Political Economy

One of the lessons of Branko Milanovic’s work on global inequality has been the realization that location, and perhaps more pertinently, nationality, is a more important explanation of how well and badly off people are than class is. Citizens of wealthy countries enjoy a “citizenship premium” over the inhabitants of poor ones that exists because they have access to labour markets and welfare systems that their fellow humans largely do not. Of course, there’s a sense in which this global difference also represents a class difference, with many of the workers simply located elsewhere while the residual “proletarians” of the wealthy world enjoy a contradictory class location (to repurpose a term from Erik Olin Wright). While it might be that world GDP would increase dramatically if barriers to movement were removed, as some economists have claimed, the relative position of the rich world poor depends upon those barriers being in place. Or to put it another way, free movement could make many poor people much better off and might not make the rich world poor any worse off in absolute terms, but it would erode their relative advantage. And people, however misguidedly care about their relative advantage.

What kind of politics would we expect to have in rich countries in a world like ours, if people were fully cognizant of this citizenship premium? I suspect the answer is that we would expect to see stronger nationalist movements seeking to preserve the advantage of members of the national collective over outsiders and correspondingly weaker parties based on class disadvantage within those countries. Which is, in fact, the tendency we do see in many European countries where traditional social democracy is struggling badly at the moment. In those same countries we might also expect to see some voters who are unthreatened by freer movement, or by the rise of new powers in the world, being more open to a more cosmopolitan politics and more preoccupied by other issues such as climate change and the environment. And this is, in fact, what we do see.

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I spend yesterday reading Emily Kenway’s excellent The Truth About Modern Slavery (Pluto Press, 2021). Kenway, a former advisor to the UK’s anti-slavery commissioner has her sights set on one of the most pernicious moral panics of recent years, espoused by right-wing politicians and “radical feminists” alike and used to legitimize a range of policy interventions, but particularly the hardening of borders, increased surveillance and, in relation to the sex industry, the “Nordic model”. Kenway’s argument is that the “modern slavery” industry, leveraging a parallel with actual slavery that is unjustified, promotes a focus on practices of coercion and exploitation that are represented as exceptional and abusive and as contaminating a system of labour and employment that is otherwise well-functioning. It leads to a discourse that emphasises the rescuing of victims from the evil gangs that exploit them and obscures the fact that the everyday operations of capitalism and the nation state generate the the conditions under which people make choices, often freely and rationally, to accept pretty horrible conditions, because those conditions are, for them, the best ones on offer. The book is very much focused on the UK, but readers elsewhere will certainly find parallels in their own countries.

Kenway is very good on the way in which the very same politician who have made “modern slavery” into a crusade have also been the ones who have increased the precarity that marginalized workers and irregular migrants experience. At the same time as May was issuing declarations on the subject, she was pioneering, as UK Home Secretary, the Hostile Environment that made it far more difficulty for migrants to get employment in the regular economy. Kenway highlights the ambigious status that workers at the sharp end of this discourse have: victims, if they are found dead in a trailer or “rescued” from a brothel; perpetrators and immigration offenders if they emerge from a trailer alive. The book is very up to date, but since its publication Priti Patel, the UK’s new Home Secretary, introducing a yet more restrictive immigration regime has complained that “illegals” are “abusing” the modern slavery protections in order to remain in the UK. So it goes.
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I recently finished reading Quinn Slobodian’s excellent Globalists, which, for those who don’t know, is an intellectual history of neoliberalism focused on the “Geneva school”. As with all good history, the book did not contain quite what I expected it to. I expected to read of the European Union as a kind of realization of Hayek’s ideas from the 1930s aimed at putting economics (and private property) beyond democratic control, a reading that gives some support to “Lexity” narratives about the EU. But the picture that emerges from Slobodian’s story is much more complex than that. In fact, the Common Market emerges as a messy compromise between German neoliberals who did want a rules-based order putting economics beyond politics and French agricultural protectionism and neocolonialism. This results in a split within the neoliberal camp between those who see EU’s regional governance as a partial step towards the legal insulation of economics from the folly of economic nationalism and those who see the EU as economic nationalism writ large, with the latter camp putting their faith in international protections for markets, competition and capital embedded in the WTO.
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Some tentative thoughts, for a chapter I’m writing about the decline of neoliberalism, and the crony capitalism I see as replacing it. (unless we can achieve a leftwing alternative)

An important difference between Trumpism[1] and neoliberalism (in both hard and soft variants) is that Trumpism is associated with crony capitalism, rather than global corporations and finance. This is obscured to some extent by shared interest in corporate tax cuts and deregulation. But it’s a clear pattern,exemplified by Erdogan, Modi, Orban and Putin (search “X + crony” for illustration). Why is this? The core appeal of US Trumpism is a negative kind of identity politics, reaffirming the rightful dominance of the “unmarked category”, or default identity, that is assumed when a term like “real Americans” is used. Unmarked categories in the US context include white, male, employed, English-speaking, Christian and cis-het.

Trump’s global counterparts have the same kind of politics, but their unmarked categories are different, most obviously with respect to language, race and religion. These differences are problematic for global corporations, who want to operate in different national markets and employ the best talent they can find anywhere.

As long as neoliberalism was dominant, Trumpist voters could be bought off with gestures, while policy was run in the interests of global business. But now that the Trumpists are in charge, they are demanding measures that harm global businesses both economically (restrictions on trade and investment) and culturally (by making ascribed characteristics, rather than market outcomes the measure of esteem). By contrast, local capitalists (like Trump himself and the billionaires who now back him) mostly benefit from these measures as well as from pro-rich policies in general. Even under neoliberalism, many operated largely on the basis of connections. Provided they can stay in the good graces of the strongman (not guaranteed, as various Russian oligarchs have discovered), they are well placed in the new environment. And, unlike global corporations, crony capitalists can operate with a short time horizon. Even if Trumpist policies are ultimately disastrous in economic terms, they have time to make their pile and cash out.

fn1. In 2016, I used the unsatisfactory term “tribalism”, for want of a better alternative, but Trumpism fits the bill perfectly.

The United Nations Development Program’s flagship index of wellbeing and social progress, the Human Development Index, no longer captures what humans need, and needs to be replaced by a Green Human Development Index. That’s what I’ll argue in this post.

First, some context for those who do not know the Human Development Index (HDI). The HDI is the main index of the annual Human Development Reports, which, since 1990, have been published by the United Nations Development Program (UNDP). The reports analyse how countries are doing in terms of the wellbeing of their citizens, rather than the size of the economy. In 1990, the Pakistani economist Mahbub ul Haq had the visionary idea that in order to dethrone GDP per capita and economic growth as the yardstick for governmental policies, an alternative index was needed. He asked Amartya Sen to help him construct such an index. The rest is history. The HDI became a powerful alternative to GDP per capita. It consists of three dimensions and several indicators. The first dimension is human life itself, for which the indicators are child mortality and life expectancy. The second dimension is knowledge, captured by school enrollment rates and adult literacy rates. And the last dimension is the standard of living, for which the logarithmic function of GDP per capita is used.

It is easy to criticize the HDI for not capturing all dimensions of wellbeing, or for other shortcomings. For whatever those academic arguments are worth, there is no denying at how successful the HDI has been at accomplishing its two primary purposes: to dethrone GDP per capita and economic growth as the sole yardsticks for societal progress, and to stimulate policy makers to put human beings central in their institutional design and policy making. And by that yardstick, the HDI has been a great success. Each year, the release of the Human Development Reports captures the attention of media and policy makers worldwide. Many politicians and governments care about their ranking in comparison with other countries. And, most importantly, the political power of the HDI provides an incentive for countries to try to invest more in education and health, combatting child mortality and increasing life expectancy.

Yet, it is now time to abandon the HDI. Paradoxically, this is not despite, but because of its political success. The reason is that we have entered the Anthropocene – the geological epoch in which the human species is changing ecosystems and the geology of the Earth. The most well-known of those changes that humans have caused is climate change. And since these ecosystems and planetary boundaries in turn affect human flourishing, they must be central in any analyses of that human flourishing. [click to continue…]

The term “white privilege” has been getting a lot of play and a lot of pushback recently, for example, from Kenan Malik in this piece and there are some parallels in the writing of people like Adolph Reed who want to stress class-based solidarity over race. Often it isn’t clear what the basic objection from “class” leftists to the concept of “white privilege” is. Sometimes the objection seems to be a factual one: that no such thing exists or that insofar as there is something, then it is completely captured by claims about racism, so that the term “white privilege” is redundant. Alternatively, the objection is occasionally strategic or pragmatic: the fight for social justice requires an alliance that crosses racial and other identity boundaries and terms like “white privilege” sow division and make that struggle more difficult. These objections are, though, logically independent of one another: “white privilege” could be real, but invoking it could be damaging to the struggle; or it could be pragmatically useful for justice even if somewhat nebulous and explanatorily empty.

One particular type of argument is to deny that some white people enjoy privilege on the basis of noticing that some groups of white people suffer outcomes that are as bad or worse than non-white people on average or some non-white groups in particular. The claim is then that it is nonsensical to think of these white people as enjoying “white privilege”, or, indeed, any kind of privilege at all. But whatever the truth turns out to be about the explanatory usefulness of “white privilege”, I think these outcome-oriented assessments, sometimes based on slicing and dicing within racial or ethnic groups in ways that create artificial entities out of assemblages of demographic characteristics (white+rural+poor, for example), don’t ground a valid objection because they misconstrue what the privilege claim is about.
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I received an email earlier today announcing a new book series, focussing on Politics, Philosophy and Economics (PPE). There has been a notable rise in the success of PPE – as can be seen from the multiplying numbers of PPE undergraduate and graduate programs and PPE scholarly activities in recent years. This series is a logical next step in the development of the multidisciplinary and interdisciplinary study of topics that are relevant to economics, politics and philosophy.

The new series, which will be published by Oxford University Press, has a website, five editors (Ryan Muldoon, Carmen Pavel, Geoff Sayre-McCord, Eric Schliesser and Itai Sher), and a long list of editorial advisors (and I’m honoured to be included there).

I’m not sure how long it will take them to publish the first book – given how slow academic publishing is, it might take a while – but in the meantime the editors welcome book proposals by scholars working in this area.

Reading this tweet by Maciej Ceglowski makes me want to set down a conjecture that I’ve been entertaining for the last couple of years (in part thanks to having read Maciej’s and Kieran’s previous work as well as talking lots to Marion Fourcade).

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I went to see occasional Timberite Astra Taylor’s remarkable film *What is Democracy?* last night. It takes us from Siena, Italy to Florida to Athens and from Ancient Athenian democracy through the renaissance and the beginning of capitalism to the Greek debt crisis, occupy and the limbo life of people who have fled Syria and now find themselves stuck. It combines the voices of Plato and Rousseau with those of ordinary voters from left and right, Greek nationalists and cosmopolitans, ex-prisoners, with trauma surgeons in Miami, Guatemalan migrants in the US, with lawmakers and academics, and with refugees from Syria and Afghanistan. All the while it poses the questions of whether democracy is compatible with inequality and global financial systems and the boundaries of inclusion.

Some of the testimonies are arresting: the ex-prisoner turned barber who tells us of his nine years in a US prison of a hunger strike when the authorities tried to take the library away and of his problems adjusting to life of the outside, to being around women, and the fact that he’s denied the vote. And all the time he’s telling you this with attention and passion he’s clipping a customers beard, which adds a note of tension. We hear from trauma surgeons who tell us of the levels of violence in Miami – so much blood that the city is used for training by medics from the US military – and the shock of cycling from one neighbourhood to the next and experiencing swift transitions from opulence to utter destitution. We hear from a young Syrian woman who relates how she had to leave Aleppo after her mother was wounded by a stray bullet in her own home and whose idea of democracy is a country where she can lie safely in her bed.
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I’ve recently been in Germany which, to a greater extent than many other countries (such as my own), is a functioning and prosperous liberal democracy. It wasn’t always thus, as every participant in internet debate know very well. By the end of the Second World War, Germany had suffered the destruction of its cities and infrastructure, the loss of a large amount of its territory, and the death or maiming of a good part of its population and particularly of the young and active ones. Yet, though not without some external assistance, it was able to recover and outstrip its former adversaries within a very few decades.

Thinking about this made me reflect a little on whether people, in the sense of talented individuals, matter all that much. That they do is presupposed by the recruitment policies of firms and other institutions and by immigration policies that aim to recruit the “best and brightest”. Societies are lectured on how important it is not to miss out in the competition for “global talent”. Yet the experience of societies that have experienced great losses through war and other catastrophes suggests that provided the institutions and structures are right, when the “talented” are lost they will be quickly replaced by others who step into their shoes and do a much better job that might have previously been expected of those individuals.

I imagine some empirical and comparative work has been done by someone on all this, but it seems to me that getting the right people is much less important that having the institutions that will get the best out of whatever people happen to be around. I suppose a caveat is necessary: some jobs need people with particular training (doctoring or nursing, for example) and if we shoot all the doctors there won’t yet be people ready to take up the opportunities created by their vacancy. But given time, the talent of particular individuals may not be all that important to how well societies or companies do. Perhaps we don’t need to pay so much, then, to retain or attract the “talented”: there’s always someone else.

Daron Acemoglu has a piece at Project Syndicate arguing that basic income is a bad policy. His argument, in a nutshell, is that a truly universal basic income (UBI) would be prohibitively expensive, and that raising additional taxes to pay it “would impose massive distortionary costs on the economy”. The alternative, to cut all existing social programs for the sake of UBI, would be “a terrible idea”, since these programs are targeting those that are particularly vulnerable or needy. He argues that the political effects of a UBI would be bad – a UBI would “keep people at home, distracted, and otherwise pacified”, whereas “we need to rejuvenate democratic politics, boost civic involvement, and seek collective solutions”. For Acemoglu, the top priorities in the USA should be “universal health care, more generous unemployment benefits, better-designed retraining programs, and an expanded earned income tax credit (EITC)”, as well as higher minimum wages.

I share Acemoglu’s view that “One should always be wary of simple solutions to complex problems, and universal basic income is no exception.” In a paper I wrote last year (alas, in Dutch, and I haven’t had the time to translate it, but perhaps google translate can help us a little), I’ve argued that the debate on universal basic income is confused and confusing, and will not be getting us far, because too many papers/interventions are not clear about their assumptions, are not spelling out the goals (e.g. is the primary aim poverty reduction or creating freedom from the need to submit to the labour market for survival or something else), and are not giving the details of the package deal. [click to continue…]

[The below text is a short memo I presented for a workshop on a left-liberal financial foreign policy for the US last week.]

The US left is starting to come to grips with the relationship between democracy and inequality. This builds on a variety of academic work over the last several years – most prominently Thomas Piketty’s book, but also work by other academics such as Emmanuel Saez and Gabriel Zucman – which maps the growth in wealth and income inequality across rich countries, and how marked it has been in market-liberal countries such as the US. But these are no longer academic debates: they are being taken up by politicians within the Democratic party, creating a new dynamic of intra-party competition. Proposals by left-leaning politicians such as Bernie Sanders and Elizabeth Warren are not only notable in themselves, but in how they are shifting the center of gravity, so that more centrist politicians too are taking them up. [click to continue…]

Attention conservation notice: long (nearly 5,000 words long) essay on the economic power of ideas. To its credit, the questions discussed are plausibly important. To its detriment, the arguments are less arguments than gestures, and the structure is decidedly baggy.

For the last couple of weeks, I’ve been wanting to write a response to Aaron Major’s (paywalled) article on ideas and economic power for _Catalyst._ Now there’s a second piece by Jeremy Adelman in _Aeon_ on Thomas Piketty and Adam Tooze. I think they’re both wrong, but in different ways. Major’s piece suggests that economic ideas don’t really matter very much – it’s the economic base, not the superstructure that’s doing the work. Adelman, in contrast, think that ideas are super important – he just thinks that Piketty and Tooze have ones that are leading us in the wrong direction.

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I’ll be teaching a Ph.D. level class on globalization this semester – the draft syllabus is below. The direct aim of the class is to provide doctoral students in both international relations and comparative politics with an understanding of broad debates about globalization, without duplicating the materials of the (separately taught) class in international political economy. The indirect aim is to get them reading at least some material outside the field of political science (specifically: sociology and financial history – they get plenty of economics elsewhere). Comments and suggestions gratefully received. [click to continue…]