Authors: Michael Perelman
Some individual economists dissent from market fundamentalism on specific issues, such as global warming. Others even accept a role for government spending, especially in the midst of a crisis, to increase the quantity of commercial transactions in order to generate more employment. But for the most part, even when the economy is in obvious disarray, the economics profession presents a solid phalanx, insisting on the primacy of market transactions at the expense of the process of production. As a result, matters of work, workers, and working conditions fall from view.
One purpose of emphasizing commercial transactions is to ensure that the “handcuffs” remain invisible, but this choice has unintended consequences. By excluding the study of work, workers, and working conditions, economists lose sight of the productive system on which the economy depends. This not only leaves them unable to recognize destructive economic tendencies, but it also encourages business and political leaders to take measures that undermine the economy by limiting people’s potential.
Although the dogmatism of economics seems as hard as a rock, the situation is not hopeless. Jacob Riis, a posthumously celebrated social reformer, recalled his therapy to avoid discouragement:
I would go out and look at a stone-mason hammering away at his rock perhaps a hundred times without as much as a crack showing in it. Yet at the hundred-and-first blow, it will split in two, and I know it was not that blow that did it, but all that had gone before.
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This book is intended as one among many blows that will ultimately crack the prevailing dogma that prevents the development of an economy that can nurture and tap in to people’s potential. It does not describe how this kind of economy will work. Developing the
details of the future organization is far more challenging than helping to make way for the transition; however, awareness of the current wasted potential must precede the transformation of the present system of social relations.
Michelangelo’s wonderfully evocative, half-finished sculptures, known as
The Slaves
, made a deep impression on me when I saw them in Florence forty years ago. These works do not display the uniform delicacy and detail of his
David
or the frescoes of the Sistine Chapel, but the very incompleteness of these four massive statues, intended for the tomb of Pope Julius, is a major source of strength. The
Awakening Slave
depicts a powerful body, seemingly waking, while still encased in stone. The effect of the
Bearded Slave
, struggling to free himself from his marble boulder, which had once completely engulfed him, is even more dramatic.
Everybody irritated by a boss’s foolish command or a corporation’s ridiculous bureaucratic demands has taken a first step toward an awakening. These annoyances are symptomatic of a much larger problem associated with an outdated system of command and control at the workplace. Once that realization kicks in, you can sense your inner
Bearded Slave
. I like to think that many economists are also like the
Bearded Slave,
deep down struggling to emerge from the self-censorship that engulfs the discipline.
Capitalist society also has something in common with the
Bearded Slave,
except that what covers its inner potential is man-made. It is capitalist control that encrusts society with unsightly layers of waste and inefficiency. This book includes many such examples. Hammering away at this crud might make the system more productive, but more often than not the waste and inefficiency serve a purpose—to maintain the existing system of control.
With enough blows, the irrationality of this system will be exposed. An irresistible vision of a humane system with rich social relations—something more beautiful than Michelangelo’s statues—will first come into view and then replace capitalism.
A Brief Note on the Characterization of Economics
This book describes economists as if they were an entirely homogeneous group, which is not entirely accurate. A tiny minority of marginalized economists remain critical of the capitalist system. A larger number of more conventional economists, some of whom have won Nobel Prizes, have been able to recognize particular shortcomings, though without understanding the systemic nature of the invisible handcuffs.
For example, the work of behavioral economists and neuroeconomists is generating interest for the development of a more realistic analysis of how people actually make decisions. This research shows why the fundamental assumptions of human behavior that economists use are thoroughly unrealistic. Although one of these scholars, the psychologist Daniel Kahneman, won the Nobel Prize in economics, the critical insights of these groups have been no more able to budge the mass of the economics profession than the generations of institutionalist economists (the progeny of Thorstein Veblen) who preceded them.
The stubborn resistance of economics to adapt to scientific evidence reflects a long-standing solidarity on the part of the discipline. Even in macroeconomics, which generates contentious economic debates, Paul Krugman’s textbook acknowledges, “the clean little secret of modern macroeconomics is how much consensus economists have reached over the past 70 years.”
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For this reason, this book will treat economics and economists as if they were homogeneous, despite the existence of a small number who do not completely fit the stereotype.
Overview
The first chapter, “The Anti-Worker Theology of Markets,” begins with a discussion of the theological defense of markets by sources as far apart in time and in stature as Edmund Burke and George W. Bush. According to such people, market relations ensure not only efficiency but
also higher qualities, such as freedom and justice. For the true believers, questioning markets is akin to blasphemy. However, a more appropriate theology of markets might come from Greek mythology, from the legend of the sadistic Procrustes, whose story is introduced in this chapter.
The second chapter, “Disciplining Workers in the Procrustean Bed,” begins to moves away from theology toward reality, by examining a less attractive aspect of the market (and one that the ideologues refuse to attribute to the market): disciplining workers. The chapter describes both direct discipline in the workplace and obvious forms of control, such as the Federal Reserve’s intentional creation of unemployment to make labor fearful of being fired—what Alan Greenspan, then chairman of the Federal Reserve Board, referred to as the traumatization of labor. Such policies are ironic, considering that policymakers pretend that all social objectives—whether higher wages, better working conditions, environmental protections, or even the quality of life—must give way to the promise of job creation. The two concluding sections of the chapter offer quantitative estimates of some of the human and economic costs of labor discipline.
The third chapter, “How Economics Marginalized Workers,” analyzes the development of economic theory’s justification of its inattention to work, workers, and working conditions. It explains why economics chooses to treat work as nothing more than the absence of leisure and how economic theory reduces workers to an abstract input—labor—comparable to coal or steel. This perspective is especially destructive because the abstractions of economics block its practitioners and those whose vision is shaped by economists from recognizing the potential of real people.
Chapter 4
, “Everyday Life in a Procrustean World,” discusses the impact of the narrow market perspective on everyday life. It examines the enormous amount of time that jobs consume, as well as the extension of controls on people’s behavior outside the workplace. These controls are also counterproductive, because they interfere with people’s opportunity to improve their own abilities and capacities. This chapter shows how mainstream economics has tried to convince working people themselves to adopt the same perspective as economists,
instructing them to identify themselves as individual consumers while seeing their own work as nothing more than a loss of leisure. In effect, workers are supposed to ignore work and their relationships with other workers.
The fifth chapter, “International Procrusteanism,” briefly extends the analysis to the international economy, showing how much of the rest of the world must comply with the demands of the United States for market-friendly policies.
Chapters 6
and
7
put the subject in historical perspective by looking back at the economic vision bequeathed by Adam Smith. “Adam Smith’s Historical Vision” looks at Smith’s analysis based on how he thought that societies evolved until they reached the ultimate form of market organization. In this intensely ideological work, Smith cast markets in a highly favorable light. Markets are harmonious, fair, efficient, and give everybody an opportunity to succeed. In this way, Smith provided the ideological foundation for the defense of markets.
Chapter 7
, “The Dark Side of Adam Smith,” shows how Smith realized that his vision of a harmonious society depended upon the prior existence of a successful coercion of labor to accept the discipline of the workplace. In his time, violent measures were often required to leave people with no other option than to accept the new conditions of wage labor. Even after people became corralled into wage labor, Smith realized that controls had to reach deeper into people’s lives, even including state regulation of religion. In short, for all his positive rhetoric about freedom, Smith’s ultimate concern was to control people in order to make them obedient workers. This reading of Smith lends further support to
chapter 2
’s emphasis on the role of discipline.
This chapter also explains why Smith had to distort his work by excluding any discussion of modern industry. He did this in order to allow him to offer his vision of marketplace freedom and liberty, and, later, accounts for how economists simplified Smith’s writings. They removed its uncomfortable ideological implications, leaving an effective, but unrealistic, propagandistic shell.
Chapter 8
, “Keeping Score,” looks at the concept of the Gross Domestic Product, a seemingly straightforward measure of the
progress of an economy. We review the evolution of this concept, showing how, just as with Adam Smith’s theory, the Gross Domestic Product focused on convenient matters that put the market in the best possible light. Just as is the case in economic theory, Gross Domestic Product accounting sweeps work, workers, and working conditions under the rug, along with any notion of the importance of social relationships. By using such a measure to gauge economic success, the concept of Gross Domestic Product served to strengthen the case for destructive, market-friendly policies.
The chapter ends by contrasting the Gross Domestic Product with the results of a recent field of “happiness studies,” in which social scientists, including some economists, recognize the disconnect between the GDP and a satisfying quality of life.
Chapter 9
, “The Destructive Nature of Procrusteanism,” is the capstone of the book, surveying some of the innumerable ways in which capitalist discipline proves to be counterproductive, even in terms of its narrowly conceived objective of increasing the quantity of commercial transactions included in the Gross Domestic Product. For example, unwieldy bureaucracies driven by purely financial motives are incapable of efficiently organizing, let alone inspiring, people. These bureaucracies are not merely a managerial mistake but, as will be shown, a natural outgrowth of an advanced market economy.
These shortcomings of the great corporations that dominate the modern market economy fall into two classes. The first class consists of the destructive effects of efforts to control labor, natural to the present capitalist system. The more interesting, second set of defects represents the ways in which the present organization of production does not just waste labor but also stunts workers’ potential.
The final chapter, “Where Do We Go from Here?” offers some hints about the future possibilities of people working together to create a better life. These propositions fly in the face of prevailing opinion. However, if we continue with the obsessive efforts to control labor, we will harm the interests of society as well as the interests of those who seem to be benefiting from current practices.
The Theological Defense of Markets
Academic economists present a great mystery. How can they muster so much brilliance and intelligence to deny any suggestion of market imperfections? These dogmatic defenders of markets warn that any measures to address economic deficiencies—other than the knee-jerk remedy of expanding market powers even further—are certain to disrupt economic efficiency. Others may acknowledge market problems, but they insist that the root cause must be people’s personal shortcomings. The proper response is to demand more from the people, not the system.
This blind devotion to the market is a kind of religion. Like the adherents of many other religions, economists can be intolerant of those who do not accept their worldview. As Margaret Thatcher, the ultra-conservative British prime minister, popularly known as the “Iron Lady,” once explained, “Economics are the method. The object is to change the soul.”
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This call for spiritual uplift inspired neoliberalism, an extremist mindset in which public policy must give way to the interests of the market.
However, when markets implode, and eventually they always do, many fundamentalists temporarily throw aside their faith in markets. They call on the government for support—never for selfish reasons, of course, but only to return the market to health once more. Once the crisis has passed, their absolute faith in the market is restored. As Charles Darwin once observed, “ignorance more frequently begets confidence than does knowledge.”
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The stubbornness of market fundamentalism reflects a theological view that markets are an end in themselves rather than merely a means to an end. Even the mildest challenge to the market reeks of heresy. Edmund Burke, perhaps the most famous British statesman of the eighteenth century, set the tone for this theological defense of markets, confidently declaring, “The laws of commerce … are the laws of nature, and consequently the laws of God.”
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The
Journal of Markets and Morality
continues to promote this theological tradition.