On economic determinism...

Reading Duncan Green's excellent blog on development http://oxfamblogs.org/fp2p/what-to-do-about-inequality-shrinking-wages-and-the-perils-of-ppps-a-conversation-with-kaushik-basu-world-bank-chief-economist/ today, I was reminded of the perils of economic determinism. This curious affliction not only infects the world's shrinking number of Marxists but also the practitioners of the more 'classical' versions of that dismal pseudo-science.

I am sometimes tempted to think that a century hence, if we blunder our way through to a happier world, that we will look back on economics as we now are presumed to do on 'astrology' or 'alchemy' - except I think that the predictive power of the former and the spiritual richness of the latter both outstrip any offering of the peculiar modern priesthood that is comprised of economists. (I am deeply comforted that they never appear in Star Trek or indeed in any imaginative, peaceable view of the future I can think of).

Meanwhile, back to the present, and on Duncan's blog today we have the opinions of the World Bank's chief economist, Kaushik Basu who I am sure is a wonderful person, not least because he recognises the importance of inequality, though appears less sure of what might be done about it or, given political constraints, what the Bank might do about it.

However, this is now what caught my attention but his remarks on labour.

On labour, he said ‘The declining share of labour’s income does worry me. Multiple crises over the last 7-8 years have at their base a tectonic shift in the structure of global market. The regulation v deregulation argument doesn’t tackle that problem. The real challenge is that you can’t stop the march of machinery that is a) displacing labour and b) linking up labour in distant lands’ (which is a good thing). He argues that we have to identify other ‘pools of cash’ (taxation, natural resource revenues) and use them as compensation for the declining share of wages, both because it is the right thing to do, and in order to prevent social and political disorder.

What interested me especially is the phrase, 'you can't stop the march of machinery' as if this was an indubitable truth framed in a deterministic system. That it is a likely truth as to how the world will go in the near future I miserably grant him but it could be different. We could choose to tax land, capital and resources and free labour from taxation. This would make complete economic, environmental and social sense. The former are depleting assets in need of conservation and care, the latter, labour, is a renewable asset able to offer care in abundance. Rather than subsidise people's income (or idleness) as Basu suggests here, we could allow people to fully benefit from the fruits of their labour, their work. This would be both renewing and prospective of social peace. In other words, there is nothing inevitable about our economic order unless our imagination is bound to certain patterns of fixed thinking.

I was reminded of this because as I read Basu's remarks I am also reading the latest collection of essays from Wendell Berry. Berry is my candidate for the world's sanest person, not always to be agreed with but you must always carefully think yourself through to the real source of your disagreement.

Prioritising labour over capital would immediately suggest to the pseudo-scientist, formerly known as the economist, that we were being inefficient. To which the answer is two fold - inefficient by whose standard - from an abstract, monetarised notion as distinct from that of an actual human community - or indeed from those very abstract standards for as Berry remarks, "The computerisation and robotification of the United States Postal 'Service' far from improving the service, has impaired its ability to transport and deliver the mail on time or at any time'!

Berry's essays continuously undermine Basu's assumptions not least by inviting us to imagine an ordering that we may want to build rather than an ordering with which we must comply.

More than once, Berry points us to a highly successful community, namely the Amish, that would see Basu's remark as complete nonsense. They have quite happily stopped the march of the machine, not because they have not, selectively, appropriated the benefits of developing technologies but have always subjected their adoption to a deeper, more meaningful criteria, namely is this or that innovation good for the community? Does it promote the health of our common life together (which, critically, is seen as both people and land as one commonwealth)? If yes, it can be adopted (or tolerated), if no, then it will be declined (or shunned).

This standard might be applied not only to the adoption of technology but also in other contexts. For example, the ability of a corporation to function might be periodically licensed and judged not simply on its ability to generate 'profits' but for its contribution to the whole of which it is a sub-set and if it consistently failed to meet this social and environmental, as well as economic, audit, its license to operate would be forfeit.

You do not have to be Amish to see that this is a sensible and life giving measure by which 'marching' can be turned aside in preference for the more humane and peaceable standard of walking. There is a beautiful moment in one essay where the standard of walking is used to imply the ecological health of the land - water that walks off the soil, rather than runs, is less likely to erode that soil for example - and this is contrasted, pointedly, with the politician who 'runs' for office (or is always running). The only way, Berry maintains, that we will restore a right balance with 'Our Only World' (to give the title essay of the collection) is if we allow ourselves again to have the time and pace to truly care for the particular places we find ourselves inhabiting.

For this jobs will have to become vocations and vocations will have to be the pathway most deeply rewarded, qualitatively and quantitatively, by the communities we inhabit. You can see how far we must travel from the political expediency and determinacy of the World Bank's chief economist.


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