal frame has been discarded but the ongoing debate remains framed by the terms that gave rise to neoliberalism in the first place. What I mean by that is, while recent criticisms of neoliberalism have emphasized the myriad problems created by individualism and free markets, the current discussion forgets about or overlooks the even-deeper problems based on and associated with capitalism itself. So, once again, we’re caught in the pendulum swing between a more private, market-oriented form of capitalism and a more public, government-regulated form of capitalism. The former has failed—that era does seem to be crumbling—and so now we begin to turn (as we did during the last system-wide economic crisis) to the latter.

“Neoliberalism” is just a garbage term, a cowardly and dishonest ploy of basically calling what is actually hyper-Keynesian “progressive” nanny-statism “individualism and free markets”. How much “individualism and free markets” are going on in the poor neighborhoods of Detroit with the never-ending Drug War, permanent welfare and horrible compulsory government schools? With a housing bubble out in the suburbs making home purchasing impossible for anyone without an existing house to sell at a bubble price. It’s all just laissez faire, right?

Vincent said...

Capitalism is their house: we play by their rules.

Exactly. in an advanced economy for capitalism to continue to provide benefits, it must be regulated and wealth redistributed (although this can be accomplished with keystrokes – but what are the chances of that), and in the current environment that just ain’t gunna happen. Analogous to the gun debate in the US, the argument has been settled. And the winner is the current system we got.

(Occupy) was forcibly suppressed under the direction of DHS.

Similar to the Kent State shootings, which put a kibosh on the growing Vietnam War protests, stomping on Occupy was insidious and coordinated nationwide. Lost credibility with progressive was so complete is it any wonder that they stayed home on Election Day?

And we’re still debating why more of the same Hillary lost? Give me a break!

AXEC / E.K-H said...

The end of political economics
Comment on David Ruccio on ‘This is the end—or is it?’

There is no such thing as economics. There are TWO economixes: political economics and theoretical economics. The main differences are: (i) The goal of political economics is to successfully push an agenda, the goal of theoretical economics is to successfully explain how the actual economy works. (ii) In political economics anything goes; in theoretical economics the scientific standards of material and formal consistency are observed.

Theoretical economics consists of four main approaches ― Walrasianism, Keynesianism, Marxianism, Austrianism ― which are mutually contradictory, axiomatically false, materially/formally inconsistent, and which got the foundational economic concept profit wrong. What we actually have is the pluralism of provable false theories.

Theoretical economics is scientifically unacceptable. Because of this, economics has nothing to offer in the way of a scientifically well-founded advice: “In order to tell the politicians and practitioners something about causes and best means, the economist needs the true theory or else he has not much more to offer than educated common sense or his personal opinion.” (Stigum)

Fact is that neither Orthodoxy nor Heterodoxy has the true theory and that, by consequence, economic policy guidance of BOTH sides has NO sound scientific foundation. Economists should no longer pretend to do science but openly push their respective political agendas.

Even if economists had the true theory they would have NO political mandate. There is NO such thing as a trade-off between theoretical and political economics. It was John Stuart Mill who told economists that they must decide themselves between science and politics: “A scientific observer or reasoner, merely as such, is not an adviser for practice. His part is only to show that certain consequences follow from certain causes, and that to obtain certain ends, certain means are the most effectual. Whether the ends themselves are such as ought to be pursued, and if so, in what cases and to how great a length, it is no part of his business as a cultivator of science to decide, and science alone will never qualify him for the decision.”

Since the founding fathers economists violate the principle of the separation of science and politics. Economics is what Feynman famously called a cargo cult science and neither right wing nor left wing economic policy guidance has a sound scientific foundation since Adam Smith/Karl Marx. Political economics has produced NOTHING of scientific value in the last 200+ years. It is high time that economics frees itself from the all-pervasive and all-corrupting grip of politics.

What Burke termed ‘one of the finest problems in legislation, namely, to determine what the State ought to take upon itself to direct by the public wisdom, and what it ought to leave, with as little interference as possible, to individual exertion’ is a POLITICAL question entirely OUTSIDE the sphere of economics. Economists have to step down from the political soap box which the founding fathers have illegitimately usurped 200+ year ago.

Egmont Kakarot-Handtke