Mon Dec 24th, 2007 at 05:20:37 AM EST
Many critiques can be made of what has become the main social science used to analyse our societies, Economics. Its paradigms - that each man is a rational utility maximiser, that a free market for them to interact in leads to an optimal state - have to be debunked; as it seems they are accepted as true by policy makers around the world, which in turn has lead to various economic crises.
The science of political economy needs not be reduced to this aspect. If the Left wants to have alternatives to put forward to the "Free Market", it needs scientific tool to analyse the state of the economy. But the currently prevailing Economics won't provide those, as thoroughly grounded is a false vision of societies that are only the sum of their individual members.
Various "heterodox" economical theories are being developed, trying to provide this alternative to the usual economics science.
French researcher Alain Caillé has written about what these approaches agree on, a "quasi-manifesto" towards an institutionalist political economy. It is not only a critique of standard economics, but also a programme on what these approaches must deliver, which tools they must develop.
Diary rescue by Migeru
In this text, he and his co-authors sum up their critiques of mainstream economics: the way its mathematical aspects have become the only tool through which the economy may be analysed, keeping the political and social context hidden:
Historically, economic analysis has been practiced in two definitive traditions : within its political context, as political economy and without, as economics or economic science. We believe that the first must be recognized as having principled superiority over the second. [...] An institutionalist political economy is thus incapable of separating the analysis of economic markets from reflection on their political and ethical backgrounds. It regards as deceit, the preliminary, isolated, analysis of the market or economy and secondary analysis of the institutions necessary to its implementation. Analytic integrity is restored with the understanding that economic institutions are tightly intertwined with political, juridical, social and ethical norms, and with their concurrent analysis. The political, as opposed simply to politics or policy matters, is the place/moment where this intertwining is given shape.
or the need to get beyond the traditional Market/State dichotomy:
All forms of institutionalism show up the incompleteness and the inevitable failures of pure market regulation. But no one advocates the substitution of a state-led economy for market regulation : all recognize that both State (more or less broadly conceived) and Market have roles to play. The important thing is to escape the zero-sum conception of the desirable relationship between the two : the State as the only genuine remedy to market failure and the Market as the only genuine remedy to failures of the State. IPE holds, above the importance of Market-State coordination and regulation, that of society itself. As well as State and Market, then, IPE also takes into account Society, however it is defined : Civil and Associative Society or, more generally, any bundle of local, national, subnational or supranational social relationships.
The consequence is that incentives alone can't make a proper economic policy:
According to IPE, no viable, lasting, global coordination can be obtained (or structured) through purely instrumental individual rationality, either parametric or strategic. Any effective macro-coordination implies, to some extent, shared values and political regulation.
The consequences are that economic policy must take into account the local context:
One of the primary conclusions of IPE is therefore that one economic "best way" does not and cannot exist. There is no unique set of recipes or technical devices to be applied anywhere, at any time, in the absence of a detailed study of the historical, social and geographical context, or the path-dependency, of a specific economic system.
Very important is that economical science must be able to analyse causes of behavior beyond the individual self-interest:
It must build models of the subject able to act not only as a separated self-regarding individual, but also as a member of a family (and in the interest of the family), of a peer-group, of an organization or institution, of one or several social, political, cultural and religious communities (and for the sake of them) etc.
Points are made that economic action can't come before political, social and moral action:
The most general conclusion we can draw is that we cannot have lasting economic efficiency outside a lasting, strong and lively, political and ethical, community. In this sense, the political and the ethical dimensions of community are prior to the economic, even in the solution of economic problems. And there cannot exist a lasting and lively political community that is not, in practice, a working social community, i.e. that does not share some core values and a similar sense of justice: briefly, that is not also a moral community.
The conclusion is that economic policy, which must be undertaken with institutional policy (whereas nowadays it sees institutions as a given), can't aim towards a single, ideal, utopian model, but need to take careful attention to local conditions. Which doesn't mean it won't propose strong reforms:
One of the primary conclusions of IPE is that those who plan to reshape existing institutions must be both modest and cautious. Owing to the compound, entangled effects of any institutional change, one can never be sure of its final result. If a reform is imposed for purely ideological or rhetorical reasons (and, a fortiori, if it is imposed by a foreign power), the most probable results will be opposed to those expected. Very gradual reforms are thus safer than harsh ones. This seems to be a plea for some sort of shy reformism. Such is not the case. A good reform is a reform which no one (not even opponents who win the next election) dares think of abolishing once it has been adopted. This is the criterion: the measure of the gap between existing and desirable institutions. A good reform is one that should have been undertaken long ago and which nobody can contest when it begins to be realized. Such reforms -which we might call shifting - can seem very modest and yet generate huge effects. Such shy reforms can be revolutionary. But a political situation may be such that only a revolution, a brutal and violent change of political regime, permits the launch of shifting reforms...
This manifesto, in full, is a very good summary of the many things wrong with current economics, and the memes it has propagated ; and an interesting basis to what will have to be done to get beyond it.
Not only from the point of view of developing nations - who have the most to lose or to gain from a good economics policy; and what has Putin done if not understood that neoliberalism alone was destroying the Russian society, and corrected this?
But if we want to fight neoliberalism in the EU, for example, we need to have a EU-wide model to put forward ; one that will need to make a EU-wide polity possible, as that is needed to have a non-neoliberal economical policy.
If you support the ideas put forward by the manifesto, there is a petition to sign...