Disparate Models, Desperate Measures: The Convergence of Limits ∗

This chapter was originally written back in 2003 and published in 2005 in the volume edited by David Coates (god father to a Miliband son I think) Varieties of Capitalism, Varieties of Approaches.  The data contained inter alia is by now stale in one sense.  However in another sense the document holds up for its time and place in the early Anglo-American debates on neoliberalism.  The trends I analyzed–rising income inequality, reduced welfare state effort, eroding quality and conditions of work, and a secular decline in productivity growth–across the rich OECD zone regardless of which model of capitalism was being pursued were in fact, as I noted at the time, secular trends.  At the time, 2003, most academics still had their heads in the ground about inequality and the punitive dynamics of neoliberal labour market policies.   Indeed the  hegemony of neoliberalism was so complete at that time most social democratic intellectuals refused or were incapable of acknowledging the state of affairs.  Even worse many were actively crafting and implementing neoliberal policies.

In the above sense I think the chapter still holds up.  Moreover, it also holds up in terms of its main hypothesis that the advanced capitalist zone, despite being populated by nation states with very different institutions and public policy regimes, was producing increasingly poor outcomes for workers and citizens. For A version of the chapter “Disparate Models, Desperate Measures: The Convergence of Limits,” leave a comment to request the document.

∗This article was originally published in David Coates (ed.) Varieties of Capitalism, Varieties of Approaches. New York: Palgrave Macmillan, (2005). The version of the article reproduced herein may be reproduced on a not for profit basis subject to the GNU Free Documentation License and provided proper citation is provided.
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Stapled to the Front Door: Neoliberal Extractivism In Canada

This article discusses several aspects of the reliance in the Canadian economy on the natural resource extraction (NRE) industries. The NRE sector illustrates the dual nature of Canadian capital in a global context. The intensification of resource extraction is associated with an increase in inequality along several vectors. These increases in inequality, however, cannot be decoupled from the institutionalization of neoliberal policies at both the federal and provincial levels over the last 30 years.

The rich get substitution effects and the poor get income effects

*This post has been popular so imma top post it here.

It is pretty much understood that the basic orthodox labour market model is agnostic insofar as income and substitution effects are concerned. If for example real wages increase workers may choose to work less because they can consume more leisure with less hours of work or workers may work more hours because the opportunity cost of leisure has gone up. Which effects dominate workers’ incentives are not predetermined by the standard labour market model.

Implicitly, however, we can glean what mainstream economics tends to think are the incentives facing different classes (economic classes that is) of workers. In Mankiw’s recently ridiculed here, here, here and here article in the NYT, he argued the impact of a tax increase on the economic class of ‘workers’ at the top of remuneration scale was a decrease in the real wage which would be met by a substitution of more leisure for less work as the opportunity cost of leisure had been cheapened by the tax increase. Simply stated this class of workers would respond to a decline in their real wage with a union strike like reaction.

So far so good. I do not imagine it inconceivable that those workers with compensation packages that put them in the top 1% of income earners could choose to work less hours if they were faced with a wage cut with one important caveat. They would have to have the type of job which allowed them to control their hours of work and or have sufficient means to withdrawal from the labour market altogether aka independently wealthy. For example, an NHL hockey player cannot say to his coach I am playing one less game a year because of the increase in marginal tax rates; although he might try to make the team offset the tax increase with a higher salary. Thank god for salary caps.

However, when we turn to lower classes of workers we find that Mankiw argues that income effects dominate their incentives. In his introductory textbook he has the following to say about unemployment insurance:

So here Mankiw argues that workers respond according to income effects. Lowering unemployment insurance replacement rates would decrease unemployment because workers would have a greater income incentive to take a job.

What, therefore, accounts for the different reactions between these two classes of workers? Why that is will increased taxes on the rich (a decrease in the real wage) lead to a withdrawal from the labour market but a decrease in unemployment benefits (again a decrease in the real wage) increase the supply of labour. The answer of course is that most classes of workers are not independently wealthy and do not meaningfully control their hours of work. Workers have to work and outside of access to unemployment benefits they do not have the option of defecting from paid labour markets. Therefore whether income or substitution effects predominate is largely a function of class. Most classes of workers save for those at the very top respond to a decreased real wage either by seeking more hours of work through one of three ways: overtime, a second job or telling their teenager to go get a job and pay their own cell phone bill.

It is interesting that Karl Marx (well Smith too in some respects) were the first to recognize the differences between classes of workers what we once called proletarians and the bourgeoisie. But that is for another post.

Varieties of Capitalism: A Critique

Abstract

The Varieties of Capitalism (VoC) has become the dominant approach in comparative political economy and enjoys wide application and attention in disciplines outside of political science and sociology. Indeed the VoC approach has enjoyed much attention in comparative industrial/employment relations (IR). This article undertakes a critical evaluation of the importation of the VoC paradigm into comparative IR. Inter alia, it is argued that the VoC approach, as it is presently configured, may have little to teach IR scholars because its basic theoretical concepts and methodological priors militate against accounting for change. This article begins with a summary of the routine problems researchers in comparative political economy and comparative IR have encountered when attempting to account for change within the constraints of the VoC paradigm. Here the focus is on the limitations imposed when privileging the national scale and the problems engendered by a heavy reliance on comparative statics methodology infused with the concepts of equilibrium and exogenous shocks. The article then goes beyond these routinely recognized limitations and argues that the importation of terminology from neoclassical economic theory, of which the original VoC statement makes foundational reference, further serves to constrain and add confusion to the comparative enterprise; namely, comparative advantage, Oliver Williamson’s neoclassical theory of the firm, the use of the distinction made between (im)perfect market competition in neoclassical economics and the fuzzy distinction made between firms, markets and networks.In the concluding section we argue that the VoC’s narrow focus on the firm and its coordination problems serve to legitimate IRs traditional narrow focus on labour management relations and the pride of place that HRM now enjoys in the remaining IR departments. Ultimately, however, the embrace of the VoC paradigm by comparative IR is a net negative normative move.

The full article can be found here

The profound hegemony of neoliberalism: economic theory, public policy and capitalist accumulation

As the Library of Canada archives do not seem to be well indexed by google I am putting up a link to my doctoral dissertation which I defended in 2012 and was published in 2013.  A link to a PDF of the dissertation can be found here, and the full citation information can be found here.  You can also download the document here: Profound Hegemony of Neoliberalism.

 

A b s t r a c t
The central thesis of this dissertation is that neoliberalism is an accumulation strategy, an ideology and a public policy paradigm that is about diminishing the collective capacity of workers to negotiate credibly over the distribution of the surplus at either the level of the enterprise (through unions for example) or through more ambitious collective action at the level of macroeconomic policy (via a democratically determined industrial policy). I employ a critical realist methodology to investigate the different facets in the development of neoliberalism’s hegemony. Inter alia, I argued that neoliberalism, as an ideology and policy paradigm, is better understood as an amalgam of intellectual currents taken not only from within neoclassical political economy but also from what I have referred to here as neo-Weberian political economy. The hegemony of neoliberalism is illustrated, on the one hand, by the capitulation of new Keynesians to the supply side logic embedded in new classical micro economics and, on the other, by the neo-Weberian incorporation of the neoclassical firm into the heart of its comparative enterprise. In the last section a quantitative description of neoliberalism across a broad range of metrics is undertaken. The central message to emerge is that while neoliberalism, as an accumulation strategy, has been more or less successful in rising and maintaining profit rates and price stability, it has not been successful in terms of other macro-economic indicators. In particular, there has been an increase in employment insecurity, precariousness and market based income inequality. Further, in the Anglo American countries, while neoliberalism has been successful in restoring profit rates in manufacturing, these self same policies have not been successful in arresting the overall decline of manufacturing. Lastly, and perhaps most devastatingly for the protagonists of neoliberalism, these policies have not been successful in restoring GDP per capita growth of unemployment rates to their Golden Age levels . And even if those levels were exceptional, they were held out as the ultimate goal o f early neoliberal innovation and restructuring.

 

 

From Despotism to Hegemony and Round-again to Hegemonic Despotism: Burawoy’s Neoliberal premonition

Relentlessly Progressive Political Economy

Michaels Burawoy’s the Politics of Production (1985), stands out as an important contribution to Marxist political economy in general and in particular Marxist analyses of the dynamic interaction between welfare state institutions, the juridical regulation of industrial relations, and the labour process.  Inter alia, Burawoy set himself the task of developing an analysis of the “politics of production which aim[ed] to undo the compartmentalization of production and politics by linking the organization of work to the state” (p.122).  Burawoy used the dynamic interaction between labour market, welfare state, and managerial regimes to generate a typology of labour relations regimes.   Specifically he argued that “the process of production is not confined to the labour process… It also includes political apparatuses which reproduce those relations of the labour process through the regulation of struggles.  I call these struggles the politics of production or simply production politics” (Ibid: italics in original).

Burawoy…

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The chimera of online community

This is just a short note on making a distinction that ought to be made between community and social media.  We have become habituated to refer to people who use social media as members of a community.  I think we would be better off if we re-habituated ourselves to refer to people who use social media as members of a “communications hub” or the more commonly used phrase “members of a network.”  The basic insight here is that communities, the physical spaces in which we live and interact with other human beings, rely heavily on personal reputation and repeated and sustained interactions.

Trumped up and buried under the ashes of neoliberalism

Introduction

At the time of preparing this talk, January 2017, Donald Trump had just been elected the 45th president of the United States of America.    This talk is not really about the United States under the tutelage of the newly elected American President Donald Trump.  Rather this talk is more about how we arrived here: about the legacy of neoliberal policies that forged the trump card for the explosion of right wing populist movements and their victories across the advanced capitalist zone including in the United States.  As the vivid title of this talk makes clear, I am not arguing that we have moved to a post neoliberal order as of yet–although there are signs we may be in a bad transition out of the neoliberal epoch.  Alternatively, I will argue that we are living with the consequences of neoliberal institutions and policies: suffocating under the ashes of neoliberalism with Donald trump as the brightest burning coal at the top of the ash heap.

As most people know, to play the “trump card” in any game—political, economic or otherwise—confers a decisive advantage to the person who plays it given the right circumstances and timing.  The idiomatic expression “trumped up” refers to situation that has been manufactured to produce one set of outcomes while falsely claiming to produce another.  A trumped up criminal case is promulgated on phony evidence where the wrongly accused faces a criminal sanction while the broader public is misled to believe justice is being done.  There is close analogue here to the phrase gaslighting.  Much of neoliberalism, indeed an important explanation for its ideological spread was the initial promise of employment and renewed economic growth, i.e., what we might call the remedy to economic shame[i].  There is a sense in which neoliberalism is and was a scam and a manipulation of public morale: the difference today is most, including significant sections of the ruling classes admit this. They simply do not care because its all just a contemporary communications game.

If you are on the left it is easy, in this context, to simply be against Donald Trump and the sundry list of right wing populist movements and leaders. Who reading this post is for racism, sexism, xenophobia and soft and hard bigotries of all stripes?

Rather the problem for the putative left, particularly but not solely, its formal parliamentary forms; the Democratic Party in the United States, the New Labour Party in Britain and Australia, the Socialist party in France, the New Democratic Party in Canada, and the Sozialdemokratische Partei in Germany, for example, is to come to terms with what is now 40 years of their own internal drift to the right and their own hand in building the very neoliberal institutions which  created the conditions in which right wing populism and inequality flourish and left wing politics languishes.[ii]

In the above regard, it is my suspicion that it will be much harder for the institutionalized left to come to grips with the folly of neoliberalism than the right.  This is particularly so in the upper echelons of the progressive social structure (intellectuals, academics, politicians and the quasi woke citizenry).

Here is why.  For the right, neoliberalism was an internally motivated project, which sought to roll back, dismantle, and or fundamentally restructure the post World War II social order.   Neoliberalism was never about jobs, productivity, or economic growth for conservative elites: it was about a redistribution of power upwards.  In this regard, the adoption of neoliberalism did not require a conversion of ideological convictions as it did for the left. It was broad and important segments of the left which made the conversion:  It is the Clinton democrats, Tony Blair’s ‘new labour’, Gerhard Schröder’s ‘third’ way, and the legions of intellectuals and academics which made their own accommodations, and indeed in many cases who crafted neoliberal innovations that will have to do the hard work of soul searching, shame letting, and back tracking.

I am not very sanguine about the prospects of the aforementioned coming to pass for three reasons.  For one thing, most left accommodations to neoliberalism were made within the reality of a very constrained political economy characterized by high unemployment,fears of high inflation, and low economic growth and a concomitant ideological restructuring to the right.  For example, Tony Blair inherited Margaret Thatcher’s new United Kingdom, and Bill Clinton inherited Ronald Reagan’s “New Day in America.”  It would be impish to maintain that these were not real reconfigurations to the possibilities facing policy makers—left or right.

The second reason I am not optimistic about the chances of a volte-face on the part of the neoliberal left is quite simply that we are now almost two generations into the neoliberal epoch and easily one generation into its hegemony.  Educational attainment, political identities and careers have been formed and built within a neoliberal cognitive and material framework.  None of which is particularly easy (and in some cases possible) to walk away from.

Third, the left remains fractured between insiders and outsiders.  Because the political insiders on the left will not admit to the paucity of neoliberalism and the role they played in constructing the neoliberal order, the most vigorous and energized elements of the left remain largely outside formal political institutions and the broader public policy processes.  Indeed many insiders on the political left are still gaslighting the outsiders.  And if they are not merely sociopaths, its fairly hard for serial abusers to admit they have a problem…lotta shame needs to be overcome.

Moreover, it is by now blatantly apparent in American politics that the political process is over-determined by campaign and party financing—with the democrats still requiring that some professional politicians and administrators be the front for the donors and with Trump era republicans increasingly disposing of the political ‘middle men’ (sic) and opting instead to just put the donors in power. That is, within American politics it is increasingly the case that the Democrats and Republican parties do not merely represent different fractions within the haute bourgeoisie–they are the haute bourgeoisie.  There is, therefore, a toxic stasis on the European and North American left facing a dynamic, well funded, and popularly organized right.

Afterword to the introduction

It has been almost a year since I gave this talk and there is reason today to feel a bit more sanguine than one may have felt in the morning after Trump was inaugurated.   The British labour party had a major coup d’état with the victory of Corbyn. Equally positive has been the increasing traction of non normie style democrats.  Moreover, and I think more importantly, there are some positive signs that that the non parliamentary left is finally working through some of its major dysfunctions of which I will just touch on two below.

First, there are strong signs that the non parliamentary left intelligentsia is moving beyond the internecine, unproductive and self defeating debates of the naughties and teenies.  I think Trump’s election was a brutal wake-up call signalling that the prosaic and bitter debates of grad school educated lefties had become a waste of real resources.  Do not get me wrong, I think those debates had to be had, but they went beyond their best before date and ossified  into petty silos.  It was as if by sitting in grad school seminars and by standing giving grad lectures we were going to change something all on our own, as if the logical consistency of our interior ontological righteousness could alone change the world:  to be sure a much more meaningful exercise than Dynamic Stochastic General Equilibrium models, but often not much (there is a future post in this analogue, someone remind me of it).

Second, while we were busy, people like Jane McAlevey and countless others were actually being a part of helping communities organize.  Her title gets right at the problem, there are no shortcuts to the real work of organizing: there is no one big existential idea, no coupling of mobilizing and online communication hubs (often falsely called communities) for living in, and being a part of, organizing ourselves in the broader (as in not self selected) communities we live in.  Life has an unavoidable spatial context and real social complexity.  Organizing involves dealing with both.  I think the non parliamentary left is finally getting this.

[i]   See Arlie Russel Hochschild, “Strangers in their Own Land: Anger and Mourning on the American Right”, (2016), The new press.
[ii]  It remains to be seen if Jeremy Corbyn marks a shift in English politics.

Attempted relaunch of RPPE

Well its been about 5 years since I have made a post to this blog, and a bit more than 3 years since I tried. Young family stress, new career stress, new language and culture stress, alienation, deep disappointment with how the world works, deep disappointment with how I was working all of which eventually led to full on burn out – clinical depression, entre autre.  Sometimes the only option is a full on retreat; particularly from an uncontrolled exposure to the public…which is the internet.

In that regard the fact that I have emerged some 6 years later with a scant internet history; no face book page, no twitter feed, and no blog posts is probably a good thing.  I already had a fairly dark, non-normie mind before the depression and I do not think blogging, or FBing, or Twitting through it would have been a good deal for anyone: the public playground is a rough and tumble place.

All that said, I am ready to try, once again, in a limited fashion, to make a couple public interventions via this blog.  I have committed to make my posts mostly from the point of view of heterodox economics and politics (yes political science has its own homodoxy; albeit less hegemonic).  Upon 6 years of reflection I do not think there is much use in trying to dialogue with homodoxy: all the intra paradigm debates are well known, all the inter paradigm inconsistencies are well documented and for 80% of the cargo cult the Cool-Aide tastes just fine thanks.

Imma write my blog posts for those that know the Cool-Aide is poison and for those that at least suspect a good bit of the mix is toxic.

………….

Please note much of the full content on 2012 posts was permanently lost.  What can I say it was the beginning of my end.

 

 

The Return of the Very Cruel Economic System

This chapter is divided into three sections.  The first section examines the origins of the neoliberal policy consensus at the OECD.  The fist major rupture in the hegemony of the Keynesianism (neoclassical synthesis MKI) at the OECD came with the publication of the McCracken Report in 1977.  Some left critics have come to regard the Report as the first truly neoliberal policy document sponsored by the OECD.  I intend to challenge this interpretation somewhat by arguing that the Report is better understood as a rupture in the Keynesian consensus and not necessarily a fully worked-out alternative and certainly not evidence of a coherent neoliberal paradigm.  The second section, attempts to clarify the relationship between monetarism and neoliberalism.  After a brief theoretical presentation, I will then examine the conference proceedings from the 1978 Boston Federal Reserve’s After The Phillips Curve: Persistence of High Inflation and High Unemployment conference.  This conference is interesting because within its proceedings it is apparent the degree to which Keynesians like Robert Solow and Barry Bosworth (more so) were beginning to cross over from the demand to the supply side.    The third section examines the OECD Jobs Study released in 1994.  I argue that the publication of this document signals the hegemony of the neoliberal policy consensus.

The rest can be read here