1. ECONOCRACY. Economic power subverting institutional barriers and becoming an intricate web of technocratic power that overdetermines the ways individuals understand the world. Responses must begin with institutions, only the AFF can challenge ingrained power.

We have already suggested that the claim of economics to be a hard science is largely spurious. Most of its propositions can be neither refuted nor verified. If this is so, economic theory is opinion cloaked in the authority of science. We trust doctors because they have science behind them, though some theorists of power such as Michel Foucault have identified the medical system as, in part, a tool of social control.20 Economists claim the authority of doctors without the credentials of medicine.

Nevertheless, the Marxist charge is only partly true. The relationship between power and ideas is not a simple base-superstructure one. Not only does economics have its own agenda; practical people – politicians, businessmen, civil servants – are consumers, not producers, of ideas. This gives the producers of ideas considerable latitude vis-à-vis their users. The vested interests are in no position – even were they capable of it – to dictate the precise form of the intellectual defence offered for their preferences. Thus the economist’s justification of the free market is likely to be both more general and also more circumscribed than that offered by the business class. For example, economists have almost always opposed protectionism and monopoly, propositions often heavily supported by sections of business.

More damaging to the Marxists is that the base on which the superstructure of ideas is supposed to be erected, is far from being the monolith of the Marxist imagination. In practice, it is usually divided into conflicting interests: in economic life, between exporters and importers, between creditors and debtors, between finance and industry. We get the phenomenon, notable in the United States, of a business class whose ideological hostility to the state is continually subverted by its reliance on state defence and research contracts for its prosperity.

A key matter here is how power is divided. How balanced is the power structure between the state and vested interests, between contending political and social groups, and between capitalists and workers? The more even the balance of forces, the less likely one is to get a single story from economics about the way the economy works. From roughly the 1920s through to the 1970s the balance of forces between capital and labour was such as to enable a policy of social compromise. In the last forty years power has shifted decisively from the old working class to those with superior birth, wealth, and education; and from the old business to the new financial elites.

For these reasons, there is never a 1:1 relationship between an economic argument and a political argument. This gives economics, together with the other social sciences, a relative autonomy from political forces, wherein lies their authority. But the distance, in the Marxist view, is only relative.

Despite its relative autonomy, there are at least three ways in which economics serves the interests of business. First, by investing their interests with the authority of science, economics can make self-interest seem more enlightened. Practical people like nothing better than to have their prejudices dressed up in scientific language. Such language has the power to turn what is really a matter of opinion into a fact of nature.

The second influence is exerted through its agenda power. ‘Nothing is so important in the defence of the modern corporation,’ writes John Kenneth Galbraith, ‘as the argument that power does not exist; that all power is surrendered to the impersonal play of the market. Nothing is more serviceable than the resultant conditioning of the young to that belief.’21 As he explains, The rise of the modern corporations has brought a concentration of economic power which can compete with the modern state . . . The state seeks in some aspects to regulate the corporation, while the corporation, steadily becoming more powerful, makes every effort to avoid such regulation. Where its own interests are concerned, it even attempts to dominate the state.22 By modelling economic life in terms of individual optimisation in competitive markets, economics renders any power that is less blatant than outright monopoly completely invisible. For example, an exploitative wage is any wage that falls below the marginal value of labour’s product. But under the assumed competitive conditions labour will receive the value of its marginal product, so exploitation is a pathology, not inherent, as Marx claimed.

Similarly with the mainstream treatment of advertising. For mainstream economists, decisions on what to buy are made by rational consumers maximising their utilities in competitive markets. In this model there is no scope for advertising to alter preferences. Advertising as an expression of power is rendered invisible by arguments to the effect that it merely confirms preferences or provides consumers with information. Today the unseen influence of networks of computers known as Cloud storage, owned by virtual companies like Google and Facebook, on the tastes, ideas, and purchases of their mainly young users, is largely ignored by mainstream enthusiasts for the market.

Third, economics supports the dominant power system not just by keeping the role of marketing in shaping consumer choices off its own research agenda, but by giving ‘scientific’ support to positive political programmes. The chief example in our own day has been the alignment of mainstream economics with the political programme of reducing the role of the state in the economy.

Specific propositions of mainstream economics include the idea that the market system ensures that business leaders are paid no more than they are worth, that globalisation benefits even those who lose their jobs, that government deficits in a slump make things worse than they would have been, and that finance is merely an intermediary in the economic system, not an actor in its own right. All these propositions may be true, or partially true, in special circumstances; it is their generalisation into universal laws that causes the damage.

Milton Friedman has left a charmingly naive account of the relation between science and ideology in his own work: During my whole career, I have considered myself somewhat of a schizophrenic . . . On the one hand, I was interested in science qua science, and I have tried – successfully I hope – not to let my ideological viewpoints contaminate my scientific work. On the other, I felt deeply concerned with the course of events and I wanted to influence them so as to enhance human freedom. Luckily, these two aspects of my interests appeared to me as perfectly compatible.23 Friedman peers very briefly over the precipice and then hurriedly withdraws. Yet the whole of his ‘scientific’ work was directed to demonstrating the futility of government intervention in the economy. Friedman deserves credit for recognising that there might be a problem in reconciling science and values. Most economists simply ignore it.

The link between ideology and economics is complex. It is not that ideology distorts the conclusion of an argument. Rather it invades the way the argument is set up or ‘modelled’ – the core assumptions (equilibrium, optimisation), the choice of problem to be studied, the choice of relevant variables, the selection of data, the choice of one model rather than another: in short, the research programmes which economists pursue. In this way economics can display a strong ideological slant, while sticking to the accepted canons of scientific enquiry. Its scientific method has served to protect it from the charge of ideological bias or subservience to power.

Economics has not found a way of modelling power. But it is worse than that. Neoclassical economics provides the intellectual backing for the political programme of neoliberalism. Economics is the cement which binds together what Joe Earle, Cahal Moran, and Zach Ward-Perkins (founding members of the Post-Crash Economics Society) call ‘the econocracy’, a network of technocratic institutions such as central banks, treasuries, large banks, and corporations which have seized control of economies from the nerveless hands of government.24 It is for these reasons that the reform of economics is more than mere academic self-indulgence.

The weakness of economics in handling power is part and parcel of the absence of institutions from its map of reality. The only actors in its map are maximising individuals. A proper economics would start with institutions – classes, organisations, and social norms – and then try to show how these shape individual choices. The objection is that such an approach is impossible to model mathematically. For mathematical modelling you need tight priors from which you can deduce precise quantitative conclusions. With any other approach you fall into – God forbid! – political economy. To this objection Keynes gave an answer which to me is irrefutable: in matters of public policy it is better to be approximately right than precisely wrong.