Decades of capitalist propaganda have reduced the notion of collectivization to Stalinist terror. This flattening of the term dismisses the breadth of forms that collectivization can take: from nationalizing communal resources and production, to other-than-human redistribution efforts to establish comradely ecologies. We need a more serious analysis of the different forms and outcomes of collectivization efforts in egalitarian movements around the world, from the deep past to recent history. The success of anti-collectivist propaganda also keeps us from revalidating collectivization’s present-day importance for regaining control over common resources in the face of massive extraction by trillion-dollar companies. It is therefore essential to explore the collectivized imaginaries and practices—collectivizations, in the plural—that make egalitarian forms of life imaginable and actionable.
1. Other Collectivizations
In capitalist propaganda, the notion of collectivization, its multiple meanings and forms of implementation, are trapped in a time capsule labelled “totalitarianism.” It is ridiculed and demonized by historians such as Oleg Khlevniuk, who decries Stalin’s 1929 proclamation for the construction of large-scale collective farms (kolkhozes) as the “brainchild of socialist fanatics.”1Other historians, less driven by anti-communism, such as Moshe Lewin, argue that while the brutal costs in lives and the use of state terror in the era of Stalinist collectivization are undeniable, “The whole set of repressive and terrorist measures has too often monopolized the attention of researchers, at the expense of the broader panorama of social changes and state building.”2 In this light, Lewin emphasizes that the very use of the term “collective” was inappropriate. He argues instead that the kolkhoz was “a hybrid structure containing incompatible principles … without ever becoming either a cooperative, a factory, or a private farm.”3 Such an approach turns the usual critique of Soviet collectivization on its head: rather than being all-encompassing, it might not have even been collective enough to be called collectivization.
Early reports by writer Maurice Hindus on the creation of the kolkhozes are an important record for engaging with Lewin’s call for a “broader panorama” on collectivization. A Russian-American émigré, Hindus returned to his home village to describe the collectivization process, published in his 1931 book Red Bread. He observes the protests by the peasant population against the relentless liquidation of the kulaks (property-owning peasants), whose families, if lucky, faced the choice between exile or joining the kolkhoz. But he simultaneously witnesses the creation of free nurseries and cultural centers across the countryside, guaranteed maternity leave for kolkhoz members, the success of cooperative stores, emancipation from the firm grip of the Orthodox Church, and the liberation of women from marriage entrapment and subservience. Hindus is unscrupulous in speaking of “dictatorial Soviet standards,”4 but this does not keep him from seeing the Soviet Revolution as a “double-armed power” of both repression and mass emancipation.5 One does not redeem the other, nor does one legitimize the other, but they are equally real parts of its history.
Maurice Hindus, Red Bread, 1931 (opening page).
It is a great historical loss that we have come to identify collectivization’s inherent relentlessness with state-imposed mass violence, due to Stalinist terror and enduring anti-communist propaganda. In recent decades, other terms such as “commoning” and the “commons” have been employed to recuperate the spirit of historical, emancipatory struggles against the primacy of private property. But as Silvia Federici writes, “Since at least the early 1990s, the language of the commons has been appropriated by the World Bank and the United Nations and put at the service of privatization.”6 In contrast to this neoliberal use of commoning language, a feminist theory of the commons, argues Federici, builds on “the collective experiences, the knowledge, and the struggles that women have accumulated concerning reproductive work, a history that has been an essential part of our resistance to capitalism.”7 Contrary to how those international organizations co-opt the term, Federici concludes that such a feminist theory of the commons entails the “collectivization of our everyday work of reproduction.”8
Federici’s use of the term “collectivization” distinguishes it from the capitalist capture of the commons, where commoning takes the form of World Bank microcredit policing and a demand for some form of preexisting property or physical ableness on the part of the commoner. Collectivization, however, is fundamentally indiscriminate: it completely rejects debt, and does not care whether people are “productive” bodies or not. Collectivization is relentless not because it is a priori violent, but because it includes and applies to everyone and everything.9
Just as Federici theorizes collectivization from a feminist perspective, there are many other historical and contemporary examples that resist the reduction of the term to Stalinist repression. The terrible famine of 1959–61 is adduced to discredit Chinese communes, but this entirely ignores—as Joshua Eisenman writes—the successes of the subsequent “green revolution” in China. Due to reforms of the nationwide agricultural research and extension system undertaken during the Cultural Revolution, experts rotating across communes pushed innovations and farming techniques. By the time of decollectivization in the early eighties, the communes had reached “historically high levels of agricultural productivity per unit land and per unit labor, life expectancy, basic literacy, and the promulgation of bookkeeping and vocational skills.”10 The communes were dismantled not because they were a failure, but because the reformist faction of Deng Xiaoping regarded them as too successful an inheritance of the Maoist era to keep in place.
Film still from Robin Shuffield’s Thomas Sankara: The Upright Man (2006) depicting Sankara’s 1985 tree planting campaign known as One Village, One Grove.
Thomas Sankara’s leadership of Burkina Faso (1983–87) embodies yet another take on the practice of collectivization, this time through an eco-socialist, anti-colonial, and anti-imperialist paradigm—another kind of “green revolution.” This manifested most famously in Sankara’s 1985 campaign to plant ten million trees, which aimed to turn reforestation and mass planting into a new “national and cultural tradition.”11 Here, collectivization cannot be reduced to the totalitarian cliché of state-imposed industrial farming, but manifests instead as an interdependent ecology of human and nonhuman workers: trees and humans struggle together for socialist self-determination. For Sankara, the campaign was a struggle against desertification, but also a struggle for resources that would sustain the country’s sovereignty from World Bank feudalism. In his words:
Our struggle for the trees and forests is first and foremost a democratic and popular struggle. Because a handful of forestry engineers and experts getting themselves all worked up in a sterile and costly manner will never accomplish anything! Nor can the worked-up consciences of a multitude of forums and institutions—sincere and praiseworthy though they may be—make the Sahel green again, when we lack the funds to drill wells for drinking water a hundred meters deep, while money abounds to drill oil wells three thousand meters deep!12
It is exactly this notion of self-determination that resonates with Coni Ledesma, representative of the National Democratic Front of the Philippines (NDFP), when she speaks of the Bungkalan as a contemporary collectivization practice. In Filipino, Bungkalan means “to cultivate,” and relates to peasants and farmworkers who have been promised land reform, to no avail, and instead take collective repossession of idle lands on the islands of Negros, Mindanao, and Luzon, among others—despite continuing disappearances and murders perpetrated by the military. Rather than depending on massive state intervention, Ledesma describes how “farmers and sugar workers take their destiny and their lives in their own hands,” as a practice of collectivization in the here and now.13
With such examples in mind—from Federici to the Chinese communes and from Sankara’s eco-socialism to the Bungkalan—it would be better to speak of a history of collectivizations in the plural. As Vijay Prashad remarks, there needs to be a history of “polycentric communism” in thought that is not “centered around Moscow and Soviet foreign policy.”14 This helps to not only reconsider the pluralist histories of collectivizations in the past, but to also redefine collectivization struggles against the theft of common resources in the present and future.
Film still from Ridley Scott’s Blade Runner (1982).
2. Trillion-Dollar Dispossessions
Faced with the rise of trillion-dollar companies such as Alphabet (Google), Amazon, Apple, Microsoft, and Bayer (Monsanto), with their massive extraction operations, there is an evident urgency to redefine the role of collectivization for egalitarian politics today, in order to reclaim control over political, economic, and social commons. When trying to grasp the vastness of the monopolization of resources by these companies, researchers draw parallels to the histories and presents of colonial empires. Siva Vaidhyanathan writes that “between Google and Facebook we have witnessed a global concentration of wealth and power not seen since the British and Dutch East India Companies ruled vast territories, millions of people, and the most valuable trade routes.”15Yanis Varoufakis claims that “the East India Company was no aberration” but should rather be considered the historical template that result in “mega-corporations like Amazon, Facebook, Google and ExxonMobil, which are effectively beyond the control of any nation-state.”16 Shoshana Zuboff argues that trillion-dollar companies are part of an era of “surveillance capitalism” and engage in neocolonial “digital dispossession,” with the result that “claims to self-determination have vanished from the maps of our own experience.”17
Zuboff’s reference to self-determination is relevant here if we want to understand the multiple forms of dispossession carried out by these trillion-dollar companies. As Karl Marx phrased it, the means of production are “the means of absorption of the labor of others,” meaning that “it is no longer the worker who employs the means of production, but the means of production which employs the worker.”18 This analysis seems fully applicable to Zuboff’s conception of surveillance capitalism, for in digital dispossession, data consumers also function as data workers.
Jodi Dean questions whether this form of surveillance capitalism is not better understood as a form of neofeudalism: “Cities and states relate to Apple, Amazon, Microsoft, Facebook, and Google/Alphabet as if these corporations were themselves sovereign states—negotiating with, trying to attract, and cooperating with them on their terms.”19 In Dean’s words, trillion-dollar companies are “doubly extractive,” because “platforms not only position themselves so that their use is basically necessary (like banks, credit cards, phones, and roads) but that their use generates data for their owners.”20 Facebook and Alphabet are less concerned with selling products to their users than with extracting behavioral data to sell to commercial and political advertisers, with the goal of eventually predicting future behavior in order to ensure guaranteed outcomes. While consuming, users are providing labor, just as that labor simultaneously becomes a form of consumption. In Blade Runner (1982), the bioengineered “replicant” Rachael perfectly summarizes the conditions for users of these platforms: “I’m not in the business. I am the business.”
When taking—consuming—a smart car for a spin, the driver is also operating as a data worker whose behavioral information is extracted to benefit restaurants and stores en route. The expanding internet of things uses our health monitoring apps to anticipate when we will become hungry, or our Google searches to predict when we will desire a new item of clothing. In the smart-city phantasmagoria, the world becomes a vast data mine that is excavated to predict our behavior, both as workers and consumers.21 This is what leads Vaidhyanathan to argue that if corporations such as Facebook merely recognized users as clients instead of resources, this alone could be considered revolutionary.22
Of course, it is important to emphasize that extraction through digital means remains a fundamentally material operation. This is exemplified by a recent lawsuit against Apple, Google, Dell, Microsoft, and Tesla based on field research conducted by antislavery economist Siddharth Kara, filed on behalf of families of children who were killed or injured at cobalt mines in the Democratic Republic of Congo (DRC). The primary phase of dispossession does not involve neofeudal data workers using their smartphones, laptops, and electric cars, but rather those who are forced to mine the materials to create these infrastructures and interfaces in the first place.23
This doesn’t mean, however, that people in the Global South are not also mined for data by trillion-dollar companies. Facebook piloted its “internet.org” project, later renamed “Free Basics,” under the guise of providing free internet to regions of the world that have limited access. The project was advertised as part of the company’s mission to “connect the world.” But the services were only free for limited apps, such as Facebook, and everything was hosted on Facebook’s servers. The goal, then, was to essentially replace the internet with Facebook.
This did not go without resistance: Indian net activists successfully fought Facebook for infringing on net-neutrality principles, leading to internet.org’s withdrawal from the country in 2016.24 But in many other countries, Facebook successfully contracted with governments to implement Free Basics, which in turn gave the company undue influence on national affairs. In the Philippines, where Free Basics went into effect in 2015, Facebook employees advised various candidates on their digital campaigns during the presidential elections of 2016. The winner, authoritarian Rodrigo Duterte, turned Facebook into his main media service, banning independent press from covering his inauguration.25 A year later, Facebook and the Duterte regime entered into a partnership to lay new underwater data cables, forging a profitable relation that ties Facebook indefinitely to Duterte’s murderous “war on drugs” campaign and his current push for an “anti-terror” bill to rid himself of any form of leftist opposition.26 Facebook might have been praised for its all-too-late suspension of Donald Trump’s account after his neofascist followers stormed the United States Capitol, but Trump’s incompetent authoritarianism is child’s play compared to Duterte’s Facebook-sponsored regime.
The emergence of neofeudalism—or “techno-feudalism” in the words of Varoufakis27—thus threatens self-determination in various ways: through multiple forms of dispossession, these companies extract our labor, equally as workers and as consumers; they dismantle any remaining notion of privacy; they structurally undermine democratic oversight and shared ownership; and they enable new forms of authoritarian (corporate) government. What twenty-first century collectivized imaginaries and collectivization practices might help us reclaim ownership over our common resources?
Left: Public protests on Black Friday in Bangladesh. Right: Projection on the wall of Amazon’s headquarters on Black Friday in London; both part of the Make Amazon Pay campaign coordinated by UNI Global Union and Progressive International. Courtesy of Progressive International.
3. Collectivized Imaginaries
As we consider contemporary strategies for collectivizing resources and forms of technology, it is important to remember that users are the ones who initially funded these trillion-dollar companies—not just through unpaid data work as described above, but also through public investment, without which these companies could not have come into existence in the first place. Apple’s so-called “innovations” are inconceivable without US government–financed technological research.28Amazon could not have kickstarted its operations without the publicly funded postal system of the US and other countries, through which it continues to be subsidized;29 and as Andreas Petrossiants remarks, “Many of Amazon’s workers are so underpaid that they receive what little welfare benefits still exist in the US—meaning taxpayer money is essentially funding the social reproduction of Amazon workers.”30 Alphabet would not exist without the knowledge production of others, who provide its search engine’s content.31 Bayer would be of no value if it did not steal decades and centuries of seed knowledges and practices from farmers and Indigenous peoples.32 That users have collectively worked for these companies, paid for them, and been expropriated by them, without renumeration of any kind, frames the core argument for transferring them to collective ownership.
Such an endeavor is not without precedent. At certain critical moments in history, even liberal-democratic societies have recognized that private enterprise can disproportionately impact public well-being; in these moments, some companies and sectors have been placed under public control. During the 2008 financial crisis, a number of banks were (temporarily or partially) nationalized—Northern Rock in the United Kingdom, Bankia in Spain, ABN Amro in the Netherlands—when their criminal dealings in financial derivatives ruined the lives of precarious people all over the world. Spain temporarily nationalized private health care during the coronavirus pandemic.33 While these actions were taken primarily to rescue a disastrous economic system, they nonetheless display a recognition that banks and privatized health care threaten collective self-determination. The same recognition should be extended to trillion-dollar companies.
It is in this light that Wendy Liu argues for “more democratic control over the online platforms we spend so much time on, through user ownership, state ownership, stronger regulation, or decentralization.” Liu further emphasizes the need to “increas[e] worker mobility” through portable personal data, which could be moved from one platform to another in order to block further monopolization, and to deprive trillion-dollar companies of their “control over intellectual property.”34
Regaining democratic control over trillion-dollar companies also means repurposing them to serve the public good. Nationalization campaigner Paris Marx argues that the logistical urgencies of the coronavirus pandemic provide further rationale for placing Amazon under public ownership, by integrating it into the United States Postal Service (USPS):
The key task of a publicly owned Amazon in this moment of crisis would be to maintain the supply chain so it can continue delivering the necessities that people rely on, with priority given to those items. However, it should also begin preparing for the large-scale delivery of packages containing food staples and essential items to every home in the country, making use of the combined labor power of USPS and Amazon delivery workers, but also the infrastructure that only the USPS has: post offices all across the country, even in small rural communities that aren’t economical for private-package delivery companies to service.35
This is not the end of the nationalization effort Marx proposes. He also argues that Amazon’s web services, its infrastructure, and its data centers could become a “strong backbone” for a publicly owned internet. Whole Foods, an Amazon subsidiary, could be “reoriented to make a food hall that provides food to the community” and could also serve as a foundation for an expanded Meals on Wheels program. Amazon Studios could be reorganized to produce smaller, mid-budget indie and alternative films, which are currently marginalized to nonexistence due to the increased consolidation of large production studios that prioritize blockbuster output.36
Liu’s and Marx’s demands for democratic oversight and public ownership resonate with current workplace mobilization. The global campaign Make Amazon Pay, coordinated by Global UNI and Progressive International, was launched on “Black Friday” in 2020, demanding workplace improvements and job security for Amazon employees, a reversal of the company’s ban on unionization, a commitment from Amazon to achieve carbon neutrality, and full taxation of the retail giant.37 When the campaign was launched, tens of thousands of Amazon workers gathered in front of warehouses across the world, from Bangladesh to India, Australia to Brazil, the United States to the United Kingdom, Germany, and Poland.
The visual morphology of the campaign, which I developed together with Remco van Bladel in close dialogue with the organizers, aimed at two things. Firstly, the famous Amazon logo, which can be read as both a smile and a forward arrow, was doubled and placed on a red canvas to emphasize the demand to return: return rights to Amazon workers, return their hard work by providing benefits and financial security, return the environmental costs of excess carbon emissions, return the profits earned through tax avoidance. Secondly, hijacking and socializing Amazon’s visual identity was also intended as a first step toward the company’s replacement: our campaign symbols gestured towards a future Amazon owned and governed by its workers and users.
Jonas Staal and Jan Fermon, Collectivize Facebook, 2020-ongoing. HAU Hebbel am Ufer, Berlin.
Creating a “visual portal” that points towards a future of workers’ ownership and self-governance is also central to the collective action lawsuit against Facebook that I initiated with human rights lawyer Jan Fermon, which we will file at the UN Human Rights Council in Geneva. In line with Zuboff, we argue that the ownership model of Facebook and other trillion-dollar companies fundamentally infringes on the self-determination of peoples and individuals. As a consequence, we demand that the Council recognize Facebook as a public entity, and transfer ownership to its 2.8 billion users.
We are asking neither to reform nor nationalize Facebook: our approach to collectivization aims to turn the Facebook platform into a transnational cooperative, owned and governed by its users.
To replace the economy of extractivism and private ownership with a common, collectivized economy, cultural work is crucial. In Varoufakis’s political sci-fi book Another Now (2020), we encounter a parallel reality in which the 2008 financial crisis did not result in a consolidation of techno-feudalism; instead, it marked a fundamental turning point towards a “corpo-syndicalist” alternative. In this “another now,” a movement called Ossify Wall Street brings a new group into being: the Ossify Capitalism Rebels. Their actions target both physical spaces and the digital realms of techno-feudalism. Employing a “double strike” strategy, the OC Rebels help organize a strike among Facebook workers; at the same time, they convince masses of Facebook users not to log on, starving the company of valuable data.38 Other major “tech strikes” follow, forcing a halt to the extraction economy of Facebook and other trillion-dollar companies. Feeling the pressure, the political class passes a new Digital Rights Act that guarantees every person on earth full property rights over their own data:
Starved of their targeted advertising revenues and access to stock exchanges, the new shareholders of Google, Facebook and their ilk—employees owning one share each—were forced to seek the financial support of their community of users. In a surprisingly short time, what used to be the world’s greatest and greediest private monopolies had mutated into vast digital communes.39
Varoufakis shows the power of the cultural imaginary to recognize our current present as criminal, compared to the feasible pathways towards the digital communes of another now. It is in this light that we should see the work of the TESA Collective, which creates cooperative board games. It is hard to name a popular game, book, or film that does not involve a storyline based on a predatory win-or-lose dichotomy—and this shows how culturally embedded the extractive imaginary truly is. From Monopoly to Risk and Settlers ofCatan, many board-game players are trained from an early age to understand narrative excitement through the theft of the commons: my gain is based on everyone else’s loss. The TESA Collective’s games, such as Co-Opoly, Rise-Up, and Strike, are instead based on collectively identifying shared oppressors—private capital and authoritarian governments. These games task players with creating large coalitions among workers, faith communities, students, alternative media outlets, and other groups, helping to train future social-movement organizers and cooperative members.40 We find real-life applications of such cooperative efforts in Clara Balaguer’s project Troll Palayan, which organizes meme-creation workshops, or what she calls “organic troll farms” (“palayan” means “rice paddy” in Filipino). The projects aims to reclaim the joys of collective memology to “dismantle toxicity in cyberspace.”41
In these examples—from Paris Marx’s mappings of nationalized trillion-dollar companies, to Varoufakis’s description of another now, to the training of cooperative mentalities by TESA Collective and Balaguer—collectivized imaginaries serve as the foundation for constructing collectivized realities.
TESA Collective, Rise Up: The Game of People & Power, 2017. Courtesy of TESA Collective.
4. Ninety-Four Million Years of Collectivism
Capitalism—along with its neo- and techno-feudal mutations—is maintained in part by a certain origin myth. Unjust systems of predation are portrayed as an inherent part of the “circle of life” or “human nature.” Through this narrative, collectivization is framed as a rarity in history, as a utopian glitch that may be desirable but is in fact incompatible with human reality. Collectivization might look good on paper, but not in practice. In this line of thought, capitalism is naturalized: it is not what we want, it’s simply what we are.
Nick Estes challenges this origin story by arguing that “Indigenous ways of relating to human and other-than-human life exist in opposition to capitalism, which transforms both humans and nonhumans into labor and commodities to be bought and sold.”42 Furthering this argument, the Red Nation coalition—of which Estes is a member—demands “dignified lives as Native peoples who are free to perform our purpose as stewards of life if we are to protect and respect our nonhuman relatives—the land, the water, the air, the plants, and the animals.”43 Through this emphasis on comradely relationality within ecosystems, the notion of private property—of legalized theft—is rejected. The struggle for collectivization today, then, is no novelty, because collectivized practices preceded capitalism all over the planet. In their proposition for a “Red Natural History,” Not An Alternative refers to this as a “world in common,” existing as a horizon within our world of capitalist capture.44
Capitalism’s origin myth even reaches further back than humans have existed on earth. For a long time, geologists claimed that the carnivorous “Cambrian Explosion” that occurred 541 million years ago was the evolutionary leap that resulted in complex life on earth. But for decades geologists ignored facts that contradicted this view—which might have something to do with their inability to imagine that complex life could result from anything other than capitalist predation.
However, in the geological era immediately preceding the predatory Cambrian Period—known as the “Ediacaran Period”—complex life-forms coexisted in a cooperative, nonpredatory oceanic world. The Ediacaran Period lasted from 635 to 541 million years ago—ninety-four million years of collectivism. In is in this light that geologist Mark McMenamin asks, “Do socialism and capitalism have, fundamentally, an ecological basis?”—implying that the Ediacaran could be considered a period of pre-socialist socialism, and the Cambrian as a period of pre-capitalist capitalism.45Ediacaran biota resemble disks, worm-like shapes, and elegant plant-like forms characterized by a quilted body architecture. They are regarded as neither plants nor animals, their existence defying biological and gendered classification. Their collectivized ecology operated through photosymbiosis, chemosymbiosis, and osmotrophy, recirculating nutrients amongst one another, making predation unnecessary.46
Rangea, Swartpuntia, Kimberella, and Alexandra Kollontai with Charnia.Jonas Staal, 94 Million Years of Collectivism (detail of storyboard study),2020–21. Gouache on paper. Courtesy of the artist.
The Ediacaran is named after the Ediacaran Hills in South Australia, home of the Adnyamathanha people. We might thus evoke here the Aboriginal concept and practice of The Dreaming, where ancestors and descendants coexist.47 Do Ediacaran biota, such as Charnia, Rangea, Kimberella, Swartpuntia, Spriggina, and Ernietta, coexist in a dream space with Karl Marx, Vladimir Lenin, Alexandra Kollontai, Rosa Luxemburg, Hồ Chí Minh, Célia Sanchez, and Thomas Sankara? Do they share the same dream, or dream of one another, beyond time and across space? A dream of socialized ecologies of coexistence, a dream of perpetual redistribution and collectivization of life? These questions belong to the field of “Proletgeology”: earth-memory studies of other-than-human proletarian and collectivist life-forms.48
While we should not naturalize the ninety-four-million-year Ediacaran Period as a pre-socialist socialism the way the ruling classes naturalize capitalism, it is essential to recognize that human and other-than-human work towards collectivization is as much a part of our deep history as of our struggles in the present. Our challenge today is to solidarize these dreams and imaginaries to collectivize worlds for all.
I want to thank Adwait Singh, iLiana Fokianaki, and Andreas Petrossiants for their editorial support in writing this essay. I further want to thank Singh and Mihnea Mircan for our ongoing conversations about Ediacaran collectivism, and Proletgeologist Vincent W. J. van Gerven Oei for his counsel. Part of the research for this essay emerged from the “Collectivizations”interview series that I co-programmed with Marina Otero Verzier and Flora van Gaalen for Het Nieuwe Instituut, Rotterdam.
Member of mέta’s Advisory Board & Senior Research Fellow, Institute for Advanced Studies in the Humanities, University of Queensland
The Commonwealth of Australia’s Biosecurity Act 2015 is anything but simple. It is some 734 pages long. Much of this legislation concerns agricultural matters, and whether it can really be used to keep Australians in India from returning home from that terrifying COVID-19 hotspot is not immediately apparent. But whatever the real legal force of the Biosecurity Act may be, the concept of biosecurity in the context of emergency government powers warrants careful thought.
In recent decades we seem to have become accustomed to the idea that our governments need safety procuring laws that furnish special emergency powers. Staying safe, then, is the idea that justifies the normalization of extraordinary government agency powers over citizens, including the suspension of the normal legal rights of citizens against the direct invasion of the state into their personal lives, freedoms of movement, and daily activities. It also justifies un-safety and brutal inhumanity towards anyone our government considers to be a threat to our safety. Here we might think of boat arrival asylum seekers, Australians wanting to get home from international COVID-19 hots spots, and possibly Australians our allies don’t like, like Julian Assange, all of which might be thought of as threats to ‘our’ safety. (But… what if ‘we’ are ‘they’?)
According to the infamous German jurist Carl Schmitt, the sovereign defines the state of exception. Indeed, to Schmitt, the ability to override normal legality is what defines a sovereign as such. Philosopher Giorgio Agamben sums up Schmitt’s stance like this: ‘The paradox of sovereignty consists in the fact that the sovereign is, at the same time, outside and inside the juridical order’.
In Australia we seem to be constructing a juridical order that has more and more provisions for extraordinary emergency powers. Our safety, it seems, can justify almost any over-riding of legal normality, such that legal normality seems to be becoming harder and harder to actually experience. We seem to be making Schmitt’s sovereignty paradox the norm in the very structures of our legislation. We have a set of normal legal rules, and a set of emergency legal rules that can over-ride the normal set of legal rules at the government’s sovereign discretion. If we end up living in a perpetual state of emergency – be it because of a terrorist threat, a biosecurity threat, a global environmental threat, a global financial or cyber-security threat, or a geopolitical crisis between the USA and China, etc. – then normal law is becoming functionally obsolete. Is this the kind of safety we really want?
Agamben explains that when preserving “bare life” becomes the prime objective of the state, politics ceases to exist. The mere quantitative fact that we are alive is not what makes us political beings (potatoes are alive, but are not political beings); it is the pursuit of reasoned discursive processes that work towards a qualitative vision of the good life in common that makes us political beings. That is, naked safety – the preservation of bare life as the first priority of state power – is the enemy of our political humanity. For it is not simply the fact that we are alive that makes our lives worth living. It is the uniquely human meanings that we give to our lives that makes our lives worth living. It is the meaning of all those things that states of emergency shut down that makes us both human and political beings. It is the meanings of relationships, religion, discussion, contemplation, art, enjoyment, imagination, compassion, love, sharing meals – the essentially qualitative and transcendently overshadowed mysteries that clothe our naked biological lives – that defines our humanity.
Ironically, it seems that whilst – in our COVID-19 times – physically buying toilet paper and shopping at Bunnings remain both essential and ‘safe’, yet singing in church, attending university lectures, weddings, funerals concerts, and meeting loved ones are all obviously unnecessary and unconscionable public safety risks. We seem to hold up bare necessities and meaningless consumption as non-negotiable, but those things that define our humanity are now somehow peripheral and dispensable.
Staying safe is an impossibly reductive simplification of a meaningful life. And perhaps we go along with this because we ourselves are simplistic when it comes to human meaning. Could it be that we allow our legislators to construct special powers that nudge us towards a state of perpetual emergency because we lack a community sense of what makes life genuinely meaningful? Are we – alas – getting the government we deserve?
The above is not an apology for recklessly unsafe government. And of course, the preservation of human life is a genuine good. But Agamben wants us to think about what makes human life worth living. Mere survival is not an end in itself; one survives in order to live a meaningful life. If we only think about preserving bare life, we may well be ignoring, even occluding, the vital clothing of our humanity. And safety can be demonically anti-human. The application of sovereign power over bare life may have no interest in our or anyone else’s qualitative humanity, and safety may become an iron cage trapping and breaking the human spirit. Passive animal bodies that special executive power firmly controls are sub-political, but human citizens are active, thinking, speaking beings who have rights and responsibilities.
Schmitt’s Nazi Germany shows us what government by the state of exception can turn into. And let us not forget that the obscene justification given to Germans and their conquered dominions for isolating and exterminating Jews, communists, homosexuals, and any civilian subverting Nazism in any way, was the ‘public safety’ argument against the risk of ‘contagion’. If the horrors of Nazi Germany have taught us anything, surely it was that the fragile clothing of our humanity is never more important than when the very meaning of human life is threatened by exceptional insecurity.
If ever there is a choice, we must choose humanity over safety. But often this is not a matter of choice but of priority. Our humanity requires us to rapidly bring Australians home from India, and also to solve the health concerns with the necessary resources in Australia. Our humanity requires us to allow grieving Indian students in Australia to go home to bury their loved ones, but also to allow them back into Australia, solving the health risks this act of humanity generates with suitable resources. Surely our resources should be used in the service of humanity? But to just pull up the draw bridge and keep our own out, and to have no compassion for the human needs of the foreigners in our midst, this is beneath the human dignity of Australians.
If we make safety the servant of our humanity then we can have both costly but strong humanity and expensive safety. If we have inexpensive safety at the cost of our humanity, this is a denial of our humanity. There is a choice to be made here. We need to choose between safety as the first goal of government, and humanity as the first goal of government. We need to choose between a small-hearted safety that upholds sub-political bare life, and a large-hearted and authentically political humanity for genuinely meaningful life.
Premises of the former MTT textile factory, Maribor Melje 21 May − 18 July 2021
Artists: Allora & Calzadilla, Lucien Anderson, Manca Bajec, Maxime Berthou & Mark Požlep, James Bridle & Navine G. Khan-Dossos, Kara Chin, Jasmina Cibic, Marcus Coates, William Cobbing, Vadim Fiškin, Laura Harrington, Stane Jagodič, Mikhail Karikis, Janja Kosi, Harley Kuyck-Cohen, Polonca Lovšin, Andri Snær Magnason, Yoko Ono, Antonis Pittas, Marjetica Potrč, Mako Sajko, Nina Slejko Blom & Conny Blom, ScanLAB Projects, Ian Soroka, Danae Stratou, Emilija Škarnulytė, Marko Tadić, Jimmy Turrell, Chris Watson and others
Relaunch of the Triennial in 2021 In 2021, the Maribor Art Gallery is relaunching the International Triennial of Art and Environment in its eighth edition. The EKO Triennial (founded in 1980), dedicated to contemporary visual arts and the environment, will explore the intersections between the current socio-economic challenges, environmental policies, and post-colonial globalisation. In line with the growing awareness that the state of our environment depends on a range of interconnected systems, including environmental policies, technological development, social practices, the economy, etc., the Triennial relates natural and social ecosystems and blurs the boundaries between the contradicting notions: nature|culture, individual|common, national|international, global|local. The renewed Triennial will thus reflect and comment on the many changes at the global and local levels that affect the environments we live in and depend on. Read the brief history of the Triennial About EKO 8 art director Alessandro Vincentelli
Artistic Director Alessandro Vincentelli The artistic director of EKO 8 Alessandro Vincentelli, an independent curator based in the UK known as a polemical and engaged researcher of the contemporary art world, who for many years co-created the exhibition and research program of the BALTIC Centre for Contemporary Art in Newcastle, named the eighth, renewed edition of the Triennial A Letter to the Future. The title is derived from the memorial plaque with which the people of Iceland marked the loss of their first glacier: “Okjökull is the first Icelandic glacier to lose its status as a glacier. In the next 200 years, all our glaciers are expected to follow the same path. This monument is to acknowledge that we know what is happening and what needs to be done. Only you know if we did it.” It is a powerful plea. The eulogy to the glacier throws us forward into the future. It encourages us to use our imagination. These words speak to us in our precarious present. Alessandro Vincentelli: “As part of EKO 8, the exhibition A Letter to the Future is also a plea to think beyond the present. To bring together works that span generations and expand our understanding. The plaque commemorating the loss of the glacier throws us forward into the future and reminds us of our shared past. We examine if it is possible today for an assembly of artists’ voices, visions, and works in a place where thousands of workers once wove textiles, to entwine profound ecological questions? Which observations of a broader community contribute to a better understanding of that which unites us and binds us together?” Read the entire curatorial statement
EKO 8 Exhibition, Programme, Protagonists In the spring of 2021, the EKO 8 exhibition will present on the premises of the former MTT factory collected visions and proposals of more than 30 international and Slovenian artists that are dedicated to the central theme of A Letter to the Future. In the face of the uncertainties created by the global pandemic, and in light of the new and enhanced need to recognise signs and lessons from history, EKO 8 will be designed as a barometer of change. It will feature ecologically conscious films from the 1960s as well as new works of art, spatial installations and sound installations that raise awareness of species extinction, the fragility of the human ecosystem, and the need for coexistence. We are proud to present the works of promising young authors and established visual artists, such as Allora & Calzadilla, Lucien Anderson, Manca Bajec, Maxime Berthou & Mark Požlep, James Bridle & Navine G. Khan-Dossos, Kara Chin, Jasmina Cibic, Marcus Coates, William Cobbing, Vadim Fishkin, Laura Harrington, Stane Jagodič, Mikhail Karikis, Janja Kosi, Harley Kuyck-Cohen, Polonca Lovšin, Yoko Ono, Andri Snær Magnason, Katie Paterson, Antonis Pittas, Marjetica Potrč, Mako Sajko, Nina Slejko Blom & Conny Blom, ScanLAB Projects, Ian Soroka, Danae Stratou, Emilija Škarnulytė, Marko Tadić, Jimmy Turrell and Chris Watsonamong others.
The new edition of the EKO Triennial will lay new foundations and new rules, and will turn the event into a project outside the gallery space, a project of combining ideas and of discovering potentials through a programme focused on the city and the urban community. Alongside the main exhibition, we will build a programme of conferences, artist, creator, and expert talks, master and practical workshops, walks and gatherings, in cooperation with local and national institutions, associations, and individuals, such as, among others, the Centre for Creativity/MAO and the Igor Zabel Association for Culture and Theory.
Location − The Premises of the Former Textile Factory MTT in Maribor Melje In its renewed form, the EKO Triennial is stepping out of the gallery space with the aim to discover and reactivate urban spaces that demonstrate creative and development potential. Such a space and the first location of the restored Triennial is the area of the former Hutter factory or the MTT textile factory in Melje. With 44,000 m2, an excellent location along the sunny Drava river embankment, close proximity to the city centre, and recognisable modernist architecture, it represents the best preserved industrial heritage in the country. This sleeping giant in Melje will be the venue of the EKO 8 Triennial, whereas the future editions will look for new spaces and potentials in the city. Simona Vidmar: “The EKO 8 Triennial will take place on several sites of this fascinating factory, while the accompanying programme enters into a wider territory of the degraded Melje area to raise thoughts on possible new contents for this forgotten part of the city through a series of creative events.” Detailed location map
EKO 8 Collaborations The involvement and support of the local community in the advancement and visibility of the event is of crucial importance for the success of the EKO Triennial. We are proud that the City of Maribor supports the EKO Triennial as an important cultural and developmental activity. Alenka Iskra, Deputy Mayor of the City of Maribor: “The City of Maribor welcomes UGM’s move to open new premises in the city with its programme and host EKO 8 at the former MTT factory. This is a symbolic place for the post-industrial Maribor as well as an area that will in the future require the City’s additional attention in its integration into the urban fabric.” Partnerships with city institutions, associations, and individual protagonists are also of great importance for the relaunch of the Triennial. With their knowledge, ideas, and actions, they co-create the EKO 8 programme and add to its purpose. We are happy to announce that we have already established collaborations with RUK — Network of Art and Cultural Research Centers, Maribor Regional Archives, Maribor Regional Museum, Maribor National Liberation Museum, Maribor Synagogue, Maribor Diving Club, and the Maribor branch of Centre for Creativity. We will continue building the programme in 2021 with several other protagonists and will unite Maribor into a creative hub!
EKO 8 Team We are a small but enthusiastic team of UGM employees and external collaborators. If you have any questions, write to us by e-mail[email protected],or call us on +386 (02) 2295860.
Exhibition & Programme BREDA KOLAR SLUGA, UGM director and creative supervision EKO 8, [email protected] ALESSANDRO VINCENTELLI, EKO 8 creative director SIMONA VIDMAR, EKO 8 project manager and EKO 8 program manager, [email protected] JURE KIRBIŠ, EKO 8 assistant project manager,[email protected] DEJA BEČAJ, project & digital content assistant, [email protected] BRIGITA STRNAD, programme manager for schools and families, [email protected] URŠA ROTMAN, volunteer leader and programme associate for schools and families, [email protected] URŠKA SABATI, associate for programme for schools and families DON KOREZ, associate for programme for schools and families
Communication & Marketing SUZANA JOVIĆ, head of digital content & media communication, [email protected], 030 312 633 DEJA BEČAJ, digital content assistant, [email protected] ALEKSANDRA HIRSCHENHAUSER, visitor information & shop, [email protected]
Technical Support BORIS RAJH, supervisor & organizer of technical service,[email protected] KLEMEN GRAHOR, head of technical service, [email protected] MITJA ŽNIDAR, technical service
Greek. Economist, politician, leader of MeRA25 and DiEM25, former Greece’s Finance Minister, author and professor
1. Why does economics matter?
Everything we do, and everything that is possible within our social milieu involves questions of dealing with the manner in which we produce our daily lives, both individually and collectively. All that is the realm of economics, so economics matter to the extent that life matters – in a world of limited resources and in a world where humanity is facing both external and internal constraints. So in a sense, any attempt to separate the economic from the political, from the moral, from the philosophical, is bound to produce bad politics, bad economics, bad life and terrible economics.
The “economic” is part and parcel of the human condition, and to the extent that the human condition matters, our understanding of economic relations is crucial.
2. What are the differences between economic science (academic economics) and economic engineering (policymaking)?
Economic science is, to begin with, not a science in the same way that mathematics is not a science and philosophy is not a science – in my understanding, maybe it’s an Anglo-Saxon understanding, but nevertheless, economics is not a science like physics is, like biology in the sense that we do not produce verifiable or falsifiable theories, but we do produce systems that help sharpen our thinking regarding the economic circumstances that we face.
The problems that economics faces, which in a sense transcends schools of thought – this is a problem that pertains to neoclassical economics, to Keynesian economics, even to Marxist economics – the problem we face is this: the moment we try to emulate the natural sciences, the hard sciences, mathematics, by turning the world out there into a mathematical model of economic variables, the problem we face is that in order to solve this mathematical model – because without a solution, you can frame economic dynamics beautifully mathematically, but without the solution you cannot answer any questions using that model. In the same way that in mathematics, if you have a system of n equations and many more unknowns, it’s a beautiful system but it’s irrelevant because you can’t solve for it.
To solve the system of equations that is our mathematical economic model, we have to make assumptions that move us away from really existing capitalism. So we face a huge trade-off: either we solve the system and then we have something definite to say – but what we say is irrelevant to really existing capitalism, or we don’t solve the system, in which case we don’t have much to say about even our own model.
That is a conundrum. That is almost a classical tragedy that economists face. Economists have a tendency to solve the model because you cannot pursue a career without actually publishing something that has some tangible hypothesis, that has certain theorems, which you can then try to ascertain whether those theorems are supported or falsified by the data, by empirical means. So careers are made on the basis of forcing solutions upon models by means usually of hidden assumptions, which ensure that your theories aren’t going to be absolutely relevant to really existing capitalism. So the more successful we are theoretically, the less relevant we are to the economic world that we live in.
And this is a major explanation of the fact that economic theory has never been able to illuminate the real problems that practitioners of economics face, whether you’re functioning at the level of government, at the level of a corporation, of a bank, of a central bank, OECD, the IMF. In the end, policy is driven by politics, by vested interests, by the profit margins of corporations and then at the end of the day, you can come up with any justification using the mathematical models and the economic models.
And that means that in the end, the mathematical economic models of different economic schools of thought, doesn’t matter which one we’re talking about, end up as a legitimizing veneer, an ideology that appears as a science, which it is not. And therefore, because we as economists, we can only understand one thing really: how lucrative monopoly is, by creating these wonderful economic models that are exceptionally complicated and aesthetically pleasing, whether we’re talking about dynamic general equilibrium models or game theory or macroeconomics and so on, those are so complicated that only a handful of people understand them.
People out there who do not understand and think that it must be that those who do understand them are the experts, those who understand them are experts in understanding those models, but they have no clue of how the economy works. So you have a feedback effect between economics as a legitimizing ideology a little bit like theology in the Middle Ages: extremely complicated, aesthetically pleasing, very interesting discussions between theologists, you couldn’t have an opinion about matters of state in the Middle Ages if you didn’t know your Bible upside down and you couldn’t have very complicated conversations about Theope and various other dogmatic discussions between the Catholics and the Orthodox and so on and so forth.
But of course this was all a veneer for the fact that a certain power – greed – was replicating itself using very interesting logical arguments and pseudoscientific constructs in order to legitimize the exclusion of the many from the decisions that affected them and the reproduction of systems of power.
3. What role does economics play in society? Does it serve the common good?
Plays the role of religion with equations and some statistics. In other words, just like religion traditionally played the role of legitimizing existing power – the power of the emperor or the power of the feudal lords, and at the same time was utilized by usurpers and rebels in order to oppose the oligarchs, the feudal lords’ rule through some kind of hierarchical schism. That is the role that economic theory plays. The fact that it uses mathematics gives it the appearance of a scientific, non-religious objective role that increases its religious power. And especially when you combine that with statistics the power of this religion is turbocharged because there’s nothing as powerful as the misuse of statistics.
And when I say about misuse, I’m not talking about so much an intentional attempt to defraud people, no, it’s far worse than that. Most of the economists using empirical data out there are doing their best to come to the truth, but this is something that I had an experience of as a young econometrician-statistician: if you are taught to emulate physics in the social realm as an economist, econometricians, statistician, then by definition, there’s no other way of doing it.
You start with a mathematical model (your theory, your theorem), you reduce it to a functional form, a mathematical form that is consistent with your hypothesis. And then try to find whether the data contradicts that functional form, and if it doesn’t, you say, “ah! See, my model, my theoretical hypothesis has been confirmed to the extent that it has not been falsified by the data.” The trouble here is that while the functional form that has been not confirmed but not falsified by the data is consistent with your hypothesis, there is no way of knowing how many alternative hypotheses are also consistent with with functional form.
In other words, you have not confirmed your theory. There are usually an infinity of theories that are consistent with a functional form that the data does not contradict, in which case we have proved nothing. And the reason why that is not a problem in physics or in other natural sciences is the fact that they have the laboratory and we do not have the laboratory. I mean, we do have economic labs and I have spent 10 years of my life doing economic experiments, but we cannot do an economic experiment regarding the Euro Crisis.
You cannot re-run the Euro Crisis and say, OK, now imagine if austerity was not unleashed upon the people of Greece, of Italy and so on, what would have happened? We cannot do that. We cannot. We don’t have a rewind button to go back and do the experiment again. And historical data doesn’t help us with that. As for the laboratory, we fill it with humans and we ask them to play games with one another, we pay them depending on how they behave within the parameters of a game. And this is extremely interesting. I mean, I spent a decade having enormous amounts of fun doing that, and I’ve learnt a lot.
But in the end, all you can do is you can test hypotheses of how people behave in the lab, which does not necessarily throw light on what’s going on out there. So this is the reason why it is impossible, even if you try to use economic methods, both theoretical and empirical, in a manner that approaches any degree of objectivity.
4. Economics provides answers to problems related to markets, efficiency, profits, consumption and economic growth. Does economics do a good job in addressing the other issues people care about: climate change and the wider environment, the role of technology in society, issues of race and class, pandemics, etc.?
The problem is worse than this. It is not just that economics knows how to deal with the question of efficiency, but in the real world it doesn’t know how to deal with the world of externalities and climate change and so on and so forth. The failure is far more deep seated. I don’t think economics can even understand or illuminate questions of efficiency. Allow me to give a particular example, and I hope that it’s not too specialized. But one of the things that economics students, one of the first things they learn in economics 101 – or actually, I’ll mention two things that we learn in economics 101.
One of them is demand and supply, standard stuff, the downward sloping demand curve and the upward sloping supply curve. You do that even at high school if you do a bit of economics. And the second concept is a concept of efficiency, of optimality. And here I shall mention the definition that everybody uses in economics of efficiency and optimality: that of Vilfredo Pareto, the Italian economist, Pareto efficiency, Pareto optimality.
Let’s look at these two, because these are supposed to be the bread and butter of economic theory. They are both highly problematic and I’ll explain why. Take the demand curve. The demand curve shows you, supposedly, the relationship between the price of a commodity and the level of demand for that commodity, how many units of it will be purchased at different prices Ceteris Paribus, all other things being equal. Right? Assume that the amount of money is spent for each consumer are the same, the prices of all competing goods are the same, substitutes, of compliments, that nothing changes, tastes are the same.
In other words, the demand curve is a hypothetical construct. It does not exist in real time because in real time the Ceteris are not Paribus as I like to say. All other things are not equal; incomes change, prices change. So in real time, the demand curve does not exist. It is a hypothetical concept. Same with the supply curve, the upward supply curve. Now, when we teach economics students, we say, OK, here’s the demand curve, here’s the supply curve, equilibrium is in the middle.
In other words, they say there’s one price, which is the price at which the demand and supply curve intersect, and the quantity is such that if that price and quantity existed, and this was the demand curve and the supply, we would be in equilibrium, there would be no reason for the price to shift. That’s fair enough. But it’s one thing to say that, and it’s quite another to say that if the demand curve shifts upwards, then prices are going to follow a path leading from the first point, which is the intersection, to the second point of intersection.
That that you cannot say. Why can you not say it? Because remember, the whole premise is that Ceteris Paribus. So if the price that’s shifting, the price of tea or coffee, that means that the demand and supply curves of all other goods will start moving around. Which means that their price is not going to be the same, which means that the demand curve that you shifted would now start shifting because it’s shifted, and it is impossible to work out mathematically how it will shift when everybody, everything is sort of shifting all over the place.
So it is impossible to talk about how prices change in the context of the demand and supply framework that we teach in economics 101. You see, here is a fundamental difference between economics and physics. Physics 101 is also full of simplifying assumptions to keep the analysis simple. Beginner’s physics starts with, let’s say, assume there’s no gravity, assume there’s no air resistance, assume this and other things that we know are not true.
But you say, OK, let’s work out the laws of physics without gravity, without dust, without all these imperfections. So we have a very simple relationship between mass, acceleration velocity. You have to create, to come up with the simplest versions of the laws of thermodynamics. And these are correct given the assumptions. And then you introduce grains of imperfection, let’s say, OK, let’s now introduce that. Let’s introduce air resistance, a little bit of dust.
So the mathematical formula becomes a bit more complicated, right, but the relationship between the amount of imperfection, complication that we introduce, and the complexity of the theory is analogous. Whereas in the demand and supply framework that I just described, you just add one speck of realism -time, you just add time – and the whole thing blows up. There is no analogy, it’s not analogous, the imperfection or the complication introduced and the complications that you get in the model. The model just blows up. It’s no longer relevant the moment in the demand and supply framework we introduce time.
So that’s why all of microeconomics, and that’s something that most economists do not know even after they finished university, is that all the microeconomics they’ve learned, the equilibrium models rely on the assumption that there’s no time. The moment you introduce time it all disappears. Imagine if you had a physics that only applied as long as there’s no gravity anywhere. It would be completely useless physics.
So it’s not that economics understands prices and quantities, demand and supply and so on, but then it has problems with things like climate change because of the complications introduced by externalities. Even if there were no externalities, the model is absolutely unrealistic. And any attempt to make it more realistic by adding things like time in it, or actually space, distance, the whole thing collapses because the moment you introduce distance you introduce monopoly, or a degree of monopoly and the whole thing collapses.
Efficiency, OK, let’s take the concept that the concept that I mentioned before of Pareto optimality, of Pareto efficiency. How is it defined? It is defined on the basis that if you have, let’s say, two people, only two people in the world: Robinson Crusoe and Friday, that’s a standard example in economics, and you’ve got two commodities, X and Y, fish and bread. And there is a finite quantity of fish and a finite quantity of bread, of X and Y.
Every distribution of X and Y between these two people yields a certain level of utility for each one of them. And you define an efficient distribution of X and Y between these two people. As a distribution such that you cannot improve the well-being, the utility of one without reducing the utility of the other. That’s the standard – and it makes some sense, right?
I mean, imagine if there were a couple of kids and there was a certain number of toys and you distribute the toys between the two kids. And suppose now that after that you could take one toy from one kid and give it to the other one and take another one from the second kid and give it to the first one. And both of them were happy. Then, of course, the first distribution was not efficient, and as long as you can redistribute the toys between those two kids and one of them gets happier without the other one getting unhappier, you are not in an efficient distribution.
And when you reach a point where whatever thing you change, at least one of them is going to be worse off then you can say that’s an efficient distribution. That’s the way that economists understand efficiency. OK, but that presumes that these children or people are sociopaths. The only way of defining that efficiency is by assuming that people are sociopaths.
In other words, what do I mean by that? I’m being very specific here. I’m not grandstanding. It assumes that each of these individuals doesn’t give a damn about the other, they only care about how many toys they have, how much fish they have, how much bread they have themselves. So sympathy is not allowed. A situation, in other words, where you take a bit of bread from me and you give it to you, and let’s say you’re starving and I’m not, and suddenly I feel okay, that’s nice because, you know, for Fabio, he was starving and starving less. That’s not allowed. And I’ll tell you why it’s not allowed. Envy’s not allowed. You know, you have all the toys and I have very little toys, very few toys and somebody takes it away from me and gives it to you, I didn’t care very much about the toy, but you do you like that one.
And I think, hang on a second. He’s already much happier than I am. And they’re giving him even more happiness and they’re not giving me any more. Now, that’s not allowed either. Why is it not allowed? Because if envy and sympathy are allowed, the whole construct, the mathematical model of efficiency, of Pareto efficiency collapses. Because the only way of working out what is efficient and what is not is to assume that what you have does not have an impact on my ability, either negative (envy) or positive (sympathy). Because if it does, then it is impossible to define a priori which distribution is efficient and which one is not.
Now a world in which time is not allowed, space is not allowed, and everybody’s a sociopath, and that must be the case otherwise our basic economic analysis does not hold, is a word which is interesting but absolutely irrelevant to the world we live in, that human beings inhabit. So it’s not that I am contesting the premise of the question which is that economics is useful when it comes to practical things like efficiency, like optimality, like working out the relationship between the price and quantity of commodities, but we have a problem when it comes to non-commodities like clean air, which has no price because nobody owns it and so on, the externalities. It is true that externalities throw a huge spanner in the works of our economic analysis. But we don’t need externalities for economic analysis to be shown to be absolutely irrelevant in a world which evolves through time in which there is space, distance and in which human beings are not sociopaths.
5. As we live in an age of economics and economists – in which economic developments feature prominently in our lives and economists have major influence over a wide range of policy and people – should economists be held accountable for their advice?
Absolutely, we should. But let me let let me go a bit further back in history. The economic problem has always been the central problem of humanity. Take for instance Homer’s Iliad. In its pages you’ll find a lot of economics, because most of the Iliad is about a war that actually doesn’t take place, that’s stalled. For most of the Iliad there is no war. The Greeks are fighting with one another over the distribution of goods looted from the Trojans, and most of the time what they do is they spend cultivating the land in order to eat. So in other words, they have an economic problem and they have economic solutions and they have management problems, it’s all economics in the end. Even in the Latin tradition with Ovid, you’ll find that the way in which Achilles’ arms are distributed between his heirs – and this is a distribution problem. It’s an economic problem. It’s central to the founding myths and points of the classical tradition.
However, they didn’t need economists. Why? Because up until the 18th century all you needed in order to understand the economic problems of life were: you needed to understand botany, you needed to understand farming, agriculture. To see why the Roman Empire was, for instance, constrained when it came to the production of wheat in Egypt and so on and so forth, you need to understand military matters. Let’s go to another example to understand the rise and fall of the Spanish Empire. You had to understand the manner in which the Conquistadors went over to Latin America and looted the gold and brought it to Spain and what effect that had on the price of gold and so on and so forth.
You didn’t need economic models for that. You needed to be a good historian, political scientist. You had to understand military history. You had to understand – Machiavelli could do it very, very well through his very smart analysis of political power. Economics was absolutely useless. The age of economics is the age of capitalism. Because with capitalism for the first time, you have the commodification of land and labour. For the first time, you have the decoupling of the political sphere from the economic sphere. That had never happened before. Before capitalism, if you were the Lord, you were rich, and if you were rich, it must be because you were the Lord.
There was no way you could be rich without being a member of the aristocracy. If you wanted land you conquered it, if you didn’t inherit it. There was no way of buying land and speculating on it. Because land was not commodified. So economics became possible with Adam Smith, maybe with the physiocrats before him, but nevertheless, Adam Smith, I think, can rightfully be considered the pioneer of economic theory only because for the very first time, society had a real need to understand what the hell was going on.
How could it be that the dirt, the lowly, socially lowly merchant could suddenly have more power than an aristocrat? And how was it that decisions were being made that change people’s lives, that did not pass through the high echelons of political power, because suddenly economic power became decoupled from political power. And that’s where economics emerged. But economics had two stages. The first was the classical period, as we know, with people like Adam Smith, David Ricardo, John Stuart Mill, Thomas Malthus, Karl Marx, people who were not economists.
I mean, if you ask them “what are you?”, the last thing they would say was “economist.” Adam Smith was a philosopher. Karl Marx was a revolutionary. John Stuart Mill was a politician. David Ricardo was a financier and the landlord. He would never answer to your question, never filling a form which says “occupation: economist” – never. So that was the interesting Classical period when there was simply a hunger to understand this new world in which economic power was divorced from political power or separated from political power.
But then there’s a second era of economics, which is what your question pertains to. That’s the era of professional economists, of people who would declare themselves to be economists, of people who got positions in universities as economists. And from the moment that economics became embedded in the academy as a separate science, as a separate discipline, I would say, with its own rituals and journals and ways of accrediting those who had the right to speak for economists. For that to take place, you had to move into this Neoclassical tradition of economics, which was a kind of emulation of physics.
So unlike Smith and Ricardo and John Stuart Mill and so on, who were discursively attacking the big economic issues, and very successfully as well, you have the academic economist who has a project as an economist, not as an intellectual who wants to understand capitalism. And the project is to impress the authorities in the university that they deserve a chair in the university. It’s not the same thing, trying to explain capitalism and trying to get a chair for yourself is not the same thing. To get a chair, to create a department, to convince the University of Cambridge, of Pisa, of Stockholm, whatever, Uppsala, that we deserve to have a chair in economics and a new discipline, a new department of economics, the way they did it – and it was quite natural because at the time the archetypal science was physics – was to emulate physics. So how did they do it? They said, OK, how does physics work? Take Newton, for instance, Newtonian physics. Newton begins with an axiom, an assumption which could be right or wrong or could be right. That’s why it’s an axiom. And the axiom was that, for instance, energy does not disappear, it simply changes form.
The conservation of energy principle. So this could be wrong, but he said ok, imagine that this is right. Now, what kind of relationship should I expect between force, mass and acceleration? So he says, ok, acceleration equals force divided by mass. This must be the case if energy is conserved. Then he goes to the laboratory, he tries this out, he says look it works. So: axiom, mathematical theorem, empirical evidence. That is the structure of science in physics.
so economists, professional economists, unlike the Classical economists, try to emulate them. And this is why we call them Neoclassical economists, or post-Classical economists. So they had to come up with an alternative to Newton’s principle of energy conservation.
So it had to be something that applies everywhere. The beauty about the energy conservation principle is that the applies in Italy, in Greece, on Mars and in another galaxy. It’s not specific to a place. So how could simulate something like that? So some of them thought, they borrowed a philosophical idea from Jeremy Bentham and they said: the principle of utility maximization, everybody on planet Earth, every human being has a utility function that they try to maximize.
Everybody’s utility functions is different, but the principle of maximum utility, which then has a mathematical manifestation – set marginal utility equals the marginal disutility or marginal cost. First order derivative equalization, this is the equivalent of the mathematical relation that Newton came up with between force, mass and acceleration. And then you say, ok, how can we ascertain whether this is true or not? You work out that derivative maximization means that if the price of bread goes down to buy more bread, and say “ah see, it works!”
So suddenly from Adam Smith and Ricardo and the Classical economists who were trying to answer big questions about what makes nations wealthy or poor. Why are there economic declines – David Ricardo. Why is there a business cycle – Karl Marx, who looked at the economy as an organic thing with profits and wages and rents and capital accumulation and so on, all organically connected. Move to the professional economists, the Neoclassical economists from the 1840s, 1850s, 1860s onwards, who suddenly, in a bid to emulate physics, start talking about demand curves and the relationship between the price of wheat and the quantity of wheat.
But everything else is Ceteris Paribus. And suddenly, for the reasons I have outlined in answering previous questions of yours, suddenly they create a mathematical model which is fantastically beautiful, aesthetically pleasing and utterly irrelevant to existing capitalism or to any possible capitalism. And these people, at some point, this tribe or priesthood actually, it is a priesthood, because then they have rituals about who is going to be the pope, who’s going to be the bishop, who’s going to be the cardinal and create journals that everybody is dying to publish in because this is how you become a cardinal.
So this whole shenanigan starts, this whole self-referential process of creating mathematical models which are successful to the extent that they misunderstand capitalism. So this is not a failure to understand capitalism. It’s a design baked into our economics, not to understand capitalism. And then the more mathematically powerful those models become – and this is something I spent a lot of time writing about before I became a politician – here’s the tragedy of economics: you have a process within the profession, the priesthood for establishing a career as a young man or woman PhD, you need to close your model. You need to start with a mathematical description, a pseudo-physics like description of capitalism, and you need to have something that your PhD committee, editors of journals, of important journals like Econometrica, the Journal of Political Economy and the Economic Journal and so on, they would say to you, what is the theorem that’s coming out of your work that we should pay attention to? What is it that you are telling us that is new using this beautiful model of yours? You have to say something, otherwise you don’t get promoted, you don’t get your PhD, you don’t get tenure, you don’t move on in life.
So you really need to produce, to squeeze that theorem out of it. To squeeze that theorem out of it, you need effectively to reduce the number of variables. Because otherwise you have too many variables, you cannot produce solutions like having too many unknowns in a system of equations. So you start making assumptions. Things you don’t know, you assume, right, and moreover the greatest hidden assumption that you have to make is that there is a solution to this model, you assume that the solution exists and then you try to find it.
But this is fascinating because often when you assume that there is a solution, you can find it, but what you can’t prove is that there is a solution. But what is interesting to prove is that there is a solution, but that you don’t try and prove because if you try to prove it, you can’t. So you introduce it in assumption. John Nash, the great mathematician, game theory, for instance, could only find the solution to the so-called bargaining problem by assuming that one existed.
But the problem with the bargaining problem is that it doesn’t have a solution. But if you assume that one exists, you can find it, and you can find it but it’s useless because it has nothing to do with really real bargaining, because the real bargaining is indeterminate, doesn’t have a solution. But who understands that? The mathematics is so complicated. It’s so beautiful that you get Nobel Prizes and so on and so forth. The tragedy, however, is this: the assumptions you make in order to find a solution in economic theory – high-powered mathematical economics – is the same assumption that financiers have used since the end of Bretton Woods in order to pinpoint the expected value of financial derivatives. The moment you assume that there is an equilibrium, you can find what the equilibrium is. The problem as you know, however, in finance is that there is no equilibrium in real life, or if it is, it’s unstable and dynamically unstable, which is why the world blew up in 2008.
So the same intellectual dishonesty, which is essential in order to promote an economist’s career, the same and precisely the same intellectual dishonesty is the intellectual dishonesty perpetrated in the financial sector in order to create the financial derivatives that blew up in 2008. So I’m coming to your question because your question is about moral responsibility of economists. Yes, we have a huge one. Because by turning a blind eye to the hidden assumption that a solution exists before we can find it, we are replicating the intellectual subterfuge and crime that has led to enormous costs being inflicted upon humanity by the financial sector.
And you know, this connection is much closer than one might think. The same people who came up with the financial economics theorems that were then used by the financial sector in order to produce the so-called value-at-risk measures that the Lehman Brothers CEO had on his desk every day thinking, OK, now I know what is the maximum I can lose.
Of course, it turned out that was a ridiculous underestimate, but it’s the same trick that academic economists use in order to publish their articles, that financial engineers use in order to infect the world with financial instability and fragility that led to 2008, which is our generation’s 1929, from which we have not recovered and from which I do not think we can recover.
6. Does economics explain Capitalism? How would you define Capitalism?
What to begin with? Economics succeeds only by not explaining capitalism. The radical point that I’m making is that it is one thing to fail. It’s quite another to succeed in your own discipline by ensuring that your own discipline is irrelevant vis-a-vis its subject matter, which is capitalism. It’s a very radical claim and I know that, and it’s one that really annoys most of my colleagues in the economics profession.
In medicine, for instance, we know that for many, many years, centuries, doctors were doing more harm than good. But that was not because that’s what they wanted. It’s not because they benefited professionally by killing more patients than they cured. It was a learning process. At some point, when was it, 1900, 1910, doctors started curing more people than they killed and they became useful through accumulated knowledge. In economics this is impossible because as long as economics or economists are in the business of creating quantitative models which are meant as abstractions of capitalism, such as the once you have them you convince yourself that you have understood the architecture of capitalism, as long as that’s what economists do, economics would only succeed in building these models if these models are dangerously irrelevant to capitalism. So effectively, they make themselves blind and deaf to capitalism in order to complete their models as models of capitalism. That’s my radical denunciation of economics. Now, I love economics because it’s like the Copernican system, right? Sorry, the Ptolemaic system.
The Ptolemaic system, it was a beautiful system. It was wrong but it was still beautiful, I’m perfectly capable of understanding the aesthetic value of a general equilibrium theory. But if you really want to understand capitalism, you have to set general equilibrium models aside in the same way that the Ptolemaic system needs to be ignored if you’re going to understand the cosmos. So your question was, how do I understand capitalism? Well capitalism, for me, is defined by two markets. The market for labour and the market for finance, for credit.
It is the only economic system in history where the process of work was regulated through a very weird market, the labour market. The reason why the labour market is weird is because it’s the only market in which the buyer doesn’t care at all about what he’s buying. So an employer buys time. They buy 40 hours a week of your time, let’s say eight hours a day for five days, whatever.
However many hours is specified by law. So they buy that time of yours, but they don’t care about that time. What they care about is your work. Is the amount of value you input into commodities – goods and services. But that they cannot buy. That is a human creativity process which can never be contracted. There’s no way you can write down in a contract that which comprises the creative power of labour, so the employer buys labour time hoping to extract creative labour, productive labour during that time. And the extent to which the commodity has value depends on how much creative labour is going into it, not how much time, because I can be employed for eight hours a day and do nothing. Stare at the wall, right. So unlike every other commodity who’s buying and selling is fully specified by contract – get so many iPhones, I’m going to buy a thousand iPhones from you for this price, that’s the quantity. The moment you signed that contract the exchange is finished and it’s no longer economically interesting.
You know what there is to know: so much money, so many iPhones, end of story. And there is no reason to have a human relationship between the buyer and seller. I mean, they may have a human relationship, you go to a market place, you say OK, how much for the potatoes? 3 Euros. OK. You don’t need to have a human relationship beyond that, you can have it.
You can to have a discussion about the weather or football or politics, but it is irrelevant to the economic transaction. Whereas, in the labour market, the moment you sign the contract, that’s when the fun begins. Because then once you say, OK, I will be going to be working for you for 40 hours a week, you enter the business, the factory, the shop, the architectural design studio, whatever, as an employee, and that’s when the economically interesting part of a relationship begins.
But that is not a market anymore. You exit the market. So this is a very weird market. It is a market where what is being sold is not what is being bought. And therefore you have this twin nature of labour. Now that is unique to capitalism. It was not the case under Feudalism. In Feudalism you were a peasant, you worked the land, at the end of the day or the season the Lord came around and collected 60 percent of the of the of the produce, end of story.
There was no market. You were not selling anything, you were not buying anything. The relationship between the lord and the peasant was a political relationship. They would leave you enough so that you do not rebel and cut their heads off. But this is not something that economics or markets have anything to do with. So the labour market.
Now, there’s a second market which is equally weird because the moment the surplus value – the difference between the value of the creative labour and the value of the labour time, this difference is surplus value from which profits, rents, interest emerges – the moment that becomes accumulated and ends up in the financial sphere, then it has to be invested.
And usually those who own it do not invest it themselves, they give it to a financial investor to invest for them, a banker, an agent, a broker. And that’s when the financial investor will have to write a contract, which is again weird, because there’s no way of specifying in advance how much money the investor will make on behalf of the owner of that surplus value. So the financial market – the market for money – and the labour market, these two weird and strange markets that are the source of all instability in capitalism and exploitation and bubbles and crisis, these two markets are what define capitalism and make it distinct from every other form of social organisation, socioeconomic organisation.
7. No human system to date has so far been able to endure indefinitely – not ancient Egypt or Rome, not Feudal China or Europe, not the USSR. What about global Capitalism: can it survive in its current form?
Over the last few years I have put forward a proposal, a hypothesis which has upset various people because I’ve already answered this question by saying that we don’t live in capitalist times anymore. That is not a question whether capital can survive because capitalism has evolved out of itself into something distinctly different.
When I was a young man, the discussion between supporters of capitalism and socialists, opponents of capitalism, was based on the difference between the primacy of the private sector, the free market and the state, sector-state planning, government. The supporters of capitalism, of free markets, were arguing that the market, including the labour market and the financial market, is a decentralised decision making process which works to the extent that it is separate from government. Government only provides the rule of law so that people don’t steal from each other, and enforces contracts between private players, and it is through this decentralised decision making where greed turns into public good. This is if you want also the Smithian, Adam Smith’s point that when everybody is maximising their own profit or utility without anyone caring about the common good, the common good is served most optimally. So that was the pro-capitalism argument.
And the anticapitalist argument, the socialist argument was that the market generates, yes, enormous amounts of goods, unleashes productive forces, but at the same time unleashes huge crisis and destroys life prospects for whole generations, and in the end, it is inefficient because some of those slumps you cannot get out of and therefore you’re going to have to need either a kind of Keynesian state intervention or a central planning of sorts like that of the Soviet Union or indeed of places like Japan, which are to a very large extent, or those economies, even though there was private ownership, there was a lot of central planning with keiretsu and so on.
So this was an interesting debate during which I cut my theoretical and intellectual teeth. But then we had the crisis of 2008, the collapse of 2008. And after the collapse of 2008, this discussion was no longer relevant. Why? Because we no longer have the distinction between the private and the public, between the state sector and the private sector. Since 2008 capitalism has been kept – or what we call capitalism – has been kept alive by central banks. On the one hand, you’ve got central banks pumping out huge quantities of state money, we give it to the private banks that are all bankrupt after 2008. The private banks, like zombies, survive on the basis of this money that is coming to them from the central bank, they lend it on to corporations. The corporations do not invest it in themselves because they fear that the little people out there don’t have enough money, the aggregate demand is too low, to buy what these corporations can produce. This is why you have the absurd phenomenon of corporate savings. You have Apple with more than $200 billion of savings.
I mean, why do corporations need to have savings? When I was a student we were being taught that in capitalism, households save and corporations borrow to invest. When Apple and Volkswagen are saving, you realise that this is not capitalism as we knew it. So Volkswagen gets a lot of money from Deutsche Bank, which gets it from the European Central Bank.
Similarly, in North America, with Apple and so on, they keep getting money from the Federal Reserve even though they have savings. And what do they do with this money?
They go to the New York Stock Exchange or to the Frankfurt Stock Exchange and they buy their own shares. So you have this complete decoupling between financial capital and commercial capital. Financial capital is doing magnificently well, you have a huge rage of capital accumulation, wealth accumulation, Mr. Bezos is making billions more wealth every day not because of profits. Amazon is not profitable. Look at Tesla: no profits. And yet Elon Musk is getting richer and richer and richer and richer. Why? This is all central bank money that is being diverted to the commercial banks into the corporations.
So that’s one thing: it’s all zombified by central bank money. And the other reason why it’s not capitalism anymore is because you have a situation where competition has died through mergers and acquisitions. 90% of the companies in the New York Stock Exchange belong to three companies: BlackRock, State Street and Vanguard. Three companies own 90% of all companies. They own the same airlines. This is not a competitive capitalist market. And you’ve got the high-tech sector producing all these wonderful technologies from Silicon Valley primarily, which allow for the Facebooks of the world to move away from capitalism. I mean, the moment you enter Facebook, you’re not in the market anymore.
Imagine if you were going to walk down the Main Street or High Street and to realise that every shop belongs to one man, all the goods that are sold in these shops are controlled by one man, all the advertisements, everything you see is controlled by one man. The street on which you walk, the asphalt, the pavement, the air you breathe belongs to one man. That man can decide what you see and what you don’t see.
He effectively gets into your brain, and very effectively too. Usually the suggestions that come from Amazon are very good. They’re the ones that even my best friends wouldn’t have the capacity to inform me of what I really want. But that’s not capitalism. That’s not the market, that’s feudalism. And this is why I’m calling it techno-feudalism because it’s a technically advanced form of feudalism. So to answer your question, can global capitalism survive? I would say it hasn’t survived. Global capitalism is already a thing of the past. We already live in post-capitalist times, which I describe as techno-feudalism.
8. Is Capitalism, or whatever we should call the current system, the best one to serve the needs of humanity, or can we imagine another one?
Of course, we can imagine something better.
One of the books that marked me as a young person was Volaire’s Candide and the character in Candide of Pangloss, who used to teach his prodigée that we live in the best of all possible worlds. Now, there’s no doubt that the very, very few who control the fates of everyone out there would love us to believe that Pangloss is right and that, yes, this world sucks, it has lots of problems, but it is the best of all possible worlds.
Every ruling class wants us to believe that Pangloss was right. And if for a moment we lose our will to imagine an alternative present, an alternative set of circumstances, then we become slaves to whoever happens to be in power. And that’s true today, it was true in the Roman Empire, in the Byzantine Empire, any kind of regime. So is it possible to imagine a different system? This is a very interesting question you see, because I spent all my life as a critic of capitalism avoiding the question because it’s so hard, such a hard question.
So, I would not avoid the question. I would say, yes, it is possible to imagine a different world. But then when someone like you said to me, OK, so how would that world work? Then I would evade, because it’s too difficult to come up with an answer. OK, so how should money work? What about land? What about corporations? How should we structure the ownership of corporations? How should decision making take place in corporations?
And some years ago, my wife confronted me and said, you know, I’ve had enough of you complaining about the world we live in. You are not allowed to continue. Not another word from you until you come up with an answer to these questions. So this is why, and you will allow me to do some promotion here, this is why I published this in September, which is my novel in which I describe – in which I try to answer your question how can I imagine an alternative now, another now.
AoE: Do you think there are enough people that really want democracy?
Yes, I do think so. I do think so, the problem is, everybody wants control over their lives. Now, the problem is that when there is more than one of us, my control impedes upon your control. And the more complicated and complex society becomes, the greater the way in which my control impinges upon yours. And democracy is the only way of giving to each one of us a degree of control consistent with everybody else controlling their lives.
Also, the questions that concern all of us are very difficult questions, and none of us are smart enough to have the answers. So for me, democracy is a system. As my friend Brian Eno, the musician, says: Democrats are people who understand that they don’t have the answers and who get together to crowdsource the answers. And I think there is a big need out there for that. People are fed up with what is presented to them as democracy because it’s not democracy, it’s oligarchy with occasional stupid elections – and expensive elections.
And the tragedy is that very often this disappointment at the lack of democracy leads a lot of people who want control of their lives to fall prey to fascism, because fascists are very good at exploiting this disappointment and the hopelessness. And they say to them, like Mussolini did, like Salvini does, like Vox in Spain, here there are right wing. I’ll make you proud again. I’ll give you control of your country again. Let’s just get rid of the foreigner, the Jew, the Arabs, the Romanian, the Germans, the Italian, whatever.
Right. And so, fascism is the dark side of the need for democracy.
The plot of mainstream economics has been monopolized for generations now by the fictional character known as homo economicus. Homo economicus has the cognitive capacities of a superhero: his ability to churn unlimited information and unflinching self-knowledge into instant and accurate decisions is infallible. But he differs from your everyday superhero in one key respect: he is in no way committed to using his powers to do good. His calculation of cost and benefit to relentlessly maximize utility is entirely clinical, and he is laser-focused on his own material self-interest rather than fluffy considerations such as social moorings. Of course, we almost never encounter such people in the real world. Yet the dominant strain of what is known as “rational choice theory” – the model that lies at the heart of mainstream economics – has placed this unsympathetic antihero squarely at the centre of economic thinking, making rationality in effect synonymous with selfishness.
Happily, in recent years, we have started to glimpse what the arc of character development of the agent at the centre of economic analysis might look like – and how it might eventually evolve beyond homo economicus. Beginning with the collaboration – now chronicled by Michael Lewis in The Undoing Project – of the psychologists Daniel Kahneman and Amos Tversky, the stick figure that had for so long populated economics has started to be filled out. Their work helped spawn a whole new field – behavioural economics – that identifies a plethora of instances where the standard assumptions of economic theory are shown not to operate. In particular, human beings appear to be both computationally inferior (lacking both complete information and self-control) and morally superior (motivated by things other than material self interest) to the robotic homo economicus.
The East could have something to offer the mighty West, where we are seeing glimpses into capitalism’s true nature. Antara Haldar on the rise and fall of civilisation as we know it
Once upon a time, not so long ago, there was a place where peace and prosperity reigned. Let’s call this place the West. These lands had once been ravaged by bloody wars but its rulers had, since, solved the puzzle of perpetual progress and discovered a kind of political and economic elixir of life. Big Problems were relegated to either Somewhere Else (the East) or Another Time (History). The Westerners dutifully sent emissaries far and wide to spread the word that the secret of eternal bliss had been found –and were, themselves, to live happily ever after.
So ran, until very recently, the story of how the West was won.
The formula that had been discovered was simple: the recipe for a bright, shiny new brand of global capitalism based on liberal democracy and something called neoclassical economics. But it was different from previous eras – cleansed of Dickensian grime. The period after the two world wars was in many ways a Golden Age: the moment of Bretton Woods (that established the international monetary and financial order) and the Beveridge report (the blueprint for the welfare state), feminism and free love.
It was post-colonial, post-racial, post-gendered. It felt like you could have it all, material abundance and the moral revolutions; a world infinitely vulnerable to invention – but all without picking sides, all based on institutional equality of access. That’s how clever the scheme was – truly a brave new world. Fascism and class, slavery and genocide – no one doubted that, in the main, it had been left behind (or at least that we could all agree on its evils); that the wheels of history had permanently been set in motion to propel us towards a better future. The end of history, Francis Fukuyama called it – the zenith of human civilisation.
While liberal democracy was the part of the programme that got slapped on to the brochure, it was a streamlined paradigm of neoclassical economics that provided the brains behind the enterprise. Neoclassical economics, scarred by war-era ideological acrimony, scrubbed the subject of all the messy stuff: politics, values – all the fluff. To do so it used a new secret weapon: quantitative precision unprecedented in the social sciences.
It didn’t rest on whimsical things like enlightened leadership or invested citizenship or compassionate communities. No, siree. It was pure science: a reliable, universally-applicable maximising equation for society (largely stripped of any contextual or, until recently, even cognitive considerations). Its particular magic trick was to be able to do good without requiring anyone to be good.
And, it was limitless in its capacity to turn boundless individual rationality into endless material wellbeing, to cull out of infinite resources (on a global scale) indefinite global growth. It presumed to definitively replace faltering human touch with the infallible “invisible hand” and, so, discourses of exploitation with those of merit.
When I started as a graduate student in the early 2000s, this model was at the peak of its powers: organised into an intellectual and policy assembly line that more or less ran the world. At the heart of this enterprise, in the unipolar post-Cold War order, was what was known as the Chicago school of law and economics. The Chicago school boiled the message of neoclassical economics down to a simpler formula still: the American Dream available for export – just add private property and enforceable contracts. Anointed with a record number of Nobel prizes, its message went straight to the heart of Washington DC, and from there – via its apostles, the International Monetary Fund and the World Bank radiated out to the rest of the globe.
It was like the social equivalent of the Genome project. Sure the model required the odd tweak, the ironing out of the occasional glitch but, for the most part, the code had been cracked. So, like the ladies who lunch, scholarly attention in the West turned increasingly to good works and the fates of “the other” – spatially and temporally.
One strain led to a thriving industry in development: these were the glory days of tough love, and loan conditionalities. The message was clear: if you want Western-style growth, get with the programme. The polite term for it was structural adjustment and good governance: a strict regime of purging what Max Weber had called mysticism and magic, and swapping it for muscular modernisation. Titles like Daron Acemoglu and James Robinson’s Why Nations Fail: The Origins of Power, Prosperity and Poverty and Hernando de Soto’s The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else jostled for space on shelves of bookstores and best-seller lists.
Another led to esoteric islands of scholarship devoted to atonement for past sins. On the US side of the Atlantic, post-colonial scholarship gained a foothold, even if somewhat limp. In America, slavery has been, for a while now, the issue a la mode. A group of Harvard scholars has been taking a keen interest in the “history of capitalism”.
Playing intellectual archaeologists, they’ve excavated the road that led to today’s age of plenty – leaving in its tracks a blood-drenched path of genocide, conquest, and slavery. The interest that this has garnered, for instance Sven Beckert’s Empire of Cotton, is heartening, but it has been limited to history (or worse still, “area studies”) departments rather than economics, and focused on the past not the present.
Indeed, from the perspective of Western scholarship, the epistemic approach to the amalgam of these instances has been singularly inspired by Indiana Jones – dismissed either as curious empirical aberrations or distanced by the buffer of history. By no means the stuff of mainstream economic theory.
Some of us weakly cleared our throats and tried to politely intercede that there were, all around us, petri dishes of living, breathing data on not just development – but capitalism itself. Maybe, just maybe – could it be? – that if the template failed to work in a large majority of cases around the globe that there may be a slight design error.
My longtime co-author, Nobel Prize winner in Economics and outspoken critic, Joseph Stiglitz, in his 1990 classic Globalisation and Its Discontents chronicled any number of cases of leaching-like brutality of structural adjustment. The best-selling author and my colleague at Cambridge, Ha-Joon Chang, in Kicking Away the Ladder, pointed out that it was a possibility that the West was misremembering the trajectory of its own ascent to power – that perhaps it was just a smidgen more fraught than it remembered, that maybe the State had had a somewhat more active part to play before it retired from the stage.
But a bright red line separated the “us” from the “them” enforcing a system of strict epistemic apartheid. Indeed, as economics retreated further and further into its silo of smugness, economics departments largely stopped teaching economic history or sociology and development economics clung on by operating firmly within the discipline-approved methodology.
So far, so good – a bit like the last night of merriment on the Titanic.
Then the iceberg hit.
Suddenly the narratives that were comfortably to do with the there and then became for the Western world a matter of the here and now.
In the last 10 years, what economic historian Robert Skidelsky recently referred to as the “lost decade” for the advanced industrial West, problems that were considered the exclusive preserve of development theory – declining growth, rampant inequality, failing institutions, a fractured political consensus, corruption, mass protests and poverty – started to be experienced on home turf.
The Great Recession starting 2008 should really have been the first hint: foreclosures and evictions, bankruptcies and bailouts, crashed stock markets. Then came the eurozone crisis starting in 2009 (first Greece; then Ireland; then Portugal; then Spain; then Cyprus; oh, and then Greece, again). But after an initial scare, it was largely business as usual – written off as an inevitable blip in the boom-bust logic of capitalist cycles. It was 2016, the year the world went mad, that made the writing on the wall impossible to turn away from – starting with the shock Brexit vote, and then the Trump election. Not everyone understands what a CDO (collateralised debt obligation) is, but the vulgarity of a leader of the free world who governs by tweet and “grabs pussy” is hard to miss.
So how did it happen, this unexpected epilogue to the end of history?
I hate to say I told you so, but some of us had seen this coming – the twist in the tale, foreshadowed by an eerie background score lurking behind the clinking of champagne glasses. Even at the height of the glory days. In the summer before the fall of Lehman Brothers, a group of us “heterodox economists” had gathered at a summer school in the North of England. We felt like the audience at a horror movie – knowing that the gory climax was moments away while the victim remained blissfully impervious.
The plot wasn’t just predictable, it was in the script for anyone to see. You just had to look closely at the fine print.
In particular, you needed to have read your Karl Polanyi, the economic sociologist, who predicted this crisis over 50 years ago. As far back as 1954, The Great Transformation diagnosed the central perversion of the capitalist system, the inversion that makes the person less important than the thing – the economy driving society, rather than the other way around.
Polanyi’s point was simple: if you turned all the things that people hold sacred into grist to the mill of a large impersonal economic machinery (he called this disembedding) there would be a backlash. That the fate of a world where monopoly money reigns supreme and human players are reduced to chessmen at its mercy is doomed. The sociologist Fred Block compares this to the stretching of a giant elastic band – either it reverts to a more rooted position, or it snaps.
It is this tail-wagging-the-dog quality that is driving the current crisis of capitalism. It’s a matter of existential alienation. This problem of artificial abstraction runs through the majority of upheavals of our age – from the financial crisis to Facebook. So cold were the nights in this era of enforced neutrality that the torrid affair between liberal democracy and neoclassical economics resulted in the most surprising love child – populism.
The simple fact is that after decades on promises not delivered on, the system had written just one too many cheques that couldn’t be cashed. And people had had just about enough.
The old fault lines of global capitalism, the East versus West dynamics of the World Trade Organisation’s Doha Round, turned out to be red herrings. The axis that counts is the system versus the little people. Indeed, the anatomies of annihilation look remarkably similar across the globe – whether it’s the loss of character of a Vanishing New York or Disappearing London, or threatened communities of farmers in India and fishermen in Greece.
Trump voters in the US, Brexiteers in Britain and Modi supporters in India seek identity – any identity, even a made-up call to arms to “return” to mythical past greatness in the face of the hollowing out of meaning of the past 70 years. The rise of populism is, in many ways, the death cry of populations on the verge of extinction – yearning for something to believe in when their gods have died young. It’s a problem of the 1 per cent – poised to control two-thirds of the world economy by 2030 – versus the 99 per cent. But far more pernicious is the Frankenstein’s monster that is the idea of an economic system that is an end in itself.
Not to be too much of a conspiracy theorist about it, but the current system doesn’t work because it wasn’t meant to – it was rigged from the start. Wealth was never actually going to “trickle down”. Thomas Piketty did the maths.
Suddenly, the alarmist calls of the developmentalists objecting to the systemic skews in the process of globalisation don’t seem quite so paranoid.
But this is more than “poco” (what the cool kids call postcolonialism) schadenfreude. My point is a serious one; although I would scarcely have dared articulate it before now. Could Kipling have been wrong, and might the East have something to offer the mighty West? Could the experiences of exotic lands point the way back to the future? Could it be, could it just, that it may even be a source of epistemic wisdom?
Behind the scaffolding of Xi Jinping’s Chinaor Narendra Modi’s India, sites of capitalism under construction, we are offered a glimpse into the system’s true nature. It is not God-given, but the product of highly political choices. Just like Jane Jacobs protesting to save Washington Square Park or Beatrix Potter devoting the bulk of her royalty earnings to conserving the Lake District were choices. But these cases also show that trust and community are important. The incredible resilience of India’s jugaad economy, or the critical role of quanxi in the creation of the structures in what has been for the past decade the world’s fastest-growing nation, China. A little mysticism and magic may be just the thing.
The narrative that we need is less that of Frankenstein’s man-loses-control of monster, and more that of Pinocchio’s toy-becomes-real-boy-by-acquiring-conscience; less technology, and more teleology. The real limit may be our imaginations. Perhaps the challenge is to do for scholarship, what Black Panther has done for Hollywood. You never know. Might be a blockbuster.
The hubris of much liberal legal thinking has been to assume that once a rule-of-law regime is in place, it will be almost perpetually self-sustaining. But the mounting constitutional disarray in the Anglo-American world points to fundamental flaws in the prevailing liberal theory of institutions.
Behavioral economics upended the idea that humans act solely in their rational self-interest. So why do most undergrads barely learn anything about the field?
In the late 1800s, one of the most enduring fictional characters of all time first appeared on the scene. No, I am not talking about Sherlock Holmes or Oliver Twist, but a less well-known though arguably more influential individual: Homo economicus.
Literally meaning “economic man,” the origins of the term Homo economicus are somewhat obscure—early references can be traced to the Oxford economist C. S. Devas in 1883—but his characteristics have become all too familiar. He is infinitely rational, possessing both unlimited cognitive capacity and access to information, but with the persona of the Marlboro Man: ruggedly self-centered, relentlessly materialistic, and a complete lone ranger. Homo economicus, created to personify the supposedly rational way humans behave in markets, quickly came to dominate economic theory.
But then in the 1970s, the psychologists Daniel Kahneman and Amos Tversky made a big discovery. The academics drew on psychological evidence to show that the actions of human beings deviate from the ironclad rationality of Homo economicus in all sorts of ways: People make systematic errors of judgment, such as being excessively attached to what they own, and yet are also more generous and cooperative than they’re given credit for. These insights led to the founding of a new field, behavioral economics, which became a household name 10 years ago, after Cass Sunstein and Richard Thaler published the best-selling book Nudge and showed how this new understanding of human behavior could have major policy consequences. Last year, Thaler won the Nobel Prize in Economics, and promised to spend the $1.1 million in prize money “as irrationally as possible.”
But despite the fanfare, Homo economicus remains a stubbornly persistent part of the economics curriculum. While it is fashionable for most economics departments to have courses on behavioral economics, the core requirements in economics at many colleges are usually limited to only two substantive courses—one in microeconomics, which looks at how individuals optimize economic decisions, and another in macroeconomics, which focuses on national or regional markets as a whole. Not only is the study of behavioral economics largely optional, but the standard textbooks used by many college students make limited references to behavioral breakthroughs. Hal Varian’s IntermediateMicroeconomics devotes only 16 of its 758 pages to behavioral economics, dismissing it as a blip in the grand scheme of things, an “optical illusion” that would disappear “if people took the time to consider choices carefully—applying the measuring stick of dispassionate rationality.” The staple textbook on macroeconomics, written by Gregory Mankiw, gives behavioral approaches even shorter shrift by scarcely mentioning them at all.
Instead, the overwhelming majority of courses that students take in economics are heavily focused on statistics and econometrics. In 2010, the Institute for New Economic Thinking convened a task force to study the undergraduate economics curriculum, following up on a report from 1991. What changed in the intervening years, it found, was “an increase in mathematical and technical sophistication” that was “not sufficient to foster habits of intellectual inquiry.” In other words, Homo economicus is going strong in lecture halls and textbooks across the country.
Economists’ resistance to incorporate the wisdom of behavioral approaches may seem like a frivolous concern confined to the ivory tower, but it has serious consequences. What students are taught in their economics classes can perversely turn models and charts that are meant to approximate reality into aspirational ideals for it. Most economics majors are first introduced to Homo economicus as impressionable college freshmen and internalize its values: Studies show, for instance, that taking economics courses can make people actively more selfish. The consequences are only made more acute by the fact that business, a more preprofessional version of economics, is the single most popular major for college students in the United States—some 40 percent of undergraduates take at least one course in economics. That behavioral economics has been minimized and treated as an aberration by the mainstream has major bearings on how students make sense of markets and the world.
What is so surprising about the hesitancy of economists today to absorb the learnings of behavioral economics is that until the appearance of Homo economicus, invoking psychology in the teaching of economics was standard. At the University of Cambridge, for instance, before a stand-alone department was established in 1903, economics was taught alongside psychology and philosophy. Only after World War II, when the center of gravity of the discipline shifted across the Atlantic, did the rupture became so stark. The dawn of the American era in economics marked a more intense commitment to mathematical analysis, at the exclusion of all else.
This profound change in the economics curriculum has resulted in a discipline that is sterile, tone-deaf, and lacking an emotional pulse—but also one that has proved ineffective in its explanatory and predictive capacities. Economists don’t exactly have a great track record at anticipating the pertinent developments of late: The discipline as a whole was caught off guard by the Great Recession in 2008 and has been late to recognize the skyrocketing rise of inequality. It is even more ill-equipped to deal with looming seismic shifts on the horizon, such as the accelerating effects of climate change or how advances in artificial intelligence will affect workers. Given the greatly amplified role of professional economists at every level of policy making, the extent to which economics is disconnected from reality is becoming more alarming.
Making behavioral economics compulsory isn’t a cure-all for the ills of the economics discipline, but doing so would go a long way in encouraging students to think about building economic models around actual human beings rather than around the caricature that is Homo economicus. If there’s a deeper lesson to come out of the behavioral revolution, it’s that the vagaries of human behavior make it very difficult to model as a pure science, and economists have a lot to learn from other disciplines, including other social sciences and the humanities. This may mean a dose of humility for economists, but it would enrich both the education that their students receive and their prospects of making positive change in the real world.
So because rumors of the demise of Homo economicus have been greatly exaggerated, economics professors today still have the chance to cast aside this antiquated character once and for all.
From high-end coffee shops to microfinance lenders, rapid growth can cause companies to lose the trust and loyalty that brought them success in the first place.
Devotees of Stumptown Coffee, a high-end roastery with fewer than 10 total locations in four select cities, pride themselves on avoiding mainstream coffee chains. What they are probably oblivious to, however, as they sip their mochas and cold brews, is that their haven of individuality may soon be just another chain in the Phoenix airport. What they might suspect even less is that the story of microfinance in Bangladesh may foretell the fate of their preferred coffee shop.
Stumptown, the iconic small-scale brand, was recently acquired by Peet’s, a chain with a couple hundred locations. On a buying spree, Peet’s has been in the news for taking over Intelligentsia, another well-loved and self-consciously indie coffee brand. And JAB Holding Company, the conglomerate that owns Peet’s, announced last year that it was acquiring the at-home coffee-brewing system Keurig.*While Peet’s offers reassurances that Stumptown will retain its authenticity even as it attempts to scale, precocious corporate growth has been shown to corrode the very core of what has, so far, sustained Stumptown: loyalty.
Stumptown’s sale to Peet’s exemplifies an economic phenomenon not confined to the world of craft coffee. Stumptown joins the ranks of a number of popular brands that went from independent to corporate—the Italian San Pellegrino, now owned by the Swiss giant Nestle (along with its main competitor Perrier), the originally Quaker-owned chocolate-bar maker, Cadbury, acquired by the U.S. corporation formerly known as Kraft, and The Body Shop, the cosmetics brand synonymous with ethical sourcing, bought by the French behemoth L’Oreal, to name a few.
Stumptown’s story is typical of an innovative young venture becoming a victim of its own success. Founded in 1999 by Duane Sorenson in his native Oregon, it turned into a national phenomenon (albeit appearing in only a few select cities) and was at the forefront of the small-scale retailers that positioned coffee-making, and coffee-drinking, as a kind of art form. Stumptown’s business model rested on providing an intensely personal experience, designed to build a dedicated following: Baristas were offered quirky benefits that included massages between shifts and, for the many musically inclined staff members, the possibility of having their first albums recorded. Coffee-drinkers, meanwhile, were treated with top-notch beans and unique brews crafted in Stumptown’s “coffee labs.” These were more than just gimmicks—they were integral to the enterprise. Indeed, Sorenson’s expenses were more than justified: His staff was willing to go above and beyond, and his customers willing to shell out for premium treatment.
But these quirky personal touches don’t fit well in the assembly lines of large-scale operations, as the seemingly irrelevant—but actually highly instructive—case of a poverty-reduction program in South Asia would suggest. Microfinance is a lending scheme with a twist: It involves neither contracts nor collateral. Launched as a small experiment in Bangladesh by the economist-entrepreneur Muhammed Yunus and his team of “bicycle bankers,” microfinance, like a high-end cafe, relies on the power of personal relationships. Just as in Sorenson’s case, Yunus’s bold gamble paid off: Because the borrowing was grounded in feelings of loyalty, poor Bangladeshi women paid back their loans much more reliably than borrowers who were considered non-risky by conventional measures.
The model grew into the Nobel-prize-winning Grameen Bank, and microfinance became the most influential single development intervention of recent times, organically amassing a borrower base of 1 billion worldwide. Yet a growth model based on the example of fast-scaling consumer industries—the bid to develop the Starbucks of microfinance, as explicitly attempted by SKS Microfinance in India—was met with a complete breakdown of trust on the part of borrowers and a mass default. The cookie-cutter approach to growth—driven by speed and profit—simply didn’t work in the absence of the personal relationships that characterized the Grameen Bank.
The arithmetic of the “bigger is better” paradigm, or what economists call “economies of scale,” is simple enough. The larger the bushel of coffee beans, the lower the cost per bean. The larger the machine, the more lattes it can spew out. Most of all, scale translates into standardization: the conversion of an unpredictable creative process into a precise and highly economical algorithm of production. All of this means more profits.
But, based on studies of human behavior in places ranging from blood banks to daycare centers, academics now recognize that the calculus is more complex: People act more responsibly in the context of personal relationships that are meaningful to them than in strictly commercial transactions. In fact, loyalty sometimes even trumps economic rationality: going that extra mile to get the perfect cup of coffee, or paying a loan back when the opportunity exists to default. This is what the shift from boutique to mass-manufactured cuts out.
Even as Peet’s plans to treble Stumptown’s presence and make it more widely available at grocery stores, it threatens to make the Stumptown experience increasingly impersonal. But making Stumptown indistinguishable from Starbucks will jeopardize its core constituency, and may even hurt Peet’s bottom line.
Smaller institutions have much to offer—not just sentimentally, but also in terms of pure economics. The idea goes back to the 20th-century British economist E.F. Schumacher’s declaration that “Small is beautiful,” a notion fashionable again in the era of institutions “too big to fail.” Since the logic of scale is more attuned to quantity than quality, workers (whose wages are usually driven down), consumers (who enjoy lower prices, but usually get a worse product) and the landscape of the economy (which shows signs of marked decreases in diversity) all suffer from growth that is too rapid. Size is the conventional metric of economic success, but when stability is pursued as passionately as profit, less may truly be more.
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