Prelude to a Non-Standard Economics

{I recently received the following question on my tumblr blog:

Hi. You seem to have a better understanding of economics than most of the people here on tumblr, an understanding of how misrepresentations of how economics works can lead to misrepresentations of the actions/attitudes we should take to solve the problems of our current economic system.

Admittedly, I sympathize with the leftist and Marxist sentiments espoused by those on tumblr and with authors such as the one you just ridiculed, but that’s mostly due to my cursory understanding of economics and the fact that when one has such sentiments, leftism and Marxism are the first theoretical positions one comes across. I think you agree that capitalism leads to Huge Problems, but could you shed some light on what you take to be the proper route of critique?

The following is my answer. I’m cross-posting it here because due to midterms it will probably take me quite some time to write a full post fleshing out all my arguments.}

I’m working on a lengthy blog post in response, but it’ll unavoidably be very dull and tedious, and I don’t want to act like I expect people to read it. The question of an alternative to Marxism is one I’ve been puzzling over for several years now, and what I’ve found is that the question is inherently problematic, and needs to first be deconstructed before the practical result it hopes for can be provided. The main problem is the necessarily philosophical nature of the answer it expects: I’m supposed to provide a philosophical theory of economics which can reconcile its different schools of thought and which somehow fits within the Continental tradition. But I don’t think that this can be done. Yahya Madra, for example—a very intelligent guy—has for some years been trying to apply Lacanian psychoanalysis (plus Derrida and D&G) to economics, but hasn’t been able to come up with anything substantial. So the following will first talk about philosophy’s inability to meaningfully speak about economics, then point toward how philosophy caricatures economics in order to speak about it at all, and finally offer some rules of thumb for getting beyond such caricatures.

Laruelle writes in Mystique non-philosophique that “The identity of the with (the One with the One, God with God), is the true ‘mystical’ content of philosophy, its ‘black box’.” (His examples are stupid, but you get the point.) My claim is simply that the statements comprising marginalist economic theory are not conceptual per se, but rather, they operate within the prepositions of a philosophical sentence (in, with, by, to, from, etc.): that is, within the black box of philosophy. As such, economic statements are constitutively inaccessible to philosophy as a discourse. All philosophy can do is to latch ahold of an ‘object’ used in economics (e.g. labor, utility, commodity-form) and try to relate it to other philosophical concepts—but from the point of view of economics, this is just to just to create an alternate model, one which can say nothing about the model it’s ostensibly ‘critiquing’ unless it can hold up to economics’ standards of operativity. (For more on the latter, see below, paragraph five.)

In short, economics is a form of antiphilosophy. This should be clear even historically, since marginalism (contemporary orthodox economics, the kind that uses calculus to measure ‘marginal’ increments between abstract ‘units’ of things such as ‘utility’ or ‘marginal propensity to save’) was designed specifically to circumvent the problems (e.g. exploitation) that Marx raised. For example, due to marginalism’s theory that value is determined solely by the intersection of supply and demand, this implies that all wages are at their proper value—thus eliminating the possibility of exploitation a priori. Likewise, dispensing with the inverse relation of profits and wages undermines the foundation of anyone who would argue that class struggle constitutes a fundamental component of the business sphere.

963-14, by les brumes

Of course, the results of economic theory are apparently susceptible to critique. But are they? I can attest from long, frustrated experience that to write about economics (without writing in economics) is extremely difficult, perhaps impossible—unless you resort to some form of pre-packaged philosophical discourse (or journalistic tripe). The main quasi-conceptual ‘discourses’ about economics are Marxism and Austrianism, and I argue that this dyad is symptomatic of the structure of philosophy, particularly when viewed through Laruelle’s concept of philosophical decision. Put in way-oversimplified terms, the Decisional structure is when philosophies invent a third term of ‘immanent transcendence’ to mediate between two objects, one of which is transcendent, the other immanent. In economics, however, the economy is both transcendent and immanent, thus screwing up this neat little pattern and forcing certain reductionisms on the part of each theory. There’s not much of substance that one can say without getting immensely technical (since it’s not just a cut-and-dried case of each theory favoring one over the other), except that when you compare Mises’ and Marx’s conceptualizations of the economy in terms of immanence and transcendence, there are distinct differences, and once these are straightened out (which I haven’t yet had the chance to do rigorously), it will help us to analyze these discourses as forms of thought, as well as to pinpoint why they have become as entrenched as they have in political discourse.

The main point of the latter paragraph is that we need a unified theory of philosophy and economics, of how the two ‘work’ in relation to one another. But to make this accessible to people who aren’t economists is very difficult. Let me be clear here that the problem is not just one of technical knowledge, but also that economists (even moronic econ undergrads like myself) are trained to view theories in terms of their operativity: all economic statements must be capable of being converted into mathematics, and of being used in a mathematical model of an economy. (Continental Philosophers, on the other hand, have no demarcation criteria to distinguish sense from nonsense, and they’re trained to take even the most whacked-in-the-head ideas seriously.) This is the main reason why the paper on “Darwin metaeconomics” is so self-evidently stupid to any economist. He takes freshman-level economic theory and dresses it up with grandiose (but completely vacuous) concepts in order to ‘prove’ a thesis (which he presupposes from the start, giving no evidence whatsoever) that any crackpot or art student at Occupy might make. There are plenty of respectable studies corroborating the idea of Wall Street corruption, centralization of power, and so on, but there’s an unwritten rule in economics that the more one’s conclusions go against mainstream ideas, the more rigorous your study must be—and for the pragmatic purposes of saving one’s resources for important matters and of weeding out crackpots, this is a reasonable rule to have.

Even the notion of a ‘critique’ of capitalism is very problematic, and Lyotard goes into better detail about this than I could in his Libidinal Economy. But since economics is the science of non-discursive social relations, and philosophy is discursive, to begin to critique capitalism from a philosophical starting point is, to a large extent, to determine one’s conclusions from the outset. Much philosophical hostility toward neoliberalism can be attributed to the latter’s inability to be thought philosophically. (And this besides the obvious bad faith of being a Humanities student.) What I don’t want to advise you is to read more about economics—this is the most banal thing in the world to say. Not that it wouldn’t help, but it’s ridiculous to expect that of someone who has no professional interest in the field (and I include due diligence in this clause), especially since laypeople will just gravitate toward books that confirm their preconceived notions anyway. But if you’re a philosopher and are curious about the economy, I recommend that you look at it through antiphilosophy, e.g. McLuhan’s The Gutenberg Galaxy, Veblen’s Theory of the Leisure Class (only the first few chapters though; as soon as he starts talking about racial theories, stop reading), or Lyotard’s Libidinal Economy. They aren’t perfect, but they aren’t autopositional in the same way as typical philosophical texts are. This is to a large extent because they don’t rely on concepts: implicit in every concept is a choice to emphasize some aspects of a thing over others. This is what I take Foucault to have meant when he called Anti-Oedipus “a book of ethics.” Hume’s Law holds absolutely—but only when we confine our purview to sensations and intuitions. In his radical empiricism, Hume denied that ‘other aspects’ of phenomena existed besides those which we immediately perceive; this is why (in its own terms) his argument is valid, but doesn’t hold in real life. So economic models do contain implicit values both positively (prioritizing things like efficiency) and negatively (the aspects of things they ignore).

a place only i can go - AnnCT 07.2012

So let’s get a bit more concrete. One of the things that Tumblr Marxists love to do is to attribute all the evils of the world to “capitalism.” Taking after Marx, they attribute a primacy of the economic sphere over the political sphere (even if they spend all the rest of their time insisting that culture is more important than economics). Yet, people like Chomsky make an excellent case for the primacy of the political sphere over the economic sphere, and thus can meaningfully argue that we’ve never had capitalism. Then again, every single economic argument Chomsky makes that isn’t either trivial or repeated verbatim from his friends (e.g. Ha-Joon Chang) is not only wrong, but really stupid. Much as I love Chomsky, he just has no understanding of economics whatsoever—yet, he’s absolutely brilliant when it comes to politics, and he’s a rigorous empiricist. And of course, Marx is hardly infallible either, despite being a genius. So I think that to think about the question of primacy in terms of being correct or incorrect is to look at matters the wrong way. Rather, the disparate discursive structures of philosophy and economics force any philosophical critique of the latter to be in the form of a model of one’s own; most people just don’t think of it that way. So the real question is what our conceptual model lets us say that other’s can’t (and perhaps more importantly, what our model can’t say that others can).

Hopefully the above doesn’t just seem like unnecessarily abstruse nitpicking about your question. It would be nice if I could just drop a weltanschauung in your lap, but that’s not how economics (or non-economics) works. That said, here are some rules of thumb that I’ve found helpful:

  1. Try to view the concepts you use in their contingency as models.This is the basic idea of what Laruelle calls ‘cloning’, where (political) philosophies are made into material, and one’s focus becomes how the form of an argument determines its conclusions. The conclusions of all models are tautologies, derivable from their premises (the aspects of the world they focus on), and what separates a good model from a bad model is the extent to which it relies on ad hoc provisions and ‘deus ex machina’-like axioms that lie dormant for a while, then tie everything together in the last minute. What studying economics lets you do is see how ‘economic facts’ (e.g. statistics) are constructed—and this, again, is the meaningful content of economics that takes place within the black box of philosophy. So since philosophy has no way to explicitly speak of its tautologous (or: autopositional) nature, it becomes doubly important to make the effort to interpret issues through more than one theory, jumping from one view to the other the way one does with a duckrabbit.
  2. Avoid thinking in terms of linear causality. In the social world, X rarely ever causes Y on its own: rather, multiple lines of causation converge together thanks to certain conditions, occasionally leading to positive feedback loops and other nonlinear behaviour. This is George Soros’s big insight, as well as that of Malcolm Gladwell in The Tipping Point. A corollary of this is that we should separate the goal we have in mind (e.g. support the working class) from the means of reaching it. It’s not that everyone who isn’t a communist wants to fuck over the working class: people like Milton Friedman just argue that Leftist measures like unions are counterproductive. It’s easy to treat political issues emotionally, e.g. that it isn’t ‘fair’ to give corporations tax breaks. But even a liberal like Robert Reich can agree with Milton Friedman (though for different reasons) that corporate income tax should be abolished. This is why I think that it’s useful to distinguish between the ‘letter’ of a partisan position (the typical goals it advocates) and its ‘spirit’ (the emotions and values it evokes to support its position). Iain Murray’s book The Really Inconvenient Truths uses original and data-focused arguments to back up conservative prescriptions traditionally supported by appealing to religion and other arbitrary value judgements. I haven’t come across any books supporting the letter of Leftism but not its spirit, but think that this would be an excellent technique to avoid falling back on stale tropes.
  3. Accept that philosophy is limited in its applicability. Philosophy’s inability to accept its non-transferability to certain domains is what Laruelle calls the “principe de la suffisance philosophique,” which may be translated as ‘principle of sufficient philosophy’ or ‘principle of philosophical arrogance’. As the Austrian economists argue quite well, markets are able to take account of tacit knowledge and inarticulable desires in a way that discourse (and central planning) just can’t. To a large extent, accepting that many social structures have evolved as they have for a reason (cf. Taleb, 2012: 212) is enough to start sympathizing—at least a little bit—with conservatives. If you believe that biosemiotics has no effect on your behaviour, dye a bowl of oatmeal with blue or black food coloring and then explain to me why it’s the bourgeoisie’s fault that you’re filled with an overpowering sense of aversion as you try to eat it. Not that these social structures are all desirable, but unless one holds a naïve base-superstructure theory, any practical efforts for social change have to keep these in mind, and try to find a way to reroute them.
  4. Make a point of avoiding paranoia. What I mean by paranoia in the context of social theories is when behind appearances is postulated some sort of absolute agency that controls everything (what Lacan calls the Other of the Other). This tendency is common among intellectuals, and I’ll give some examples. In Naomi Klein’s book The Shock Doctrine, once you remove the presupposition of malicious agency by the USA, her argument degenerates into the claim that regime changes tend to happen during economic crises—which is quite trivial. Likewise, Chomsky’s lecture on Colombia (entitled “An American Addiction”) degenerates into vacuous conspiracy theory once the reader takes into account that coca ≠ cocaine. Coca is, of course, a staple agricultural product in South America precisely because of all its useful applications, and Chomsky attributes its pervasiveness solely to the malevolent interests of the Colombian government (backed, of course, by the USA). This is NOT to say that the USA doesn’t use its hegemonic power for the sake of coercion, or that theories of a paranoiac form are always invalid. After all, people like Chomsky and Glenn Greenwald show over and over the naïveté of denying that the USA behaves in many respects like an Empire. What I am saying is that one’s personal pathologies influence the type of data one seeks out, and also that by indulging one’s pathologies one is apt to make shitty arguments. Moreover, any social theory should allow for the possibility of contingent events influencing an outcome—and Marxism rarely does. This is why things like falsification criteria and scientific method are so important—they’re constructed specifically to avoid all-too-human tendencies of adopting pet theories, or of convincing yourself that you’re valiantly fighting the capitalist beast.
Sargam Griffin - The Economy, 2010

Sargam Griffin – The Economy (2010)

So if I had to sum up all of the above into one little catch-phrase, it would be this: it is absurd to expect one kind of economic policy to hold for all countries and situations; instead, policies should be chosen on the basis of each country’s unique situation. This isn’t a crazy thing to suggest. There are some scenarios where the tenets of neoclassical theory just doesn’t hold, just as there are others (e.g. stagflation) where those of Keynesianism don’t hold; conversely, there are scenarios where communal business practices work very efficiently. As I’ve argued before, this perverse desire (reinforced by party politics) to impose one policy everywhere can be thought of as the ‘principle of sufficient economics’. Economics since Keynes has focused on developing a general economics—instead we need to develop a Riemannian economics. This is what I think a non-standard economics inspired by Sraffa can do.

Peter Lichtenstein, in fact, presents a very interesting Sraffian model of a pluralist domestic economy. It does become problematic when you consider its relation to global finance, plus how zero-growth would make it into a zero-sum game between capitalists and communes, and this is something I need to think more about. But it should be obvious that austerity is not generally applicable—if all countries cut consumption at once, the world would go into another Great Depression. So, much as I’m annoyed by Richard Wolff’s populist rhetoric, I’m fully in favor of his attempts to draw attention to scenarios in which communal business practices are more efficient than capitalistic ones. (And of course, we need not confine ourselves here to overly narrow definitions of ‘efficiency’ which, as Taleb [2012: 44-5] argues, leave much to be desired.) All that matters is what works best. But one should be suspicious of any political theory or policy that says it will only work when it is applied to the whole world at once. And if you object to the notion of economic pluralism by the Marxist fallacy of lumping together disparate economic policies under the heading of ‘capitalism’ or ‘neoliberalism’, then this is what happens.

About Graham Joncas

I create nothing. I own.

Posted on February 20, 2013, in Economics, Non-Philosophy, Philosophy, Politics and tagged , , , , . Bookmark the permalink. Leave a comment.

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