Note — Nov 17, 2019

Against Economics

David Graeber, reviewing Robert Skidelsky’s Money and Government: The Past and Future of Economics for The New York Review of Books. Before getting to the book itself, there is a long introduction / explainer concerning the recent history of economics, “heterodox” theories of economics, how money is made, by whom, and to what end. He then gets into Skidelsky and views it as “one of the most significant books to come out of the UK in recent years.”

The TL;DR might be: mainstream economic theory and application moves very slowly, and often keep thinking the same thing for decades, even in the face of copious contradictory evidence and multiple economic catastrophes. It is also wholly unfit for today’s planetary challenges.

There are way too many interesting passages in there to properly summarize, you should have a read of the whole thing.

McDonnell’s office—and Labour youth support groups—have been holding workshops and floating policy initiatives on everything from a four-day workweek and universal basic income to a Green Industrial Revolution and “Fully Automated Luxury Communism,” and inviting heterodox economists to take part in popular education initiatives aimed at transforming conceptions of how the economy really works. […]

Is money best conceived of as a physical commodity, a precious substance used to facilitate exchange, or is it better to see money primarily as a credit, a bookkeeping method or circulating IOU—in any case, a social arrangement? […]

In fact, there’s absolutely no reason a modern state should fund itself primarily by appropriating a proportion of each citizen’s earnings. There are plenty of other ways to go about it. Many—such as land, wealth, commercial, or consumer taxes (any of which can be made more or less progressive)—are considerably more efficient, since creating a bureaucratic apparatus capable of monitoring citizens’ personal affairs to the degree required by an income tax system is itself enormously expensive. But this misses the real point: income tax is supposed to be intrusive and exasperating. It is meant to feel at least a little bit unfair. Like so much of classical liberalism (and contemporary neoliberalism), it is an ingenious political sleight of hand—an expansion of the bureaucratic state that also allows its leaders to pretend to advocate for small government. […]

Economic theory as it exists increasingly resembles a shed full of broken tools. This is not to say there are no useful insights here, but fundamentally the existing discipline is designed to solve another century’s problems. The problem of how to determine the optimal distribution of work and resources to create high levels of economic growth is simply not the same problem we are now facing: i.e., how to deal with increasing technological productivity, decreasing real demand for labor, and the effective management of care work, without also destroying the Earth. […]