The problem that academic, orthodox economics faces in the
aftermath of the global economic crisis is how to overcome
being brought face to face with a realization, a moment of
essentialist cognitive dissonance. This moment was the
revelation that (following Baudrillard) orthodox economics
is: “A hyperreal henceforth sheltered from the imaginary,
and from any distinction between the real and the
imaginary, leaving room only for the orbital recurrence of
models and the simulated generation of difference.”
Contemporary orthodox economics, based on the classical
economics of the 19th century, has always been desperate
to fulfil its ‘science envy’ whilst continually being
denied that hallowed status by the messiness, complexity
and uncontrollability of the situations for which it seeks
to find logic and structure. Classical economic
theorization was based on the post-hoc-ergo-propter-hoc
premise that because there was capitalism, therefore it
must be functional and neo-classical economics re-assumed
that mantle in the post-war period. In other words, just
as classical economics developed (in the same way as
geography) as an explanans for imperial and colonial
reality, so neo-classical economics developed increasingly
as an explanans for the massive growth and overwhelming
dominance of northern market-based economies, post-WWII.
In this way classical/neo-classical economic orthodoxies
follow the order of simulacrum image phases outlined by
Baudrillard. Firstly, economic theory began to develop
around nascent capitalisms in the 18th century as a
heavily subjective ‘reflection of a basic reality’ - the
ideas of Colbert, Ricardo, Hume, Colbert, Malthus, Smith
(and critics of capitalism such as Marx and Engels) etc.
were ineluctably set within the theistic, occido-centric
and socially Darwinian intellectual precepts of the
socio-economic processes and problems of their time. In
this socio-cultural location, the origins of economic
theorization inevitably ‘masks and perverts a basic
reality’ and combines with a Judaeo-Christian supremacist
world-view under the guise of a nomothetic, objective
rationality.
But 20th and 21st century capitalisms, ‘lived-reality
capitalisms’, have shown themselves increasingly to be
chaotic dynamic systems with a growing propensity for
instability and volatility and an inevitable tendency
towards monopolization and crisis. Furthermore (in perhaps
one of the greatest ironies) capitalisms have been shown
to be increasingly unsustainable without central
stabilizers-of-last resort, initially nation-states and
central banks, then trading bloc authorities and more
recently supranational institutions and
globally-coordinated bail-outs, as the crises have
increased in intensity and frequency. In this reading, a
la Foucault, ‘free markets’ cannot be ‘free’ without the
structures of the state/regulator to limit and control
them…
Orthodox economics, even with the brief interlude
constituted by Keynesianism (which is a different view of
system processes and mechanics, without challenging the
functional integrity of the system itself) can be viewed
as a dialectical take on human society designed to
reinforce a Foucauldesque, capitalistic regime-of-truth.
Looked at this way orthodox economics developed in the
post-war period to initiate phase 3 of the simulacrum
development, that of masking the chaotic dynamics of
capitalisms, ‘the absence of a basic reality’. This phase
produced, for example, so-called development economics, in
which the simplistic dualist models of Lewis, Todaro etc
were produced out of a hat, not so much with the aim of
producing a realistic pathway by which the poor south
might become the rich north but (as Rostow at least
admitted with his Take-off model) as a theoretical gloss
over basic global social and economic inequality which at
once held out promise for the future and tried to prevent
the spread of communism.
Phase 4 of this particular simulacrum began with the
development of complex derivative instruments from the
early 1970s and the rapid development of power within
financial services actants thereafter, which received a
massive boost with the collapse of the socialist bloc in
1989. If the development of complex derivatives provided
an important weapon, the collapse of the socialist bloc
gave what I refer to elsewhere as ultracapital a degree of
political freedom which rapidly eroded regulatory
boundaries and enabled the rapid incorporation of
state/authority actants within ultracapital. What is
occasionally referred to with disapproval as
‘revolving-door government’ is now the norm and
ultracapital achieved a strategic victory by internalizing
and making a virtue out of conflict-of-interest. Thus
having become simultaneously the state and
that-which-is-regulated-by-the-state, ultracapital now
‘bears no relation to any reality whatever: it is its own
pure simulacrum.’
The list of putative scapegoats for the current economic
crisis is unending and selective according to ideology;
Fannie Mae, Freddie Mac, NINJA loans, Alan Greenspan,
Larry Summers and Robert Rubin, the Fed, profligate
lenders, profligate borrowers, AIG, Bank of America,
Lehman brothers, CDOs, John Paulson, Goldman Sachs and,
last but not least, the discipline of economics. Economics
is a fair inclusion in some respects because, as Steve
Keen said in The Naked Emperor of the Social Sciences:
“Virtually every aspect of conventional economic theory is
intellectually unsound; virtually every economic policy
recommendation is just as likely to do harm as it is to
lead to the general good. Far from holding the
intellectual high ground, economics rests on foundations
of quicksand. If economics were truly a science, then the
dominant school of thought in economics would long ago
have disappeared from view (Keen, 2001, p. 4).”
Looked at from another point-of-view, however, this is a
bit unfair. Including economics in that list is to blame
it for something that it was not designed to do – be a
functional, descriptive and predictive discipline capable
of producing practical and socially progressive policy.
Economics should be seen for what it is, which is the high
priest of a regime of truth, a Janus simulacrum, a
two-faced gatekeeper seeking both to describe its own
unreal simulacrum and, having described it, seeking to
construct a logical framework from which such a hyperreal
could have arisen.
--
Dr Jon Cloke
Lecturer
Geography Department
Loughborough University
Loughborough LE11 3TU
E-mail: [log in to unmask]
Tel: 00 44 07984 813681
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