This week’s quote is taken from the book What Capitalism Needs, discussed in my previous post. One important point that I take from the book and indeed the extract below is the different view that sociology can take of capitalism, as compared with mainstream economics. In fact, the latter really takes capitalism as a given, rather than as a particular historical form which has not always been with us. In contrast, sociology can be more critical and go deeper in its analysis of society and the economic system. This approach and the different questions it asks are more readily found in some non-mainstream, heterodox and radical economics, and political economy. I get the impression that there is a sense of despondence among some heterodox academic economists that their field can ever have much of an influence on the mainstream of the subject, and that they are better off working with social scientists outside of economics departments.
“Sociologists see capitalism as a much more complex system of social relations than do most economists. Economic activity is based not only on people pursuing their economic interests but also on trust, historical tradition, and personal identity. Sociologists also recognize that capitalism is embedded in a wide variety of institutions – political and cultural, as well as economic. And sociologists understand that the way in which capitalism operates varies significantly across countries and over time. But what is perhaps most noticeable about sociology is its fundamental criticism of capitalism. The greatest sociologists on the subject spoke of the alienation, anomie, and disenchantment associated with capitalism. There is nothing inherently wrong with this view, given the exploitation of workers in many capitalist societies both past and present, and we really speak warmly in this book only about the Golden Age of capitalism – that is, the first few decades following the Second World War – when, by contemporary standards, the interests of the many carried greater weight relative to those of the few. To be sure, those economists whose thought we admire had their own reservations about capitalism. But they differ from the sociologists in two ways: First, they were aware of and appreciated the dynamism and prosperity that capitalism can produce; second, they provided useful sociological insights about the mechanisms of capitalism and the institutions needed to make it work – and whose absence brings chaos.”
John L. Campbell and John A. Hall (2021), What Capitalism Needs: Forgotten Lessons of Great Economists, Cambridge University Press, p.2.
A flourishing capitalism needs both high levels of social cohesion and strong state capacity, according to a new book by two sociologists. Today’s societies are in trouble. We could do worse than draw on the ideas of some of the great economists of the past who realised that factors beyond the economic can help to provide a richer understanding of how capitalism works and may enable us to restore and sustain a more widely shared prosperity.
Sociology can often be critical of capitalism. Unlike much of mainstream economics, it sometimes draws attention to exploitation, inequality, alienation, and the neglect of society and social relations in general. Heterodox or non-mainstream economics, particularly when it takes more of a political economy and interdisciplinary perspective, can have more in common with the concerns of sociology than its often narrow and intolerant mainstream cousin. A sociological approach to studying capitalism and the economy can therefore offer useful insights. It was Marx whose own approach to political economy perhaps reached the heights of interdisciplinarity in the history of the discipline, and whose deeply critical and radical approach drove economics to become, at its core, something of an apology for an optimally working system. Continue reading →
As noted in this week’s previous post, Stephen Marglin is a Professor at Harvard and a distinguished leftist and heterodox economist. Today’s quote is taken from his newly published and voluminous tome Raising Keynes, which seeks to bring up to date the theoretical ideas and policy implications of Keynes’ General Theory of 1936. The quote emphasises the interdependence of ideology, theory and policy: we all have our ideologies, which inevitably shape the way we learn, perceive and act in the world.
“The final lesson is skepticism about the conventional distinction between positive and normative economics. Mainstream economists believe that description can be separated from values, the first representing science, the second ideology. But just as there are no facts without theory, there is no separate realm for description that does not embody values. Ideology ought not to be, as it is glossed in the Cambridge Dictionary of Philosophy, “a disparaging term used to describe someone else’s political views which one regards as unsound.” Acting on ideology is not a failing or disease of the Other, against which Taylor (sic) (or I) can claim immunity. As Joseph Schumpeter insisted, we all operate on the basis of assumptions that cannot be proved or disproved, and ideology is the coin of the vast realm of what is beyond our powers to confirm or deny. This does not mean there is nothing to discuss, nothing to learn. To the contrary. We may seek to transcend ideology, but we will never do so until we admit that it is the necessary starting point of any serious discussion about policy.”
Stephen A. Marglin (2021), Raising Keynes: A Twenty-First-Century General Theory, London: Harvard University Press, p.571.
Today’s post summarises some of what are for me the most important and interesting topics in economics, in particular those which draw on Marxist and Keynesian thinking. While the approaches and concerns of the two traditions sometimes overlap, they also give rise to tensions.
I have just finished Stephen Marglin’s new book Raising Keynes, which is the Harvard Professor’s attempt to resurrect and reform in modern guise the key ideas of the great man’s General Theory of 1936. On a personal level, the book is my latest foray into what is broadly known as post-Keynesian economics, whose practitioners claim to be the heirs of Keynes and the developers and propagators of his most important ideas. Through his work, Keynes intended to save capitalism by ridding it of some of its most damaging tendencies, such as periodic mass unemployment. This makes his work appealing to progressives and leftists who are uncomfortable with the idea of revolution and are not convinced that socialism, in the form it has taken historically, is the answer to society’s problems. Continue reading →
Following the extracts I have posted in recent weeks, this is the last in the series from the 1947 edited volume The New Economics: Keynes’ Influence on Theory and Public Policy. Once again the piece is from the chapter by Douglas Copland, this time on addressing the problems of the global economy while maintaining a policy of high employment. In particular, Copland discusses the balance of payments and the high demand for imports that will tend to result from such a policy. As before, it is of historical interest, being written while Keynes’ influence was in its ascendency. But it also remains relevant today, in that conflict over international trade is much less likely if the countries concerned are able to achieve full employment. Free trade by itself is not enough and is unlikely to be sustained if it is not associated with high levels of employment and widely-shared prosperity. Continue reading →
Rising inequalities under capitalism have an important regional dimension. After four decades of neoliberal globalisation, today’s interlocking crises offer an opportunity to renew regional policies to reduce uneven development, drawing on the lessons and experiences of the past to shape a more sustainable future.
Global recession, a pandemic, climate change, war. We live in an era of multiple crises. All of these have an uneven impact on our societies; in the absence of policy reforms, they can exacerbate existing inequalities. This is the case at the national level, but also at the level of the regions within particular countries. The latest issue of the Cambridge Journal of Regions, Economy and Society (CJRES) features a range of articles on the rethinking of ‘spatial policy’, or policies which respond to geographical inequalities as an essential part of advancing social justice and sustainability (the editorial pieces are free to view). The editors argue that over the past four decades, geographical inequalities in economic prosperity and social conditions have been rising in almost all capitalist countries, as well as some emerging economies such as China. This is in spite of attempts by many governments to use regional policies to reduce inequality. ‘Left-behind’ regions and communities have experienced diminished social cohesion and bred political disaffection, in some cases undermining support for moderate or traditional political parties and threatening democracy. If the latter is to be sustained and its legitimacy enhanced, capitalism needs to be seen to be delivering prosperity, justice and freedom. Policies which encourage poorer regions to catch up with richer ones within capitalist economies are essential to this end. Continue reading →
As the ugly war in Ukraine drags on, with more lives lost and atrocities (apparently) committed, energy and food prices hit yet more highs. The Food and Agricultural Organisation (FAO) of the UN publishes a monthly global price index. The FAO Food Price Index reached yet another record high of 159.3 points in March, up 12.6% from February.
Oil and gas prices are also near all-time high levels. In Europe, gas prices hit a record €335 per megawatt hours, and at that level, it is now cheaper for some power stations to burn coal rather than gas even when the cost of carbon permits is taken into consideration. Europe wants to follow NATO’s bidding and cut back on Russian energy imports. The irony is that some countries, like Italy, say that will need to burn more coal, in order to burn less Russian gas. The International…
Following on from last week’s extract from the 1947 volume The New Economics: Keynes’ Influence on Theory and Public Policy, here is another from the same chapter by Australian economist and government advisor Douglas Copland. This time, he discusses the role of public investment and the government budget in a policy of high employment. It is, firstly, of historical interest, as this was a time when some aspects of Keynesian thinking were in the ascendance in the realms of both economic theory and public policy. Secondly, it is interesting to reflect on how the ideas propounded below are seen today. In particular, Copland covers the role of budget deficits and surpluses, the importance of substantial public investment in the communities of modern democracies, public ownership of utilities, and the need for a change in the attitude of private business towards the budget and its role in promoting prosperity and high employment. Continue reading →
When assessing commentary on the current unfolding tragedy of war in Ukraine and its possible motivations, as well as its potential direction and outcome, I am finding it useful to revisit some alternative approaches to history and social science. In particular, these include the ‘great men’ theory of history, and at the other end of the spectrum, that of history largely determined by impersonal forces, and the downplaying of individual action. I blogged about this here in one of a series of posts in response to former economist and UK government minister Vince Cable’s book Money and Power: the World Leaders who ChangedEconomics. Continue reading →