Friday, July 16, 2010
One aspect of this specious conception of "reason" is the encroachment of a set of analytical principles established by marginalist economics into other fields of social science. Though specifically concerned with the workings of markets, it is assumed by their advocates that these could apply universally. And, as Ben Fine and Dimitris Milonakis argue (From Economics Imperialism to Freakonomics, Routledge, 2009), the 20th Century saw a growing tendency for various authors, including the writers of such ordure as Freakonomics, to extend them as universally as possible. Freakonomics (and its Super- sequel) discovers a market logic behind a bewildering variety of social phenomena. Gary Becker finds that market logic explains a wide range of phenomena including crime and punishment. For Robert H Frank, "economics explains everything", and he encourages his students to find ways to apply market laws to all manner of questions. Everything up to and including romantic relationships can be understood in terms of utility maximization. Thus, the search for a partner can be interpreted as a petty entrepreurial activity in a competitive market, in which - acting on information and incentives - couples form property-based relational contracts as a means for effectively utilizing resources, and the relationship is only sustained for as long as each maximises the utility that the other receives.
Underpinning this approach is three basic analytical principles. The first is individualism. The individual is taken to be the self-sufficient unit of all forms of behaviour, the real basis of all fictitious corporate entities. The second is rational self-interest. The individual behaves in ways that will maximise utility to herself, on the basis of a rational assessment of the information available in the market. Here, utility is purely subjective - whatever is useful to an individual is whatever she thinks is useful, while there is an assumption of an "implicit market" in all walks of life, even where there are no commodities, no price signals, and no currency. The third principle is exchange. Utility maximisation optimally takes place through the act of exchange, and that exchange can take place between the drug dealer and the addict as much as the lover and the pursued. This kookiness, where it is not merely circular and vulgar, descends into absurdity when the suitability of the theory can only be established through an ad hoc proliferation of conceptual innovations, as when - for example - Becker explains criminal recidivism in terms of a "preference for risk". This naturalises and universalises the cut-throat self-advancement of career-minded bourgois WASPs, distilling it into a set of puerile anthropological axioms. Middle market books such as The Economic Naturalist probably aggrandise the narcissism of the bourgeois, allowing them to read about themselves and their conduct in flattering terms, giving it a metaphysical twist, endowing it with transcendent validity. And small wonder that such people like to hear that everyone else has exactly the same petty, criminal mentality that they do - it is not capital that is self-maximising, it is humanity itself! - and that they have merely been more successful utility-maximisers than the majority of humankind.
This imperialism of "reason" ("economic imperialism", as Fine and Milonakis dub it), has policy consequences. 'Public choice' economics, for example, has acquired a prized position in the academia, in think-tanks, and among policy 'wonks'. Its apostles have usually found a place in policymaking institutions. William Niskanen, for example, had worked in the Kennedy administration, was appointed to Reagan's 'Council of Economic Advisors', and his Bureaucracy and Representative Government was required reading material for higher civil servants during the Thatcher era. This tendency has been very useful for ruling class neoliberal praxis. The principles of 'public choice' economics were first outlined by James Buchanan, and later refined by Gordon Tullock and Anthony Downs, and then Niskanen. Essentially it involved the idea that public sector bureaucratic workers are, like marketplace actors, utility maximisers. Buchanan allowed that there were other motivations, "unexplained residues" that weren't covered by the principles of market rationality - ethical considerations, for instance - though such exiguous constraints on the applicability of the theory have tended to be lost in its subsequent development. This model of the individual as a 'utility function' is obviously circular - it is simply assumed that everything human beings do is maximizing. It is not a falsifiable assertion, but more in the way of an articulation of faith, a capitalist theology.
Niskanen's account says that bureaucrats are budget maximisers. But this is only a proxy for the maximisation of other utilities, such as "salary, perquisites of the office, public reputation, power, patronage, output of the bureau, ease of making changes and ease of managing the bureau”. Bureaucrats act on incentives to maximise their budget. If they do not, their tenure will be brief, their reputation diminished, their power limited, and their income reduced. This behaviour takes place in circumstances like those of a private sector monopoly: a "bilateral monopoly" as Niskanen has it. The politician requires services that only bureaucrats can provide, and the bureaucrats require funding that only politicians can allocate. As monopolists, bureaucrats have considerable ability to control the information pertaining to the production processes, and thus to inflate the costs of their product. Without competition, they drive up spending and over-supply services. Meanwhile politicians act on incentives to service clients and special interests, thus increasing their clout, consolidating votes, and sometimes getting hefty back-handers. Niskanen's solution was to introduce competition among public sector bureaus, and between public sector bureaus and the private sector; cap taxes and spending to the lowest sustainable levels; change the incentive structure within bureaucracies so that they become more transparent; and severely restrict the scope for legislators to increase taxes, insisting that such increases could only be passed if approved by two-thirds of legislators, thus reducing the potential for politicians to service interest groups.
The technocratic cadences of this school only partially obscure the rightist political animus driving it, and particularly its roots in radical right-wing political theory and pro-capitalist economics. The theory has little predictive value, and there has been little evidence that public sector bureaucrats are in fact 'budget maximisers'. The reforms introduced into the public sector under the influence of such theories, have usually been part of an attack on organised labour. The Tories, for example, introduced something called Compulsory Competitive Tendering in various aspects of service delivery throughout the 1980s. It meant that public authorities were compelled to introduce competition between public sector service providers and private sector contractors. This was supposed to introduce a new era of streamlined administration, but it was also intended to weaken public sector unions as part of the Tories' project of shifting the balance of power from organised labour to employers - if the public sector protected unionised employees from 'market forces', this had to be stopped. Wages should be cut and jobs shed, if necessary. Nicholas Ridley argued at the time that poor quality services was the result of a grip exerted by trade unions, who ensured that services costs mere and delivered less for "the consumer". In local government, this meant reduced wages and lost jobs across the board - part of the overall downsizing of the state that has been a continuous project since the Thatcher era - even where private bidders didn't win the contract. It often meant that the quality of such services was run down, but even more gravely it was an assault on democracy. The Thatcherites didn't object to local administration as such, but they did object to the idea of a local authority exercising the full range of devolved powers under democratic scrutiny and control. In place of such authorities, they introduced a network of single-function or area-specific bodies that were not democratic, or democratically accountable, to administer local services. It was through such reforms that undemocratic quangos were propagated, of which there are now 1200, controlling a vast budget and thus a great deal of public life in the UK.
Such reforms have also opened up new avenues for capital accumulation, and this has tended to increase bureaucratic costs rather than - as should theoretically be the case - diminish them. Bureaucracy has proliferated, as has rent-seeking, as corporate interests became interwoven with public service delivery. For a paradigmatic example of private rent-extraction from the public sector, you might consider SERCO. This private enterprise has built a vast empire in public service delivery in the UK. It runs schools, trains, prisons, hospitals, immigration detention centres, the Docklands Light Railway, the Woolwich Ferry, speed cameras, nuclear weapons, local education authorities - the works. SERCO holds 40% of contracts for the Home Office, making a mint out of 'control orders' and 'anti-terrorist' legislation, has run some of the most abusive and repressive detention centres, and will certainly be bidding for the control of the new "GP-led" health authorities. It is already bidding to run Hinchingbrooke hospital in Cambridgeshire. The Tories 'free schools' programme, in which parents can set up state-funded schools independently run, and free of local education authority oversight, has already provided SERCO with its first whiff of profits, as the Birkenshaw, Birstall and Gomersal Parent Alliance has procured the firm to run a new 900-place secondary school. Its activities in the Private Finance Initiative Industry are almost three times as profitable as its other private sector activities. But what does SERCO actually do? By itself, nothing. It is a parasitic entity that accumulates immense profits by telling other people what to do, or rather by contracting other suppliers to tell other people what to do. And, as Private Eye revealed a while back, its chief executive is sponsored in his hobby of Ferrari driving by three companies who have been suppliers to SERCO. This is just one, albeit one very large and typical, example. Of course, SERCO works hard to reproduce the doctrines legitimising its extraction of rent from the public sector, through its research sector, the SERCO Institute, and its publications are widely distributed among local and national government officials.
Now that the Tories are back in power, they are promising to democratise and devolve power in the public sector - down with Big Government, up with the Big Society. But their rationale and means have not altered. They are taking crucial public service functions in the NHS and education out of democratic oversight and 'devolve' them to non-elected bodies and private sector firms, under the pretext of a spurious market rationality. What I'm describing as the imperialism of market "reason" is nothing other than the ability of the ruling class to naturalise and universalise its accumulation activities, to express it as an ideology, a pseudo-sociology with pseudo-explanations for social phenomena, and to use that ideology as a justification for advancing on and enclosing all areas of public life that are not commodified, not subject to the laws of accumulation. It's an ideology of primitive accumulation, or accumulation-by-dispossession, and the fact that its intellectual product is so impoverished, vulgar and circular will not reduce its appeal for as long as there is capitalism, and for as long there is some human activity that is not making someone a profit.