economic theory

Now, the reason why Marx is important in all of this is because Marx had an acute understanding of how capital-accumulation works. He understood that this perpetual growth machine contains many internal contradictions. For example, one of the foundational contradictions Marx talks about is between use-value and exchange-value. You can see this worked out in the housing situation very clearly. What’s the use-value of a house? Well, it’s a form of shelter, a place of privacy, where one can create a family life. We can list a few other use-values of the house, but the house also has an exchange-value. Remember, when you rent the house, you’re simply renting the house for what it’s worth. But when you buy the house, you now view this home as a form of savings, and after a while, you use the house as a form of speculation.

Marx talks about this contradiction and it’s an important one. We must ask the question: What should we be doing with housing? What should we do with healthcare? What are we doing with education? Shouldn’t we promote the use-value of education? Or should we promote the exchange-value of these things? Why should life necessities be distributed through the exchange-value system? Obviously we should reject the exchange-value system, which is caught up in speculative activity, profiteering, and actually disrupts the ways in which we can acquire necessary products and services. Those are the kind of contradictions Marx was well aware of.

My interest in this derives from a very simple contradiction: We’re supposed to live under capitalism, and capitalism is supposed to be competitive so you would expect that capitalists and entrepreneurs would like competition. Well, it turns out that capitalists do everything they can to avoid competition. They love monopolies.

But if such stress on fiscal responsibility on the part of the government was beginning to sound reminiscent of introductory economic textbooks in the United States, she assured me I was mistaken. “We don’t see macroeconomic stability as an end in itself. We don’t believe in the maintenance of stability at any cost. Rather, we think of it as a medium through which we can achieve all the rest of the policies of the government. We can achieve these policies without distorting the economy. Starting from this vision, the Morales government has been able to achieve an extraordinary level of macroeconomic stability since it assumed office, indeed stability without precedence in the country.” She paused for emphasis. “Every year we’ve run budget surpluses, we’ve accumulated substantial international reserves, and inflation has been controlled at every moment, apart from a brief deviation from this trend.”

The freedom to vote carries little weight without economic freedom – the freedom to work and to have food, shelter, education, medical care and a decent retirement. President Franklin Roosevelt maintained that we need an Economic Bill of Rights. If our elected representatives were not beholden to the moneylenders, they might be able both to pass such a bill and to come up with the money to fund it.

We Make Our Own History rethinks humanist Marxism as a theory of collective action, including the ways in which social movements from below can develop from localised struggles over individual issues to far-reaching projects for social change (a welfare state, an end to patriarchy, an ecologically sustainable society). It also looks at the history of movements from above – those which can draw on the resources of capital, the state or cultural power to impose themselves.

If the ideologists of neoliberalism want to present it as the natural order of humanity, a more sober historical assessment points out that it has lasted about as long as Keynesianism did before it – a few decades – and is just as vulnerable to the collapse of the alliances which sustain it.

The Latin American pink tide demonstrated US inability, for the first time in a century or more, to impose its will (in military, foreign policy or economic terms) on its Latin American “backyard”. The planned “long war on terror” is basically over, with the original strategy for a rolling series of attacks on rogue states buried in the sand and political support for US wars collapsing not only among US elites, but also their European and Arab allies under the impact of the anti-war movements of 2003 in particular. This has fed into a broader weakness in relation to control of the strategically crucial Middle East and North African region manifested in the “Arab Spring”, in particular events in Egypt, and subsequent failure to secure support for war in Syria. Meanwhile, the Wikileaks and Snowden affairs have highlighted the legitimacy crisis of the supposedly all-powerful surveillance state.

In common with many other countries, higher education in the UK has been subject to various measures designed to increase transparency and replace collegial decision-making with managerial hierarchies and market-based performance indicators.

The knowledge economy was regarded as important, but it was embedded within the wider idea of a knowledge society.

For-profit providers have no obligations other than the satisfaction of consumers and the creation of profit for their shareholders. Indeed, they are likely to be further advantaged by new policies for open access to academic publications.

Centralised economic planning was at its height thanks to a combination of world war, statist ideologies and the new macroeconomic techniques invented by John Maynard Keynes. It was against this backdrop that a marginalised group of economists and philosophers began the neoliberal fightback. They were inspired and organised by the émigré Austrian intellectual, Friedrich Von Hayek.

Markets, from this perspective, are information-processing machines. They are like vast computers, channelling decisions, desires and preferences. They have no ideas of their own about what is worth producing and having: they just process the choices that individuals happen to make. And their capacity to do this is all thanks to the price mechanism.

Firstly, individuals, not experts, were the best judges of their own tastes and welfare. Secondly, the price mechanism of the market could be trusted to adjudicate between the various competing ideas, values and preferences that exist in modern societies. The state, by contrast, could not.

Although the purity of Hayek’s vision was inevitably polluted by the messy reality of politics, the new era ushered in by Margaret Thatcher and Ronald Reagan treated free markets, governed by the magic of price, as the basis for the moral and economic logic of state and society

Wandering around Stratford Westfield the other day, I had a similar but more pessimistic thought: maybe capitalism is gradually morphing into the 'actually existing' state socialism of the old Eastern Bloc.

Yet Suzi reported that, while Westfield Stratford had duly delivered its promised 8,000 jobs, Peckham Rye Lane's local market was already a source of 13,000, via a far greater number of businesses. This is aside from the webs of social networks that accompany an 'embedded' market economy, in contrast to identikit businesses that are taking over most highstreets. The notion that in an age of shrinking social security, policy-makers might view such a street as anything other than an irreplaceable socio-economic benefit is just bizarre. Why such government suspicion of the market?

My feeling is (and I discuss this in a book I'm just finishing) that neoliberalism has entered a post-critical, repetitive phase, in which certain things have to be spoken - delivery, efficiency, security, competitiveness - but in order to hold the edifice together, rather than to reveal anything as objectively 'delivered', 'efficient', 'secure' or 'competitive. Political systems which do not create space for critique encounter this need for mandatory repetition immediately, as occurred to state socialism.

This also poses questions about the latest manifestation of ‘neoliberalism’. The fact that it is social media that is facilitating this new form of state power, that it is social networks that are the object of its gaze, may indicate that neoliberal government no longer places quite so much emphasis on the market, as a mechanism for organizing knowledge, regulating freedom and achieving transparency.

States play an important role in making ‘society’ visible and measurable, through collecting and publishing large quantities of statistics. But the claim of social theorists and sociologists in the tradition of Emile Durkheim is that ‘society’ has some reality, over and above the particular statistics through which we come to know it.

The social hovers as a paradox, between a space of state coercion governed by law, and a space of market spontaneity governed by individual incentives and price. When acting socially we are both rule-bound and free at the same time. And it was precisely this mysterious and contradictory nature that led pioneering neoliberal thinkers, such as Friedrich Von Hayek, to pour scorn on the very idea. The term ‘social’, he argued, is a “weasel-word par excellence. Nobody knows what it actually means”.

The problem with this reactionary stance is that attempts to base economics on the “real” economy focusing on technology and universals are so materialistic as to be non-historical and lacking in the political element of property and finance.

A “real” economic analysis focusing on their common denominators would miss the distinct ways in which each accumulated wealth in the hands of (or under the management of) a ruling elite different modes of property and finance, and hence with what the classical economists came to classify as “unearned income.”

For classical and Progressive Era economists, the word “reform” meant taxing economic rent or minimizing it. Today it means giving away public enterprise to kleptocrats and political insiders, or simply for indebted governments to conduct a pre-bankruptcy sale of the public domain to buyers (who in turn buy on credit, subtracting their interest payments from their taxable income).

The message underlying this use of the term customer for so many different kinds of human activity is that in all almost all our daily activities we are operating as consumers in a market – and this truth has been brought in not by chance but through managerial instruction and the thoroughgoing renaming of institutional practices. The mandatory exercise of "free choice" – of a GP, of a hospital, of schools for one's children – then becomes also a lesson in social identity, affirming on each occasion our consumer identity.

Another word that reinforces neoliberal common sense is "growth", currently deemed to be the entire aim of our economy.

Instead of an unrelenting quest for growth, might we not ask the question, in the end: "What is an economy for?", "What do we want it to provide?"