Analytical focus and outcomes in political economy

What the mind focuses on determines what you get. This is the kind of statement that can be found in the philosophies of many self-help practices. If you have ever tried, when faced with a many coloured-pattern in a painting or even on furniture, to focus mentally on one of the colours present and then found that all the elements of that colour subsequently stand-out in your vision, you will know what I mean. More powerfully, mental habits can form that seem to focus mainly on the positive or the negative aspects of situations in life. We have all come across people who are of a ‘glass half empty’ or ‘half full’ disposition. This may have a genetic component, which we can’t change, but self-help guides suggest that we can change our disposition by changing what we focus on and thereby our mental habits in life.

I will not go any further with this discourse on self-help and the examples given above may be in dispute, but I wish to focus on social theory and political economy in particular, the subject area of this blog. My proposition is that the same mental process as that described in the opening paragraph takes place in our theorizing about society and the economy, and by implication in many academic fields. In all my readings in political economy, I have only found this examined in the post-modern Rethinking Marxism project, which takes a very conscious look at different schools of economic thought in some of its output, particularly that of Stephen Resnick and Richard Wolff.

Introducing a new analytical category or object of study into a theory can change our focus and in doing so, the results and implications of our study. This happens all the time in academic debate, but is not examined in itself, at this ‘meta’ level. One person can criticize another’s theory by introducing a new object to the analysis and claiming that leaving it out makes the first person’s conclusions invalid and the ‘newly’ constructed theoretical argument more ‘realistic’ and consistent. Our first person may not accept the new object as relevant or important and stick to his original argument. The two theorists may then find themselves at loggerheads, unable to resolve their differences. In this way are born rival schools of thought in academia.

Take class for example. Mainstream neoclassical economics ignores this concept, while heterodox approaches to economics and political economy often bring class into their analysis, albeit in different ways. Some approaches to Marxist political economy define class in terms of who appropriates surplus value in production from whom. The capitalist class exploits the working class through its appropriation (theft) of the surplus value the latter has produced. Post-Keynesian economics sometimes analyses capital and labour in society and the conflict between them which alters the balance between profits and wages and in doing so influences the path of capital accumulation or economic growth.

Bringing class into one’s analysis from a Marxist perspective can open the eyes of the theorist to the flaws in a capitalist mode of production or society, in particular to the injustice many working class people face. I will not debate the Marxist theory of exploitation and its validity here, but merely want to make the point, that focusing on this aspect of production tends to lead us to perceive labour as suffering in some way, and if we sympathise, to find ways to overcome this suffering and injustice. For many Marxists, socialism is the answer.

Post-Keynesians focus on the implications of class conflict for the structure of the economy and the path of aggregate demand which is a key determinant of economic growth and material prosperity. The state has a key role to play here in managing conflict and ensuring that aggregate demand grows fast enough to promote high levels of employment and low unemployment.

Analyses of industrial policy which focus on rent-seeking and bring political elements into the theory offer more useful conclusions than purely neoclassical or even some heterodox theories, that state policy should try to achieve a development path which takes into account the balance of class forces and the political settlement. In other words, not all countries can develop like South Korea or Japan in the 1960s, 1970s and 1980s, but they can analyse their internal politics and try to adopt a successful industrial policy which is unique, relevant and successful.

Neoclassical economics ignores class and exploitation and neglects the importance of aggregate demand, and tends to frown on industrial policies which involve infant industry protection, subsidies and the generation of ‘rents’. It therefore reaches very different conclusions from the kinds of analysis discussed above. By leaving out these elements, it is blind to the conclusions they reach for policy and tends to promote the free market in most situations and a minimal role for the state.

Thus, through a focus on different analytical elements, quite different outcomes are produced, with quite different views of society and implications for policy. While heterodox political economy often looks at social conflict, exploitation, evolutionary processes and change, mainstream economics produces static models with movements between different points of equilibrium poorly represented and described, if at all, and only the points themselves analysed. One can bring in political motivations to the analysis described by these different schools of thought, noting who benefits and who loses from the policy outcomes they imply. Leaving all to the market may often promote inequality and rising incomes and wealth benefiting mainly those at the top, while intelligent interventions can produce more social justice and improved material well-being for a larger majority in society. In practice, all governments intervene in the economy, so it becomes a question of what sort of interventions will produce the desired outcomes, rather than a debate between intervention and the free market.

Introducing class in economic analysis can make people uncomfortable as it implies a desire for radical change in society, even revolution, which conservatives find unnecessary. But sometimes radical change is needed and even those on the right can be in the vanguard, as Margaret Thatcher demonstrated in the 1980s in the UK.

In sum, the kind of analytical objects we accept and use in our theories affect our focus and the view we take of society and the economy, as well as the policies that we in the end endorse. All social theorists should be aware of this and in doing so reflect on their own thinking and become more conscious in their work. Surely we can all benefit from such practice.

 

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