One
A Summary Overview of What Economics Has Been
And Is Now, Compared with What it Should beThe Mainstream
No need for needs? In the introduction, it was said that economists should answer two questions: the first concerning what we need to know, the second concerning what must be done to meet human, social, and environmental needs. But the word need cannot be found in the entire theoretical literature of mainstream economics--as though it were a dirty word. It is not difficult to understand why that vacuum exists. Were economists even to begin to seek answers to those questions they would have to construct and learn another discipline, serving a completely different audience: throughout most of capitalism's history, usually unconsciously, economists have served as capital's obliging servants--come what may for people, society, or the environment.
In the unlikely event that mainstream economists were to read the foregoing, they would respond by huffily asserting "Our economics already confronts such questions, as witness its definition: 'Economics is the science of allocating scarce means to unlimited wants.' That is our abstract way of establishing an analytical framework for asking the same questions."
But that is not so for many reasons, among which are (1) means are not scarce and wants are not unlimited, nor do needs and wants mean anything like the same thing; (2) the analytical framework is one based solely on deductive reasoning, of premises and conclusions, of logical "arguments."1
Illogical arguments are of course to be scorned, but logic alone does not constitute science. When the premises (or assumptions) of mainstream economic theory are not only abstract but fanciful, when the facts of socioeconomic reality are assumed away, what is left is not only not scientific, it is ideology.
There is also at least one other reason for rejecting contemporary economic theory in its entirety: (3) it ignores the existence of power.
In a world in which an understanding of economic and political power is required for comprehending both economic functioning and economic policies, mainstream economics manages to deflect its gaze elsewhere (or nowhere).2 In the following pages, we'll gaze directly at the above three--scarce means and unlimited wants, economics as logic only, and power. Very briefly.
Scarce means?
Our means consist of human and other natural resources. Here we'll not discuss the fullness or not of the actual and potential supply of human resources, except to note that our socioeconomy (and others') almost systematically underuses, misuses, and thwarts both actual and potential human resources.
One misapplication is an educational system which--especially, but not exclusively, from kindergarten through high school--is intended to train the young to "take their place" in society, rather than to do everything that can be done to nourish the creative and constructive in all of us, and to assist us in the appreciation and understanding of ourselves and others, of nature, and of society.
As for nonhuman resources, their very definition is determined by the interaction of social and technological processes. Thus, although there was petroleum seeping out of the ground in North America in pre-Columbian times, the people did not see it as a resource, or when they did, saw it as a totally different resource than now.
But surely we are running out of some resources--forests, water, even air, and especially oil? After all . . . But no. As with human resources, the problem is not what exists, but how resources are used, overused, misused, abused. And that applies equally to the air, the seas, minerals, soils, to the entire range of flora and fauna. Often there's some deadly combination, such as the madness of car ownership and use with respect not only to the depletion of petroleum resources, but equally to the poisoning of the air. If we add to these perversions the high percentage of utter waste (much of it destructive wastes) involved in contemporary economies, on both the producing and consuming ends, we are confronted not by a shortage of natural resources but by a socioeconomic system gone berserk.3
Among the leaders of this destructive parade are the purveyors of what has been called the green revolution. The reference is not to the political Greens, but to the chemically based transformation of agriculture in, especially, the poorer countries. Put forth in the name of rescuing the agricultural peoples of those countries, its effects have been very much the opposite: the almost total displacement of those who had earlier survived (however modestly) through traditional subsistence agriculture, engineered by giant companies who produce entirely for export, from which they, not the local inhabitants, take the gains. Meanwhile, millions of people have lost their livelihoods and are now sucked into the overcrowded cities of their own countries or pushed into becoming hard put immigrants elsewhere, where they are increasingly the targets of racists and fascists and even people who have thought of themselves as decent. And not the victimizers, but the victims are blamed for their plight, while the former trumpet their green revolution. And this omits mention of the side-effects of the chemicals employed.4
Unlimited wants?
All human beings have certain basic needs, whose definition changes through history: in our time, those basic needs are adequate food, clothing, shelter, education and health care. Given existing resources and productive capacities (of both goods and services), everyone in the world could have most of those needs satisfied within a few years, and all of them within two or three decades.
Instead, the top twenty percent (at most) of the world's population are being coaxed, seduced, mesmerized--in some sense pressured--into buying increasing quantities of goods and services they don't need--and from which, studies show, they get little or no satisfaction, or downright dissatisfaction. The result is crowded highways and polluted air, a family both of whose adults work and go always deeper in debt and . . .
Meanwhile, in the same period and for the connected reasons, basic needs for a rising number even of some of those in that top twenty percent are met with always greater difficulty--adequate health care, not least.
Confronting Capitalist Reality
Were the proverbial man from Mars to have visited the earth fifty years ago, learned of the technological marvels preceding and following his visit over the next decades, and then examined the socioeconomic condition of peoples in both the rich and the poor countries--not least, in the United States, richest of all--he could come to the conclusion that the animals running the world had gone mad. And he would have been right.
Are we a hopeless species? Saying all this raises an important set of questions concerning what is usually called human nature. Neither implicitly nor explicitly is it suggested here that human beings are naturally sane or reasonable, nor that they are the opposite. We are, instead, both; but our lives are lived out in a shaping society--whether that means family, school, or everything else; and it means all of those. We have in us, that is, both positive and negative, constructive and destructive possibilities: our species produced Einstein and Jack the Ripper, Goethe and Hitler, Beethoven and Clinton.
Marx and Veblen, in their different ways, both saw things this way. Marx saw us as alienated by living under capitalist conditions--and he saw the taproot of that alienation as in the exploitative conditions of work. For Marx, the main motive force of history revolved around the production and reproduction of life: an animal's life (and we are animals) is its activity; thus, first and foremost what humans do is to produce and reproduce the stuff of life (including, of course, themselves). Work is not only natural and necessary, it is fulfilling. Or can be.
Under capitalist conditions it is anything but, except for the lucky few (yours truly among them).
Work or labor? Marx was no romantic. But he noted that however harsh the lives of precapitalist peoples, often as not they had some control over their own work processes (hunting, farming, etc.). That was work, and like many before and since him, Marx made a sharp distinction between work (over which one has at least some control--setting aside natural disasters)--and labor, where someone else has the control.
It is of the very essence of capitalism that people do not work for themselves, but labor for others--others who decide what they will do, when, where, for how long, and why. Having no means of production except their own labor power, workers are thus powerless, and thus, as Marx saw it, alienated from their work, their society, themselves. In words that could have been written yesterday, Marx said,
[T]he work is external to the worker . . . . [It] is not part of his nature; . . . consequently, he does not fulfill himself in his work but denies himself, has a feeling of misery rather than well-being, does not develop freely his mental and physical energies but is physically exhausted and mentally debased . . . . His work is not voluntary but imposed, forced labour. It is not the satisfaction of a need, but only a means for satisfying other needs. Its alien characteristic is clearly shown by the fact that as soon as there is no physical or other compulsion it is avoided like the plague.5Thorstein Veblen's Instinct of Workmanship (1914), though in a different formulation, agrees with and effectively extends Marx's position. A main difference is that Veblen saw the irrational elements of society as finding fertile ground in, among others, Marx's proletariat, also seeing this, the working class (which he called the underlying population) as irrational precisely because of exploitation. Veblen saw capitalism as nourishing our destructive side and starving (or even punishing) our constructive instincts.Such matters will come under further scrutiny later in our class. Now we turn to number three of our trio.
Power, Inc.6
If what economists do had no serious consequences--if, that is, it were only an academic activity--we could be as oblivious of them as they are of the real world (including us). Unfortunately, that is not so: even though all the major capitalist powers (and many of the lesser ones) function within the framework of political democracy, majority public opinion supports a status quo always changing for the worse, and worsening always for the majority of the world's population.
The citizenry has the formal right to decide what should and what should not occur in the economy (among other matters), presumably based upon its information and understanding. On economic matters, the affirming origins of that information and understanding are economic experts. This alleged expertise is filtered down to the public in its formal education and by the media. Economists' pronouncements, couched in the language of the free market, almost always ratify (or oppose) whatever it is that the giant corporations and their political allies want (or oppose)--and do so in the name of economic principles. The powers of democracy thus become--not for the first time--the powers of a plutocracy.7
But in the long run? Economics and capitalism came into the world at the same time. From the beginnings of economics (Adam Smith, T.R. Malthus, Jeremy Bentham, and David Ricardo), economics has served to support the interests of capital, but always in the name of general well-being. In the first century or so of industrial capitalism, the ills then afflicting the large majority of the people in both the leading and the imperialized countries might conceivably have been seen as temporary--although numberless thousands of premature deaths are hardly temporary for those dead.
The fabled long run of economics, when everything would be just fine, could conceivably be seen as requiring several decades of industrialization; but two centuries have gone by and the long run has yet to arrive, except for about a maximum of a fifth of the people in the rich countries, and then only for the years 1950-1975. Since then, the good times have been replaced by stagnant or falling real wages and declining health care, education, housing and care of both children and the old. The times never were good for the rest of the people of the world, and they are now ferociously bad.
After more than two centuries of such industrialization, with that pleasant long run yet to be achieved, indeed, with the plight of the people in the formerly imperialized countries more severe for more of their people than ever before, and, for at least the past twenty years, the good times of 1950-1975 for the majority in the richer countries being replaced by stagnant or falling real wages and declining public services (whether in health care, education, housing, or the care of both children and the old)--under such conditions, for economics to continue its praise for the free market approaches mass criminality. Economics has become the propagandist for the deadly games of Big Business--its fig leaf.
Thus, economics is important. When it is ideological rather than scientific in nature, and when that ideology serves the interests of the best-off people in the world at the already great and rapidly rising expense of almost all people, all societies, and all of nature--then it becomes vital for people to know what's going on, why, and what are the desirable and possible alternatives--and, given the present concentration of power, what must be done by ordinary people to translate what is possible and desirable into reality.
Thus, these classes. And now we turn to the critics of capitalism, beginning with Marx. To repeat: with Marx, as in the arguments of all those discussed after him and up to the present, our aim will be to put together a synthesis of useful/necessary analyses, as brought up to date by contemporary processes and relationships and their associated data.
Notes
1. Deductive as distinct from inductive reasoning, where the latter draws generalizations concerning reality, based on the study of that reality, not starting with premises that fit nicely with the economic (or other) policies to be recommended--premises such as assuming that we are rational creatures, where the term itself is defined to mean that anything (and everything) we do is a consequence of our having made calculations, which in turn set anticipated pleasure against anticipated pain (or its modern version, utility vs. disutility) as the means guiding all decisions--by workers, consumers, capitalists. Check yourself out on that. Return
2. On the surface, it might seem otherwise, for economists do speak of market power. But their analysis of that notion is conducted in a dreamlike manner: they begin where Adam Smith did, arguing that the economy can function well if and only if in no industry does any firm have the power to affect anything except its own decisions on what to produce, when, and how. That is, it has to accept market prices, not set them; it must adjust its supply to the market, rather than (in conjunction with other firms) restrict supply to keep prices up. Nor, among other matters, would there be in the ideal markets any use whatsoever for advertising, for all firms would be producing identical products (and in relatively small quantities).
One doesn't need to be an economist to know that none of those conditions is met in the real world; indeed, it helps not to be an economist, for their training has taught them to shut their eyes to reality. There are economists who do study these matters, and whose studies enable us to know what the realities are, but they have always been at the edges of the profession and in recent years have been totally ignored. Return
3. I have written a small book regarding this whole matter, The Waste of Nations (1989). In the year of its publication, things had already gone well beyond the point of safety. By now the situation has worsened considerably--and does so at an accelerating rate. Return
4. See the essays in Bernard Glaser (ed.), The Green Revolution Revisited: Critiques and Alternatives (1987). London, A&U. Return
5. Karl Marx, Early Writings (1963), translated and edited by T.B. Bottomore. (emphasis in original). Marx wrote this in 1844, as part of his "Economic and Philosophic [or, sometimes, "Paris"] Manuscripts." Interestingly, these were unpublished until 1932. See also the excellent book by Bertell Ollman, Alienation: Marx's Conception of Man in Capitalist Society (1976). For a contemporary view, see Harry Braverman, Labor and Monopoly Capital: The Degradation of Labor in the Twentieth Century (1974). Return
6. As it happens, that is the title of a very useful paperback (1976), by Morton Mintz and Jerry S. Cohen. Mintz is a respected journalist with the Washington Post and Cohen has served as Chief Counsel for the Antitrust and Monopoly Subcommittee of the U.S. Senate. Written twenty-five years ago, it may be seen now as a well-written, if now also a substantial understatement, of the realities of concentrated power. Return
7. Also not the first time, but the best-known of such times, was the emergence of a plutocracy in the last quarter of the nineteenth century--the so-called Gilded Age (Mark Twain), also called The Great Barbecue, and the Era of the Robber Barons. There are many differences between then and now. Most important of those are that dominating power is now exercised globally, through the giant transnational corporations (TNCs, hereafter), and that their power goes well beyond what is called economic and political. Because virtually everything has become commodified by now (or shortly will be), the power of money now seeps into every crevice of our existence: Everything for Sale, as the title of a recent book by Robert Kuttner has it (1996). Return
Aug 8, 2000 editor@vaivecchio.com