Monday, October 26, 2009

Against Oreodoxy!

by Tom Walker

Among tenured economists who fancy themselves heterodox are a considerable number who might better be described as "oreodox". That is to say, they are hetero with regard to method but ortho to the core when it comes to the economic imperative of growth. Post-Keynesians, traditional Marxists, Institutionalists, Minskyites and what have you. Have they never heard of Herman Daly?

I understand the pressures of "fitting in" to the academy, where most colleagues are more concerned with climbing the career ladder (or at least not falling entirely off it) than with the "fate of the planet" or the unemployed. On the other hand, unemployment and/or environmental externalities are always good topics for a seminar, a journal article or an op-ed piece in the local paper. It would be a pity if they could be too easily banished, throwing scores of marginalized, oreodox economists out of a job.

Degrees of orthodoxy can best be gaged by the economist's position on unemployment.
Ultra-orthodox: there is no such thing as unemployment
Orthodox: there is unemployment; it is regrettable but unavoidable
Oreodox: there is unemployment but it can be eliminated by State policy
Reality: unemployment IS the State's policy


Martin Langeland said...

Management positively relishes contract negotiations in a recession. Their only fear is that they might demand too little in concessions. So, of course. their puppet state works to keep unemployment high.
The beauty is that none of this is some vile conspiracy. Just the direct cunning of greed in people intelligent enough to know better, but too lazy to care.
--ml said...

I have long argued that unemployment is the central distinguishing characteristic of the neo-liberal era from a public policy POV. More so than say financialization. But hey I am not tenure track in an economics department.

Sandwichman said...

It's also instructive to observe that the oreodox are frequently the most intense battlers against economic heresy. They fear -- and perhaps rightly so, given the history of purges and inquisitions -- that unless they are seen to vigorously attack subversion, they will otherwise be pronounced guilty by association or -- what amounts to the same thing -- by insufficient disassociation.

Wordplay said...

1) See my latest comment on the previous thread.
2) It's possible to combine Post-Keynesianism with growth fetishism, but they are not inherently complementary to each other. The real opposition here is between a teleological and a procedural view. Don't you see how pointless the dichotomy of "dynamism" (i.e., non-statism) vs. "growth" is? Yet you are not discussing any details of the Stiglitz report or otherwise being helpful in terms of evaluating the criteria for incentivizing/disincentivizing economic activity.
3) If you seriously want to reduce overall economic activity, you will have to support more restrictions on immigration. There is just no avoiding this conclusion. I'm not offering a value judgement here, but if you don't come out and admit that straightforwardly, then you have to be prepared to see the "liar"-label that you just tried to pin on others attached to your own position - and legitimately so.
4) Post-Keynesians shouldn't have a problem with currency revaluations at all. But that's just negative nominal growth. Real values are a different matter entirely.
5) Re: Daly. See the recent Peter Dorman-post. What's the situation? There is an objective: emission reductions. There are different procedural options we can employ in our effort to implement this objective. There is no a priori-theory that guarantees either taxes or cap-and-trade to be the more effective or efficient of the two methods. In emergencies, the only remaining possibility is rationing, BTW.
Note that Daly makes assumptions about the rest of the world in outlining optimal strategies (in at least one text I have read). In the emissions case, the world has basically settled on trying cap-and-trade. Compliance costs are a major factor in comparing the utility of the chosen policy instruments. These costs are potentially infinite should one country decide that the rest of the world ought to follow its prescriptions. So there is no question that we have to accept second-best alternatives. And this is also true in Herman Daly's universe.
I don't know if you get what I try to convey. Essentially aspects of one paradigm can be reformulated in terms of the other (e.g., a bloated financial sector can be seen as an environment the rest of the economy has to operate in - an environment causing opportunity costs that may be avoidable). Since Barkley has worked on both environmmental economics and Post-Keynesian theory, he should be able to confirm that the imputed mutual exclusivity of these approaches is, in fact, a myth.
Somehow you seem to have a need to contradict yourself. If the state offers tax credits in order to facilitate worktime reduction, then this a state policy, not some "dynamist", "non-statist" private- sector initiative. And it doesn't solve the distributional issue in any way. Disallocating resources is not conceptually different from allocating resources. There is still the question whether you want to discontinue some of the provision of goods and services the state currently engages in or whether the financing of "non-performing" work (to put it in financial terms) is intended to be an additional expenditure. In a deflation, the second variant should be a viable strategy. You just cannot sell it the way you do because it's not a way to "shrink the beast" as you suggest. My assumption is that your sales proposition has no chance of being accepted because most people can easily see that it isn't what they want. If you clarified the distributional issue, the outcome would likely be different. But maybe you have a libidinous issue with throwing away the pitchfork (or, heaven forbid, using it to underscore a demand for more deficit spending)?

Walker said...


"But hey I am not tenure track in an economics department."

Fortunately for us, the Masters have a sense of humor and didn't even try to conceal the fact that "tenure" is an anagram for "neuter".

Oh give us a home
Where the lib-er-als foam
While Goldman and BofA prey
Where seldom is heard
A discouraging word
Cause professors are all in their pay

Walker said...

Wow, Wordplay, you outdo yourself with your run-on erudition. Take a break, step outside and have a look around.

"I don't know if you get what I try to convey."

Sure, what you're trying to convey is that you know better than I do therefore I should shut up when you tell me to. That ain't rocket science.

Here's your problem as I understand it: you write in conceptual shorthand which seems symptomatic of the way you also think. You know a,b,c... n -- there's a jump in there somewhere but you're so sure you know so much of the rest that the jump must be trivial.

What you got yourself there, dubya-boy, is a closed system. Hey, what we got ourselves here is an open one! All the statistical tests in the world aren't going to "confirm that the imputed mutual exclusivity of these approaches is, in fact, a myth."

Well, no, wait. I take that back. They are going to confirm that it's a myth but they're also going to confirm that the obverse purported non-exclusivity is also a myth. It's a more conventional myth, but no less a myth.

So given the choice between a myth that's been tried and failed and tried and failed and tried and failed and tried again; and another myth that has been consistently rebuffed by the high priests of myth-keeping, I put my bets on the "let's try something different, this time, please." It's what Einstein said about doing the same thing over and over.

As for the tax credits thing: You do understand the difference between tactics and strategy, don't you? Dean's proposal also calls for more deficit spending. Oh, my, am I being inconsistent, then? Well, yes. But you see I'm supporting deficits as a tactic to move toward an end game where the value of the working time reduction comes to be appreciated without any artificial incentives. The job guarantees etc., treat deficit spending as a perpetual motion machine for jump starting that other perpetual motion machine whose perpetual mojo has lost its get-up-and-mojo. When that big perp machine gets going again then we can shut down the little perper and maybe even pay down some of the deficit. Rinse and repeat.

"Since Barkley has worked on both environmmental economics and Post-Keynesian theory, he should be able to confirm..."

Well, now. Why don't we just let Barkley speak for himself, then?

Walker said...

"...the criteria for incentivizing/disincentivizing economic activity..."

A formulation so ugly in its abuse of language that it immediately renders null and void any and all argument associated with it. said...

Tom I must pick a quibble with your taxonomy. First you will be hard pressed to find a tenured Marxist economist who would argue that unemployment is not endemic to capitalism. Also I doubt very much any marxist economist has been hired in NA in the last 15 years even as contract faculty.

Second your trichotomy is not nuanced enough. Let us get this right.

In the house of scientific liberalism there are roughly two camps: classical and reform liberals. The former pretty much deny unemployment or its significance.

Then you have the reform cohort who argue one of three things. (1) Unemployment is a shame but we can't do much about it save for beef up income replacement programs like unemployment insurance. (2) unemployment is inevitable and necessary to maintain discipline at work (stiglitz wrote a paper on this). (3) Unemployment is a waste of resources and the state can and should do something about it.

It is the classical and the first two of the reform liberal types who have ruled the roost since the eighties. Let us call them neoliberals even if some of them today have started singing a new tune (think Delong and Krugman).

Unemployment was the point of neoliberal restructuring. Nothing less than the naked coercion of the capital labour relation or what Burnham called market despotism.

Walker said...


It was one of those quick sketch off the cuff things. I have a weakness for fourfold schematics so if I can think of a way to draw and quarter the field, I'm happy.

Another name for the coercion is the "lash of hunger", in some cases the hunger is figurative and in others, literal.

Saying that unemployment was the point of neoliberalism might be overstating the case. The point was 1. domination and 2. profits. In that order. Unemployment, under the reign of King NAIRU was a key strategy.

I think we would have to split the difference on tenured Marxists. Agreed they would see unemployment as endemic but they would also argue that growth is necessary to reduce unemployment. Domar in his paper tipped his hat to Marx as the originator of the growth argument. Although Postone and Nyland (neither of them economists, BTW) have quite different interpretations of Marx, both insist that most Marxist overlook the dynamic role that struggles over work time play not just "politically" but structurally in the economy. Of course there are exceptions. But generally a disappointment. I've seen more from Institutionalists (who might, however, be closeted Marxists).

15 years? Are you sure you didn't mean 25?

Anonymous said...

"Of course there are exceptions. But generally a disappointment..."

Truth! said...

Last time I read Semmeler, Botwinick, or Shaikh's work that touched on unemployment it was clear that they held unemployment to be the average operating parameter of capitalism. So perhaps if we put some specific names to which marxists hold the view that growth can solve the unemployment problem of capitalism would be a good idea.

On unemployment and neoliberalism. It is clear that neoliberalism hinges on a territorially trapped yet flexible supply of labour. And part of the flexible policy paradigm has been a high degree of tolerance for unemployment. Hence words like "natural" and "frictional" levels of unemployment. Whose estimates conveniently rise and fall with the "actual" level of "measured" unemployment. But even beyond this, neoliberal labour market policy has been by and large about designing programs which reinforce the discipline of paid labour markets. In this sense we can say that unemployment is key to neoliberalism.

See Travis Fast "Disparate models desperate measures: the convergence of limits" in David Coates ed The Varieties of Capitalism, palgrave 2005.

Walker said...


I didn't mean that Marxists argue that growth can solve the unemployment problem, only that they traditionally have viewed output growth as indispensable to employment growth. Presumably, the reserve army of unemployed makes their unique contributes to that output growth by helping to enforce discipline and providing a buffer stock of "hands" in a tightening labor market.

I really have to defer to you on what Marxist economists these days say about this stuff because I haven't been following that thread. My past experience with Marxist academics is that they operate at two levels, a very abstract one of high theory and a populist one of immediate political action and the relationship between those two levels is left unspecified and arbitrary. And then there are those for whom theory has no implications for practice.

Anonymous said...

If I can interject a thought here:

Based on my understanding of Marx, what present day "marxists" do not seem to understand is that capital destroys it own foundations for existence because it progressively abolishes work. It is a simple as that. The briefest examination of the impact of capital on agriculture over the past 200 years would demonstrate this clearly.

Of those I even bother to read, Postone probably comes closest to understanding this - that the theory is not a critique of capital from the standpoint of labor, but a critique of capitalist labor itself.

Those around Monthly Review haven't a clue.

Postone's weakness on the issue is precisely as Tom stated: he operates on a very high level of theory, and appears unable to connect his remarkable reconstruction of the theory to a concrete program - which program, if he were to articulate the logic of his analysis, could not be any thing but a global movement of workers to reduce in hours of work.

Anonymous said...

"... capital destroys it own foundations for existence because it progressively abolishes work."

Can't wait!