Zombie Marx and Modern Economics: or, how I learned to stop worrying and forget the transformation problem

There are two versions of this piece: one, here, a conference paper, and the other in the new edition of Jacobin. The Jacobin piece is shorter and stripped of its academic accessories, and much of the section on the value of money, but it’s not entirely an abridged version – I changed the tone a little, and added a Joan Robinson quote someone reminded me of. I’ve had a lot of responses to this, so a follow-up will hopefully follow.

In 2009, UC Berkeley Economics Professor and former Clinton adviser Brad DeLong took a pot shot at our David Harvey on his blog. Headlined ‘Department of “Huh?”’, and beginning “Why neoclassical economics is an absolutely wonderful thing”, the post quotes 11 straight paragraphs from a Harvey essay, which DeLong proceeds to ridicule.

For DeLong, the essay is contentless waffle. It strings together economic concepts without making an economic argument. He would call it “intellectual masturbation”, he writes, except that it “does not feel good at all”. Only in the eleventh paragraph does he find “the suggestion of a shadow of an argument”. Here Harvey argues that the US stimulus package is bound to fail because the deficit needs to be financed by foreign powers, and the amount of Treasury bonds it will be able to sell to the likes of the Chinese central bank will not fund a big enough stimulus. DeLong responds that this is a question that requires a theory of the bond market and interest rates, which Harvey does not provide: “The question is thus not can government deficit spending be financed… the question is at what interest rate will financial markets finance that deficit spending.” [DeLong, 2009]

[More: Zombie Marx and Modern Economics (pdf)]

Published in: on 17 July, 2011 at 3:29 pm  Comments (1)  

Inflation and the making of macroeconomic policy in Australia, 1945-85

Everything you always wanted to know but were afraid to ask…

My PhD thesis is now available here.

Abstract

This thesis traces the impact of inflation on the making of macroeconomic policy in Australia between the end of World War II and the mid-1980s. I take issue with accounts of policy change that focus primarily on ideological change on the part of policymakers. Instead, I present policy as strategic activity within a complex, evolving economic system which is not centred on policy, and in which, therefore, policy does not have a monopoly on initiative.

I draw on Marxian state theory and Tinbergian theory of economic policy to explore why counter-inflationary policy emerged as an imperative for the capitalist state and how it came to play a dominant role in organising macroeconomic policy in general. I also focus in detail on the development of central banking in Australia, drawing on post-Keynesian structuralist monetary theory. The body of the thesis is divided into two parts, one dealing with ‘the long 1950s’ and the other ‘the long 1970s’. Both are treated as periods of transition, rather than of stable policy regimes.

In the ‘long 1950s’ macroeconomic policy was brand new, and the authorities had to build an effective system of macroeconomic management, sometimes against the active opposition of other groups. A contradiction developed between full employment and price stability, and the latter was prioritised because of limits set by the balance-of-payments under the Bretton Woods international monetary system.

The ‘long 1970s’ was a period of crisis and distributional class conflict. The break-up of Bretton Woods and the movement towards flexible exchange rates changed the form of constraint but continued to impose a counter-inflationary imperative. Monetarism provided an organising and legitimating principle for extremely restrictive macroeconomic policy and the abandonment of full employment as a policy goal, even though policymakers were sceptical of its propositions. Finally, I discuss the movement towards deregulation as something which strengthened rather than undermined the central bank’s power to pursue monetary policy.

Pessimism of the will

I’ve reviewed Eric Hobsbawm’s How to Change the World in the new issue of Jacobin:

It is a little bright spot at the end of the penultimate, gloomiest chapter of Hobsbawm’s history of Marxism: at least the albatross of “really-existing socialism” might not hang around the neck of the latest generation to turn to Marx. “… [E]ven today only those in their thirties and above have any memory of the actual years of Cold War.” The idea that Marx was “the inspirer of terror and gulag, and communists… essentially defenders of, if not participants in, terror and the KGB” was no more valid than “the thesis that all Christianity must logically and necessarily lead to papal absolutism, or all Darwinism to the glorification of free capitalist competition.” Most “really-existing communists” in the West had been critics of Stalinism since 1956 (yes, says Hobsbawm, who stayed in the British Communist Party into the 1980s, even “by implication” within Moscow-line parties). But the line that socialism meant Stalin and Mao was always an effective rhetorical strategy for anti-communists, always a way to change the subject whenever socialists were in the conversation. As the Soviet Union and the Great Leap Forward recede into history, surely the shadows they cast over the very idea of a post-capitalist society will lighten. […]

Published in: on 16 March, 2011 at 8:07 am  Leave a Comment  

Law as unifier of the state

The Poulantzas project 2

Bob Jessop’s book on Poulantzas [Nicos Poulantzas: Marxist theory and political strategy, 1985, Macmillan] helpfully summarises some of the early papers I can’t read as I don’t know French. There’s some useful background on his view of the law which is highly condensed in the translated papers. This, in particular, is useful in clarifying his view of the nature of the ‘internal’ logic of law discussed in the last post:

One of the most pervasive and fascinating influences within modern legal theory has been the neo-Kantian positivism of Hans Kelsen (and the so-called ‘Vienna School’) with its concept of a purely internal Normlogik. This argues that an effective legal order must be hierarchically unified under a fundamental legal norm (Grundnorm) and backed up by effective coercive sanctions. It also declares the state and law to be identical and insists that in any one society only one sovereign, coercive legal order is possible. Indeed Kelsen argued that in any real, ‘sociological’ state there will be many authorities, multitudinous relations of domination, numerous acts of commanding and obeying: only the unity of the legal order justifies us in considering the state as a single system of domination. For the same reason Kelsen denied that the state is a subject which exercises power – its power is simply that of a valid and effective legal order. At best he was prepared to concede that the machinery of state (‘the bureaucratic apparatus’) is the material personification of the broader formal legal order within a nation-state. He also suggested that the division between public and private law is ideological and simply serves to dissimulate private law as located beyond politics… (more…)

Published in: on 11 October, 2010 at 8:19 pm  Comments (1)  

Not, in fact, where we might choose to begin

The Poulantzas project 1

Nicos Poulantzas in his final book, 1978:

The constructivist image of ‘base’ and ‘superstructure’, which is supposed to allow the determining role of the economic sphere to be visualised after a fashion, cannot in fact provide a correct representation of the articulation of social reality, nor therefore of that determining role itself. It has proved to be disastrous in more ways than one, and there is everything to be gained from not relying on it. For my own part, I have long ceased to use it in analysis of the State. [Poulantzas, 1978: State, Power, Socialism, Verso, p. 16] (more…)

Published in: on 10 October, 2010 at 9:57 pm  Leave a Comment  

The Poulantzas project

Nicos Poulantzas in days before smoking in the office was structurally selected against

Now that I have some spare time on my hands, one of my medium-term projects is to do a proper engagement with Poulantzas, with the aim of sorting out my own theory of the capitalist state, and of economic policy in particular. I draw on Poulantzas a bit in my thesis, borrowing useful ideas without dealing with his vision as a whole. Now I want to go back and sort out exactly what I think. Poulantzas is one of those theorists who is incredibly helpful even when I disagree with points or even think the framing itself is misguided. He asks the right kinds of questions, and shows what a theory of the capitalist state has to do, even when his own particular constructions (which he kept radically revising throughout his short career) are problematic. Thirty or forty years on, he is still the person to engage with in Marxian state theory – a tradition that reached its high-water mark in the late 1970s, and never died but faded away.

Poulantzas is also difficult to read, and I don’t think it’s the translation. He adopts the language of other theoretical systems – first Sartre’s, then Althusser’s – of which he simply assumes knowledge. So there are a lot of sidetracks to do in dealing with him. On the other hand, once the language is understood, he is a very clear and systematic writer. And the fact that most of his exposition takes place through engagement with other writers is a good thing – in dealing with Poulantzas, you are also dealing with the Marxian ‘classics’, with Gramsci, Sartre, Althusser, Ralph Miliband, Perry Anderson, and Foucault.

The book Paradigm Lost: state theory reconsidered, edited by Aronowitz and Bratsis [2002], has some great chapters on why Poulantzian state theory – along with the work of Miliband, which I’ll also discuss – receded as a research program and why it deserves to be revived. (It also makes clear why Poulantzas and Miliband – their names linked mainly by the polemics they directed against one another – can be seen as part of the same program.) Leo Panitch, in his chapter, “The impoverishment of state theory”, stresses that there was substance and systematicity to the state theory of the 1970s that was new to both social science and the Marxian tradition, especially in its attempts to deal with modern advaced capitalist democracies:

It needs to be stressed today that we did not at all see ourselves as falling back on a prefabricated Marxism; the new theory of the state had Marxist roots but it was founded on the notion that nothing like an elaborated and coherent theory of the capitalist state (in contrast with the complex array of concepts and tendential laws that constituted Marxian economics and historical materialism) had been fashioned either by Marx himself or by his successors—up to and including Gramsci. And the new theory was concerned to displace the narrowly ideological official Marxism of the Communist parties. [p. 90]

My plan, then, is to work through Poulantzas’s major essays and books and some of their reference points – with particular attention to his theory’s relevance for the development of economic policy in the twentieth century. Economics is sometimes said to be a weak point for Poulantzas – but that gives me something to do.

Published in: on 16 September, 2010 at 12:54 pm  Comments (3)  

Technocrats vs. ideologues revisited

Back in February 2009 I wrote about what I saw as the break-up of a longstanding political alliance between “a pragmatic, basically scientific technocratic economics and conservative pseudo-economics.” The split was forced by the technocratic imperative to run stimulatory fiscal policy in response to the crisis, while conservatives remained attached to balanced budget, small government rhetoric.

What we’re seeing is not the ‘end of neoliberalism’, because most practical neoliberals never ditched the idea of stimulatory spending in a downturn. We’re just seeing the widening of a split between technocrats and ideologues. The ideologues have become an obstacle to policy which is functional for capitalism; they are being cast adrift, but no doubt they’ll be useful again.

In a comment JCD wrote:

…the reiteration of the ideologue line in the media through all the op-eds and interviews though certainly has a broad impact on the wider public’s understanding of economics, so I am not so sure that the break is going to be so clean. At least here in the States. There are a whole bunch of cranks–professional economists and not–who loathe the notion of a government deficit.

And clearly he was right. I still think the technocrats have the upper hand within most policy bureaucracies. In Australia it almost goes without saying. In the UK the situation is more complicated, with a government committed to deficit reduction. In the US, also, it looks unlikely that the degree of stimulus that is called for will get through Congress. In both these places, though, this should be qualified by the substantial stimulus that has been run these past few years – the ideologues are in the ascendancy in the media-political sphere, but it remains to be seen whether policy follows through.

In the UK the bulk of the promised cut-backs are due to come a year or two down the track. I doubt they would go ahead in the event of another downturn, whoever is in government, and I think it is a very open question whether the government will succeed in its planned program even without a downturn, since its severity will surely provoke countervailing pressure. In the unlikely event of a boom, the technocrats and the ideologues will in any case be back in alignment, although the latter will probably prefer a more drawn-out process of deficit reduction.

The US is an interesting case. Although the US government is often seen as having a strong executive, that’s clearly not the case when it comes to fiscal policy. My impression is that the President’s relationship to Congress has more in common with temporary coalition building in a multi-party hung Parliament than with a winner-takes-all system. That makes technocratic fiscal policy extremely difficult – it faces stronger problems of timing and economic rationality than in most countries. (In some ways the strongly independent Federal Reserve has evolved to compensate for that.) So the ideologues in the media-political sphere are correspondingly more potent, and with elections this year we see almost the reversal of the traditional ‘political business cycle’, where stimulus is difficult to build support for.

I have to admit to still being surprised by the know-nothingness of the likes of the Wall Street Journal, in contrast to the more technocratic financial press elsewhere in the world. This editorial from Tuesday is a case in point. It is transparent pseudo-economics all the way through, arguing first that the first round of stimulus was a failure because there was still a recession, and second that this was a result of public deficit spending ‘crowding out’ the private sector, despite the lack of apparent upward pressure on interest rates. Hilariously, it puts ‘demand’ in scare-quotes, as if it were some kooky concept dreamed up by community organisers: “Larry Summers, who would later become Mr. Obama’s chief economic adviser, made the case for such a stimulus to boost domestic ‘demand’ in late 2007.” It’s hard to see it as anything other than propaganda – but propaganda for who? Wall Street doesn’t benefit from demand restraint. It can only be Republican anti-Obamaism; it is not really a rational ideology for capital.

Showing that the technocrat-ideologue struggle is alive and well, the Economist’s economics blogger has taken to ridiculing the Wall Street Journal and its “own special brand of economics”. On the other hand, today he or she gives a good illustration of why, however much we may enjoy their beatings of the conservative ideologues, the technocrats are ultimately not friends of the left either, and why eventually they will again be the force to contend with, precisely because they are rational:

When expanded government activity generates increased interest rates, that’s a sign that the activity is coming at the direct expense of private sector expansion, and society should think very, very carefully about the return to that increased government activity. It might nonetheless be worthwhile—defending the nation from attack would fall into this category—but in general it probably means that the government should find ways to reduce wasteful aspects of its demands on the economy.

Published in: on 9 September, 2010 at 11:02 am  Comments (3)  

Rundle on Zizek

I’m more of a fan of Guy Rundle than Slavoj Zizek. Now the former has reviewed the latter’s First as Tragedy, Then as Farce. It’s a generally positive review – it’s good as motivational literature apparently – but it makes the following point about a certain brand of philosophical Marxism that has been pretty fashionable these last few years, a point I think is spot on:

The question Žižek perhaps does not face is whether invoking the idea of communism for the relatively unspecified transformation he suggests acts as a form of focus, and a renewal of possibility, or a slaking-off of energy by taking on the glamorous role of spectre, the – hushed tones – ‘communist’. It is not ridicule that is the greatest risk, but an easy resort to an historically given role, which not only refuses to connect to current struggles or movements, but on whose ideal content one is equally silent.

If you start worrying about what you are going to call a movement, before you actually get on with building it, are you firing your guns too early? After all, it is potent movements – from Methodism to Big Bang physics to Marxism itself – which have been named by their enemies, a moment of recognition of their real status. Meanwhile it is the most ephemeral and/or dated movements – Theosophy, Christian Science, fissiparous late Trotskyism – that wasted so much energy arguing over names.

[…]

Since the act of self-describing is rhetorical anyway, its only criteria of judgement is whether it gets some sort of effect – or whether it instead rushes to get a dividend from a process of getting people to think otherwise what, at this stage, needs to be more concrete and particular, albeit not fragmented and ungrounded in postmodern fashion.

Published in: on 2 December, 2009 at 7:31 pm  Comments (8)  

The lucky country

The third annual report of the Workplace Research Centre’s Australia at Work project came out today. It’s a longitudinal study of the reported experiences of more than 6,000 workers. This year’s was bound to be interesting because it reports the effects of the ‘crisis’ over the last year. Apparently falling interest rates and petrol prices, as well as the stimulus package, have had a broader impact than un(der)employment:

The event that arguably had the most impact on the Australian economy and labour market in 2008 was the Global Financial Crisis (GFC) in October. While expectations that the Australian economy would go into a technical recession were unmet, the impact was felt through a rise in unemployment and reports of further reductions in working hours. However, this report finds that only small sections of the workforce have endured negative impacts from the economic downturn. Around 8 per cent of all respondents report losing a job in the last year, and around two-fifths of these people are now in a job. While the levels of job insecurity remain very low among Australian employees, there has been an increase between 2008 and 2009, from 7 to 12 per cent. Insecurity is higher among private sector employees, at 14 per cent in 2009.

There have been some positive changes that have resulted from the economic downturn. While reports of increased living costs peaked in the first half of 2008, the GFC saw Australian interest rates plummet, petrol prices return to previous levels and the Government distribute a series of stimulatory cash hand-outs. The ease on costs of living is reflected in respondents’ reports of living standards. The proportion of people finding it ‘very difficult’ or ‘difficult’ to get by on their current household income has dropped from 20 per cent in 2008 to 16 per cent in 2009. Correspondingly, those ‘living comfortably’ or ‘doing really well’ has increased from 41 to 45 per cent in the same period. [p. i]

Sydney Morning Herald op-eds translated into formal logic

The first in an occasional series. Now I don’t really know my syllogisms from my enthymemes, so further translation may be required. Sydney Morning Herald op-eds do not necessarily lend themselves to a logical treatment, and I have taken the liberty of supplying some unstated but necessary propositions. In other cases, I have unable to discern the missing propositions and have accordingly left them out. Unfortunately, this means not all premises lead to conclusions and not all conclusions derive from premises.

Elizabeth Farrelly, 19 October, 2009: Wake up, Greens, and savour the organic pork belly

1. Books about organic cooking ought to be literary and aesthetic delights, and contain jokes.

2. A book I bought about organic cooking turned out to be nether literarily nor aesthetically delightful, nor did it contain jokes.

3. The nature of books about organic cooking reflects the green agenda.

Therefore: 4. The green agenda is flawed by its lack of literary and aesthetic delight, particularly in regard to jokes.

5. The green agenda is naturally conservative.

6. The voters of the Higgins electorate are naturally conservative.

7. The Green Party is radical.

8. At the upcoming Higgins by-election, the winner will be the Party whose character reflects the views of the voters of the Higgins electorate.

9. The Green Party should attempt to win the upcoming Higgins by-election and future elections of its type.

Therefore: 10. The Green Party should stop being radical and become naturally conservative.

11. A clear sign of the Green Party becoming naturally conservative would be the appearance of a recipe for organic pork belly in future books about organic cooking.

Published in: on 20 November, 2009 at 10:37 am  Comments (4)