Tuesday, 16 April 2024 04:44

Saving economics from the Economists - Clara Mattei and Aditya Singh

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When seeking empathy for their financial woes, most people know better than to talk to an economist. To understand how the field gained a reputation for not caring about social-justice issues requires tracing the origins of the intellectual paradigm that dominates academia economics and public policy today.

In 1921, Maffeo Pantaleoni, widely recognized as one of the architects of today’s mainstream economic framework and a close collaborator of Italian economist and sociologist Vilfredo Pareto, expressed his disdain for the working class. “It is disgusting,” he wrote, “to witness the masses of workers that are drunk in all our cities.” The “notable increase of wages,” he observed, “was not accompanied by greater civilization so that the worker and his spouse live like pigs (porci) in their homes in order to waste the greatest part of their income in wine at the tavern.”

Horrified at the thought of workers gaining economic rights, Pantaleoni felt an urgent need to help fix what he perceived as a world descending into chaos. World War I had led many European citizens to demand a complete overhaul of their capitalist economies. They sought to replace exploitative structures with emancipated work and prioritize public service and production for use over profit-driven output. During Italy’s so-called Red Years (1919-20), citizens challenged established social hierarchies in unprecedented ways. Peasants collectively managed agriculture through assemblies and cooperatives, while workers took over factories and managed production through councils. These gatherings were widely viewed as the institutional basis for economic democracy.

As workers stormed the stage of history with visions of an alternative society, the defense of capitalism took on more powerful forms. Pantaleoni and his colleagues played a vital role in shaping a new economic paradigm that continues to capture – and, at times, suppress – people’s political imagination, leading to a resigned acceptance of the current capitalist system as the only viable option.

This dominance was achieved through a multifaceted and powerful process of “depoliticization.” Although this tactic has become so ingrained in contemporary discourse that today it goes unnoticed, a close examination of early-twentieth-century economic thinking shows that the process of depoliticizing the economy was, in itself, profoundly political.

As part of this process, the term “pure economics” emerged as the new label for what until then had been known as “political economy.” This strategic rebranding positioned economic knowledge as “objective” and “neutral,” thus detaching it from class dynamics and endowing economic experts with an aura of omniscience that enabled them to oppose workers’ mobilization from a position of authority. Economics was treated as a “hard” science, and its practitioners were cast as the sole gatekeepers of infallible models that the benighted masses were too stupid to understand.

In 1922, just as experts began to assert their authority to run the economy without democratic oversight, Benito Mussolini rose to power in Italy. Viewing Mussolini’s fascist regime as an ideal vehicle for “pure economics,” many economists, including Pantaleoni, enthusiastically embraced it.

Umberto Ricci, another of Pantaleoni’s eminent colleagues and a member of Mussolini’s economic cabinet, encouraged his peers to disregard criticisms from the “profane public.” As the economist “progressively climbs the ivory tower, and abandons at each floor his prejudices and interests,” he wrote, “his vision gets ever more refined, his horizon is enlarged; eventually, when the high summit is reached, he discovers the unity in the truth, the order in the disorder.” At this altitude, he noted, one is capable of distilling rigorous and elegant laws, worthy of competing with the laws of celestial mechanics. This vision of beauty is the economist’s sovereign reward.”

This intellectual ecstasy, steeped in positivism, was anything but innocuous. It reflected a deeply political desire to shape people’s behavior to fit economists’ “true” models. As Ricci explicitly put it, “theoretical constructions” were “essential to tame men.

Economists and the Capital Order

To be sure, the justification for economic coercion was based on “apolitical” methodological assumptions that structurally eliminated workers’ economic agency. Indeed, proponents of pure economics waged an arduous campaign to supplant the paradigm established by classical political economy’s founding fathers – Adam Smith, David Ricardo, and Karl Marx – who studied capitalism through the prism of class and class conflict. The new economic framework rejected the concept of class entirely, reducing social dynamics to the complex interactions among atomized individuals moving in harmony.

Under this framework, the entrepreneur, not the worker, was regarded as the engine of economic growth. While the classical paradigm recognized labor as the source of profit and interpreted exploitation as a structural trap inherent to capitalism, pure economists viewed labor relations as a series of equal exchanges among individuals. Consequently, they envisioned a free-market society where anyone sufficiently rational and virtuous could thrive.

But this seemingly emancipatory insight was actually deeply classist. By suggesting that social hierarchies are merely a reflection of individual merit, pure economics implied that those who are not at the top do not deserve to be. As Ricci put it, “The businessman is thrifty, a thinker and a calculator, it is this real man who most resembles the abstract man pictured by economists, who does not fuss like a sissy of a hardship to come.” Consequently, the profits of saver-entrepreneurs were regarded as just rewards for their virtuous behavior, legitimizing their role in signing workers’ paychecks and “driving” the economy forward.

This theoretical approach was remarkably successful in stripping workers of their agency and justifying the unlimited growth of private wealth. The notion that if we just try hard enough, we can become rich investors has permeated our thinking to such an extent that many have internalized its core tenet: those who do not “make it” have only themselves to blame.

Over the years, these obvious absurdities have been concealed under a veneer of scientific rigor. Individuals struggling against low wages and precarious contracts to make ends meet cannot possibly raise the necessary funds to become a “saver-investor.” But many continue to be misled by this narrative.

The impact of prevailing economic thinking is devastating. For too long, economists’ so-called “scientific rigor” has been used to wage a one-sided class war in which a wealthy minority profits while most of the world’s population bears the costs.

Given that there is nothing more political than the lens through which we see the world, we must resurrect and harness the buried tradition of classical political economy to promote radical social transformation. The first step is for economists to adopt an explicitly activist approach. This does not imply forgoing the rigor of scientific inquiry. On the contrary, it means acknowledging the social context of intellectual endeavors. As another renowned Italian thinker of this period, Antonio Gramsci, observed, scholars are active participants in the world they study and, as such, are inextricably involved in the dynamics of class conflict.

By moving beyond the false dichotomy of “pure abstraction” and “pure empiricism,” we can transform economics into a field that fosters people’s participation rather than one that perpetuates a system of exploitation. To this end, we must embrace a systematic analysis that focuses on the unique historical characteristics of capitalism and its social nature. As Marx noted in his critique of “bourgeois” economics, “capital” – often viewed by experts as a standalone material asset, a mere input in production – is underpinned by a specific social structure. Within this “capital order,” most people have no choice but to sell their labor for wages.

This realization can be conceptually and politically empowering. Today’s capital order relies on active state intervention, often in the form of austerity measures, to keep workers docile. In other words, there is nothing spontaneous about the “free” market. Given that this system is underpinned by the exploitation of the majority, it requires constant protection.

Contrary to the prevailing economic narrative, our socioeconomic system is not inevitable, nor do we need to grudgingly accept it as the only way forward. The depoliticization of economic discourse is a political project aimed at preserving the capitalist structure of class dominance and foreclosing any alternatives to capitalism. Fortunately, just as this status quo was established through collective action, it can also be subverted through collective resistance.


Project Syndicate

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