Mainstream economists haven’t exercised much of a voice when it comes to the Occupy Wall Street movement. Paul Krugman refused to be associated with the movement, while Greg Mankiw quickly dismissed the Occupy-related walkout on his class. And most of the other mainstream economists in the United States followed suit, either downplaying or ignoring altogether the issues raised by the Occupards.
Fortunately, Suresh Naidu has broken the silence and assembled a special issue of Economists’ Voice on the Occupy movement (unfortunately, the contents of the issue are behind a paywall). Here is a quick rundown of the four main essays:
The only way Daron Acemoglu and James A. Robinson can see what is going on with the Occupy movement is through the lens of their recent book, and thus as a problem of pushing back against the capture of political institutions by the 1 percent (which is also how their understand the Gilded Age and the subsequent Populist and Progressive movements).
the lesson from the Populists and the Progressives is that to succeed OWS must come up with a list of specific institutional and policy changes that will help to counterbalance the trends they have set themselves against. . .Such policies and reforms should focus on the really first-order issues, particularly how to reform the U.S. political system by making it less likely that the wealthy and other special interests can cement their capture of politics.
Fortunately, the other contributors to the special issue have a much better understanding of what is at stake in the Occupy movement.
According to Arindrajit Dube and Ethan Kaplan, the movement’s focus on the 1 percent concentrates attention on the aspects of inequality most closely tied to the distribution of income between labor and capital.
Consider three pieces of evidence. First, there has been a broad decline in the labor share of income from around 66 percent in 1970 to 60 percent in 2007. Moreover, as measured, labor income includes compensation going to top executives—the modern day equivalent of the nineteenth century capitalist. The exclusion of their compensation would show a substantially greater drop in labor’s share. . .
Second, based on tax data, the majority of income at the top comes from capital-based earnings (capital gains, dividends, entrepreneurial income and rent). . .
Third, the biggest driver of upper-tail inequality—both in terms of capital and wage based income—was finance, the sector which governs the allocation of capital.
Maliha Safri, for her part, traces the history of the Occupy movement through other such occupations (e.g., from the factory sit-down strikes in the 1930s to the recuperated enterprises in Argentina beginning in the 1990s) and reveals two different aspects of the movement: to take up space and to do work.
Of course their squatting and claims over the space received more than ample media, police, and judicial attention. Perhaps less-reported are the various working committees of OWS: the library which organized and ran a free book-lending service, the kitchen committee which produced and distributed up to 4000 meals a day on peak protest days, the education and empowerment committee which organized and distributed well-attended lectures and daily free classes (one on popular economics at OWS NY which I co-taught every week), the facilitation committee which trained people in the art of running meetings, the press committee which handled the hundreds of reporters and media demands, the comfort committee that produced and distributed clean laundry and arranged beds and showers, the structure group that organized the eventual spokes council decision-making structure for the entire occupation, the technology committee that produced the infrastructure for communication, the janitorial committee charged with clean-up, and dozens of more committees. The architecture of OWS speaks to at least one of the movement’s basic points: how society can and does organize partial production and distribution of goods and services outside market mechanisms.
Finally, Mike Beggs argues that the “budding economists of the Occupy movement” (including the students who walked out on Mankiw) may make common cause with anti-austerity liberals but their concerns go well beyond Keynes and “rational demand management.”
At the top of the list are inequalities of income, wealth and power – precisely the central issues for Occupy Wall Street and in the students’ letter to Mankiw. These are issues which continue to be neglected by mainstream economics, precisely because there are no easy policy fixes. . .
The fundamental questions about society raised by the Occupy movement are not going to be answered by a regression analysis – this much income inequality is explained by technology, that much by“globalization”, another part by tax policy…. Economics must become a broader church; open itself up again to the grandest old questions of political economy – what is capitalism, where did it come from and what is happening to it? – and stop taking for granted that it has no problems a policy tweak could not fix.
I can’t say these economists give voice to the Occupy movement—which has been developing its own ways of speaking since entering Zuccotti Park. But they certainly give voice within economics to the kinds of issues the Occupards have been raising across the United States and around the world.