Channelling Galbraith

Jamie Galbraith’s conclusion in his essay at Dissent magazine:

“The progressive alternative to an economic program of reckless stimulus and real-estate capital gains is a program of full employment, fair wages, and broad investment in social, cultural, and environmental needs, backed by taxes that fall directly on rents, monopoly profits, and on inheritances, thus directly dismantling the dynastic oligarchy that has been running the United States, through both parties, since 1981. How precisely progressive action along these lines can be made to work is a matter for study and argument. But this needs to begin now. Intellectually and politically, the Democratic Party is in ruins. It cannot be rebuilt solely from a defense of past achievements, nor by reacting to disasters that lie just ahead, nor from simple economic models or fragments of a half-baked agenda. It is time, in short, for a left program at least as radical as that about to be enacted by the right.”

Exactly.

It is time for the entire neoliberal era to be drawn to a close. Or torn down, whichever is easier. Average people everywhere are being oppressed by the combination of plutocratic corporatism and liberal intellectual indifference. Four decades of this is enough. Surely Trump’s election ought to be sufficient warning that something has to give.

A word of caution: the tired and outmoded nostrums of twentieth century progressive thought are not up to the task. Nor are those of the nineteenth century. We might agree that the pace of change over the past century has done much to create a distance from tradition and the older more pastoral worlds that so many progressive analysts seem to yearn for, but industrialization has come and gone, we are no well into digitalization. A new world is being shaped. That requires new ideas not a revamping of old ideas.

Economics has failed to keep up with this change. It is stuck firmly in the past. It is bereft of relevance in an increasingly complex world where simple models and axiomatic reasoning are inappropriate tools. Humanity creates complexity by virtue of every decision it makes. Each decision becomes a fact of the environment that the next decision has to take into account. The implied explosion in interconnectedness devastates the methods of neoclassical economics. For that matter it undermines the methods of all economics hitherto: heterodox as well as mainstream.

Our economies now rely more and more on intangible products and services, they are saturated with information, and are ever more opaque as a consequence. Imagining that theories or methods built on foundations laid down in the late-1800’s, even if updated in the mid-1900’s, are still useful is a dangerous illusion. Economics is contextual. It is a narrative. It needs re-inventing as such. Its methods are as old and rusty as the factories whose loss we decry. Neither have much value going forward other than to prompt nostalgia and to occupy historians.

Galbraith hits home: if progressive economists are to contribute to a revival of the fortunes of ordinary people, rather than continue to be part of the intellectual elite whose ineffectual opposition to plutocracy is scarcely different from abject co-option by it, they have to step forward with new ideas and not retreat to the old. Discussing twenty-first century capitalism using the vocabulary of 1848, of 1935, or of 1980 for that matter, renders the discussion obsolete before we begin. The progressive tradition needs to modernize itself. It needs to find language appropriate for our digital age where a century of rising prosperity and education have produced a more sophisticated and nuanced society albeit one riddled through with shattering inequality.

People are hurting. But they are hurting in a wildly different context and with wildly different aspirations to those that dominated progressive thought even as recently as half a century ago. To fall back into the comfortable cliches of a bygone age is to commit the very error we accuse neoclassical economics of: namely pursuing an otherworldly and utopian agenda divorced from the grittiness of reality. The grand structures of the old ideas, with all their arrogant presumption of certainty, and constructed in the heady days of early modern rationalism, need to be replaced. The new ideas will be more modest and pragmatic. They will recognize the radical uncertainty of reality and they will take into account the foibles of ordinary people. They will live, in other words, in recognition, rather than in defiance, of our limited ability to penetrate the irreducible complexity that is society.

This may sound less ambitious than the older project. Perhaps it is. But at least it has a shot of being useful. Which is more than we can say for economics as it now exists.