Tower of Babel
I have quoted Gombrowicz before, allow me to repeat myself – or, rather him, – once more. Only this time at more length:
“I stopped by the cafe where a group of young poets, Concreto-Invencion (or maybe it was the group Madi), gather every week. There were always ten poets yelling at each other in a passionate exchange at one of the tables. Yet this cafe has terrible acoustics and at this hour is full of people. You can’t hear a thing. So I said: wouldn’t it be appropriate to move to another cafe? … but these words drowned in the general racket. So I shouted them again, once, twice, and I kept on shouting into the ear of my neighbor until I realized that they were probably all shouting the same thing – but they could not hear each other. Strange people these poets. To gather together every week in one place in order not to be able to make themselves understood in the matter of moving to another cafe …”
I have the same reaction.
Non-mainstream economists seem to gather together for the sole reason of exchanging the same opinion all the time. That opinion bounces back and forth symbolically. It becomes a totem of allegiance. It is invariant. Indeed it is the one thing we can rely upon: mainstream economics – whatever that truly is – sucks. It is absurd. Silly. Unrealistic. It does grave injustice to the world as we know it. Yet it endures.
Its endurance is abetted, of course, by its critics who take little responsibility for discussing something else. Like their own ideas. Or those of others who might have useful input into a new economics, but who aren’t economists. Like historians, for instance.
Now, I realize I am doing great disservice to those who have dedicated their lives to living on the fringes of what passes for economics. For this I apologize. But we must progress. Plurality is perilously close to babel too. We must be careful that we do not choose plurality for fear of making a choice. There are wrongheaded heterodox ideas too. They must be weeded out. Or ignored.
For this latter ability – ignorance – we can lean heavily on the lessons learned by the mainstream economists: they have developed a supreme capacity to ignore anything they find inconvenient. They simply sweep it aside contemptuously as having no great import. They then march onwards secure that their ignorance provides them with sufficient cover against the charge of disregarding an issue. Such issues, they argue on these occasions, were examined and cast aside as unimportant.
High amongst the pantheon of those given the task of this incorporating ignorance into the mainstream was Milton Friedman. Indeed there are moments when I see Friedman as leading the charge towards ignorance.
Why am I thinking all this?
Because I have just read the review of “Saving Capitalism: For the Many, Not the Few” by Robert Reich, in the Holiday issue of the New York Review of Books written by Paul Krugman. Deep inside this review Krugman suddenly springs open a door onto the ignorance of which I speak when he says this:
“Economists struggling to make sense of economic polarization are, increasingly, talking not about technology but about power”
As if any discussion of the economy could possibly ignore power. Krugman goes on to to argue that power, in its suitably cleansed personas and technically neutered guises of monopoly, monopsony, or oligopoly have always been part of the mainstream’s analytical arsenal. Then he says:
“But what does this matter? Milton Friedman, in a deeply influential 1953 essay, argued that monopoly mattered only to the extent that actual market behavior differed from the predictions of simple supply-and-demand – and that in fact there was little evidence that monopoly had important effects.”
Friedman had a habit of writing ‘deeply influential’ essays that exonerated economics from taking reality too seriously. After all his preferred system of thought operated far more smoothly if we all simply assumed it as being right all along, and that any glitches could be ‘safely ignored’ as irrelevant. Such ignorance, as they say, is bliss. Especially if it expedites the incorporation of all that fancy mathematics we want to display in order to demonstrate the rigor of our work.
What is particularly sublime in Friedman’s intent is to ignore as much as he could about the actual workings of the origins of supply. Economists generally fall into this trap so perhaps I ought not blame Friedman too much. Supply in maintream economics is generally distorted and simplified out of recognition until it pops up as a function and not an activity or process subject to the whims of power.
This contrivance – a deliberate veil of ignorance over ugly reality – is necessary in order to facilitate the smooth workings of models that subjugate all else to the magic of markets. For, if we want to believe that outcomes in our economy are all the result of ‘forces’ that are both inexorable and objective, and are thus unarguably and unassailably ‘fair’ or ‘efficient’, we must first of all prevent the taint of power intruding into their formation.
And monopoly is not just a taint, it is a great big blot.
So we treat it as an exception set aside for those who are curious to go study at their leisure. Meanwhile we assure the less curious that the market – which without the taint of power is now portrayed as a warm bath of impersonal objective interaction – cannot be improved upon. It just cannot.
Unless we are at business school where we teach that the market exists to be manipulated in whatever way we like in order to extract every last drop of ‘profit’. It is not that warm bath but is a vortex of dastardly competition, corporate intrigue, and manipulation. In other words it is a veritable clearing house for power relations.
And since the real world of supply is more affected by those who are trained to distort markets than by those who are trained to adore markets, guess which education reflects the real world?
All economics, every last part of it, ought to begin with power relations as a central aspect of explanation. Power is not an exception. It is the rule.
But now I sound like one of those poets in Gombrowicz’ favorite cafe: shouting myself hoarse with exactly the same message that my fellow poets are also shouting.
And what’s the point of that?
