Posts Tagged ‘economics’

The same day I wrote that capitalism was coming apart at the seams, indicated by the shocking disparity between the compensation of corporate CEOs and workers, the Business Roundtable published its new statement of purpose of a corporation.*  The 180 or so corporate executives who signed the statement declared that all their stakeholders, not just owners of equity shares, were important to their mission.

Many business pundits, such as Andrew Ross Sorkin, greeted the new statement as a sign that the era of shareholder democracy (what he refers to as “shareholder primacy”) had finally come to an end and that a “significant shift” in corporate responsibility to society would be ushered in. Readers, however, had their doubts, most of them echoing JDK’s response to Sorkin’s piece: “Talk is cheap.”


The fact is, over the past three decades, net dividend payments to shareholders have soared—from $178 billion in 1989 to $1.3 trillion in 2019 (that’s an increase of 630 percent, for those keeping track).** And much of the responsibility is laid at the feet of mainstream economists like Milton Friedman (pdf), who famously declared that “there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits” and the only responsibility of corporate executives is to their employers, the shareholders—and corporate raiders such as Carl Icahn.

As I see it, the idea of shareholder democracy has merely served as a cover for any and all corporate decisions and strategies. When pushed to take on other responsibilities, or to make other decisions, the corporate defense has long been that it ran counter to the mission of maximizing profits or shareholder value.

In reality, corporations have never attempted to achieve just one objective or to maximize one value. One issue is that the usual objectives or values ascribed to corporate managers are ill-defined. There is neither singular meaning of profits (since, as they’re reported, they’re largely the result of a particular set of accounting conventions, defined over the fuzzy boundaries of the inside and outside of a corporate entity) nor a unique time frame (over what period are profits or dividends maximized—a week, quarter, year?).*** But the defense of such a corporate mission has served as a convenient excuse to resist pressures to make different decisions or adopt alternative strategies—such as increasing worker pay, improving working conditions, implementing environmentally sustainable practices, and so on.

My view, as I argued back in 2013, is that corporations have never done just one thing or followed a single rule. They do make profits (at least sometimes, depending on the definition and timeframe). But they also seek to grow their enterprises and destroy the competition and maintain good public relations and buy government officials and reward their CEOs and squeeze workers and lower costs and reward shareholders and implement new forms of automation and build factories that collapse and. . .well, you get the idea. In other words, they appropriate and distribute surplus-value in all kinds of ways depending on the particular conditions and struggles that take place over the shape and direction of their enterprises.

The problem inherent both in the new Business Roundtable statement of purpose and in the attempts by corporate critics to argue that corporations should take on additional social responsibilities is that corporations are already too central to the U.S. economy and society. They’re the main institution where the surplus is appropriated and then distributed—with all the consequent effects on the wider society. The private decisions of corporate entities, as decided by the boards of directors and implemented by the chief executives, are responsible for the Second Great Depression, the grotesque levels of economic inequality that have been growing for decades now, the global-warming crisis, and so much more. Why would anyone want to give corporations even more power or scope to decide how to solve those problems when they’re the root of the problem in the first place?

No, the only viable strategy is make corporations less important, to decenter the American economy and society from the decisions made by corporate directors and executives. That begins with fostering the growth of other types of firms (such as worker-owned cooperatives) and making sure that the workers employed by corporations play a significant role in corporations (including how much surplus there will be and how it will be utilized). That’s the best way of moving beyond the era of shareholder democracy to a real economic democracy.

Anything else is just cheap talk.


*I certainly don’t want to imply that the Business Roundtable was responding to my blog post. No, the fact that they felt it necessary to issue such a new statement of purpose is an indication that American corporations—and, with them, U.S. capitalism—have lost a great deal of legitimacy in recent years. As Farhad Manjoo [ht: ja] recently wrote,

A recession looms, and the nation’s C.E.O.s are growing fearful.

It isn’t the potential of downturn itself that has them alarmed — downturns come and downturns go, but whatever happens, chief executives, like cats, tend to land on their comfortably padded feet.

Instead, the cause of their fear appears to be something more fundamental. . .They’re worried that when the next recession breaks, revolution might, too. This could be the hour that the ship comes in: The coming recession might finally prompt the masses to sharpen their pitchforks and demand a reckoning.

**During that same period, average hourly earnings (for production and nonsupervisory workers) increased by only 140 percent—but corporate profits (after tax) rose by 570 percent.

***As I have long explained to students, that’s the myth that serves as the foundation of the neoclassical theory of the profit-maximizing firm: what exactly are corporate profits and over what time frame are they supposed to be maximized? The assumption of a profit-maximizing firm is equivalent to what one hears from many so-called radical economists, that “capitalists accumulate capital.” Again, no. Accumulating capital (that is, purchasing new elements of constant and variable capital) is only one of the many possible forms in which capitalists distribute the surplus-value they appropriate from their workers. Sometimes they accumulate capital, and other times they don’t. The presumption that they always seek to accumulate capital is the heroic story proffered by classical economists (so that, in their view, capitalist growth would take place), much as neoclassical economists today presume that capitalists maximize profits (so that, in their view, an efficient allocation of resources will result). Marxists presume neither that capitalists maximize profits nor that they always and everywhere accumulate capital.


It’s time to get back to blog writing—after a 6-month hiatus during which I taught my final two courses at the University of Notre Dame (A Tale of Two Depressions and Marxian Economic Theory) and prepared for my retirement (which involved, among other things, sorting through, packing up, and moving decades of “stuff”). Now, after 38 years of teaching, I am officially Professor of Economics Emeritus. But, rest assured, I plan to continue this blog and other writing projects. 

For the first time in almost four decades (aside from a few research sabbaticals), I don’t face the prospect of returning to campus and teaching economics. But, I can’t help it, I still worry about what millions of students in the United States and around the world will learn—or at least be subjected to—when they enroll in their economics classes this fall.

One of the major issues for any economics class, especially an introductory or principles course, is how to make it useful for students. My own approach has always been to teach the basics of mainstream economics—the key assumptions, the standard models, the relevant conclusions—and then to teach the critique of mainstream economics (including alternative theories within the discipline of economics). Two for one, I used to tell the students. In my view, they would be better students and citizens of the world when they understood both how mainstream economics affected their lives and how they could criticize and explore alternatives to the hegemonic theories within economics.* And I updated the content, and made it more useful to students, as mainstream economic theories changed and as particular issues were taken up in the media and political discourse.

That’s certainly not how mainstream economists approach teaching. For example, Justin Wolfers, a liberal mainstream economist at the University of Michigan, recently announced that he wants to make introductory economics useful to students by teaching them “a set of tools that can empower them, providing insight that will guide them toward better decisions.” And those “better decisions”? Exactly the presumptions and pronouncements that mainstream economists have celebrated since their approach was invented by Adam Smith and then reinvented in the late nineteenth century as neoclassical economics. It’s the entire arsenal of comparative advantage, rational choice, opportunity cost, given scarcity, and so on.

The approach introduced by Wolfers with such fanfare is no different from the miserable and misleading analogy invoked by Harvard’s Greg Mankiw between international trade and hiring someone to shovel snow. And it accomplishes nothing more than demonstrating that current economic arrangements are exactly as they should be because, in the view of mainstream economists, free trade is always mutually beneficial:

Start thinking this way and you’ll quickly see that the ideas that guide your everyday decisions also propel international trade, which is why American engineers design iPhones, while foreign workers — who have fewer alternative opportunities — do the laborious work of putting them together. By assigning tasks this way, Americans have gotten cheaper iPhones, and Chinese and Indian consumers have gotten greater access to advanced technology.

Fortunately, there are many other economists who are devising courses that are much more useful to today’s students. Last year, Aditya Chakrabortty wrote about one such course, in which students learned that the rules of the economy “aren’t laws of nature.” And just last week, Andrew Simms and David Boyle published a new beginners’ guide to economics for non-experts:

In it we ask some heretical questions that that could get us expelled from most university economics departments, such as: is the price mechanism so clever, or rising productivity always a good thing? We talk about the trouble with growth, and why working less might be better. Our common starting point is that the economy should serve rather than dominate people, and that it must work within planetary ecological boundaries.

As against what Wolfers, Mankiw, and so many other mainstream economists teach their students, these approaches are useful to students because they serve to denaturalize both existing economic thought and economic arrangements, thereby creating space for alternative ways of thinking about how the economy is organized and creating other possibilities.

I’ll only be able to rest easy in my retirement when the teaching of economics is taken out of the hands of mainstream economists and the millions of students who enroll in economics classes are taught to think critically and creatively about the economic dimensions of their lives and the world around them.


*So, I was heartened and gratified when, on the occasion of my retirement, some of my former students shared their thoughts about what they’d learned along the way:

Ruccio Gift1





Tom Toles Editorial Cartoon - tt_c_c160330.tif

No matter how we measure it, most Americans are falling further and further behind the tiny group at the top.

fredgraph  fredgraph (1)

That’s not at all surprising. Whether we compare the growing gap between average wages and Gross Domestic Product per capita (as in the chart on the left) or real median household income and real Gross Domestic Product per capita (as in the chart on the right), it’s clear the average American has been losing out. A growing proportion of what workers produce hasn’t been going to them but to the richest households for decades now.

That does not mean, contra Robert Samuelson, that “the incomes of most Americans have stagnated for decades.” That’s a canard. No one makes that argument.

No, the real issue is that American workers have been producing more and more but getting only a tiny share of that increase. As I explained last year,

That’s what mainstream economists can’t or won’t understand: that workers may be worse off even as their wages and incomes rise. That problem flies in the face of every attempt to celebrate the existing order by claiming “just deserts.”

It’s what is known as relative immiseration. And it simply can’t be disputed by the alternative statistics invoked by Samuelson or Stephen J. Rose (pdf).

The exact numbers concerning the distribution of income in the United States depend, of course, on a whole host of assumptions and methodological choices, mostly involving what counts as “income.” The more categories that are included in income—starting with the traditional series (wages and salaries, dividends, interest, and rent) before and after taxes, and then including payments from government programs (such as Social Security, unemployment insurance, Temporary Assistance for Needy Families, and the earned-income tax credit), and going so far as to add employer contributions for health insurance and 401(k) retirement accounts, the employer share of the Federal Insurance Contributions Act, government noncash benefits (e.g., the Supplemental Nutrition Assistance Program, Medicare, Medicaid, and housing vouchers), housing services (homeowners paying rent to themselves) and government services (e.g., defense, education, legal system, and administration)—the less measured inequality turns out to be.


In fact, as Rose demonstrates, most of the available studies show growing inequality in the United States, with a high and rising share of income captured by the top 1 percent.** The only real outlier is by Auten and Splinter, who merely demonstrate that it is possible for mainstream economists to make growing inequality virtually disappear with enough “massaging” of the underlying numbers.***

In the end, Samuelson himself is forced to admit,

None of this means we should stop debating inequality. Who gets what, and why, are inevitable subjects for examination in a rich democratic society. By contrast with many advanced societies, income and wealth are indisputably more concentrated in the United States.

And the problem of growing inequality is only going to get worse as we move forward, especially with ongoing automation. As David Autor explains,

employment is growing steadily, and its growth in terms of number of jobs has not been discernibly dented by technological progress. But the sum of wage payments to workers is growing more slowly than economic value-added, so labor’s share of the pie of net earnings is falling. This doesn’t mean that wages are falling. It means that they are not growing in lock step with value-added.

That’s exactly right. Workers’ wages and middle-class incomes may continue to rise in absolute terms but their relative standing with respect to the tiny group at the top—those who are in the position of capturing the surplus—will likely worsen.

Measure by measure, the economic and social landscape is being fractured and American workers are being left behind.


*So that I avoid the problem I encountered when I presented my “Merchant of Venice” paper, this post is not about Shakespeare’s play.

**The main studies include Emmanuel Saez and Thomas Piketty (pdf), Piketty, Saez and Gabriel Zucman (pdf), Gerald Auten and David Splinter (pdf), and the Congressional Budget Office. As I showed in 2016, even Rose, for all the faults in his own study, found

an enormous increase in inequality between 1979 and 2014: combined, the share of income going to the rich and upper middle-class more than doubled, from 30 to 63.1 percent, while the amount of income going to everyone else—middle-class, lower middle-class, and poor—fell precipitously, to less than 40 percent.

***Auten and Splinter arrive at such a misleading result through two statistical maneuvers: allocating underreported income (primarily business income) according to IRS audit data and retirement income. Thus, they conclude, “Our results suggest an alternative narrative about top income shares: changes in the top one percent income shares over the last half century are likely to have been relatively modest.”


Mainstream economists continue to discuss the two great crises of capitalism during the past century just like the pillars of society performed in the brothel—a “house of infinite mirrors and theaters”—in Jean Genet’s The Balcony.* The order they represent is indeed threatened by an uprising in the streets, and the only question is: can they reestablish the illusion of control?

The latest version of the absurdist economic play opens with Brad DeLong, who dons the costume of the liberal mainstream economist and argues that, while the Great Depression of the 1930s was far deeper than the Great Recession (what I have long referred to as the Second Great Depression), the recovery from the crash of 2007-08 was so mishandled that it casts a shadow over the U.S. economy in a way the first Great Depression did not.

now we are haunted by our Great Recession in a sense that our predecessors were not haunted by the Great Depression. Looking forward, it appears that we will be haunted for who knows how long. No unbiased observer projects anything other than slow growth, much slower than the years during and after World War II. Nobody is forecasting that the haunting will cease — that the shadow left from the Great Recession will lift.

Basically, DeLong blames two groups—conservative mainstream economists and policymakers (“including the decision makers at the top in the Obama administration”)—for a recovery that was both too long and too slow. The first claims the monetary and fiscal policies that were adopted were wrongheaded from the start, and fought every attempt to sustain or expand them. The second group claims they prevented a second Great Depression and refuses to acknowledge the failure of the policies they devised and adopted.

The customer who dresses up as a representative of the conservative wing of mainstream economics, Robert Samuelson, expresses his sympathy with DeLong’s analysis but considers it be overstated. Samuelson’s view is that slow growth is not caused by the shadow cast by inadequate economic policies, but is the more or less inevitable result of two exogenous events: reduced growth of the labor force and slower growth in productivity.

The retirement of baby-boom workers would have occurred without the Great Recession. The slowdown in productivity growth — reflecting technology, management and worker skills — is not well understood, but may also be independent of the Great Recession.

This is exactly what is to be expected in the high-end economic brothel. It’s a debate confined to growth rates and the degree to which economic policies or exogenous factors should ultimately shoulder the blame of the crisis of legitimacy of the current economic order. Each, it seems, wants to play the fantasy of the Chief of Police in order to create the illusion of restoring order.**

What DeLong and Samuelson choose not to talk about are the fundamental differences between the response to the 1929 crash and the most recent crisis of capitalism. As is clear from the data in the chart at the top of the post, the balance of power was fundamentally altered as a result of the New Deals (the first and especially the second), which simply didn’t occur in recent years. After 1929, the wage share (the green line) remained relatively constant, even in the face of massive unemployment—and eventually, as a result of a whole series of other policies (from regulating the financial sector through jobs programs to unleashing a wave of labor-union organizing), the shares of national income going to the bottom 90 percent (the blue line) and the top 1 percent (the red line) moved in opposite directions. The current recovery has been quite different: a declining wage share (which, admittedly, continues a decades-long slide), the bottom 90 percent losing out and the top 1 percent resuming its rise.

And the reason? As I see it, what was happening outside the brothel, in the streets, explains the different responses to the two crashes. It was the Left—in the form of political parties (Socialist, Communist, and the left-wing of the Democratic Party), but also labor unions, councils of the unemployed, academics, and so on—that pushed the administration of Franklin Delano Roosevelt and Congress to adopt policies that moved beyond restoring economic growth to fundamentally restructure the U.S. economy (which, of course, continued during and after the war years).*** Nothing similar happened in the United States after 2008. As a result, the policies that were discussed and eventually adopted only meant a recovery for large corporations and wealthy households. Everyone else has been left to battle over the scraps—attempting to get by on low-paying jobs retirement incomes based on volatile stock markets, with underwater mortgages and rising student debt, and facing out-of-control healthcare costs.****

It should come as no surprise, then, that the elites who continue to play out their fantasies in the house of mirrors have lost the trust of ordinary people. Unfortunately, in the wake of the Second Great Depression, it’s clear that new masqueraders have been willing to don the costumes and continue the fantasy that the old order can be restored.

Only a fundamental rethink, which rejects all the illusions created within the economic bordello, will chart a path that is radically different from the recoveries that followed both great crises of capitalism of the past hundred years.


*I saw my first production of “O Balcão” at Sao Paulo’s Teatro Oficina in 1970, as a young exchange student during one of the most repressive years of the Brazilian dictatorship. Staging Genet’s play at that moment represented both a searing critique of the military regime and an extraordinary act of resistance to government censorship.

**Much the same can be said of a parallel debate, between Joseph Stiglitz and Lawrence Summers.

***Even then, we need to recognize how limited the recovery from the first Great Depression was. Amidst all the changes and new regulations, leaving control of the surplus in private hands left large corporations with the interest and means to circumvent and ultimately eliminate the New Deal regulations, thus creating the conditions for the Second Great Depression.

****As Evan Horowitz has shown, roughly 14 percent of workers have seen no raise over the past year (counting only those who have stayed in the same job). That means, with inflation, their real wages have fallen. Moreover, “when a large share of workers get passed over for raises, wage growth for all workers tends to remain slow in the year ahead.”


Teaching critical literacy.

That’s what professors do in the classroom. We teach students languages in order to make some sense of the world around them. How to view a film or read a novel. How to think about economics, politics, and culture. How to understand cell biology or the evolution of the universe.

And, of course, how to think critically about those languages—both their conditions and their consequences.

I’ve been thinking about the task of teaching critical literacy as I prepare the syllabi and lectures for my final semester at the University of Notre Dame.

Lately, I’ve been struck by the way mainstream economics is usually taught as a choice between markets and policy. Whenever a problem comes up—say, inequality or climate change—one group of mainstream economists offers the market as a solution, while the other group suggests that markets aren’t enough and need to be supplemented by government policies. Thus, for example, conservative, market-oriented economists teach students that, with free markets, everybody gets what they deserve (so inequality isn’t really a problem) and greenhouse gas emissions will decline over time (by imposing a tax on the burning of carbon-based fuels). Liberal economists generally argue that market outcomes are inadequate and require additional policies—for example, minimum-wage laws (to lower inequality) and stringent regulations on carbon emissions (because allowing the market to work through carbon taxes, or even cap-and-trade schemes, won’t achieve the necessary reductions to avoid global warming).*

That’s the way mainstream economists frame the issues for students—and, for that matter, for the general public. Markets or policies. Either rely on markets or implement new policies. Once someone learns the language, they see the world in a particular way, and they’re permitted to participate in the debate on those terms.

The problem is, something crucial is being left out of those languages, and thus the economic and political debate: institutions. The existing set of institutions are taken as given. Therefore, the possibility of changing existing institutions or creating new institutions to solve economic and social problems is simply taken off the table.

Among those institutions, perhaps the key one is the corporation. The presumption within mainstream economics is that privately owned, publicly traded corporations are simply there, allowed to operate freely within markets or nudged in a better direction by government policies. What mainstream economists never encourage students (or, again the general public) to consider is the possibility that institutions—especially the corporation—might be modified or radically transformed to create the foundation for a different kind of economy.

Consider how strange that is. Corporations are the central institution when it comes to the distribution of income and therefore the obscene, and still-growing, levels of inequality in the U.S. and world economies. It’s how most workers are paid (because that’s where jobs are available) and where the surplus is first appropriated (by the boards of directors) and then distributed (to shareholders and others). And as workers’ wages stagnate, and the surplus grows, economic inequality becomes worse and worse.

The same is true with climate change. The major institution involved in producing and using fossil fuels—and therefore creating the conditions for global warming—is the corporation. Especially gigantic multinational corporations. Some make profits by extracting fossil fuels; others use those fuels to produce commodities and to transport them around the world. They are the basis of the fossil-fuel-intensive Capitalocene.

Within the language of mainstream economists, the corporation is always-already there. They may allow for different kinds of markets and different kinds of policies but never for an alternative to the institution of the corporation —whether a different kind of corporation or a non-corporate way of organizing economic and social life.

If the goal of teaching economic is critical literacy, then we have to teach students the multiple languages of economics—including the possibilities that are foreclosed by some languages and opened up by other languages. One of our tasks, then, is to look beyond the language of markets and policy and to expose students to a language of changing institutions.

Now that I begin to look back on my decades of teaching economics, I guess that’s what I’ve been doing the entire time, exploring and promoting critical literacy. I’ve always taken as one of my responsibilities the teaching of the language of mainstream economists. But I haven’t stopped there. I’ve also always endeavored to expose students to other languages, other ways of making sense of the world around them.

Maybe, as a result, some of them have left knowing that it’s not just a question of markets or policy. Economic institutions are important, too.


To complicate matters a bit further, the three elements I’ve focused on in this blog post—markets, policy, and institutions—are not mutually exclusive. Thus, for example, at least some conservative mainstream economists do understand that properly functioning markets do presume certain institutions (such as the rule of law and the protection of private property) and policies (especially not regulating markets), while liberals often advocate policies that allow markets to operate with better outcomes (I’m thinking, in particular, of antitrust legislation) and institutions to be safeguarded (especially when they might be threatened by grotesque levels of inequality and the effects of climate change). As for institutions, I can well imagine noncorporate enterprises—for example, worker cooperatives—operating within markets and relying on government policy. However, such enterprises imply the existence of markets and policies that differ markedly from those that prevail today, which are taken as given and immutable by mainstream economists.


*Dani Rodrik summarizes the terms of the debate well in a recent column: when a local factory closes because a firm has decided to outsource production,

Economists’ usual answer is to call for “greater labor market flexibility”: workers should simply leave depressed areas and seek jobs elsewhere. . .

Alternatively, economists might recommend compensating the losers from economic change, through social transfers and other benefits.

Once again, it’s a question of markets (in this case, the labor market) and policy (more generous social transfers to the “losers”).


Mark Tansey, “The Occupation” (1984)

It’s not the best of times. In fact, it feels increasingly like the worst of times. I’m thinking, at the moment, of the savage attacks in Pittsburgh (at the Tree of Life synagogue) and Louisville, Kentucky (where 2 black people were recently gunned down by a white shooter at a Kroger store) as well as the election of Jair Bolsonaro (who represents, in equal parts, Rodrigo Duterte and Donald Trump) in Brazil. So, it seems appropriate to change gears and, instead of continuing my series on utopia, to turn my attention to its opposite: dystopia. 

Mainstream economics has long been guided by a utopianism—at both the micro and macro levels. In microeconomics, the utopian promise is that, if the prices of goods and services are allowed to reach their market equilibrium, everyone gets what they pay for, everyone is equal, and everyone benefits. Similarly, the shared goal of mainstream macroeconomics is that, with the appropriate institutions and policies, capitalism can be characterized by and should be celebrated for achieving full employment and price stability.

But that utopianism has been disrupted in recent years, by a series of warnings that reflect the emergence of a much more dystopian view among some (but certainly not all) mainstream economists. For example, the crash of 2007-08 and the Second Great Depression have raised the specter of “secular stagnation,” the idea that, for the foreseeable future, economic growth—and therefore the prospect of full employment—is probably going to be much lower than it was in the decades leading up to the global economic crisis. Moreover, what little growth is expected will most likely be accompanied by financial stability. Then, there’s Robert J. Gordon, who has expressed his concern that economic growth is slowing down, it has been for decades, and there’s no prospect for a resumption of fast economic growth in the foreseeable future because of a dearth of technical innovations. And, of course, Thomas Piketty has demonstrated the obscene and still-growing inequalities in the distribution of income and wealth and expressed his worry that current trends will, if they continue, culminate in a return to the réntier incomes and inherited wealth characteristic of “patrimonial capitalism.”

Such negative views are not confined to economics, of course. We all remember how readers sought out famous dystopian stories—for example, by Sinclair Lewis and George Orwell—that connected the anxieties that arose during the early days of the Trump administration to apprehensions the world has experienced before.

However, Sophie Gilbert [ht: ja] suggests that, over the last couple of years, fictional dystopias have fundamentally changed.

They’re largely written by, and concerned with, women. They imagine worlds ravaged by climate change, worlds in which humanity’s progress unravels. Most significantly, they consider reproduction, and what happens when societies try to legislate it.

She’s referring to speculative-fiction books that parallel the themes in and draw inspiration from The Handmaid’s Tale by Margaret Atwood—novels such as Louise Erdrich’s Future Home of the Living God, Leni Zumas’s Red Clocks, and Bina Shah’s Before She Sleeps. 

With the help of Jo Lindsay Walton, coeditor of the British Science Fiction Association’s journal Vector and editor of the Economic Science Fiction and Fantasy database, I have discovered another burgeoning literature in recent years, representing and critically engaging the dystopian economics in fantasy and science fiction.

A good example of a dystopian scenario is “Dream Job,” by Seamus Sullivan. As the editor explains, it is a “cutting parable for a generation that undersleeps and overworks to get underpaid—where paying your student loans is quite actually a waking nightmare.” The protagonist, Aishwarya, lives in Bengaluru and works for low wages in a call center. In order to supplement her income, to pay back her loans, she attaches wireless electrodes that arrive by courier from SleepTyte and sleeps for an extra hour or two a day on behalf of someone else (such as as banker in Chicago), who gets more waking hours in the day without feeling tired. An eight-hour shift pays more than the call center and her customers tip her well. But even though Aishwarya manages to save enough rent for her own apartment, the increasing number of hours she’s spending sleeping for someone else leads to her own ruin, as her body deteriorates and she can no longer control the break between her customers’ dreams and her own living nightmare.

As Robert Kiely and Sean O’Brien explain, while much twentieth-century science fiction tends to traffic in a certain techno-optimism, a growing body of recent work looks to counter that narrative and emphasize the negative effects of the existing (or, in the near future, imaginable) technologies of capitalism, especially increased automation and the rise of digital platforms.* The themes include, in addition to the capitalist takeover of sleep time, the automation and digitization of both the labor process and the distribution of commodities, the proliferation of new border zones and heightened constraints on the circulation of laboring bodies, the reappropriation by capital of ameliorative measures such as the universal basic income, the development of performance-enhancing drugs for the workplace, the development of surveillance technologies and a concomitant increase in hacking tools designed to evade detection, and the intensification of climate change. The result is a dystopian landscape of impoverishment and impasse,

not a transitional space on its way to postcapitalism, but an immiserated space going nowhere at all, a wasted landscape of inequality and insecurity built on the backs of precarious workers and hardwired to keep them in their place at the bottom of the slagheap.

The fact is, utopian literature has always been accompanied by its dystopian opposite—each, in their own way, showing how the existing world falls short of its promise. Both genres also serve to cast familiar things in a strange light, so that we begin to notice them as if for the first time. What distinguishes dystopian “science friction” is the warning that if things continue on this course, if elements of the economy’s current logic remain unchecked and alternatives are not imagined and implemented, the outcomes may be catastrophic both individually and for society as a whole.

As is turns out, mainstream economic theory, when viewed through the lens of speculative fiction, is replete with its own dystopian narratives. As Walton points out, the story of the origin of money offered by mainstream economists—that money was invented in order to surmount the problems associated with barter—is not only a fiction, which runs counter to what anthropologists and others have documented to be the real, messy origins of money as a way of keeping track of debts and as a result of the actions of sovereigns and the state; it rests on a dystopian vision of a money-less economy.** The usual argument is that barter requires the double coincidence of wants, the unlikely situation of two people, each having a good that the other wants at the right time and place to make an exchange. Without money, producers (who are always-already presumed to be self-interested and separate, in a social division of labor) are forced to either curtail both their production and consumption, because they can’t count on exchanging the extra goods and services they produce for the other goods they want to consume. People would have to spend time searching for others to trade with, a huge waste of resources. Barter is therefore inconvenient and inefficient—a presumed dystopia that can only be superseded by finding something that can serve as a means of exchange, unit of account, and store of value. Hence, money.

The barter myth is eager to argue that money arises from the uncoordinated, self-interested behavior of individuals, without any role for communal deliberation or governmental authority. Simultaneously, it tries to insinuate that money is a completely natural part of who and what we are. It tells us that learning to use money isn’t too different from an infant learning to move around, or to make their thoughts and feelings known. In other words, money has to be the way it is, because we are the way we are.

The theory and policies of mainstream economics are based on a variety of other dystopian stories. Consider, for example, the minimum wage. According to mainstream economists (like Gregory Mankiw), while the aim of the minimum wage may be to help poor workers, it actually hurts them, because it creates a situation where the quantity demanded of labor is less than the quantity supplied of labor. In other words, a minimum wage may raise the incomes of those workers who have jobs but it lowers the incomes of workers who can’t find jobs. Those workers, who mainstream economists presume would be employed at lower wages (because they have little experience, few skills, and thus low productivity), would be better off by being allowed to escape the dystopia of a regulated labor market as a result of eliminating the minimum wage. Similar dystopian stories undergird mainstream theory and policy in many other areas, from rent control (which, it is argued, creates a shortage of housing and long waiting lists) to international trade (which, if regulated, e.g., by tariffs, would lead to higher prices for imported goods and less trade for the world as a whole).

Dystopian stories thus serve as the foundation for much of mainstream economics—from the origins of monetary exchange to the effects of regulating otherwise-free markets. Their aim is to make an economy without money, or a monetary economy that is subject to government regulations, literally unthinkable.

But, Walton reminds us, “the relationship between dystopia and utopia is intensely slippery.” First, because it’s possible to go across the grain and actually want to inhabit what mainstream economists consider to be a dystopian landscape—for example, by embracing the forms of gift exchange that can prosper in a world without money. Second, once everything is torn down, it is possible to imagine other ways things can be put back together. Thus, for example, while Laura Horn argues that the ubiquitous theme of corporate dystopia in popular science fiction generally only allows for heroic individual acts of resistance, it is also possible to provide a sense of what comes “after the corporation,” such as “alternative visions of organising collectively owned, or at least worker-directed, production.”***

Dystopian thinking can therefore serve as a springboard both for criticizing the speculative fictions of mainstream economics and for imagining an “archaeology of the future” (to borrow Fredric Jameson’s characterization) that entices us to look beyond capitalism and to imagine alternative ways of organizing economic and social life.****


*Robert Kiely and Sean O’Brien, “Science Friction,” Vector, no. 288 (Fall 2018): 34-41.

**Jo Lindsay Walton, “Afterword: Cockayne Blues,” in Strange Economics: Economic Speculative Fiction, ed. David F. Shultz (TdotSpec, 2018), 301-326.

***Laura Horn (“Future Incorporated,” in Economic Science Fictions, ed. William Davies [London: Goldsmiths Press, 2018], pp.  41-58).

****Fredric Jameson, Archaeologies of the Future: The Desire Called Utopia and Other Science Fictions (London: Verso, 2005).