A Debate

It is – in its own right – an interesting question why and how some ‘books make a career’ – in this case referring to Mazzucato’s ‘The Entrepreneurial State’. I am always skeptical when hearing about such ‘bestsellers’ and actually really hesitant to read, let alone to buy them. Having been invited to take part in a debate on the book I read the text – and now I am somewhat surmised to see that my ‘prejudice’ is in actual fact very much a ‘judice’, i.e. a reflection confirmed by this reading experience. There is not much new in it – it surely summarises important points, and even more sure is that it’s radical character has to be seen in ensuring that there will be no radical change.

Some points from the debate my be of some wider interest – and what follows is not a systematic critique of Mazzucato’s work or even one of the ‘one book’.
The foundation from which her argument is developed remains by and large unclear: there is a bit of economics, some political economy, some political theory and some philosophy and … a lot of confusion caused by not developing from all the wealth of borrowings a systemic approach. Thus, the possible wealth of a merger is lost to eclecticism. And the loss – or wasted opportunity – is even larger when considering the shallow reception of some of the references … – yes, of course, the Smithian ‘invisible hand’, which is taken out of its original context and supposedly suggests that Smith rejected any state intervention – generally and fundamentally and for everybody and at any time. It is not quite true, and leaving aside that there is a
Book V: Of the Revenue of the Sovereign or Commonwealth
there is in my reading of Smith another relevant point. He left with us another major piece of work, namely the
THEORY OF MORAL SENTIMENTS. An Essay towards an Analysis of the Principles by which Men naturally judge concerning the Conduct and Character, first of their Neighbours, and afterwards of themselves. TO WHICH !S ADDED, A Differentiation on the Origin of Language
In some way this was one of the genius acts: splitting the task in order to maintain through the backdoor its unity … – and much later this allowed him, namely Smith, to turn up in Beijing, with this remark I am obviously alluding to the highly interesting book
ADAM SMITH IN BEIJING. Lineages of the Twenty-First Century by Giovanni Arrighi. 
Discussing in this context secular stagnation: if one really wants to address this in a radical way, one has to take note of much more radical views, as expressed already a long time ago, for instance by Keynes – here reference is usually made to his writing on the
Economic Possibilities of our Grandchildren
and even earlier by Mill [for instance in chapter xi ‘Of the Law of the Increase of Capital’ in his
Principles of Political Economy with Some of Their Applications to Social Philosophy].
Such radical ideas, however, are just what Mazzucato strictly rejects – instead she searches for ways that ensure that there is no ‘quasi-blasphemic’ attitude and politics towards the gods of eternal growth. And her proposal is that, if laymen’s activities are not sufficient, the entrepreneurial state could emerge as high priest, collecting the lost sheep, developing new grazing lands for their new thriving.
Indeed, there are interesting facts on the cowardliness of the stray sheep …, risk averse behaviour which are expressed in the statement
I think there is a world market for maybe five computers,
allegedly said 1943 by Thomas Watson, chairman and CEO of International Business Machines (IBM). The entirety of the  story, beyond the exiting individual chapters, is not much more than overcoming the stagnation of the history of great men by pulling now women on the same stage, while actually the real problems are about the need of changing the stage. Green growth remains commodity growth, regulated and controlled data extraction remains data extraction, prone to abuse and in need of a real public, common ownership, going much beyond the provision of a seedbed for renewed private profitability, retrieving new sources of value production needs a new understanding of what value is about, going beyond the concept of exchange values only.
The one fundamental problem with the work I see is as follows: As one of the colleagues mentioned during the discussion here in Vienna, he reads the text as reference to the rejection of private entrepreneurs to accept sitting down at the roulette table. And I would agree with such interpretation to some extent – to the extent to which we are talking about the simple game, played by simple minds. The limitation of such metaphor is soon showing up: While accepting ‘The Entrepreneurial State’, thus following Mazzucato’s suggestion, we would be accepting the specific hegemony, i.e. the need and justification of downgrading ourselves to the Dostoyevsky’ian Gamblers, in other words: the acceptance of a new round of what became known as casino capitalism.
It is the acceptance of the reality that I saw expressed in the slogan which was spray-painted on one o the walls:
…. Human capital of al countries, accumulate …
Annunci

How to write a bestseller and get a Pulitzer Award?

I am not sure if I missed something, or if it was just a rumor about some things that went wrong around that time?

What makes capital provision work so well in America is the security and regulation of our capital markets, where minority shareholders are protected. Lord knows, there are scams, excesses, and corruption in our capital markets. That always happens when a lot of money is at stake. What distinguishes our capital markets is not that Enrons don’t happen in America—they sure do. It is that when they happen, they usually get ex- posed, either by the Securities and Exchange Commission or by the business press, and get corrected. What makes America unique is not Enron but Eliot Spitzer, the attorney general of New York State, who has doggedly sought to clean up the securities industry and corporate board-rooms. This sort of capital market has proved very, very difficult to duplicate outside of New York, London, Frankfurt, and Tokyo. Said Foster, “China and India and other Asian countries will not be successful at innovation until they have successful capital markets, and they will not have successful capital markets until they have rule of law which protects minority interests under conditions of risk… We in the U.S. are the lucky beneficiaries of centuries of conditions of risk… We in the U.S. are the lucky beneficiaries of centuries of economic experimentation, and we are the experiment that has worked.”

From: Thomas L. Friedman: The World is Flat; New York: Picador: 2007: 332 f.

Well, the Friedmans, be it Thomas or Milton don’t understand that we face what James Galbraith calls

The End of Normal: The Great Crisis and the Future of Growth

as reviewed here.
One important point is, and that is another way to think about the end of the normal, the need to question the normal or at least part of it. Three (we always strive for trinities) essential parts of the normal were: growth, growth, and some form of regulation – and indeed Friedman talks about such regulation. But what he does not say is that this had been about marginal forms of social distribution, limited control of excesses and in particular/not least about securing the conditions of and for growth. It is interesting that even this is now largely taken away. As we know since recently, namely the leak of the TISA-Annex on the Annex on State Owned Enterprises the role of securing the conditions of and for growth is now under the increasing pressure of being finally, formally and completely handed over to the ‘market’. This is globalisation not simply by imposing specific structures and conditions on other countries but by establishing the control
Freedom and democracy – the flattening of the world by fattening the few global players.

Does one ‘super-corporation’ run the global economy? Study claims it could be terrifyingly unstable

The Network of Global Corporate Control – Research Article

The Network of Global Corporate Control – Annex

Indeed, I took up on some of the issues of the supposedly flattened world not only recently in Havana (here for for a background paper), but now again during the Shanghai Forum, presenting on Growth and Development – Complement or Contradiction? Challenges for a Global Agenda– more information can be found here.

Shanghai Forum 

Under the title

Growth and Development – Complement or Contradictions

I looked at some challenges for a global agenda.

This contribution had been part of the  China and Latin America round table, organised by the Centre for BRICS Studies, Fudan Development Institute in the framework of the Shanghai Forum 2016.

The participation was also the public commencement of the cooperation between the Centre for BRICS studies and the BRICS laboratory at EURISPES, Rome.

A background document can be found here, a recording of the presentation can be found here.

From my contribution to the discussion it should be added that the current “shift towards China and the BRICS” should be seen in a world systems perspective, indicating the need of a move away from the mode of production that leaves the old centres EU and USA behind: their ability to offer answers to today’s challenges. The challenge we face together, however, is not about shifting to a new centre but to develop a new overall systemic approach to antroponomic challenges. The Brazilianisation, going hand in hand with the so-called trade agreements (TTIP …) should be dismantled as what they are: protectionist systems that are increasing exclusionary competition- making this point was actually welcomed by many of the participants from Latin America.

I can’t go back to yesterday because I was a different person then

I can’t go back to yesterday because I was a different person then.

And knowing that they come from the beautiful book ‘Alice in Wonderland’ we may feel tempted to recommend Lewis Carroll’s book as reading for Joseph Stiglitz.

Sure, there is always some temptation to go to events like the one today at LUISS Università Guido Carli, listening to Joseph Stiglitz looking at the question

Can the Euro Be Saved? An Analysis of the Future of the Currency Union.

Part of the temptation may actually sometimes be simply seeing economics another time as questionable subject and as such not so much an academic discipline (sure, fouling the own nest – but there had been more outstanding economists that did so, thus I am only doing the usual thing: standing on the shoulders of giants, though I am not sure how much further I can see).

Be it as it is, my first irritation came right at the beginning of Joseph’s presentation, hearing about recession and subsequently recovery. The terms had been used in connection with the locating European economies in respect of their development.

It is an often-discussed point and an extremely tricky question – recession and depression had been mentioned in the presentation. And indeed it is somewhat funny then to hear that during the time Joseph Stiglitz worked for the World Bank the term depression had been admonished – it would sound so negative, and have such bad effects especially at times where people are already depressed. Still, the question remains if talking about a recession is not as misleading as the reference to depression. Isn’t it much more precise and honest to say what all this is about:

A crisis – and indeed a structural crisis.

And it is not a structural crisis just of the Euro. In fact we are confronted with a crisis of the fundamentals of the capitalist economy. Actually I talked with Marco today in the morning exactly about this question – and we should accept that it is a question and any claim to give an unequivocal answer is pretentious. Before shortly looking at this, there is at least the following that Joseph valuably emphasised: austerity policy is causing huge problems for a majority of the people, not contributing to solve economic problems but evoking a major social downgrading for many.

There are at least the following perspectives waiting for some thorough reflection. One can be seen as capitalism returning to its pure form. There is surely some truth saying that in one way or another, capitalism as it emerged and became known as Manchester Capitalism had been tamed: social and welfare state being one aspect, general working conditions and some forms of respect of workers (also political) rights have to be mentioned. So one way of looking at the current crisis and the harsh ‘restructuration’ may be interpreted in this way: we are returning to pure capitalism.

Another perspective, however, is to see the structural change in connection with some fundamental shifts caused by the development of the means of production. We may then suggest that we are witnessing the emergence of a new mode of production – it is not (necessarily) about capitalism or not-capitalism. It is just about recognising a more fundamental shift that is not directed towards establishing a status-quo-ante. Instead, it is about the emergence of a new system that goes ‘beyond’ the current system.

The social consequences then – not least visible in the development of precarity – would then be somewhat comparable with the development that went hand in hand with the emergence of capitalism. The machinery – i.e. progress – showed devastating consequences for example for the weavers who lost their work. At the same time, the new inventions allowed also progress by way of developing new ways of work and working conditions – objectively surely progressive at the time.

Coming back to the presentation then, there had been two striking points:

* Stiglitz did not engage in any of those questions that had been raised in the 2009-report The Measurement of Economic Performance and Social Progress’ (see my own comments specifically on this report from a Social Quality Perspective in the article Economic Performance, Social Progress and Social Quality [International Journal of Social Quality 2(1), Summer 2012: 43–57 © Zhejiang University, European Foundation on Social Quality and Berghahn Journals 2012 doi:10.3167/IJSQ.2011.010204]).

* This means at the same time that he oriented very much on a traditional perspective: economic recovery, seen as matter of industrial policy.

Actually I would agree with the need of recovery, but only under strict observation of the following qualification:

  • It has to be a matter of ‘covery’, meaning a policy that is fundamentally oriented on covering the entirety of economic and social challenges in an integrated way and also covering on a global level the entirety of the population – surely something on which we can easily find agreement. – Actually one of Joseph’s remark pointed into this direction, saying that there cannot be a surplus in all countries – yes, and indeed something also Germany has to accept.
  • Talking about recovery means that we have to find an integrated approach in terms of bringing the issue of soci(et)al sustainability thoroughly on the agenda. This is not just about ‘balancing different policy areas’ as it had been issued in the Economic Performance and Social Progress-report. A much more fundamental consideration is required.
  • This means not least to revisit the hugely valuable work issued by Karl Polanyi in his opus magnum on ‘The Great Transformation’, talking about the political and economic origins of our time (if I am not mistaken there is a more or less new edition of the book available – with a foreword/introduction by Stiglitz). Polanyi looked extensively at processes of dis- embedding, i.e. the separation of ‘the economy’ from the soci(et)al context. If we talk about the lost connection between finance and real economy, we surely have to look at the underlying loss of the connection between ‘society’ and ‘economy’.
  • This brings me to the last qualification when looking at the need for recovery. In a contribution I wrote together with Marica Frangarkis, we spoke about The need for a radical ‘growth policy’ agenda for Europe at a time of crisis (in: Dymarski, Wlodzimierz/Marica Frangakis/Leaman, Jeremy, 2104: The Deepening Crisis of the European Union: The Case for Radical Change; Poznań: Poznań University of Economics Press, 2014). And the kind of recovery, and even the way of thinking of recovery has to start at this point: the quid pro quo. It can only make sense if we start by overcoming the dichotomisation between economic and social thinking, demanding for both a sustainable orientation.

Indeed, the cart in front of the horse is always in danger to be pulled back – and at least this is something where I would strongly agree with Stiglitz: Austerity policies never did any good. But for the rest, we should remind ourselves of the little discussion between Alice and the cat.

“Would you tell me, please, which way I ought to go from here?”

“That depends a good deal on where you want to get to.”

“I don’t much care where –”

“Then it doesn’t matter which way you go.”

(from Alice in Wonderland)