Overcoming Lions: Why Economics Needs to Drop the Cult of Opportunism
Chapter 6 of ‘The Revolution that Nearly Was: How Aotearoa New Zealand’s progress was frustrated, and utopia mislaid’
OF all the animals, it is self-evident that humans are one of the more social species, a fact emphasised all the more by our possession of language, something that is of little use to a solitary creature.
The feebleness of the individual human, which lacks the sharp teeth and talons of the predator or the massive bulk and horns of many herbivores, is something we compensate for, in our natural condition, by banding together, as many herd animals do, but with greater guile and cleverness.
Consider, for instance, the following clip in which three members of an African tribe psych out lions into running away from their kill, so that the people can then carve a joint or two for their band. Clearly, no lone human would be likely to succeed in such an endeavour.
Given that our natural condition is essentially social, for reasons now evident, it is one of the enduring paradoxes of contemporary economic thinking that it is based on an a-social concept of human action and motivation.
Namely, the idea that if we each pursue our ends opportunistically, by always driving as hard a bargain as possible in whatever circumstances we find ourselves and resisting any impulse to share, cooperate, or practice restraint, this will maximise not only our own wellbeing but that of society as a whole.
In the image made famous by Adam Smith in his 1776 Inquiry into the Nature and Causes of the Wealth of Nations, all this self-interest will be coordinated into the social good as if by an invisible hand.
To foreshadow a point made further below, this was not an entirely unreasonable idea in Smith’s day, given that most industrial processes were small in scale: family farms and little workshops. By selling their products for what a competitive market would bear they maximised efficiency.
But Smith’s Wealth of Nations was published before the Industrial Revolution. The economy has become far more organised and large-scale since then. Yet economists continue to insist, or pretend, that the giant firms and other organisations of today should be run on the basis of what used to be known as ‘every man for himself’.
And that they should also seek to sell their wares for what the market will bear, even though their markets are seldom fully competitive these days.
Ironically, the cooperative spirit of the tribe, which is sometimes contrasted to an (allegedly) more individualistic modernity, is a more accurate foundation upon which to be thinking about the most advanced forms of modern organisation. In the real world, the Smithian, competitive worldview has thus undergone a rise in its relevance followed by a fall, which the sociologist Karl Polanyi called the ‘double movement’.
Polanyi made that point eighty years ago. And yet, in economics, we are still waiting for the opportunistically acting social atom to be replaced by something else.
And so, in this chapter, and the next, I will argue that that foundation of economics is long overdue for replacement, and how we might replace it.
Itis overdue for replacement in much the same way that the idea that the Earth lay at the centre of the universe and that the heavenly bodies remained aloft because they were made of fire came to be replaced, in the age of the telescope, by something far closer to our modern view of the solar system. And, subsequently, the universe.
Back then, a scientific revolution was possible even in the face of the Inquisition, which imprisoned Galileo but could not stop the spread of his ideas. Moreover, this revolution happened quite swiftly. In the nations into which the new scientific understanding had penetrated, the mental world of 1700 was completely different to that of 1600.
And yet the opportunistic and atomistic orthodoxy of economics, conceived before the Industrial Revolution (!), has proven to be far more reform-proof than the mediaeval view of the universe was in the 1600s. This is a striking paradox, indeed.
In fact, a case could be made for the proposition that this orthodoxy is a form of cult language, a rigid and unyielding set of concepts by which an inward-looking group sets itself apart from the masses.
That there is, in other words, a touch of Ayn Rand even about economics as a whole.
And that Paul Bieleski’s Anti-Economist Papers, a collection of satirical 1990s depictions of the economists of the New Zealand Treasury and certain other departments, firms, universities and agencies as so many mad monks, were never that far from the truth.
The Limits to Opportunism, 1: The Impulse to be Useful
This is not, of course, to deny the effectiveness of markets and shrewd bargaining in situations where the suppliers are atomised, and where there is keen competition among numerous near offers.
The problem with opportunistic conduct arises when the suppliers are not atomised: where there is a degree of actual productive or distributive interdependence or collectivity.
Suppose that to achieve something collective, such as the assembly of a jigsaw with ten pieces each held by an individual, there is a ninety per cent chance that each individual will supply their piece. In that case, the odds of the jigsaw being completed are only about one in three: for that is what 0.9 multiplied by itself comes to.
Furthermore, if nine people are willing to supply their piece and one holds out, that holdout wields all the power, and could, in theory, demand all the profits of the common enterprise. But if everyone behaved like that, nothing would get done and there would be no profits for anyone.
Thus illustrated is what is known as the ‘paradox of implementation’ or the ‘problem of collective action’: the paradox, or problem, being that it is amazing that anything complicated ever gets done because if, in theory, we are all out for number one, it shouldn’t be possible.
The paradox, or problem, is overcome by the fact that when we are not on our own, we generally restrain ourselves from what sociologists, in this context, refer to as ‘defection’. Which is to say, acting as opportunistically or impulsively as we might otherwise wish to.
(In the case of the lions, defection would be to break the spell by running away in the hope that they won’t give chase and will instead eat the other two.)
Instead of defecting all the time, we normally enter into what Jean-Jacques Rousseau called the ‘social contract’. In the social contract, opportunism is traded for a reward that seems fair, as opposed to what the market will bear: the latter being the maximum that we could theoretically chisel out through a strategy of defection if we weren’t worried about everything falling apart, or not being invited back to participate in future rounds of the same activity.
An important thing to note is that the outcomes of the social contract and its underlying principle of fairness are always more egalitarian than the outcomes of the hardest possible bargain.
Though sociologists and political theorists since Rousseau have used the term social contract as well, the requisite behaviours are, of course, mostly instinctive among all but a troublesome minority of sociopaths, narcissists, and the like.
For the most part, the social contract is fulfilled through a desire to be useful to others and respected thereby, thus gaining what the Māori and other Polynesians call mana.
“All the qualities of a man acquire dignity when he knows that the service of the collectivity that owns him needs them:” thus wrote the philosopher William James in 1906.
The sorts of stiff-upper-lip war movies that were popular in the 1950s were often about little else: ‘Service Above Self’, as the motto on the Queenstown, New Zealand war memorial arch has it. But James’s point was that we should discover a way to organise the peace in mana-enhancing or being-of-service ways, instead of pursuing an economics that tends to disintegrate modern society and then having to rely on external threats (either real or manufactured), some modern-day equivalent of the lions that encourage the members of a tribe to look out for one another, to bind modern communities together.
The social contact is also consistent with a more personal desire to be creative, in the manner that has led some to suggest in the past that we should not be called homo sapiens, ‘man the wise’ — old-school language once more, of course — but homo faber, ‘man who makes things’.
Many writers have emphasised the importance of motives that go well beyond immediate opportunism. At the turn of the twentieth century, Thorstein Veblen wrote of ‘the instinct of workmanship’; our contemporary Daniel Pink writes of a tricolon of autonomy, mastery, and purpose.
That there was a spectrum of motivations was acknowledged even centuries ago, but with the proviso that the ‘higher’ forms of motivation, including the more social ones, really required that one’s basic needs to be satisfied first.
And that for the poorer classes more direct incentives were, supposedly, required. One encounters this idea in Joseph Townsend’s 1786 Dissertation On the Poor Laws, in which Townsend condemned an early form of the dole as providing an incentive for poor people to loaf and not look for work:
The poor know little of the motives which stimulate the higher ranks to action — pride, honour, and ambition. In general it is only hunger which can spur and goad them on to labour; yet our laws have said, they shall never hunger.
By the poor, English-speakers of Townsend’s generation meant anyone of more-or-less proletarian or peasant occupations.
Of course the question is whether the alleged reluctance of the poor to labour was born of some innately degraded condition, or rather a reluctance to labour for some aristocratic landowner.
As we have seen, tribal peoples have no problem being ‘all for one, and one for all’, even though they are often materially poorer than even the European labourers of centuries ago.
The truth of the matter is that the assumption that other people are lazy or of purely self-interested is not only inaccurate on the whole, but also deeply prejudicial in its origins, either in class or ethnic terms.
It is always ‘we’ who are honest and instinctively hardworking, ‘they’ who supposedly require the carrot and the stick.
Ironically, in view of the element of kicking-down involved, such parasitic tendencies are if anything more likely to be found nearer the top than among the workers, who generally help each other out without asking too many questions.
All this is quite straightforward as an explanation of why the paradox of implementation, or problem of collective action, is no paradox and no problem (most of the time, at any rate).
The problem for the economists who insist on calling it a paradox or a problem is in a sense, self-inflicted, in that that most forms of economics refuse to countenance the existence of the social contract or the higher motivations, even though they obviously exist.
Indeed, for the most part, the economists do not even interrogate such troubling questions, preferring to stick to the safe terrain of the isolated, “hedonistic” opportunist, as Veblen put it in 1898:
The hedonistic conception of man is that of a lightning calculator of pleasures and pains, who oscillates like a homogeneous globule of desire of happiness under the impulse of stimuli that shift him about the area but leave him intact… He is an isolated, definitive human datum, in stable equilibrium except for the buffets of the impinging forces that displace him in one direction or another. Self-poised in elemental space, he spins symmetrically about his own spiritual axis until the parallelogram of forces bears down on him, whereupon he follows the line of the resultant.
And as the modern student will be aware, not much has changed to alter the usual economic view of the world since.
The Limits to Opportunism, 2: ‘The War of All Against All’
The idea that if everybody is truly, opportunistically self-interested, everything will fall apart and nothing complicated will get done, is, of course, far from new.
Such an insight lay behind the seventeenth-century political philosopher Thomas Hobbes’s famous image of the ‘war of all against all’: a condition evoked in the following detail from a painting made during the disorderly times in which Hobbes spent much of his adult life: a generalised European omnishambles of shifting alliances which nobody seemed to be able to turn off, known as the Thirty Years War (1618–1648) because it took that long to burn itself out.
And of which the English Civil War — King Charles the First getting his head chopped off, and all that — was really the local franchise of the conflict: the European distemper eventually crossing the English Channel just as the Black Death had done three hundred years earlier.
Hobbes blamed the chaos of his time on rivalrous self-interest, indulged not merely the spirit of a bull in a china shop but more like several bulls fighting in a china shop, and argued that a powerful state, which he called Leviathan, was needed to keep such antisocial rivalries in check.
The alternative was the liberty of the strong, which in Hobbes’s time principally meant roving bands of cutthroats, to oppress the weak. Either that, or total chaos: the actual breakdown of civilisation, which as most Europeans knew, had happened at least once before in their past.
Hobbes’s image of the war of all against all was invoked in the 1850s by Karl Marx, who argued, in support of his own socialist convictions, that Smith’s invisible hand was a just-so story and, in Chapter 3 of a collection of notes unpublished in his lifetime, called the Grundrisse or ground-plan, that we could as easily argue the opposite:
The economists express this as follows: Each pursues his private interest and only his private interest; and thereby serves the private interests of all, the general interest, without willing or knowing it. . . . One could just as well deduce from this abstract phrase that each individual reciprocally blocks the assertion of the others’ interests, so that, instead of a general affirmation, this war of all against all produces a general negation.
No doubt, the truth lies somewhere in between. But even this possibility is rejected when the economists say ‘assume perfect competition’, or put forward the kind of simplified model described by Veblen in the passage above, which comes from an 1898 article called ‘Why is Economics not an Evolutionary Science?’
By an evolutionary science, Veblen did not mean a pseudo-scientific ‘social Darwinism’ or anything of that sort. What he meant was a genuinely scientific economics that did not continually assume some variant of opportunism as its starting point, but which was instead based on careful observations of the world like those of biologists.
And which would therefore not be exclusively concerned with what Veblen called “hedonistic” either/or choices exercised in isolation, but would also analyse both/and, cooperative situations like that of the jigsaw example, and long-term committed relationships in support of cooperation: relationships. Relationships that are actually just as important in modern industry as in our personal lives, or the life of a tribe.
Denial through Definition: The ‘Cult’ of Opportunism
Instead, economics tends to uphold an image of how the economy works that is highly abstract to the point of ruling out cooperation and interdependence, the element of both/and or banding together for a common purpose, as a matter of definition, even though this then turns collective action into a ‘paradox’ and a ‘problem’ and also denies the cautions of the Hobbesian school.
From this definitional point of view, which is quite often invoked in support of a standpoint that might otherwise be condemned as unrealistic, one is still free to talk about cooperative situations and pro-social motivations.
It is just that, if one does start talking about cooperative situations and pro-social motivations, one is labelled a sociologist— not an economist.
As Paul Samuelson wrote near the beginning of his famous textbook, Economics, “Even children learn in growing up that ‘both’ is not an admissible answer to a choice of ‘Which one?’” (in the 8th edition, this sentence can be found at pp. 16–17).
Such passages reveal an additional conceit. That is, that while an exclusive focus on opportunistically exercised either/or might be narrow it is nevertheless, supposedly, the most hard-edged of rationalisms.
And that anyone who talks about both/and, everything being connected to everything else, fairness, or the social contract is, somehow, an idealistic hand-waver by comparison.
Such an insistence on being the ‘tough guys’ of the social sciences reminds me of something the esteemed, semi-dissident Soviet author Vasily Grossman wrote in a book called Stalingrad, lately translated into English by Elizabeth and Robert Chandler. According to Grossman, in that translation,
There are people who like to ascribe only the basest of motives to the actions of others. This is not always because they act basely themselves, often they would not dream of acting as they suspect others of doing. They talk like this because they think that cynical explanations testify to their knowledge of life. A readiness to believe that others are acting honourably, so they imagine, is a sign of naiveté. (p. 30)
I think that nails it. In fact we can go further, to speak of opportunism in economics as a sort of ‘cult’, or more precisely, the language of a cult. That is to say, something upheld as a marker to distinguish ‘us’ and ‘them’ and to reinforce ‘our’ sense of superiority and being in possession of secret knowledge, with any connection to reality strictly secondary.
Of course, quite apart from its cultishness and the fact that it also tacitly sides with inequality, sociopathy and narcissism, the definition of economics in terms of atomised, relationship-free exchange is narrow: something that, if we are honest, could only ever apply to a subset of reality.
That last point is often conceded by the economists themselves, for instance in a 1963 American Economic Review (AER) article, ‘Analytic Economics and the Logic of External Effects’, by a scholar named Sherman Krupp:
Where direct physical or social interdependence exists, the aggregate of firms produces effects other than those expressed by price: industrial smoke affects real estate values; ecological changes are introduced by pesticides; a hospital complex reduces absenteeism; education raises productivity beyond the increased efficiency of the recipient of education…. Microeconomic theory fails to provide an adequate theory of the economic consequences of direct interdependence. New complexities are introduced … Whether these consequences are trivial or not, the failure of microeconomic theory to provide a theoretical basis for evaluating them virtually disregards their existence. Consequently they are often neglected, sometimes by inattention and sometimes by intent. The theory does not force consideration of the economic consequences of physical or social interdependence. Might not adequate treatment of these relationships require abandoning of the assumption of independence logically required by certain basic postulates of the system as it stands? (AER Vol. 53, №2, pp. 220–226, at p. 225)
William J Baumol, the co-author of an economics textbook nearly as well known as that of Samuelson’s, wrote, a couple of years after Krupp, in a book called Welfare Economics and the Theory of the State (2nd edn, 1965), that:
The problem in sum is this: so long as we recognize the existence of particular types of interdependence in the results of the activities of our economic units, our analysis is likely to break down. We know, moreover, that the simplifying premise that these types of interdependence are negligible or non-existent is misleading. Such an assumption is not neutral; rather it leads inexorably to the acceptance of laissez-faire. (pp. 205–206)
In his 1973 presidential address to the American Economic Association, ‘Power and the Useful Economist’, J K Galbraith noted that:
The noninclusion of external diseconomies was long viewed as a minor defect of the price system — an after-thought for an hour’s classroom discussion. And, as E. J. Mishan has observed, it was largely ignored in the textbooks. (AER Vol 63, №1, pp 1–11, at p. 9)
Why Smith’s Approach Made Sense — In His Day
The aridity and narrow self-definition of today’s economics — its ‘Tyranny of A Priorism’, as the Australian economist Evan Jones called it — is, ironically, quite different to the approach taken by its most famous founder, Adam Smith, in his Inquiry into the Nature and Causes of the Wealth of Nations, first published in 1776.
In Smith’s work there was more recourse to the real world, of precisely the kind for which Veblen called a bit over a century later. Yet by 1898 the discipline had become arid, shutting itself off from sociology and the social contract. What led to this difference in approach?
The answer to that question is that in Smith’s day, and for the whole of recorded history before, most forms of private enterprise were both small and simple. As such, Smith argued, opportunistically calculated self-interest would suffice to coordinate them in the market.
A painting from the same decade as Smith’s Wealth of Nations, by a regional artist known as Joseph Wright of Derby, depicts some artisans hammering out a piece of hot iron, in the course of which, one takes a momentary break to gaze fondly on family members who have come to watch.
What this painting also illustrates is the fact that, in those days, even the making of iron and steel was what we would now call a cottage industry: one that in this case was probably being carried on just outside the cottage where the family lived.
Smith does describe a pin factory near the start of Chapter 1 of Book 1 of his Wealth of Nations. But even this pin factory is still quite small by modern standards, employing only ten workers. Moreover, it only produces a simple product, namely, pins.
In the simple, mostly small-scale, and mostly rather straightforward world of Adam Smith, any artisan who was not actually a slave — a condition deemed unenforceable in England by 1776, though unfortunately not as yet in the colonies — could feasibly, if disgruntled with their conditions of employment, go into business themselves and make a go of it.
Few absolutely depended on being able to persuade some employer to take them on. Such was the theory and indeed, to a large extent, the reality of the Smithian economy.
Clearly, all that is less true today. For instance, laid-off automobile workers cannot go into business making automobiles of their own.
But in Smith’s day, the ability to set up a small business and actually make a go of it was more widespread.
Another Smithian Habit: Skepticism toward Science
In the same era, several other paintings by Wright documented the rise of science and an increasing degree of popular interest in scientific subjects. As I suggested at the start of this chapter, the invention of the telescope — which happened in 1608 — soon led to discoveries, such as the mountains on the moon, which were very much at odds with the earlier idea that the Earth was at the centre of the universe, that everything weighty was attracted to this centre — first ‘earth’, then water, then air — and that the heavenly bodies floated above us because they were made of the fourth of the classical elements, fire, which alone was repelled from the centre of the universe and always shot upward.
To give them their due, the ancients had figured out that the Earth was a globe, with some sort of inward-acting gravitational phenomenon holding everything in place: the point being that for the next two thousand years, there was hardly any advance on the idea that what attracted everything, save for fire, was the central point of the universe.
A confident bookplate to a 1647 atlas of the visible face of the moon, Hevelius’s Selenographia, depicts a telescope-wieldng ‘Contemplatio’ mounted atop an eagle, while a panel describing the book is held up on the left by a scholar of the Islamic golden age named Alhasen (properly, Ibn Al-Haytham), known even in Christendom as the ‘father of optics’, and, on the other side, Galileo, holding another telescope.
Hevelius’s atlas was published in a year in which Matthew Hopkins, the self-styled Witchfinder General of eastern England, had still been active at his depradations.
But clearly, a new and more sensible way of looking at things was already afoot: an age of nullius in verba, the motto that the Royal Society of London would choose for itself in 1662, meaning ‘take no-one’s word for it’.
For the truth was that an absolutely revolutionary era had been kicked off by the telescope: a scientific revolution that is still ongoing. This new era — the modern era — was a socially revolutionary one as well, given that if two thousand years of received wisdom about the Earth’s place in the universe was wrong, what else had we being told that was wrong as well?
Perhaps the most famous of Wright’s scientific paintings depicts several middle-class folk gathered around an orrery, a device that replicated the motions of the planets in the solar system as it was now conceived, with a lamp in the place of the sun.
Nonetheless, Smith discounted the idea that science had much of a part to play in the economy.
And that was precisely because most of the means of production in his day were still as yet untouched by it. As for those that were touched by it, Smith tended to discount them. Perhaps the most scientifically influenced of eighteenth-century inventions, the steam engine, is mentioned only once in Smith’s Wealth of Nations, and only in passing as well (Smith calls it a fire engine in the passage in question). And that was the case even though Smith was well acquainted with the legendary engineer James Watt, who improved the steam engine to the point that it became a generally useful device as Smith was working on his Wealth of Nations: indeed, Smith had once been Watt’s employer.
In the year Smith’s Wealth of Nations came out, Watt’s partner in the steam engine business, Matthew Boulton, told the diarist James Boswell, colleague of Dr Johnson of dictionary fame, that “I sell here, Sir, what all the world desires to have — POWER,” The improved steam engine was by no means obscure. Yet Smith clearly failed to foresee that Watt’s improved steam engine would soon begin to revolutionise the world of work and, indeed, the world in general.
To this day, free-marketeers, invoking the mantle of Smith, tend to ignore and disparage science: perhaps because it is a fundamental challenge to their ideal, also inherited from Smith, of an economy of do-it-yourselfers. Or, because it is also the ultimate spark plug of the revolutionary forms of technical and social change that are the hallmark of modernity, and yet often a threat to the incumbent, the conservative, and the privileged.
To be fair, the Smith of 1776 had not yet truly seen what science could do to transform industry. But science was soon to become a lot less economically irrelevant, all the same.
From the Scientific Revolution to the Industrial Revolution
And that was because the world of Smith ran headlong into the Industrial Revolution, of which the most distinctive feature was the growing scale of everything. Indeed, to a first approximation, we could say that the Industrial Revolution was all about the exploitation of economies of scale.
The new economies of scale were also associated with a growing complexity of the objects produced, and of the firms that made them. No blacksmith of Smith’s day, or ten-person workshop, could have manufactured even so apparently straightforward a device as a treadle-operated sewing machine or a typewriter, and certainly not at an affordable price — but a large factory could.
Furthermore, the new means of production also required increasing amounts of scientific input, much of it furnished by the state.
The drift toward ever-increasing scale, complexity, and knowledge-intensiveness was to be a feature of all subsequent waves of industrial change. Even in the course of the twentieth century just gone by, we can see how, in the first half of that century alone, we went from biplanes that could mostly have been made in a piano factory by averagely skilled sorts of workers, to jet planes that were far more complex and scientific in character.
Partway through that transition, a World War II-era documentary describes how the engines of the B-29 bomber each comprised 13,000 precision-engineered parts, made in a factory two miles across with the aid of five thousand subcontractors.
The same bomber’s guns were aimed by the very first electronic computers, the production of which was just as complicated.
At the end of World War II, a management scientist named Peter Drucker completed a book called The Concept of the Corporation, which was first published in 1946 and then, with a new introduction by the author, in 1972. In his 1972 introduction, Drucker stated that:
Only a lifetime ago, at the turn of the century, the social world of Western man might have been represented as a prairie on which man himself was the highest eminence. A small hill — government — rose on the horizon, but while it was larger than anything else there, it was still quite low. Today, by contrast, man’s social world … resembles the Himalayas. Man seems dwarfed by the giant mountains of large-scale organization all around him…. How great the change has been, very few of us appreciate. It is hard for us even to imagine the reality of 1900. As far as we can tell, for instance, there was then not a single university in the Western world with as many as 10,000 students; only a very few institutions had student bodies of 5,000. Indeed, the “large” university of those days was so small that its president, or dean, was expected to know every student by name . .. The American military services have a peacetime budget now — some seventy or eighty billion dollars a year — which would have sufficed to maintain the most powerful and dreaded army of 1900, that of Imperial Germany, for more than a century. The “giant” business of those days … was Mr. Rockefeller’s Standard Oil Company. Every one of the eleven companies into which the Supreme Court split the “octopus” in 1911 is today larger than the original Standard Oil Company ever was — in capital, in employees, in production…. When Lord Curzon became British Foreign Secretary at the end of World War I, he found the Foreign Office so swollen and inflated by wartime expansion that, as he complained bitterly, he still had not met every member of the professional staff after working for three whole days. (pp. xiii-xv)
By the 1960s, things had got more complicated still, as a documentary about the Apollo moon rockets makes clear.
According to that documentary, the famous Saturn V rocket, “designed to propel the United States’ manned lunar landing mission,” was put together as follows:
Three million parts, from the labor of people at twenty thousand companies, universities, and government facilities. A first stage, assembled in Louisiana, using parts from Kansas, Missouri, Washington, and many other states. A second stage, shipped to the Kennedy Space Center in Florida, through the Panama Canal from California, with a stopover in Mississippi for testing. A third stage, flown from California to Florida. An instrument unit from Alabama. The spacecraft came from factories in Oklahoma, New York, and California, and electronics systems came from such widely separated sources as Massachusetts and Wisconsin. Major equipment to prepare, test, launch, guide, track, and recover the spacecraft are the products of Minnesota, New Jersey, Pennsylvania, Arizona, Ohio, Tennessee, and other states.
A few moments further, we are told that:
It is watched over in minute detail by an extraordinarily complex array of facilities. It answers to a chain of electronic eyes and ears that circle the world. And it flies a course dictated by an assembly of advanced computers. It is the result of the work of some three hundred thousand Americans in the disciplines of science, engineering, technology, and management.
In a mid-sixties book called The New Industrial State, the previously quoted John Kenneth Galbraith wrote, in the gendered language of the time, that:
By all but the pathologically romantic, it is now recognized that this is not the age of the small man. (7th printing, 1967, p. 32)
In The New Industrial State, Galbraith divided the economy into an organised ‘technostructure’ and an older sector of atomised businesses and un-unionised workers.
In competition with each other and with the technostructure, the atomised businesses and workers would always lose in the long run, like gamblers in a casino in which the house always wins.
This was not a simple case of black and white villainy. The technostructure, as the more modern sector, generally produced its goods more cheaply than the atomised sector. How much would automobiles, or for that matter flat-screen TVs, cost if they were made in little workshops, assuming that were even possible?
More controversial was the way that the technostructure could exploit the fact that “the economy’s center of gravity came to consist of large oligopolistic firms ringmastering value chains.” Thus does Brad DeLong put it on page 18 his fine new economic history of the twentieth century, Slouching Towards Utopia. Ringmastering value chains, the large oligopolistic firms could beat down atomised suppliers such as farmers and maintain a degree of artificial scarcity for many of the essentials of life, from electricity to pharmaceuticals to houses, in an economy otherwise more productive than any the world has yet seen.
Under these conditions, there were two paths an initially Smithian economics could take. One was to refound itself, abandoning opportunism for the social contract. Such a policy was recommended by another eminent economist, Herbert Simon, in his 1991 article ‘Organizations and Markets’.
And to take seriously the management scientist W Edwards Deming’s concept of ‘overcontrol’, which holds that because so many things are connected to other things in an organisational setting, it is often literally impossible to measure the contribution of individuals, who are affected by events upstream and by their surroundings.
From Deming’s point of view, when faced with apparent mistakes, or for that matter what seems to be record-breaking performance, we should withhold praise and punishment until we have performed a root cause analysis (RCA), of which the most familiar example to many people would be the modern air crash investigation.
Deming was one of the few management scientists of which it could be said that they actually were scientists, or scientific in their approach, as opposed to coming up with some new buzzword without much weight of meaning behind it. Deming’s original background was in statistics, and of course, nobody is more aware than a statistician that the numbers often lie, and that, just as often, the most important numbers are the ones nobody has thought to record, which Deming called the ‘invisible numbers’.
Overcontrol is really the antithesis of RCA and a statistically savvy approach. An antithesis that rests on the false belief that the performance of the individual in an organisational setting can be precisely measured, rewarded, and punished, and that the performance of the organisation as a whole is the arithmetic sum of all these individual efforts. This is all complete nonsense, yet economic orthodoxies predispose us to accept that it must be true.
Basically, overcontrol equals the blame game, as opposed to anything truly scientific. For, anything truly scientific would mean facing up to an irreducibly collective organisational reality, in which things are richly interconnected. And to richer, social-contract theories of individual motivation which would, however, imply not only the compression of economic inequalities but also of the height of managerial hierarchies, along with a certain surrender of control at the top and greater professional autonomy at the bottom.
Deming also called overcontrol ‘tampering’. Both words conjure up an image, which will be familiar to many people from their working life, of furiously active middle managers armed with tickbox checklists, getting in the way of workers who would otherwise get their jobs done more quickly.
As the reader will may well suspect already, most forms of management thinking that have been influenced by neoliberalism are exercises in the promotion of unscientific or pseudo-scientific overcontrol, over more genuinely scientific Deming / RCA approaches.
The abandonment of opportunism as the economic ideal, and of economically-inspired overcontrol in the organisational setting, in favour of economic and management perspectives informed by the social contract, would have been an intellectual and practical revolution equivalent to that visited on cosmology by the telescope.
It would have shown economics to be a genuine science, capable of revolutionising itself when the facts change or when new discoveries are made.
The alternative was to double down on the old Smithian paradigm, itself the product of a culture somewhat estranged from science and scientific revolutions.
In the face of ever-increasing industrial scale and organisation, such a strategy would necessitate making economics more abstract: indeed to the point that the otherwise irreducible sociality of organisations themselves would be denied in favour of overcontrol.
To the extent that this abstraction was often mathematically expressed, the resulting economics would often be mistaken by outsiders for science: indeed for the ‘Queen of the Social Sciences’ or minor variations upon that expression, as in the following passage from another self-critical economist, Abba Lerner, in a 1972 article called ‘The Economics and Politics of Consumer Sovereignty’:
An economic transaction is a solved political problem. . . . Economics has gained the title Queen of the Social Sciences by choosing solved political problems as its domain. (AER Vol. 62, №s 1/2, pp. 258–266, at p. 259)
In other words, by ignoring interdependencies, which, if acknowledged, would dethrone the ‘Queen’: a discipline that gets an outsize share of the plum consulting and policy jobs for its members because it successfully presents itself as more rational, scientific, and ‘tough minded’ than all those disciplines where people like to talk about how everything is interconnected, such as sociology and ecology, urban design and criminology, and even the more genuinely scientific forms of management science.
But because a doubled-down economics could not revisit its underlying assumptions without becoming professionally dethroned, and for that matter losing the support of wealthy backers threatened by equality (I will have more to say about this in the next chapter), it would not remain a science, if it ever was, but would instead crystallise into something more akin to sacred geometry. Or, as I have suggested, a system of cult language.
Guess which strategy would be adopted?
