A Political Economy of Justice

Danielle Allen,Yochai Benkler,Leah Downey,Rebecca Henderson,Josh Simons

• Éditeur: University of Chicago Press
• Année: 2022
• ISBN:
  9780226818436
• Sujet: Politica e relazioni internazionali
• Sous-sujet: Politica

Defining a just economy in a tenuous social-political time. If we can agree that our current social-political moment is tenuous and unsustainable—and indeed, that may be the only thing we can agree on right now—then how do markets, governments, and people interact in this next era of the world? A Political Economy of Justice considers the strained state of our political economy in terms of where it can go from here. The contributors to this timely and essential volume look squarely at how normative and positive questions about political economy interact with each other—and from that beginning, how to chart a way forward to a just economy. A Political Economy of Justice collects fourteen essays from prominent scholars across the social sciences, each writing in one of three lanes: the measures of a just political economy; the role of firms; and the roles of institutions and governments. The result is a wholly original and urgent new benchmark for the next stage of our democracy.

Part 1

New Goals for a Just Economy

1 Power and Productivity: Institutions, Ideology, and Technology in Political Economy

Yochai Benkler

Introduction

Neoliberalism was an ideology and institutional transformation program that aimed to shrink the role of the state in the economy and “liberate” market actors to pursue their profits in response to market signals. It was a reaction to the post–Great Depression ascendance of high modernism in economic policy (Keynesianism and dirigisme): the idea that expertise and scientific management by the state and managerial elites could provide a stable, growing economy liberated from the boom-bust cycles that bedeviled capitalism in the long nineteenth century.1 Neoliberal epistemology was Hayekian: markets offer better information about the complexity of human need, desire, and ability than a state administration ever could. Its political morality was libertarian: efforts by the state to get the clear signals it requires to manage the economy necessarily result in oppression. The neoliberal policy packet therefore aimed to shrink the state and expand the market through deregulation, privatization, low taxes, and free trade. It promised economic dynamism in exchange for publicly governed economic security and enhanced consumer sovereignty and entrepreneurial freedom in exchange for social solidarity. Together, these promised to increase productivity and sustain growth that would raise all boats.

The reality of the past four decades has been the inverse of the promise. Instead of broadly shared wealth driven by newly dynamic markets, the United States saw less dynamic markets coupled with dramatic rent extraction by a small oligarchic elite. Productivity growth since 1973 has been slower than in the preceding century, excepting the 1995–2004 interlude.2 Business dynamism and entrepreneurship, measured by firm entry and share of employment in young firms, declined.3 Industry concentration rose4 and markups increased.5 Real median income stagnated6 while the share of income going to the 1 percent and the 0.1 percent skyrocketed.7 Economic insecurity became widespread. Forty percent of American households report that they cannot cover a $400 emergency.8 Americans are the only population in the developed world that saw declining life expectancy in the past 30 years.9 Economic insecurity appears to be a driver of the rise of populism.10

Understanding neoliberalism as reactionary—an effort to revive laissez-faire against then-dominant progressive and social-democratic alternatives—helps us focus on the critical theoretical and methodological elements that distinguished it as an intellectual and political movement. Postwar social-democratic institutions were built on both sides of the Atlantic by harnessing the solidarity and collective efficacy developed through two World Wars and the Great Depression. The core tasks of neoliberalism were to replace that solidarity with individualism and undermine the sense of collective efficacy. The “social” was reinterpreted purely as the aggregation of individuals. Social welfare was framed as simple aggregation of individual preference-satisfaction; democracy, as simple aggregation of voter preferences. Preferences, in turn, were exogenous, interpreted as something with which individuals come into markets and elections, and so they are pre-political and reflect the individual’s authentic exercise of freedom. The behavior of these individuals could be formalized by rendering them transhistorical rational, self-interested actors operating in perfect markets with perfect information and no power, except in well-defined exceptional circumstances. These same agents came to a state in which gaining and leveraging power were the primary objective, and so these rational, self-interested individuals made well-functioning government impossible. From here, the workhorses of neoliberalism flowed from the abstract to the concrete: rational actor theory; regulatory capture; efficient markets; agency theory; shareholder value; Friedman’s monetarism; Lucas’s microfoundationalism; Buchanan and Stigler’s assaults on the possibility of public governance; Becker’s rationale for increased criminal punishment—all were based on these core epistemological and methodological foundations.

The revival of “political economy” as a frame for work on the relationship between productivity and justice in market societies encourages us to reintegrate history, power, and the social and material context—institutions, ideology, and technology—into our analysis of the economy. The economy, in turn, is understood not as “markets,” which are but one crucial part of the economy, but as social relations of production: how we make and distribute what we need and want to have. The “political” in “political economy” stands for two distinct but interrelated ideas. First, power is pervasive within economic relations: production and distribution in market societies follow historically path-dependent patterns of conflict, coordination, and cooperation, rather than a single ahistorical pattern of coordination around prices among self-referential agents. Second, the deployment of the polity proper—the legitimate threat of violent coercion—is an integral part of economic relations. The political and economic structure each other and are the arena of conflict and cooperation about both. The implication of these two simple points is that there is no single, natural, and efficient equilibrium to which market societies move if regulation is minimized to remove known, neutral, and ahistorical sources of market imperfection. Instead, market societies at the same productivity frontier develop along diverse historical trajectories, resulting in large differences in the productivity and justice of social relations of production, sustained over significant periods. Understanding why Denmark and Mississippi, small market societies integrated into larger imperfect political and economic unions at the cutting edge of global technology and productivity, have diverged in justice and human development is the core analytic task of political economy. Harnessing that understanding to pursuing justice is the core programmatic role of the new political economy.

Various chapters in this volume focus on different aspects of the rejection of the neoliberal frame. Woodly takes aim at the ahistorical, unsituated self as a preference-bearer as the proper basis for determining society’s goals, replacing it with “the individual-in-context” who “has their own perceptions, dreams, desires, and agency, but they are nevertheless born into a world that is given and that givenness includes power asymmetries rooted in and reproduced by unjust inequality.” Shelby’s proposal for a public-private nonprofit prison management system is expressly anchored in the specific historical context: focusing on how for-profit systems interact with government “under the current unjust background . . . conditions,” rather than in individual rights or abstract principles of criminal justice. It is under these conditions, where “social conditions are grossly unjust and the state lacks legitimacy in the eyes of the most disadvantaged,” that Shelby seeks to justify specifically nonprofit private institutions, leveraging diverse human motivations and social arrangements to underwrite production by neither market nor state. Henderson’s intervention leans heavily on understanding corporate leaders not as they are in agency theory—self-interested actors who must be managed by precisely calibrated compensation mechanisms—but as socialized individuals who can be persuaded to pursue prosocial goals and shift the behaviors of firms. Salter focuses on the ethical and practical value of reciprocity to argue that more cooperative enterprises will in fact do better, but must be released of the institutions and ideology embodied in shareholder value theory. Schor and Eddy examine the effectiveness, advantages, and limitations of a new approach to embedding economic production: platform cooperatives. Eaglin takes as his starting premise the observation that firms invest in building and deploying political power. Rahman takes head-on the central programmatic thrust of neoliberalism—shrinking the state—and advocates for a committed strategy to construct public capacity. Downey engages in institutional innovation aimed at making the Federal Reserve democratically accountable. Rodrik and Sabel challenge the core epistemic claim of neoliberalism—that public administration operates in the dark—designing a good jobs policy that sees the government as not only directly responsible for training and job placement opportunities, but also best able to identify these opportunities through iterative, cooperative models of information exchange, experimentation, and learning that already function across a range of mission-critical public administration fields.

Theoretical Antecedents

The new political economy challenges three core theoretical moves that anchored neoliberalism. First, it replaces transhistorical assumptions about human nature with historically grounded explanations of social relations. Second, it replaces self-interested rational actors with socialized or embedded individuals, while avoiding the fallacy of purely structural explanations. Third, it replaces models that treat power as the exception in markets and insists on understanding conflict and power as central determinants of economic relations, interacting with coordination and cooperation.

Historical versus Transhistorical Explanations of the Human Condition. From Smith to Marshall and neoclassical economics, markets are conceived as the natural outgrowth of human nature left to its own devices. Individuals interact freely according to their nature, pursuing their rational self-interest and coordinating their desires and abilities through the price system toward ever-more productive arrangements to satisfy their needs and desires. The explanation flows from human nature rather than from any particular historical set of facts that could have been otherwise. It explains larger structures (the division of labor in society; production and allocation of resources) as the aggregation of microfoundational choices of these individual agents.

Marx is the fountainhead of understanding economic relations as historically specific results of earlier struggles, but the twentieth century saw a sustained flow of economic history that explained the emergence and divergence of market societies as products of struggles along dimensions of class, race, and gender. As Stuart Hall put it, “Appeals to ‘human nature’ are not explanations, they are an alibi.”11 Other works—Webb’s History of Trade Unionism in 1894; Weber’s Protestant Work Ethic in 1905; the Hammonds trilogy and Beard’s Economic Interpretation of the Constitution of the United States in the 1910s; Du Bois’s Black Reconstruction and Pinchbeck’s Women Workers and the Industrial Revolution in the 1930s; and Polanyi’s Great Transformation in 1944—offered sustained analyses of the development and shaping of social relations through struggle over institutions and ideology in the emergence of capitalism. Historical analysis continued to provide a counternarrative to neoliberalism in the 1970s through 1990s. Horwtiz’s Transformation of American Law, Wertheimer’s We Were There, Davis’s Women, Race, and Class, Fields’s Slavery, Race, and Ideology, or Berg’s Age of Manufactures all offered sustained historical analysis of market societies alongside, and rarely in conversation with, work that continued specifically within the Marxian tradition but developed a more institutional and political version, most prominently Brenner’s Agricultural Class Structure and Meiksins-Wood’s The Origin of Capitalism. All this work was distinct and opposed to cliometrics, the effort to understand history through the prism of neoclassical economic assumptions, typified by the early work of Douglass North (though less so by North’s later work). Its insistence on historical specificity is also different from new institutional economics, most prominently North’s Institutions, Institutional Change, and Economic Performance and its most sophisticated present-day version in the work of Acemoglu and Robinson in Why Nations Fail and the associated formal papers it builds on. That line of work suggests a cleaner, more consistent alignment of optimal (inclusive) and suboptimal (extractive) institutions across all societies and time, rather than focusing on understanding capitalism as a distinctive system or on divergences among contemporary market societies. Indeed, Acemoglu, Robinson, and Verdier go as far as to describe Nordic social democracies as “cuddly” capitalism that free-rides on innovation from more “cutthroat” capitalist economies that are the primary driver of innovation and growth.12 Countering this line of “false necessity” of a single path to opulence, as Unger called it, is most often found in comparative politics and the new institutionalism in political science, as Pierson’s Politics in Time epitomizes and work by Hacker, Pierson, and Thelen theorizes.13 Esping-Andersen’s Three Worlds of Welfare Capitalism and Thelen’s synthesis between that work and the “varieties of capitalism” literature in Varieties of Liberalization are central to understanding the divergence among market societies along the dimension of justice without sacrificing productivity.

Agency versus Structure. Perhaps the thorniest problem in social science is teasing out the roles of individual agency and social structure in shaping human behavior and patterns of social relations. Neoliberalism was committed to explaining patterns of economic and social behavior in purely microfoundational terms: the aggregation of individual choices driven by exogenously given preferences. The intellectual roots of refuting this position are deep and broad. Rejecting the determinism of both early Marx materialism and Durkheim’s social facts, the twentieth century saw a flow of efforts, across disciplines, to reconcile the lived experience of individual choice with the obvious force of social structure. In economics, the clearest articulation was Veblen’s.14 But his insistence that beliefs and preferences were always structured by the same institutions that structured markets and were therefore endogenous to market actors’ preference-shaping investments destabilized the entire project of welfare economics and so was ignored. Contemporary behavioral economics has only flourished by bracketing preference formation and focusing on well-behaved “deviations from rationality” and “misperceptions,” ignoring the fact that preference shifting is the object of massive investments by firms (Google and Facebook’s business model depends on selling p...

Table des matières

• Cover
• Title Page
• Copyright Page
• Contents
• Introduction
• Part 1. New Goals for a Just Economy
• Part 2. New Aspirations for Firms and Other Organizations
• Part 3. The Role of Democratic Associations, Institutions, and Governance in a Just Economy
• Acknowledgments
• List of Contributors
• Index