June 27, 2021

Arjun Jayadev / J.W. Mason

Arjun Jayadev: Indian. Economist. Professor at Azim Premji University, Bangalore, and Senior Economist, INET. J.W. Mason: American. Economist. Associate Professor at John Jay College, CUNY, and Fellow, Roosevelt Institute

1. Why does economics matter?


Josh, why don’t you start?


Well, the most obvious way that economics matters is that it has an enormous prestige in our society. Economists have a level of respect and authority that no other social scientist, arguably no other academic discipline possesses. An enormous number of policy debates are conducted in the language of economics. There’s an ability of an economist to speak directly in policy settings, in political settings in a way that most academics simply can’t. And so, you know, Joan Robinson has that famous line that the reason you study economics is to avoid being fooled by economists.

And there’s some truth to that. Even if you think that the discipline is completely vacuous, it’s worth investing in learning its language and techniques just in order to be able to at least criticize the arguments that other economists are making. But I would say we don’t think that economics is completely worthless and vacuous because we think it actually does bring some positive ways of thinking to the larger conversation. You know, one thing that really is sort of defining of economics is the insistence on formalizing ideas, expressing your thoughts in some sort of highly abstract way, either as a system of equations or a system of diagrams in a way where you’re sort of explicitly stating all of the causal relationships that you think exist in the story that you’re trying to tell.

And I think that’s a useful habit of thinking that is not necessarily as widespread outside the economics profession. Sometimes you actually can learn new things just by writing down your assumptions and working through them. You know, the whole debate in the heterodox field about wage led growth versus profit led growth, what are the circumstances where redistribution, you know, from, let’s say, profits to wages is likely to boost demand? And what are the situations where it’s likely to reduce demand? I think it’s something of a sort of insight that comes out of trying to write down your vision of the economy as a system of equations. The notion of balance of payments-constrained growth, where we kind of think that maybe for a lot of countries, the thing that’s fundamentally driving the rate of growth that they can sustain is how elastic - how responsive, how income elastic - their exports are versus their imports is another sort of set of ideas that really comes out of, I think, writing down a formal model in the first case.

So I think this is a useful discipline that economics, that training as an economist gives you, that people with other kinds of backgrounds don’t have. This really sort of effort to make explicit the kind of causal connections that you have in mind. Arjun, did you want to add something to that?


Yeah, sure. You know, I think, of course, I agree with everything that Josh is saying, but I think it’s also important to realize that economics has actually come up with some very useful concepts, if you will, right, to make sense of this world around us: concepts like GDP or employment. These are actually concepts which are well defined and measured. And it’s not straightforward and really helps us to have an understanding of the system as a whole.

And admittedly, lots of economics, education doesn’t pay as much attention to it as it should. And I think maybe the question that was an implicit critique when you ask why does economics matter, maybe there are some people who feel that economics doesn’t matter because of what’s happened to the discipline in many ways. I think that Josh and I would like this particular quote by the economist Trygve Haavelmo. He said that the reason that you learn economics is to - I believe the phrase is - “to be a master of the happenings of the real world”.

Right. And I think that that’s really why one should be doing economics, not as an exercise in and of itself, but really to understand what’s happening in the world.


Yeah, that’s right. The real secret to doing good economics is to start from somewhere other than economics. If you come into economics with a set of political commitments as Arjun and I, you know, I would say both did, but also if you come in with a desire to make money in the business world and you’re associating with people who do that, or you come in because you’re focused on a particular set of public debates that you want to clarify you’re thinking about. You come in with some sort of other set of concerns that are going to guide you in terms of what’s important, what’s relevant, what’s reasonable, then I think you’ll find a lot of useful tools within economics.

The problem arises with people - and, unfortunately, this I’d say is the majority of professional economists - who don’t really have any intellectual base or personal - their intellectual development is entirely within the sort of academic economics. And I think then it becomes very easy to lose sight of the happenings of real life that this field is supposed to be illuminating.

2. What are the differences between economic science (academic economics) and economic engineering (policymaking)?


Well, you know, I think today there’s a very wide gap between academic economics and sort of what we might call policy economics, particularly in macro. I think if you’re maybe a labor economist, maybe the terms that are used in sort of academic studies and the terms that are used in policy debates might be closer to each other. But I think there’s a long standing divide between the sort of questions that academic macroeconomists ask and the sort of questions that come in policy debates which has gotten much wider since the crisis. You know, the unfortunate fact - and people are going to say this is not fair, but I can tell you, I’ve looked at, you know, qualifying exams, recent ones from graduate programs in macroeconomics and this is a fair characterization, what I’m about to say - that the way academic macroeconomics trains people to think is to imagine a representative agent with perfect knowledge of the probabilities of all future events, who is then choosing the best possible outcome for them in terms of maximizing utility over infinite future time under a given set of constraints. That is literally what you are trained to think about if you are getting an academic training in macroeconomics. Really I have to say for people who are not economists watching this, you actually really do have to study this stuff to understand how weird it is.

But unfortunately that aspect of the profession has not really changed very much. On the other hand, the public debate on macroeconomic questions has moved a lot over the last decade. So there’s a much wider range of perspectives if you look at people in the policy world during the financial press or even in the business world. So in some ways the public debate has gotten I think much better over the past decade, but that’s really widening the gap between the public debate and academic macroeconomics. And I think, I don’t know how exactly this will come about, but at some point I think we’re really going to have to essentially throw out the existing graduate macroeconomics curriculum and start fresh, you know, roll back the clock to 1979 or start from somewhere else, because it really does seem like the sort of dominant approach in academic macroeconomics is just an intellectual dead end.


And just to pick up on a point which Josh made, so, you know, we have friends who are, I would say, doing a lot of work, as you said, in labor. People like Arin Dube at UMass Amherst, which is one of these places which really takes these things seriously, or my colleague Amit Basole where I am at Azim Premji University. And really in some fields there is sort of back and forth between the world that exists and policymaking and really the craft of economics and academic economics.

I think it requires also talking to people from outside the discipline to see how far academic economics and macroeconomics has drifted away, if you will, from policymaking. And this is why I come back to the Haavalmo point, right. In some sense, the reason for us to be doing many of the things we are doing is academic macroeconomist is to really try to see if we can have an effect on the world, understand the world. And this distinction has become so sharp right now to really make it sort of dysfunctional.

Now, the additional problem that comes with it is that because it’s hard, it’s complex and it’s weird, people spend a lot of time invested in this kind of activity. When I say thess activities, the activities that Josh was talking about, you know, basically solving equations, but some imaginary state. And by the way, that’s not only limited to macro, but it’s really the worst in macro. And as a result, it becomes very hard for people to pull away from that, and say that there’s actually something really wrong, sort of emperor’s new clothes moment is extremely painful to face.

But it is interesting that one of the advantages, if you will, of studying macroeconomics is there are always people who want to understand what’s actually happening in the world and in some sense the policymaking space - I wouldn’t say that’s the policymaking space, but what you might call concrete policy macroeconomics - has got much more open, much more interesting than in the past. And you can have a very strong and I will use the word “economic science”, use that only for academic economics.

But I think there’s an economic science aspect in concrete policy macroeconomics. I wouldn’t want to separate them so sharply as you might have done in the question.


And to be fair, you know, there are plenty of prominent mainstream macroeconomists who I think have a lot of interesting and insightful things to say about real economies. The thing is that just when they’re talking about the real world, they sort of ignore what they do in their scholarly work. They’re smart enough and they’ve got time and energy that they can kind of follow both tracks at once, but they’re still two separate tracks.

And of course, for most people, that’s actually not practical. And if you get sucked into the theory, then you stop thinking about the real questions. And the other thing, just to be fair, is that in the world of empirical macroeconomics, there’s more interesting work being done for sure. The problem is that there isn’t really a body of theory that the empirical work can link up with.

3. What role does economics play in society? Does it serve the common good?


You know, you can criticize economists for being ideological and, you know, you just did, and I think a lot of people can. Obviously there are very specific assumptions about how the world works that are kind of baked into the theory in a way that is not even visible to the people who are sort of educated in that theory.

But I think to me, I think it’s almost impossible to imagine a non-ideological economics. I mean, I think in principle we could study the economy scientifically in the way we study other areas of existence scientifically. But we can’t do it as long as we live in a capitalist economy because the questions are too close to the basic structures of authority and hierarchy of our society. They are too close to the ways that all the inequalities, all the sources of power in our society are legitimated.

They can’t just be scrutinised in a sort of neutral way from the outside. So I think we’re never as long as we live under capitalism, we are never going to have an established scientific study of capitalism. That’s just not possible. You know, in a way, you could even say to me the function of a lot of academic economics is not so much to instill an ideological, particular ideological view of capitalism, but just to stop people from thinking about it systematically at all.

It gives you something else to think about instead. So I think, you know, it doesn’t mean that on an individual level we should not aspire to be sort of scientific in a broad sense in our approach. We should expose our ideas to critical scrutiny. We should systematically consider alternatives and formulate hypotheses and see if the world is giving us, you know, reason to think our hypotheses are right or wrong. I think we should follow that.

But we should also recognize that this is something that’s either going to be - you’re going to be on the margins as you do this. And that’s OK, because the life of a professional economist is pretty good. So the margins of the profession is still a perfectly fine place to be. But that’s where you’re going to be. Or occasionally in moments of deep crisis, when the survival of the system is at stake, then there will be periods where a sort of more rational perspective on it is kind of tolerated.

But I think the notion that we’re going to sort of persuade people in the economics profession that we have a better set of ideas and we’re going to win out that way, I think it just kind of misses that there is a deep political reason why economics is the way it is. So you need to just - you know, again, what we were saying at the beginning - if you want to do good scientific work, you actually have to have a foot outside the profession to give you a base somewhere else.

You know, Hayek is probably not somebody that neither of us agrees with on very much, but I think he has a nice line about this, he says, “no one can be a great economist who is only an economist.” And I think that’s very true.


So I wanted to pick up again on some aspects of this, but, you know, the question sort of reminds me of the famous story about Keynes when he finishes I think being the editor of the EJ, I can’t quite remember, where he raises a toast to the economists who are the trustees of the possibility of civilization. There’s a sort of belief among economists that in some sense they are, you know, standing apart and really guiding the forces of history in a way that is meaningful.

Of course, that sounds a little pompous. Keynes could get away with it. Nowadays we wouldn’t say that, but we’d say that we maximizing social welfare, or we’re trying to look at things, which is in some ways the same thing. One of the things that you ask is, is it serving the common good? I think one of the things that economics does in its training is posit a common good. And I think that immediately takes you away from the space of politics, right. Because in some sense, there are many situations in the economy in which there are conflicts of interest.

There are conflicts of not just opinions, it’s actually conflicts of interest, conflicts around things like the distribution of income and so on. And so many of these questions become unavoidably political. And so in some sense pulling away from that, which, by the way, the Classical economists never did. You know, it allows you to talk about something abstract like social welfare. So to that extent, I think that economics, the way that I would like to understand it, clearly can play a good role in trying to understand what we would want to have from a democratic, open, egalitarian society. But posing something like the common good can sometimes, if you will, obscure that.


Well, I think we might actually turn this question around a little bit. Economics does best when it’s focused on urgent questions like climate change. We do better economics when we’re oriented towards real urgent live political questions like around race and class. Economics, I think, you know, this is a little of what we’re saying, economics when it’s sort of focused on questions of markets and efficiency in the abstract, I think doesn’t contribute very much to the conversation. It quickly loses contact with the real phenomena that it’s supposed to be dealing with.

And what focuses our attention is precisely that sort of second set of questions that you raise. Those are the sort of questions that create enough urgency that forces people to adopt a more realistic kind of economics. So in that sense, I think we actually do a better job talking about markets, we give a better, more useful definition of things like efficiency when we’re actually focused on concrete questions like climate change. You know, I think there’s a good reason that modern macroeconomics begins with the Great Depression, because this is a moment when you really do need to look at the economy as it is.

There’s a lot of urgency to that question. It’s obvious that the existing models aren’t working, and it’s also there’s a political urgency to coming up with a better set of stories, a better set of tools. And I think the climate crisis has a very good chance to be a similar sort of clarifying moment, maybe much more so probably than the financial crisis of a decade ago or whatever the next financial crisis is (I have a feeling maybe the next one is closer than the last one at this point).

But I think climate change may actually force us to rethink some of our broader economic ideas in a more fundamental way. You know, the truth is established economic theory does not give good questions in general to the problems of profits, economic growth and so on. And I think a focus on climate change can actually improve the field in that way. The other thing, you know, you bring up race, class, gender, I think there is a problem there that nobody has a God’s eye view of the world. Nobody can step out of their own skin and see things from a perfectly objective view. And as a middle class white man in the United States, I have a particular way of looking at the world, which is in some ways, you know, a limiting one. And I think economics as a field would be better if we had more diversity, a broader range of backgrounds and perspectives.


So I’d like to add, though, one of the reasons, I mean, when you actually think about it, there should be no reason why a particular set of tools that you use in one sphere should automatically be something that you can use in another sphere. And I think one of the great sort of flexibilities of the way that modern economics is set up, you know, which is just a set of maximization problems, it allows people to sort of seamlessly say that they are actually studying on the one hand buying oranges and apples, and on the other side solving the problems of climate change.

So I think there is an issue in the way that you posit, that in some sense it is using tools which it may be - I agree with Josh, it’s not very good at - but it may be better than its applications in other spheres. So, for example the very famous example of the choice of discount rate for climate change. And that’s been such a long-standing disaster in the amount of time we’ve spent to actually think about this particular issue for which that sort of analysis is completely inappropriate.

So I think, yes, there are places when it may be more appropriate, but still it’s not maybe even very appropriate in those spheres. Overall I think one should you know, I would agree with Josh that this current moment and other moments of crisis - you mentioned 2008 - it’s really opened up the space to think much more carefully about specific issues. And I think when you have a crisis that confronts you, it forces you to come up with a different sort of economics or use other traditions of economics which have better answers than the ones that are there presently.

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?


Well you know, as Arjun, I think, was sort of saying earlier, I think in some sense this is almost giving economics as a field too much credit in the sense that it suggests that a lot of economic outcomes are directly dependent on the advice given by economists. And I think economic, as we’ve said, it has an enormous prestige in terms of the presence of economists in all sorts of public debates. But I think a lot of times if you look at how views actually change, it’s not the economists who are leading the way. It’s the politicians or the broader public who’ve shifted. And then the economist kind of come in to justify this after the fact.

I think, you know, there’s a certain sense, just as a concrete example, where a lot of the development in macro economic theory over the past generation has been a sort of after the fact effort to justify the kind of policies that central banks were already following. Like a way of demonstrating that what central banks were already doing in terms of inflation target, using something like the Taylor Rule and so on was actually the socially optimal thing. And I think that generalizes pretty widely.

So I’m not sure that we should be blaming or crediting economists for policy outcomes that often they probably do more to legitimate or, you know, help with the execution of than to actually shift. The other reason I don’t personally see this as a particularly productive direction to go in is: who’s going to impose the accountability, who’s going to step in and say, all right, you were wrong and that had consequences and now you’re going to pay a penalty.

There’s no consensus position from which to do that. So I think we all just have to go on making our arguments the best we can and we’re not going to reach agreement. And so we try to shift the debate our way and somebody else shifts it their way, and there’s never going to be an impartial referee who’s going to come in and say that one side was right and the other was wrong.


Yeah, I mean I think having done this, being a practicing economist for 10-15 years, I think broadly one has to realize that whatever you say and whatever you think and whatever you do, is strictly circumscribed by what the world is open to at that point of time. And I think that’s something that’s hard for us sometimes to really accept because there are many people who for years made the argument that we shouldn’t really be so concerned about supply constraints, that in fact that should not be something that we’re as concerned about - and these are broadly, I suppose, Josh and my brethren, you know, people broadly in the heterodox sphere - and it was only after 20011-12-13, when the world started to move away from - later, maybe from 2014-15 - when the world started to move away from austerity or the costs of austerity became well known, that space was made for these kind of arguments. And it’s always the case like that.

Spaces are made in some moments and they’re not available in the moments. And of course, there are those people - for whatever reason, I think it’s a more sociological reason - there people who for whatever reason in some universities, in some spaces, seem to capture elite opinion. And they’re the ones who you see again and again and again. It doesn’t really matter if they’re right or wrong, but they’re the ones who are opinion makers.

But I don’t think this is distinct from any other marketing in that sense. There are always going to be a few people who are really, if you will, opinion and market leaders, I don’t know what the correct term is. Having said that, it would be good if we were able to sometime or the other actually have a list of when people were wrong. And actually sometimes it would be good to take people down a peg or two.

But again, I don’t think it’s an important thing. I don’t think that we should necessarily valorise economics and economists one way or the other more than it is.

6. Does economics explain Capitalism? How would you define Capitalism?


When you mentioned earlier before we started this, that we are now able to use the word capitalism again, and it was interesting because Josh and I were having this discussion a few months ago where really there seemed to have been a 40 year moratorium on the use of the word. And for whatever reason, that was really, I guess, the height of neoliberalism.

But if you really want to think about capitalism as a system, you really need to go back to Karl Marx. You don’t have to call yourself a Marxist, but if you want to think about the questions like the ones that you’ve posed, you really have to take very seriously because in some sense, his work was the founder of many of the ways that people are thinking about capitalism. So, again, Josh and I are working on a book and we sort of take up this question about what capitalism means, and in our minds I think it really has a clear definition. I think that has three elements at three phases.

So what’s the first? The first is sort of the conversion of all kinds of human activities and their products into commodities, this thing that you actually buy and sell, you know, this alienated thing, and that is sold in markets. That’s the first. The second is the endless accumulation of money as an end to itself. This kind of drive of the system, which seems to be out of human control.

And then finally, something which is very critical and which I think gives in some sense some of its emotional heft, which is the hierarchy in the workplace where people work under the authority of the boss. And now all of these elements are there historically. But their fusion in this kind of incredibly changeable system that we’ve had for 200 years, that has been unique. I think that’s the really kind of central aspect that we want to focus on, the combination of these three things - there maybe other elements that we want to talk about - but these three things. And it’s the fact that when combined it gives you this dynamism, this ability to transform society, these far reaching ways in ways that really seem in some sense out of really the kind of human sphere of control. That’s what I would say capitalism is. Josh maybe you want to speak for industrial capitalism?


I mean, obviously we’re working together on this stuff, and I agree. I think it’s sort of the correct definition of capitalism as a system. And I think the problem comes when you try to pull out one of those elements in isolation and think that’s what defines the system. But it’s really the fusion of the three of them. I think the other piece, which maybe isn’t quite as defining but I think historically has been very important, is that the process of endless accumulation has this moment in the middle of it where money is tied up, locked up in long-lived means of production, that you’re not just, you know, buying commodity, working it up and then selling it again, but you’ve got machines, you’ve got buildings, you’ve got technology.

So there’s this long gap between the outlay and the final sale. And that’s I think one of the things that has made this a system that actually is really dynamic and has transformed human productive capacities in ways that, you know, I think we would agree with Marx’s judgment that in the long run, really expand the space for human freedom and possibilities because it’s sort of broken up the sort of old, local, simple ways of carrying out productive activity and allowed people to have a much more extensive division of labor, much wider scale cooperation and the development of all of these new ways of transforming the world through technology that didn’t exist before or that were much - let’s not say it didn’t exist, but developed much more slowly in limited ways before.

But this is also where a lot of the conflict comes up, because you build up a business and it exists sort of for its own purposes, its own function, it has its own norms, it has its own sort of internal logic. And then at some point, you have to turn the products of that back into money to keep the accumulation process going. And so a lot of the sort of tensions, I think, around the system come from that.

The other part of your question, can economics explain capitalism, I think from our point of view economics is part of the larger set of social phenomena that kind of grow out of generalisation of capitalism as a way of organizing human life and productive activity. So in that sense, you can’t really use the tools of economics to explain capitalism, because economics is kind of within capitalism. The categories of economics are really specific to capitalism. And if you want to explain the origins of it, certainly you can do that, but you need a different set of tools. It’s more of a historical kind of question than one that you can answer with the tools of economics.

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?


In some ways this seems like a wrong question, right? Capitalism, although it’s dominant and it seems to have spread all across the world, it’s just one way of organizing human activity. And throughout history, it’s always existed alongside other ways of organizing our collective lives, as it were. So even today, if you take a look at it, a lot of the activity, maybe the most of the activity isn’t structured directly by capitalism the way that we’ve understood it. So, for example, families or your interaction with the government are broadly non-capitalist institutions.

Some of us are part of co-ops, you know, there are other ways of organizing that are very far reaching in all our lives. And, of course, even capitalist organizations aren’t entirely capitalist, as it were. It’s like a mix between an army in a village as people have said, right? So in some sense, I think the question about whether it will survive indefinitely, clearly nothing survives indefinitely, hasn’t survived indefinitely. And it seems that in many cases, a lot of our lives are - there is this dialectic that sometimes the capitalist movement actually seems to be more and sometimes it actually seems to be less. And I would argue, I think one of the things that Josh and I have been discussing a lot is that maybe what we’re seeing and we shall continue to see is a slow sort of disentanglement of a lot of our lives as the forces of production become more productive, as you start to see, you know, organizing our lives this way is maybe completely irrational, that we will slowly but surely start to reorganize our ways in ways that are more meaningful and more humane, if you will.

Yeah. So I’m stuck with this.


Yeah, that’s right. I mean, there’s multiple modes of production, whatever phrase you like, ways of organizing human activity that coexist next to each other. It’s not either all capitalism or something else. And actually there’s already today a lot of other stuff, even though in certain settings the sphere of capital is expanding, but in others it’s diminishing. And so it doesn’t have to be the question: oh, is capitalism going to be abolished and replaced by something else?

It’s an incremental process. And, you know, actually, if you go back and read what Marx said, that’s what he said, too. He has a line towards the end of Capital, he says, the socialist revolution will be infinitely less violent than the bourgeoisie revolution because all of the structures of socialism will have already developed before the sort of final abolition of capitalism. But we don’t even have to imagine that final abolition.

You can imagine a diminishing sphere of activities that still look sort of like capitalism. You know, just the same way you might say, you know, theology was once this overwhelming organizing principle of social legitimation and structuring all kinds of social activities. Some people spend a lot of time worrying about it, but it doesn’t affect the rest of us very much at all. So you can imagine that sort of incremental diminishing of the sphere where capitalist logic applies without a decisive break.

And I think when you frame it that way, it’s clarifying because we don’t have to think what can there be, you know, another Russian revolution or whatever, because that’s not - if you can imagine the displacement of capitalism by other ways of organizing productive activity without imagining that sort of violent transition. You know, I think, that said, there obviously is still today an enormous area of life that is organized along capitalist lines.

And I think that does create some major problems for us in terms of things like dealing with the climate crisis. You know, not so much, I think people sometimes have this idea that, well capitalism is a system of endless accumulation so that means we always need more oil, more energy, more material. I don’t think that’s true. I think we can easily imagine, in fact can see the beginnings of a kind of material de-linking.

But where there really is a problem is that when we sort of set up most of our productive activity on the basis of private property and we’ve kind of got these little dictatorships where people with their business, their property are supposed to be able to do, you know, whatever they want, then that creates a real obstacle to any sort of rational collective action and a lot of the sort of economic transformations we’re going to have to carry out if we want to maintain a planet that can support our civilization, are going to require large scale, rapid, coordinated transformations of things like our power system, our transportation system, we’re going to need different land use patterns, denser cities.

And it’s very hard to do that on the basis of individuals’ profit-seeking behavior. So that’s, I think, where the real obstacle lies, and not so much some sort of objective drive for growth. But there is, I think, with the kind of transformations decarbonization is going to require, a need for a more conscious, centralized decision making authority and really sits comfortably with our sort of existing ways of organizing production.


Just to continue on those lines, I mean, maybe a historical defence of capitalism, which there may be some truth to, is show me a system which has led to so much prosperity in the past. And it’s true that capitalism was, than the previous systems, you know, has led to the development of the forces of production and so on. But, you know, if you take aside England and maybe Netherlands and so on, those places where it does seem to have been some sort of strange, sui generis process, all the later industrializers, really very much were only able to transform because of extremely clear direction of the force, the production direction, if you will, of industrialization, mobilization of resources.

It’s always needed, almost always needed a leading role for collective action. And so if we assume that we are going to tackle the problems of the world by the kind of elements of, if you will, completely decentralized actions with markets really allocating resources, that’s going to be a disaster. That’s just not going to allow us to deal with the kind of issues of climate change and other crises that are looming.

And so in that sense, if we really are to survive as a species - and I think it really is a question that confronts us now very urgently - it will require us to move away from the way that we’ve imagined that we ought to be organizing society along these lines and have a much more rational collective effort.

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?


Yeah, again, we can easily imagine other systems, we don’t have to imagine them, they’re all around us. You know, as Arjun was saying earlier, we all of us experience every day systems where productive activity is organized through some sort of collective decision making process. An enormous amount of our productive work, our reproductive labor that keeps us going individually and collectively, is carried out in the family where, you know, some families are more egalitarian, some families are more hierarchical, but no family is organized on the basis of the pursuit of profit - well, let’s not say no, - but a trivially small fraction of them are.

So we all have firsthand experience that this is a way that we can organize our activity. We all go to workplaces where within the workplace, you know, you don’t make decisions based on some sort of profit maximizing criteria. And your immediate boss isn’t doing it that way either. Probably they’re just following orders and some sort of bureaucratic system or perhaps there’s an element of voluntary cooperation going on.

But either way, it’s a different way of organizing our activity than the notion of markets and the pursuit of profit. As academics, we’re fortunate enough to have a collective decision making process that covers a lot of the traditional roles of the capitalist employer. You know, we collectively decide on hiring and we collectively organize our work schedules and so on. Most obviously, very few workers in the world are as fortunate as academics in that way.

But the point is that this is a model that actually exists. It works. I mean, certainly here in the United States, higher education is one of our big industrial success stories. And it’s organized in some sense as a bunch of little worker co-ops. In any workplace, there are moments when people sit down to make a decision together where people do stuff because, you know, that’s just what makes sense and they’ve agreed to do as opposed to somebody making a calculation of self-interest.

This is David Graeber in his wonderful book, Debt, he talks about everyday communism. Even in the most sort of traditional workplace if somebody says, you know, pass me that hammer or can you do some little favor for me, people do it just as a way of cooperating and not because they’ve been ordered to or because they’re calculating that it will pay off for them.

And then obviously, we have a huge public sector in the world as well. We have public schools and public libraries and public transit and fire and police services and so on. So we already have an enormous amount of non-capitalist organization of production around us. We don’t have to imagine it. The challenge intellectually is to generalize from this stuff, to recognize how these principles can be applied more broadly. We don’t have to create something new, but we do have to bring in sort of general principles. I think, for people on the left, let’s say, or people who support individual public sector programs or individual sort of non- capitalist ways of organizing particular activities, there’s often a tendency to make the argument in terms of that specific activity: well, here’s why we want public schools and we want better funding for our public schools, as opposed to trying to articulate what is the general principle that makes markets and the pursuit of profit a bad way to organize that. What is the general principle that says teachers should have autonomy? We actually want less authority of the boss in the classroom. That’s why we have civil service protection, so that’s why we have professions, because we want people to have autonomy.

We actually want to move away from the model of sort of proletarian labor where you’re completely under the authority of the boss. We do that in a lot of specific cases already. The intellectual challenge is to sort of generalize that and see how we can apply it more broadly to the areas of society where it’s not not currently organized that way.


You know, the question actually, I think is quite nicely posed because in some sense, I think most people would broadly agree that capitalism generates a lot of good, you know, that’s there. But there’s been a sense right from the outset that it may not be serving the needs of humanity. That in some sense, I think the only word that really describes this is a drive, a sort of alien drive which sometimes intersects with the need of human beings and very often doesn’t.

I mean, when we think about the way the kind of concerns about what happens in farms and how people spend their entire lives working really as drones, it’s really kind of very tragic history, if you will. Of course, people are richer and healthier as well. But, you know, in some sense capitalism, the way that it’s developed, has not always served the needs of humanity. I mean, we don’t have to look historically.

Let’s look at what’s happening right now with the whole question of vaccination. I mean, the belief that in some sense you needed intellectual property and you can only solve this by the genius of a few pharmaceutical companies when in fact, what actually happened in all of this innovation was that it was really the public sector backing all of this, which made certainly some of the vaccines even viable in the first place. And so now you have this really perverse situation where some people are prevented from access because we want to maintain whatever capitalist institutions that we’ve built up.

So I think it’s important to realize that capitalism, while it’s done many great things as Marx and others recognized, in terms of developing capacities and so on, it’s never been a force which has very nicely dovetail with human needs. But I think that what’s I think useful now to think about is that we don’t need to imagine, if you will. And again, something that Josh said, we don’t really need to imagine - we have a model and a system that’s already there, that we’re going to replace it with.

I think, you know, this thing will happen incrementally. Maybe this is radical optimism, I think that we as a whole, we both believe that the domain organized around, if you will, these arbitrary hierarchies - the market and so on - maybe the next few generations with the challenge of climate change, with many more crises and with a truly, in some sense, a global world right now, I think that the domain of collective freedom, I think Josh would agree with this, will be much greater in the future than now.

And so the domain of capitalism will be smaller. And so the domain, if you will, of where hopefully human freedom can flourish, that, I hope, is actually - we hope and I think we believe that that’s actually going to be the case in the future.


Yeah, that’s right, I almost want to leave it there because it’s such a perfect ending, but I just wanted to amplify something Arjun said, because the vaccine case is really a perfect example of this dynamic. On the one hand, we have a really urgent collective problem, this pandemic. And the solution comes from you know, it’s directed by the public. It’s a collective decision mediated by governments to devote our common resources to solving this problem.

And it’s incredibly effective when you want to solve this problem and you have a political decision to do it. You can really work wonders. And it’s also of course carried out by scientists who have a whole set of professional norms around the conduct of science, which is precisely in order to suppress market incentives. We don’t want scientists thinking about how to get rich. Now, of course, we do get that because that’s ubiquitous in our society, but the reason we have a whole set of professional norms around science is precisely because we think that this is the kind of activity that people carry out better when they’re insulated from market incentives.

And then we have a sort of centralized public direction to mobilize their activity. So it’s really pretty amazing when you look at it. But then the problem is that the fruits of that still have to be squeezed into this box of private property. Somebody has to have a property right over all this collective labor and public resources in the form of a patent.

And that really then limits the value. It makes this success much less than it could have been. So that conflict, I think we’re going to see it, we do see it, we already are seeing it and we’re going to continue seeing it probably even more so as we deal with more sorts of problems like the pandemic and climate change and so on.

That when we really urgently need to solve a problem, we find we do it by suppressing the logic of the market and making decisions collectively. But then as long as we still sort of have this overarching insistence on organizing our claims on each other in the form of property rights, it really creates a conflict, it really gets in the way of that. And I think over time, again, just the necessity of solving our urgent problems is going to force us to move away from the private property model and away from the pursuit of profit and towards more rational collective ways of dealing with the problems that face us.

About Arjun Jayadev / J.W. Mason

Arjun Jayadev is a Professor of Economics at the School of Arts and Sciences at Azim Premji University (APU), Bangalore. He is a Senior Economist at the Institute for New Economic Thinking. He has also worked as an Associate Professor of Economics at University of Massachusetts (UMass), Boston, as a Fellow at Roosevelt Institute, New York & was a Post-Doctoral Fellow at the Columbia University Committee on Global Thought, New York . He is also a board member of Oxfam India. His research interests are economics & development, with interests across multiple areas such as, macroeconomics (especially issues of debt, balance sheets, the political economy of finance and central banking and macroeconomic policy choices), income distribution and inequality (classical approaches to distribution, and group based inequalities), intellectual property, and the economics of power. Arjun was also the co-editor of ‘The Journal of Globalization and Development’ from 2013 to 2018. He has won numerous awards for his research.

J.W. Mason is associate professor of economics at John Jay College, CUNY and a Fellow at the Roosevelt Institute. His research focuses on the history and political economy of money and credit, including the evolution of household debt, public-sector balance sheets, and the changing role of financial markets in business investment. His Ph.D. in economics is from the University of Massachusetts at Amherst, and his B.A. is from the University of Chicago. He has published articles in American Economic Journal: Macroeconomics, Journal of Post Keynesian Economics, Metroeconomica, Rethinking Marxism, and Review of Keynesian Economics, as well as Review of Radical Political Economics. His popular writing has appeared in The American Prospect, The Baffler, Barron’s, Boston Review, City Limits, Dissent, The International Economy, In These Times, Jacobin, New Statesman, and the New York Daily News, among other publications. His personal blog is at jwmason.org/the-slack-wire.

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