Mark Howard
Department of Politics, University of California, Santa Cruz

The term economic reason will be understood and defined differently depending upon the object to which it is applied. This keyword entry examines three: 1) the rationality of actors within an economy or economic system; 2) the rationality of economic analysts; and 3) the rationality of economic systems.

Raymond Williams (2014, 252-256) notes that the term ‘reason’ has an immensely complex history that from its earliest use connoted two distinct meanings: one specific (a statement, account, or understanding e.g. a reason for believing something); and one generic (a faculty of connected thought and understanding). The latter, which we shall distinguish with the capitalized form (i.e. ‘Reason’), has a history in both theological and philosophical tracts as being related to first principles: the opposite of empirically based practices of logical rationalization and calculation. To claim one has reason on their side has therefore led to bitter debates in intellectual history, with various factions claiming exclusive ownership. It is in connection with this understanding that rational and reasonable denote a being endowed with reason, and as such able to give reasons for exercising particular beliefs, actions, or behaviors.

When connected with the word ‘economic’ we are presented with a term that implies either a statement, account, or understanding relating to the production, distribution and consumption of goods and services, or a faculty for understanding the same. It is worth noting that this definition does not necessarily imply an empirically informed position, and may include behaviors and interactions that are based on logical reasoning divorced from practical experience. 

The rationality of economic actors (including individuals, institutions, corporations) within an economy or economic system are most commonly understood in economic discourse through the rational-choice paradigm, a principle that assumes individuals will always make logically reasoned economic choices (based on available information) according to the principle of individual preference. In the classical political economy of Adam Smith, this pursuit of individual preferences, when aggregated, produces a socially-beneficial outcome contributing to ‘The Wealth of Nations’, thus giving the title to his famous book on the subject, and bestowing us with the term ‘invisible hand’ (Smith 1776, 572). He notes that it is not out of the goodness of his heart that a butcher provides customers with meat, but as a manifestation of his rational self-interest to receive compensation. The butcher’s self-interest in turn services the rational self-interest of the hungry customer in need of satiation (Smith 1776, 23-24). The neoclassical school of economics took this idea further and, extending the principle of socially-beneficial outcomes arising from self-interest, developed the idea of laissez-faire economics, which concludes that the outcome of aggregate individual preference will be self-equilibrating markets—that is, markets that balance supply and demand (and consequently price) without the need to make individual sacrifices for the greater good (Chang 2014, 87-92). Essentially, the greater good will unfold if we simply leave people undisturbed to “truck, barter, and exchange” on the market (Smith 1776, 22). Thus the principle of modern economic individualism is born.

Of course, economic actors are not all equal in the information they possess when making a so-called rational-choice. The Austrian School of economics (e.g. Friedrich von Hayek) believed that custom and tradition stand in the way of rational choice, and that it is impossible for anyone to have all information and to reason from a fully informed position. They do however still argue that the free market is the best system, because leaving rational actors alone produces a ‘spontaneous order’ in which diverse preferences and actions of economic actors can be reconciled with each other (Chang  2014, 100-102). However, asymmetric information problematizes the notion of equilibrating markets, such that there are cases where some actors know more than others and are therefore able to exploit market situations from a position of information superiority. This means that different types of self-interested economic actors may reason towards different preferences based on what information they have or do not have. Furthermore, economic actors do not develop interests in a vacuum that is insensitive to broader objective factors of the market;  geography, technology, and political systems all play an influential role.

This is where the rationality of economic analysts come in. Economic analysts may be professional economists in the public or private sector, politicians, academics, or simply critics writing from activist or journalistic perspectives. Professional economists may generally accept the rational-choice model of economics, but will vary in opinion about how the rational choices of individuals will play out depending on various economic factors operating beyond individual preference. For instance, classical political economists such as Smith subscribed to Say’s Law, which proposed that economic supply creates its own demand, thus implying that the market preferences of economic actors will be affected by the behavior (i.e. rational preferences) of producers. The theory was that the interests of consumers and producers would balance each other out to produce overall social benefit (Foley 1999, 8). However, modern experience (particularly since the Great Depression and 2008 Global Financial Crisis) and analysis (such as that of John Maynard Keynes) has shown that market intervention by way of stimulus packages is occasionally necessary to stimulate demand in a deflated market (Harvey 2017, 17). Thus, we have a situation in which the economic reason of professional economists helps to manipulate the rational choice (i.e. economic reason) of consumers and producers. Similarly, interest rates and exchange rates may influence the rational action of economic actors in ways that economic analysts feel confident enough to predict with significant degrees of certainty. For example: low interest rates will discourage economic actors from saving and stimulate market demand, thus stimulating supply; high interest rates will encourage saving and bring foreign investment into a national economy from international economic actors applying their economic reason to self-interest and profit (Frieden 1991, 431). 

Economists also use reason to come up with principles that can guide their action in making economic decisions that will affect the rational-choice behavior of economic actors on the market. Mundell-Fleming conditions, for example, specify how rational-choice will be impacted by capital mobility, exchange rates, and monetary expansion policies, but cautions that there are limitations to the manipulation of these factors, such that they may cancel each other out if not organized in a rational way. Therefore, a state can only move towards two of the following at any one time: fixed exchange rate, monetary policy autonomy, or capital mobility. (Frieden 1991, 431) The impacts of mixing and matching these policies will have significant effects on the rational-choices of economic actors and the economy as a whole, but must be managed well and in accordance with market conditions in order to provide overall economic benefit. Similarly, professional economists reason about the response of the market and economic actors within it in relation to financial instruments pertaining to debt and credit. Cohen notes that for a state economy running in trade deficit with other states, there are two rational-choices: financing or adjustment (i.e., a change of economic parameters, such as foreign exchange rates) (2017, 4). Financing is a mechanism used to stay adjustment, and implies a growing debt burden. This debt burden, however, can be managed by the application of economic reason to apply policy instruments such as currency depreciation (lowering the exchange rate), deflation (austerity, reducing spending and imports), or direct controls (limiting imports or exports).

In practice, which of these policies are pursued does not merely influence the rational-choice of economic actors, but is also influenced by the rational-choice of economic actors, particularly those with disproportionately large influence over the formation of politics and policies impacting the economy. We saw earlier that economic actors may not simply be individual consumers or producers on a market, but also be institutions (e.g. Central Banks, the IMF, Bond Rating Agencies etc.) or corporations. It stands to (economic) reason that institutions that already have a seat at the table with political actors and governments, and corporations with vast sums of money available for lobbying activities, will have a greater influence on the policies pursued by state actors (Frieden 1991, 450). Therefore, powerful industries with nation-state specific interests may lobby for decreased international integration of economic and financial resources so as to further their own interests (Frieden 1991, 443), which may in turn have little benefit for many individual economic actors operating in the economy. It may, in fact, reduce the menu of options available to them, thereby stunting their ability to exercise economic reason in making a rational-choice. Power and politics consequently become significant factors influencing economic reason. Indeed, such powerful corporations and institutions often operate for their own self-interest. For instance, during the subprime mortgage bubble preceding the Global Financial Crisis, corporations and institutions (e.g., banks), knowing full well that their interests would not necessarily align with the self-interest of individual economic actors, could reason that, on the one hand, the bubble would not go on forever, and on the other, that they would be bailed out by the state should a crisis be realized (while individuals would be compelled to honor their subprime debt obligations) (Dupuy 2014, 68).

All that said, the above analysis has one assumption in common, which is that the economy is (and should be) organized according to the principles of capitalism. This therefore constitutes the economic reason of that particular system. An economic system, much like the economic actors so far described, demonstrates a propensity for self-interest and has at the center of its economic rationality a will to self-preservation. The 2008 US government bailout of Wall Street was enacted in part because powerful actors on Wall Street threatened to essentially blow up the economic system if the US government did not provide the liquidity (through US Bond Markets) to protect them (Lawrence 2008). There was a conscious effort by the puppet masters of capitalism to protect and sustain the system. What is more interesting, however, is that capitalists pursuing their own interests in the market under conditions of perfect competition are driven towards the pursuit of profit at the expense of surplus-value creation through labor, which in turn threatens the reproduction of the very capitalist class that benefits from the system. Why? Because although this is not necessarily a freely rational act, it is one that is impelled by the very market forces they are engaged in. Thus, the system itself influences capitalist economic reason and in turn generates the potential for crises (Harvey 2017, 34). None of this can be achieved without exploitation, which is precisely what power enables institutions and corporations to do in their self-interest profit rationality.

Alternative economic systems may assume alternative rationalities, but to do so must look beyond, or deeper into the ways in which economic reason is constituted and justified. Marx, in his critique of capital, repeatedly draws our attention to appearances in commodity production and exchange, suggesting that something more is going on, and that our rational understanding of the economic reality is skewed in numerous ways (Marx 1906, 125). Capitalism is systematically generating wants needs and desires in conjunction with the self-interested preferences of a particular class (i.e. capitalists), and therefore commandeering economic reason for its own self-interest at the expense of another class’s (i.e. wage laborers) self interest. What the Frankfurt School would call ‘real interests’ are being obscured behind manufactured interests that serve only a portion of society. This is what we commonly understand as ideology, which for Marx and Engels is an abstraction from the real processes of history, the ideal expression of the dominant material relationships grasped as ideas (Williams 2014, 155). Ultimately, we are a long way from Smith’s conception of a socially-beneficial outcome derived from the economic reason of self-interested individuals.

(See Neoliberalism, Variegated Neoliberalism)

Bibliography

Chang, Ha-Joon. Economics: The User’s Guide, Vol. 1. Bloomsbury Publishing USA, 2014.

Cohen, Benjamin. “The IPE of Money Revisited.” Review of International Political Economy 24, no. 4 (2017): 657-680.

Dupuy, Jean-Pierre. Economy and the Future: A Crisis of Faith. MSU Press, 2014.

Foley, Duncan K. “Notes on the Theoretical Foundations of Political Economy.” 1999.

Frieden, Jeffry A. “Invested Interests: The Politics of National Economic Policies in a World of Global Finance.” International Organization 45, no. 4 (1991): 425-451.

Harvey, David. Marx, Capital, and the Madness of Economic Reason. Oxford University Press, 2017.

Lawrence, Patrick. “Scholar Robert Meister on a New Model: Using the Financial Markets to Fuel Historical Justice.” Salon.com, July 8, 2018. http://patricklawrence.us/scholar-robert-meister-on-a-new-model-using-the-financial-markets-to-fuel-historical-justice/.

Marx, Karl. Capital. Modern Library. New York, NY, 1906.

Smith, Adam. The Wealth of Nations. 2003 ed. New York: Bantam Dell, 1776.

Williams, Raymond. Keywords: A Vocabulary of Culture and Society. Oxford University Press, 2014.

Mark Howard
Department of Politics, University of California, Santa Cruz

territory

/ˈterəˌtôrē/

noun

1. an area of land under the jurisdiction of a ruler or state.
2. (especially in the US, Canada, or Australia) an organized division of a country that is not yet admitted to the full rights of a state.
3. an area of knowledge, activity, or experience  (Oxford English Dictionary).

Deterritorialization and reterritorialization are terms used to denote the fluidity of spatial, legal, and cultural forms. They illustrate how the strategic disruption of fixed territory (defined above), offers the opportunity to recreate territorial forms with new organizations of power. 

The term ‘territory’, implicit to any definition of deterritorialization and/or reterritorialization (hereafter de/reterritorialization), is essential to interpreting the latter terms’ conceptual meanings. De/reterritorialization, unlike the noun ‘territory’, denote processes that can be rendered in both noun and verb forms (i.e. de/territorialize); they are processes that put territory in motion. 

Furthermore, the definition above reveals at least three interrelated and important dimensions of ‘territory’—space, law, culture—that are illuminated by these processes. Thus de/reterritorialization are processes that can and should be described at spatial-physical, political-juridical, and cultural levels of analysis.

Beginning with the spatial-physical dimension, de/reterritorialization both presume prior territorialization. Extending the definition above gives us the processes of: 1) putting land under the jurisdiction of a ruler or state, 2) administering the division of a country that has not been given the full rights of a state, and 3) acquiring and containing an area of knowledge, activity, or experience. There are two obvious processes by which territorialization has historically taken place. The first is through regimes of imperialism and state-formation. Physical regions, along with the populations inhabiting them, have been the subject of conquest and subsequent political administration going back to the earliest records of humankind. Jared Diamond (1998) argues that it is through these processes of forced acquisition that nomadic hunter-gatherer communities developed into sedentary agrarian societies, and eventually formed a prototype of the political unit we today refer to as the state. Such states, again from their earliest documented existence, proceeded with additional acts of territorial conquest giving rise to the most famous empires of history: Roman, Mongol, Han, Ottoman, British, and so on. But there is an argument to be had that territorialization continues today in the perhaps less physical (though nonetheless spatial) form of US-modeled liberal democratization (Hall 2015, 3), which has been relatively unimpeded since the end of the Cold War. This brings into view the relevance that capitalism and its cognate political-economic forces will have on our definitions of de/reterritorialization, and also leads us to the second process by which territorialization is presumed to have taken place: so-called primitive accumulation (cf. Marx 1990, Part Eight). This process, according to Marx and his subscribers, is nothing but the original separation of producers from the means of the production (Tomba 2009, 51). In the history of capitalism, one of the most famous instances of this was seen in the late eighteenth and early nineteenth century process of English ‘enclosure’: the legal reclassification of common lands into privately owned estates. As with imperial practices, however, such processes are not merely a relic of the past. Max Tomba (2009, 55) reminds us that primitive accumulation and large-scale industry are not bookends to a completed historical process, but are rather complicit with a machinery of state-violence that serves to regulate contemporary forms of capital accumulation. He goes on to argue that given capitalism’s continued dependency on such processes of accumulation (i.e. through labor discipline, knowledge enclosure, etc.) we may in fact speak of the permanence of primitive accumulation under capitalism.

Given these considerations, what then of de/reterritorialization? Deterritorialization is related to, but not synonymous with, globalization. For example, deterritorialization speaks to the diminution of border relevance, whereas globalization speaks more broadly to a process of growing integration among individual, social and political entities across the physical globe. Deterritorialization refers more specifically to a disaggregation—perhaps even displacement—of cultural beings (objects and subjects) from territorial locations. It also speaks to modes of capitalism in which corporations may choose to disaggregate their operations into multiple territories in order to pursue arbitrage opportunities arising from the benefits of, say, innovation in a liberal market economy (LME) such as the US on the one hand, and high-value-added manufacturing in a coordinated market economy (CME) such as Germany on the other (Hall 2015, 5). If deterritorialization speaks of dis-aggregation, then reterritorialization is the process of aggregating cultural beings in ways that both include and go beyond the traditional political forms we associate with international and global affairs. It is often also a process accompanying or following deterritorialization, which makes sense if we consider the opportunities available to economic actors limited by traditional political forms. These actors first deterritorialize to disaggregate the content of closed locations, and then reterritorialize into new  convenient, profitable, and typically postnational forms (Sparke 2005, 89). What de/reterritorialization both also speak to is a qualitative shift in economic relations whereby spatial-physical entities are reconstituted to suit the economic imperatives of capital mobility. Property, for instance, comes to be rendered in terms of rights (claims, privileges, immunities, etc.) rather than as things (Nichols 2018, 250). Thus, arguably, markets become the spatial dimension in de/reterritorialization, while the physical dimension is rendered subordinate and utilized in whatever form is most profitable. Markets become the coeval political economic actors to states under such processes (Hall 2015, 2), and given the prevailing understanding that democracy has no place in market processes (Teubner, 2017, 94) we are seemingly sent back to a kind of imperial imposition—or perhaps even, as some (Nichols, 264) have argued, a new form of enclosure.

Moving on to the political-juridical dimension of de/reterritorialization, it  would appear prudent to begin with political economy’s (seemingly) most definitive legal entity: the nation-state. Arjun Appadurai (as cited in Sparke 2005, 55-56) suggests that key disjunctures—delineated as ethno-scapes, media-scapes, techno-scapes, finance-scapes, and ideo-scapes—between economics, culture, and politics can no longer be contained within the traditional territories of the nation-state. However we cannot simply switch analysis from domestic to international law, for international law is itself superseded by processes of de/reterritorialization. What needs to come into view is, instead, a kind of transnational law that intersects public, private, domestic, and international legal systems (Beckers & Kawakami 2017, 13). Teubner (2017, 90-91) goes as far as to claim that given the transfer of power from public to private (i.e. corporate) organizations as a result of capitalist development, we may now speak of transnational organizations and the laws that they appeal to (e.g. corporate codes of behavior) as the real constitutional authority in global political economy. What is clear is that an autonomous legal system is evolving in-between the cracks; one that—through processes of de/reterritorialization—overdetermines, underdetermines, and even mis-determines existing orders of legal practice (cf. Beckers & Kawakami, 2017: 1). One illustrative way in which this has occurred is through the investor-state dispute settlement (ISDS) arbitration system. For Shawn Nichols, the ISDS functions as the “political-juridical counterpart to disciplinary neoliberalism” (2018, 247). Circumventing domestic judicial systems, and superseding international legal institutions, the ISDS dispute mechanisms offer private arbitration in situations whereby a state’s domestic policies appear to adversely impact transnational investment interests in that state (244). Steeped in the neoliberal conviction that the market is superior to the state in political-economic matters, the ISDS regulates disputes between domestic public and transnational private parties with a bias towards free market enterprise (244). This reflects a relegation of democratic values, as the state’s ability to set policies according to the will of its electorate is vetoed by ISDS mechanisms giving preference to unelected political-economic actors. In one case, the Mexican government was found to be violating its ‘fair and equitable treatment obligation’ by applying a tax to beverages sweetened with high fructose corn syrup (HFCS) while exempting Mexican cane sugar (262-263)—the problematic reality being that HFCS is associated with numerous health issues not applicable to cane sugar. The rights of the state (and its population) that are suspended in such cases points to the notion of rights articulated in definition 2) of ‘territory’ above, and therefore represents a case of de/reterritorialization to meet global capital interests.

Finally, we come to the cultural dimension of de/reterritorialization. For some, such as Arjun Appadurai, the cultural dimension is the primary dimension. It has already been noted that one way to define de/reterritorialization is as an entropic and negentropic movement of cultural objects (objects and subjects) in relation to locations in space and time. The most obvious way this happens is through population migration, which Hardt and Negri (2001) argue is a primary characteristic of the modern world with its smooth de/reterritorialized capital flows (an immanent whole they dub ‘Empire’). Of course, Marx (1990) defined labor as variable capital, suggesting that for capital to stay in motion, not only money and machinery must move across the globe, but human labor as well. Writing in 2000, Hardt and Negri were on the tidal wave of internet communications technology expansion, a factor that has to some extent negated the need to physically move variable capital (telecommuting technologies are today far more advanced than in 2000, and the cultural values of organizations are shifting towards an acceptance of remote labor through outsourcing, or contingent labor), however even then they were able to recognize the vast deterritorializing significance of changes to spaces of communication. This continuous circulation of signs, they argued, was tantamount to the dissolution of every sovereign relationship (Hardt & Negri 2001, 347), and while history has perhaps shown this claim to be hyperbolic, there is no doubting the cultural dispersion and reformation by revolutions in communications technology as applied to capitalist enterprise. Their underlying claim is that ‘Empire’ has eliminated any territorial center of power, and we might perhaps suggest that the US shift towards economic nationalism is a recoil against the early signs of such deterritorialization. But what is clear is that the smooth space of immaterial labor and communications flows is still subject to the bumpy realities of realpolitik and material state power, and to subsequent modes of material reterritorialization. For a world in flux, it seems hard to envisage a future that is not characterized by the unending oscillation of de/reterritorialization.

(See Empire, Enclave, Enclosure/Border, Geopolitics, Labor Migration, Neocolonialism)

Bibliography

Beckers, Anja, and Makoto T. Kawakami. “Why Domestic Enforcement of Private Regulation Is (Not) the Answer: Making and Questioning the Case of Corporate Social Responsibility Codes.” Indiana Journal of Global Legal Studies 24, no. 1 (2017): 1-13.

Diamond, Jared M. Guns, Germs and Steel: A Short History of Everybody for the Last 13,000 Years. Random House, 1998.

Hall, Peter A. “Varieties of Capitalism.” Emerging Trends in the Social and Behavioral Sciences: An Interdisciplinary, Searchable, and Linkable Resource (2015): 1-15.

Hardt, Michael, and Antonio Negri. Empire. Harvard University Press, 2001.

Marx, Karl. Capital: Volume 1: A Critique of Political Economy. Penguin Classics, 1990.

Nichols, Stephen. “Expanding Property Rights under Investor-State Dispute Settlement (ISDS): Class Struggle in the Era of Transnational Capital.” Review of International Political Economy 25, no. 2 (2018): 243-269.

Sparke, Matthew. In the Space of Theory: Postfoundational Geographies of the Nation-State. Vol. 26. University of Minnesota Press, 2005.

Teubner, Gunther. “Corporate Codes in the Varieties of Capitalism: How Their Enforcement Depends on the Differences Among Production Regimes.” Indiana Journal of Global Legal Studies 24, no. 1 (2017): 81-97.

Tomba, Massimiliano. “Historical Temporalities of Capital: An Anti-Historicist Perspective.” Historical Materialism 17, no. 4 (2009): 44-65.

Mark Howard
Department of Politics, University of California, Santa Cruz

It would be impossible to assert that a free society will always and necessarily develop values of which we would approve, or even, as we shall see, that it will maintain values which are compatible with the preservation of freedom. (Friedrich von Hayek 1967)

Neoliberalism, the doctrine of unfettered market rationality, is praised by its proponents as the summum bonum of free human social life, and derided by its opponents as a nefarious force of impoverishment, servitude, and precarity. In explaining this divergence of opinions, the quote from Friedrich von Hayek above—Hayek being one of the twentieth century’s most famous and militant proponents of laissez-faire economics—offers some illumination. At the core of his proposition is the suggestion that freedom cannot be entirely free, and that the preservation of freedom may not prevail in a laissez-faire system of governance.

Neoliberalism is defined by David Harvey (2007, 2) as a theory of political economy that situates human prosperity within a state-led institutional framework of strong private property rights, free markets, and free trade. To support these institutions, the state establishes security practices and legal structures to ensure the ongoing function and expansion of markets. At its core, is the principle of market supremacy: the market is understood as an information processor far more powerful than any human brain, and far more efficient at manifesting desirable outcomes (Mirkowski 2013, 56). It has been the world’s dominant economic doctrine since perhaps the early 1980s, and unquestionably so since the collapse of Soviet communism (Chang 2014, 53). Neoliberalism bears similarities to classical liberalism, but diverges on specific points. For instance, neoliberalism and liberalism both advocate a minimal state, but while neoliberalism promotes the presence of central banks with note issue monopoly, classical liberalism proposed competition of money along with everything else (Chang 2014, 53). Furthermore, whereas classical liberalism in many ways opposed (and preceded) democracy, neoliberalism often leads to the sacrifice of democracy for the sake and preservation of private property and the ‘free’ market (Chang 2014, 53).

This highlights two features of neoliberalism that seemingly contradict its ostensible devotion to the principles of freedom. First, despite its elevation of the principle of laissez-faire, neoliberalism is a doctrine that depends on the active  construction of what is taken to be the ‘good society’ (Mirkowski 2013, 55). It is inherently interventionist and imposing. The first signs of neoliberal intervention are discernible from 1979, when Margaret Thatcher began dismantling the extant mixed economy that she inherited from Britain’s socialist Labour Party. By lowering higher income tax rates, reducing government spending, defanging union power, abolishing capital controls, and privatizing numerous national industries, she effected a rise in interest rates that gave impetus to investment by foreign capital and began the process of enriching a global capitalist elite at the expense of the British working (and unemployed) classes. Though this was perhaps the point—labor militancy in the 1970s had reached its apex on both sides of the Atlantic, and breaking the inflationary cycle by raising interest rates served the double purpose of disciplining labor by removing the barriers to competition of labor (Panitch and Gindin 2012, 15). Thatcher’s coeval in this process, Ronald Reagan, began his own dismantling of the previous (Keynesian) economic order after coming to power in 1981. Following a similar pattern, he cut the higher income tax rates, explaining that enriching the rich capitalist elite would make them work harder to create opportunities for the poor, an economic principle that is today better known as ‘trickle down’ or ‘supply-side’ economics. It is indeed a strange contradictory logic that suggests we may make the rich work harder by making them richer, and the poor work harder by making them poorer (Chang 2014, 66-67). The effect of interest rate rises in the US (where they doubled) was that many debtor nations in the developing Global South, who had borrowed to finance industrial growth and to compensate for higher oil prices caused by the increasingly militant OPEC cartel, now went into default as they were unable to repay the interest on their loans. In order to recover, these debtor nations were forced to submit to structural re-adjustment programs which involved the imposition of neoliberal reforms such as government budget cuts, the privatization of national industries, and reduced economic (i.e. market) regulation (particularly with regard to international trade, see free trade). It was these imposed reforms that gave neoliberalism the pseudonym ‘Washington Consensus,’ for many of them went against the economic principles of the countries forced to submit to them but accorded to the principles of neoliberalism now evangelized by the US (and UK) (Chang 2014, 68).

It is this imposing force of neoliberalism, along with the impoverishment of the mass of lower domestic classes that leads us to the second feature of neoliberalism seemingly opposed to the principles of freedom: the sacrifice of democracy. For Wendy Brown (2015, 9), this “conceptual unmooring and substantive disembowelment” of democracy is a defining feature of neoliberalism. As noted in the keyword definition for liberalism, there are two unequally equitable domains of liberal freedom: the political and the economic. In the former, we have absolute equality before the law as political subjects. However in the latter, while we have equal theoretical opportunity to enter into economic relations, the reality is that the game is rigged by a capitalist minority elite that have climbed the ladder of capitalist accumulation and then kicked the ladder away to maintain the class divisions that sustain them (Miliband 1992). What is truly distinctive about neoliberalism is that the political domain is subordinated to the economic domain such that the state does not control the market, but the market controls the state. Consider how fiscal policy is determined by market imperatives, and the health and growth of the market is identified with the health and growth of state legitimacy (Brown 2003). Thus the democratic state, which should be concerned with the needs of its electorate, is dominated by the logic of market rationalities and imperatives. Market logic and economic rationality come to infiltrate social domains formerly understood as non-economic—healthcare, social security, environmental pollution—and the private individual so venerated by liberalism and democracy comes to be dominated by market forces (Brown 2003; Harvey 2007, 2). Social policy must now be judged according to the standard of profitability tests, resulting in nothing but unequal inequality for all (Brown 2003). Good neoliberal citizens organize themselves according to market options without ever questioning the options on the table; they are caught up in a game (or, we might rephrase, ‘competition’) which, claims Foucault, they never explicitly wanted to take part in, but cannot escape (2008, 201-202). The neoliberal subject is a subject disciplined according to neoliberal ‘ethics’ of pseudo-freedom, a subject that has internalized their own impoverishment, and is blind to the sequestration of their democratic voice.

Thus, neoliberalism arguably constitutes a form of tyranny. In the aftermath of the 2008 global financial crisis, cruel policies of austerity were imposed upon the working masses in the name of fiscal responsibility and market stability. The very actors responsible for imposing misery upon the people—the reckless financiers and bankers responsible for the crisis—instead of being vilified and locked up by the state in an act of democratic justice for its electorate, instead employed the very same perpetrators to help ‘fix’ the crisis, rationalizing that they best understood the shape of the crisis having created it in the first place (Mirowski 2013, 67). The subordination of the state was thus rendered complete, with the tyrants ruling supreme and tyranny run amok. The subsequent policies of austerity have resulted in almost total dehumanization as the market (already taken to be superior to human rationality by Hayek) have come to supersede the rationalities of ethical conduct, morality, and justice. Individuals carrying the burden of unwieldy subprime mortgages are implored by state actors (on the behalf of the impersonal neoliberal machine) to continue paying their debts, to take it as a moral burden, even as the reckless financiers and bankers are not merely given loan forgiveness, but are rewarded with the keys to power (Bryan and Rafferty 2014, 410). In the aftermath of the crisis, cruel and arbitrary power has not only found its way into the halls of government, but also into the inner being of neoliberal individuals. Neoliberalism has become governmentality, and tyranny of the market rules supreme.

(See Variegated Neoliberalism, Free Trade, Liberalism, Economic Reason, Double Movement)

Bibliography

Bryan, Dick, and Michael Rafferty. “Political Economy and Housing in the Twenty-First Century–From Mobile Homes to Liquid Housing?.” Housing, Theory and Society 31, no. 4 (2014): 404-412.

Bloom, Allan, and Adam Kirsch. The Republic of Plato. Basic Books, 2016.

Brown, Wendy. Undoing the Demos: Neoliberalism’s Stealth Revolution. MIT Press, 2015.

Brown, Wendy. “Neo-liberalism and the End of Liberal Democracy.” Theory & Event 7, no. 1 (2003).

Chang, Ha-Joon. Economics: The User’s Guide, Vol. 1. Bloomsbury Publishing USA, 2014.

Foucault, Michel, Arnold I. Davidson, and Graham Burchell. The Birth of Biopolitics: Lectures at the Collège de France, 1978-1979. Springer, 2008.

Harvey, David. A Brief History of Neoliberalism. Oxford University Press, USA, 2007.

Hayek, Friedrich A. V. “The Moral Element in Free Enterprise.” Studies in Philosophy, Politics and Economics (1967): 229-236.

Miliband, Ralph. “Fukuyama and the Socialist Alternative.” New Left Review (1992), no. 193: 108.

Mirowski, Philip. Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown. Verso Books, 2013.

Mark Howard
Department of Politics, University of California, Santa Cruz

The term liberalism—at root, an ideology of economic and political individualism—evokes multiple meanings, some of which appear to be in contradiction with one another. This makes what we (or at least those of us schooled in a Eurocentric mode of thought) sometimes assume to be an intuitive and simple concept into something less obvious and more complex. Stuart Hall (1986, 37) argues that the chief power of liberalism is that it has become part of the English (and by extension, Western Capitalist) common sense; it has become self-evidently obvious, and in need of minimal philosophical defense. In domestic terms, we can see this common-sense view of liberalism played out in the ideas of Adam Smith who, building on the work of John Locke, contributed to the establishment in Britain of an institutional liberalism that was embraced and developed by both conservative (e.g. Edmund Burke) and radical (e.g. Thomas Paine) political factions. Smith took it for granted that liberal ideas formed the basis of the fundamental laws of economy (Hall 1986, 38). In international terms we can see the common-sense view demonstrated by Francis Fukuyama’s (1989), perhaps premature, declaration of ‘The End of History’—the teleological victory of Liberal Democratic ideology as the only viable conception of political-economic organization left standing in post-Cold War political-economy; one that would be, if not adopted, then begrudgingly accepted as unquestionably the most adequate ideology to structure forms of life beyond US/Soviet hostilities.

Although it is commonplace to deride Fukuyama’s grand (and generally misinterpreted) claim about the triumph of Liberal Democracy, his explication reveals something fundamental to the nature of liberalism: that it is, above all, an ideology. This view is shared by Hall (1986, 36), who notes that if there is anything essential about ideology, it is that no ideology has an unchanging essence; that is, ideologies are always marked by inconsistencies and logical breaks. This goes some way to explaining why different political factions (conservatives and radicals) have, up to the present day, adopted liberalism and its variants as their philosophical impetus. 

But this does not tell the whole story, for there are two distinct branches of liberalism, each with its own distinct and unequally beneficial outcomes: political liberalism and economic liberalism. The former is that which was first philosophically articulated by John Locke, who argued for the equality of individuals before the law. Political subjects, he claimed, constituted a class of free men (Williams 2014, 179). On this account individuals living within a liberal society were the bearers of political rights and free speech, however the reality of such a claim was that until at least the twentieth century large sectors of society, such as women and the poor, were excluded from these rights (Chang 2014, 51). Political liberalism therefore, has not always signified a completely liberal democracy. Still, once implemented it imbued all included members of a society with equal rights before the law. Economic liberalism, on the other hand, because inextricably intertwined with capitalism, makes claims to economic equality, but in fact signifies a society in which a relatively small class of people who own the means of production exercise a vastly disproportionate influence on society (Miliband 1992, 109), and wield their influence at the expense of those without capital (i.e. the workers). Thus, while economic liberalism offers a condition of equality, this condition is insufficient given the unequal context in which it is bestowed. First given popular credence by Adam Smith, it was recognizable even to him that economic liberalism was “in reality instituted for the defense of the rich against the poor, or of those who have some property against those who have none at all” (in Chang 2014, 51).

Thus liberalism has never been without its controversies, nor its opponents. Indeed, it has found promotion and opposition in both conservative and socialist circles (Hall 1986), just as it has been equated with human freedom at one given moment (i.e. the Liberal internationalism of Fukuyama and his adherents), and as neo-imperialism the next (cf. Harvey 2007 on the invasion of Iraq). Further confusing the sea of animosity and praise, is that liberal has become a byword for centrism and laissez-faire in countries such as the UK, but denotes left of center political allegiance in the US (where ‘liberals’ are roughly the equivalent of European social democrats) (Chang 2014, 52).

Part of the problem is that liberalism constitutes a somewhat hollow ideology that has been filled out with varying forms of content in different times and places. At the center of its ideology there is really only one emphasis—individualism. Both Locke and Smith in their accounts of political and economic liberalism placed the (gendered) individual at the center of their analysis, in the form of an abstract being endowed with concrete characteristics derived from human nature (Hall 1986, 40). Thus we end up with a negative form of freedom from, that is intended to protect the individual from nefarious outside forces. In both politics and economics this implies freedom from the arbitrary will of a sovereign or the state (in the latter this amounts to a protection of private property from arbitrary confiscation), which at the time of its advent was a radical move, in that it elevated civil society—the space of individual interest and realization—over the state as the primary object of ideological concern (Hall 1986, 40). It is this reversal that is in some ways responsible for the disparity of equality between political and economic liberalism, for the economic theories of liberalism are founded on a principle of healthy competition, and the assumption that for some to win, others may have to lose. It is in this context that the strict separation of civil society and state allowed political equality before the law/state to be preserved, just as the private accumulation of wealth and influence was able to proceed uninhibited in the enclosed domain of civil society (Hall 1986, 43).

The outcomes of such inequality in relationships ostensibly formed around equality are the same as those that I described in the separate keyword definition for free trade: the weak are forced to be free and to engage in free relations, even though those free relations are not to the benefit of the weak, but to the distinct benefit of the strong, who forced the relationship to exist in the first place. Quijano and Wallerstein (1992) reveal some of the ways that this may be characterized beyond a strict (domestic or international) bourgeoisie/proletariat distinction, and that are most clearly seen in relation to the capitalist world-system. For instance, remnants of colonially produced hierarchies are culturally sustained in ethnicity constructs, and these ultimately become manifest as racist ideologies that do not fit within the liberal political-economic framework, but rather need to be assimilated in order to sustain it. Through liberalism’s capitalist symbiosis we thus arrive at the twin ideologies of universalism and meritocracy (Quijano & Wallerstein 1992, 551), each of which offers the myth of equal opportunity and obscures the socially and culturally rigged system in which such ‘opportunity’ will be offered.

(See Economic Reason, Empire, Neoliberalism, Enclosure/Border)

Bibliography

Brown, Wendy. “Neo-liberalism and the End of Liberal Democracy.” Theory & Event 7, no. 1 (2003).

Chang, Ha-Joon. Economics: The User’s Guide, Vol. 1. Bloomsbury Publishing USA, 2014.

Fukuyama, Francis. “The End of History?.” The National Interest (1989): 3-18.

Hall, Stuart. “Variants of Liberalism.” Politics and Ideology (1986): 34-69.

Harvey, David. A Brief History of Neoliberalism. Oxford University Press, USA, 2007.

Miliband, Ralph. “Fukuyama and the Socialist Alternative.” New Left Review (1992), no. 193: 108.

Panitch, Leo, and Sam Gindin. The Making of Global Capitalism. Verso Books, 2012.

Quijano, Anibal, and Immanuel Wallerstein. “‘Americanity as a Concept, or the Americas in the Modern World.” International Social Science Journal 44, no. 4 (1992): 549-557.

Williams, Raymond. Keywords: A Vocabulary of Culture and Society. Oxford University Press, 2014.

Sasha Wasserstrom
Department of Politics, University of California, Santa Cruz

Varieties of Capitalism (VoC) is a framework coined by scholars Peter Hall and David Soskice, which posits that there are two principle variations in the structure of market economies in capitalist societies (Hall and Soskice 2001, 1). Hall and Soskice claim that these two systems form the basis of the interplay between actors working within the market, whether that be the state, private enterprise, public institutions, trade unions, etc, and thus create a sort of framework for interaction and decision-making that can be categorized and analyzed (2). This body of literature seeks to provide an alternative structure for interpreting the ways in which social entities interact and the reasons for why, as Hall clarifies, “at the heart of these inquiries are questions, not only about how political economies differ but also why ensembles of institutions cohere” (2).

In his article, “Varieties of Capitalism”, Hall focuses on a specific entity in the system, in this case, the role of firms, and investigates the ways in which firms themselves coordinate in the two principle variations of capitalist systems (Hall and Soskice 2001, 3). They call these two systems liberal market economies (LME) and coordinated market economies (CME) (3). The LME system is one in which firms are generally more competitive and coordinate via hierarchies, contracts and formal, distanced agreements (8). This system relies on market mechanisms, such as price, to dictate the behavior of firms that engage within it and is exemplified in an economy such as the United States (4). Conversely, CMEs are more explicitly coordinated in nature, both by the state and by the entities that interact within it as exemplified in the economies of East Asia and northern Europe (in fact, Hall states that there are numerous variations of both system types that inform the dynamics he describes) (4). However it is not as simple as just being centrally coordinated by state interventions and institutions; Hall distinguishes the CME market economy as one in which different firms work hand-in-hand in an informal manner. In this way the environment is more collaborative and less competitive, relying more on relational correspondence, rather than formal contracts for cohesion (8). Thus, the power dynamic and the way in which firms balance or coordinate their behavior in order to either maintain or disrupt this balance is what distinguishes these two types of economies (5). Hall indicates that by being able to dissect and analyze the dynamics at play and the way in which the economies in question are designed, we are better able to understand the reasoning behind the actions that are being taken, particularly in the case of producer groups, i.e. firms that are supplying commodities to the market (8).

In his article “Corporate Codes in the Varieties of Capitalism” (2017), Teubner  provides an interesting intervention into the discussion of varieties of capitalism by engaging with the problems that have arisen due to globalization. Teubner intervenes by defining a new conception of the organization that occurs within market economies underneath the umbrella of varieties of capitalism, as well as seeks to address the question of how globalization has impacted regulation and law enforcement when territorial boundaries of the national market economy have been diminished (82). However, let’s begin with Teubner’s addition to the conceptualization of varieties of capital. In the aforementioned article, Teubner emphasizes the importance of understanding what he calls, production regimes, which he defines to be the specific rules of a particular market economy as they “ are the structure of the production of goods and services by way of markets and market-related institutions… the incentives and constraints of economic transactions, [are] formulated through an ensemble of institutions in which economic activity is embedded” (84). Teubner asserts that the idea of production regimes is important to understand when thinking about globalization as, unlike the varieties of capitalism described by Hall and Soskice, production regimes are able to transcend territorial borders and still dictate the ways in which firms do business in an international context. This is a troubling issue for the regulation of multinational corporations that act both outside of one particular market economy and production regime. Teubner brings attention to the difficulties in regulation and application of law when, due to the transnational nature of globalized economy, there is no centralized authority to create or apply it, particularly when differing varieties of capital and production regimes dictate relationships and responses among institutions and participating actors.

Bibliography

Hall, Peter A., and David Soskice. “Varieties of Capitalism.” Annual Review of Political Science 4, no. 1 (2001): 11-43.

Teubner, Gunther. “Corporate Codes in the Varieties of Capitalism: How Their Enforcement Depends on the Differences Among Production Regimes.” Indiana Journal of Global Legal Studies 24, no. 1 (2017): 81-97.

Alberto Ganis
Department of Politics, University of California, Santa Cruz

According to the Merriam-Webster Dictionary (2019), crisis is defined as “an unstable or crucial time or state of affairs in which a decisive change is impending, especially one with the distinct possibility of a highly undesirable outcome” (Merriam-Webster Dictionary). As students of political economy and capitalism, it seems crucial to define the term crisis as it, according to the Marxist critique at least, is invariably connected to the expansion of capital and its support system. According to Panitch and Gindin (2012), the development of the American Empire has been intertwined with its means of production, as well as the financialization and internationalization of its capital investments. Through policies of economic nationalism of “promotion” of the capitalist ideals, the United States established itself as the economic, political, and military leader of the Western world. Its meddling with the political regimes of other countries in its sphere of influence was done under the guise of a “white-man’s-burden” like campaign of national and economic liberation. In truth, it worked to establish friendly trade environments based on the gold standard, low tariffs, and secure, inviting markets for private foreign investment (105). 

Panitch & Gindin discuss several crises that happened throughout American history. For example, the great financial crisis of 1907, which signed a year punctuated by a Wall Street stock market crash, an 11 percent decline in GDP, and accelerating runs on the banks. This crisis was caused by the increasingly common “practice of trust companies to draw money from banks at exorbitant interest rates and, without the protection of sufficient cash reserves, lend out so much of it against stock and bond speculation that almost half of the bank loans in New York had questionable securities as their only collateral” (Panitch & Gindin 2012, 42). Economic crises in 1907, 1929, 2008, etc. can be categorized as crises of capitalism, a description that reflects an unraveling of the inherent contradictions within the system, a system in terminal decline. Panitch and Gindin also note that the crisis of Keynesianism/capitalism coincided with “a crisis of US imperial power in relation to the Third World. To be sure, the fact the revolutions in Cuba and Vietnam did not have a ‘domino effect’ was in good part due to US support for the dictatorships that emerged in Asia and Latin America’” (133). It seems clear that the foreign policy of the USA is linked to the growth of capitalism as much as internal affairs. Due to the deep connection between American (and not only) capitalism and its societal underpinnings, the crises end up spilling from the economic realm to all the other ones. 

These structural contradictions of capitalism were studied by Antonio Gramsci, who developed the term “organic crisis” to describe the inherent, “natural” failings of capital and the hegemonic class connected to it:

A crisis of authority is spoken of: this is precisely the crisis of hegemony, or general crisis of the state. The crisis creates situations which are dangerous in the short run, since the various strata of the population are not all capable of orienting themselves equally swiftly, or of reorganizing with the same rhythm. The traditional ruling class, which has numerous trained cadres, changes men and programmes and, with greater speed than is achieved by the subordinate classes, reabsorbs the control that was slipping from its grasp. (Gramsci 1971, 210)

Here, Gramsci describes the societal magnitude of economic crises, and  provides  an alarmingly accurate depiction of the 2008 recession, which affected so much of society while the hegemonic financial class remained largely unharmed.

As mentioned, an economic crisis often leads to a crisis that is political, moral, and/or cultural. For example, Balibar (1991) sees the development of racism as a phenomenon, the more or less inevitable, more or less resistible crisis effect of an economic crisis. It is apparent that crises are needed to spark policy making, from citizenship laws to the association of economic trends and race-relations. Unsurprisingly, the crisis of Keynesianism in the US coincided with the anti–Vietnam War mobilizations, the explosion of African-American frustrations in urban riots, and the radicalization of black workers and unemployed youth (Panitch & Gindin 2012, 143). Marxist and Gramscian critiques of capitalism tend to normalize crises as “organic” parts of a failing system; this does not leave much room for considerations of crises’ discursive nature. The discourse of crisis is extremely important because it creates a sense of urgency that warrants extreme acts aimed at solving the crisis. For authors like …, the hegemonic class is able to utilize these tender times in their favor through legislation and scapegoating. In fact, by connecting weak economic realities to issues like globalization and immigration, the ruling class is able to shift the attention of the masses to other matters. This allows capitalism to hide its clear shortcomings and “buy” enough time to redirect its development in other social spheres. A compelling example can be found in Allan Pred’s writings regarding Sweden, where he discusses the economic crisis in the 1990s as a disruptor of the pillars of Swedish culture by questioning the certainties of social democracy and steady employment, therefore pushing Swedes to re-negotiate their identity. This included identification processes based on racist and nationalistic ideals (Euroscepticism, othering, etc.).

The field of political economy is often concerned with the analysis of economic crises as they pose peculiar hurdles in the making of economic theory.The development of capitalism means a development of its crises, which leads to a crisis of economic theory. Conventional economics proves ill-equipped to respond to its challenges. The example below shows how an older theory of crisis has “evolved” in order to adapt to modern society as well as modern political economy. Karl Polanyi’s work tries to make sense of the Great Depression, submitting that the root cause of the crisis was the collapse of the international economic system, which was exacerbated by the Great War and the subsequent treaties. Polanyi offers an understanding based on the dialectical process of marketization and push for social protection against that marketization, which in a utopian world, would find a balance between capital interests and dis-embedded social outcomes that manifests through labor laws, tariffs, etc. Polanyi calls this process the “double movement” and points the finger to the lack of balance between these two spheres as the cause of the above-mentioned crisis. He develops the idea of embeddedness of the economy within society. Polanyi’s (2001) groundbreaking work on crisis offers the basis for Nancy Fraser’s analysis of the recent Great Recession of 2008, which appears to be based on similar imbalances. Fraser (2013) also underlines some key differences of the crisis itself, as well as a new way to look at possible solutions. Both crises appear to be rooted in a common dynamic, called ‘fictitious commodification’ (119). In both eras, “free-market fundamentalists have sought to commodify all the necessary preconditions of commodity production. Turning labour, nature and money into objects for sale on ‘self-regulating’ markets, they proposed to treat those fundamental bases of production and exchange as if they could be commodities like any other” (ibid, 119).Unlike the double movement, she speaks of a triple movement that delineates a three-sided conflict among proponents of marketization, adherents of social protection and partisans of emancipation, which represent the forces that pull away from the market-society dichotomy (2013).

Note: The focus on crisis as a discursive/narrative device was informed partially by this Vox video: https://www.youtube.com/watch?v=Ln61AksUCjY

 Bibliography

Balibar, Etienne. “Is there a ‘Neo-Racism’?” In Race, Nation, and Class: Ambiguous Identities. London: Verso, 1991.

Fraser, Nancy. “A Triple Movement?” New Left Review, May-June 2012, Issue 81. 2013.

Gindin, Sam, and Leo Panitch. The Making of Global Capitalism: The Political Economy of American Empire. Brooklyn, NY: Verso.

Gramsci, Antonio. Selections from the Prison Notebooks. Edited and translated by Q. Hoare and G. Nowell Smith. London: Lawrence and Wishart, 1971.

Merriam-Webster Dictionary. 2019.

Polanyi, Karl. The Great Transformation. Beacon Press, 2001.

Vox. “Why Every Election Gets Its Own Crisis.” 2018. [Online video] Available at: https://www.youtube.com/watch?v=Ln61AksUCjY. Accessed 2018.

Ingy Higazy
Department of Politics, University of California, Santa Cruz

Production is perhaps one of the most central concepts to political and social critical thought of the twentieth and twenty-first centuries. The term, according to the Oxford Learner’s Dictionary, is defined as the process by which a thing is made, either naturally or through human intervention. In the latter case, the definition states, it is a process which yields large quantities of a single product from an aggregate of material. Thus, as already implied in the definition, production is specifically crucial to the study of political economy.

Karl Marx’s critique of political economy, and thus, of capitalism, as well as his materialist approach to history, centered on analyzing historical modes of production, with capitalism being the contemporary mode. Production in this case both alludes to an encompassing system and a process. Accordingly, one of Marx’s main premises is that capitalism is a social relation of production. This social relation of production, according to Marx, binds together labor in “a purely atomistic way,” whereby the laborers’ “own relations of production…assume a material shape which is independent of their control” (Marx, Capital, 187). Thus, production is both a social and material relation, where both are intertwined, and the former is expressed in the latter. For Marx, production is distinguished from distribution (Marx, Capital, 172), as well as from circulation (247), to which he dedicates the second volume of Capital (1885).

The capitalist mode of production is characterized by ownership of the means of production, and is thus a bourgeois mode of production (Marx, Capital, 176). What is furthermore specific to the capitalist mode of production, Marx explains in Capital, Vol. I (1867), is the creation of commodities and of value. For Marx, commodities are the products of labor and the basic unit of the capitalist system. Thus, capitalism entails a dialectical social process, between labor and capital (specifically the owners of the means of production), that in turn produces the capitalist system. In fact, for Marx, both labor power and capital are produced, and are thus specific to capitalism (Marx, “Wage Labor and Capital,” 207). In other words, Marx, and Marxian political thinking, approach labor and capital as both producers and products of capitalism. This attentiveness to the inherently social character of labor and capital opened up new avenues in thinking critically about the social world and about capitalism as a social system. The dynamism of such social character is most clearly captured in analyzing and understanding the specificities of the process of production under capitalism. One cannot critically and analytically approach production as a concept, however, without engaging value and the process of value creation, which Marx also theorizes in Capital, Vol. I. In the first chapter to Capital, Marx explains use-value as the product of labor time (Marx, Capital, 129). Marx writes: “[what] exclusively determines the magnitude of the value of any article is therefore the amount of labour socially necessary…for its production” (Marx, Capital, 129). For Adam Smith, in The Wealth of Nations (1776), as representative of the classical economists Marx critiques in Capital, production also comes in different forms and shapes (Smith, 25). In essence, it is a process that involves a division of labor (Smith, 19), which Marx closely and critically analyzes. Thus, Marx’s critique of capitalism and of the sites of capitalist production entailed a theoretical engagement with the spaces and (spatial) divisions of, or inherent to, production.

Thus, it comes as no surprise that production, as a concept and a process, is central to the study of space and geography. According to Susan Mayhew, in her entry in The Oxford Dictionary of Geography (fifth edition). “Mode of Production,” “each mode of production creates its own geography.” In its turn, the capitalist mode of production creates an uneven geography of development (Mayhew, “Mode of Production”), where discrepancies in levels of capitalist development characterize the global expansion of capital. One of the foremost theorists of capitalism’s uneven geographical development is the British geographer David Harvey, who also authored A Companion to Marx’s Capital (2010). Further, Marx’s theory of production directly influenced a number of other influential thinkers of space and geography, most notably, the French Marxian theorist Henri Lefebvre, author of The Production of Space (1991). Lefebvre theorized that space—both social and material—was a product of capitalism. Failing to analytically capture, and thus explain, space as both an active agent and a product of capitalism, is, according to Lefebvre, failing to capture the capitalist mode of production in all its myriad forms or expressions. It also means losing sight of the dialectical relations of production that begot those expressions in the first place. Thus, production has been a crucial concept in the development of a number of theoretical approaches within the field of geography. Such approaches have both expanded on and used—as well as continue to use—as their analytical tool Marx’s theory of production relayed in Capital.

Prominent thinkers, such as the French philosopher Michel Foucault, also theorized knowledge and truth production as central to the modern enterprise, or, more accurately, as building blocks of capitalist modernity. For Foucault, the production of truth is the function of disciplinary power—the modern form of power that regulates and acts on the body. This kind of power, according to Foucault, is not separate from the development of the capitalist mode of production, as he specifically writes in Discipline and Punish: The Birth of the Prison (1975). Therefore, production does not play a role merely in materialist analyses and critiques of capitalism, but also in, broadly defined, social and cultural analyses. Thus, culture and identity, or cultural identities, have also been theorized as direct results of a/the process of production. Culture industries, national identities, and even nation-states have been all conceptualized as products of processes specific to each, as well as products of the capitalist mode of production. In fact, within the discipline of sociology, the concept of the production of culture, developed by sociologist Richard A. Peterson, stipulates that “the content of symbolic elements (or cultural objects) is significantly shaped by the environments within which they are created, distributed, evaluated, taught, preserved, and even consumed” (Santoro, “Production of Culture”). Thus, production, as a concept, has taken on lives of its own—sometimes all together separate from Marx’s initial theorization.

Finally, a number of scholars have expanded on the contributions of Marx, Critical Marxian Geography, and Foucault to stipulate a theory of production. Particularly in the fields of Sociology and Critical Geography have such endeavors been undertaken, and continue to yield new and fresh analyses. One example is Deborah Cowen’s work on logistics’ spaces and the changing (and expanding) sites of production, particularly in The Deadly Life of Logistics: Mapping Violence in Global Trade (2014). Cowen theorizes that production has changed and expanded to include even transportation, an activity previously theorized as belonging to the realm of circulation. This engagement with production in its own right is not a radical departure from Marx himself, who deals more directly with production in the second half of Capital, Vol. I. Cowen’s work is but one example of a theoretically-informed text that directly and critically approaches the concept of production, from within Marxian thinking more generally. While more and more scholars continue to engage Marx’s writings on production, it becomes more pressing to approach the concept with both an historical and a critical eye—in order to account for the myriad ways that it has been previously approached and theorized, as well as the myriad ways in which what it signifies continues to change and to evolve.

Bibliography

Cowen, Deborah. The Deadly Life of Logistics: Mapping Violence in Global Trade. University of Minnesota Press, 2014.

Foucault, Michel. Discipline and Punish: The Birth of the Prison. Vintage Books, 1995.

Harvey, David. A Companion to Marx’s Capital. Verso, 2010.

Lefebvre, Henri. The Production of Space. Blackwell Publishing, 1991.

Marx, Karl. Capital, Vol. I. Vintage Books, 1977.

Mayhew, Susan. “Mode of Production.” In The Oxford Dictionary of Geography, 5th ed. Oxford University Press, 2015.

Peterson, Richard A. “Production of Culture.” In The Blackwell Encyclopedia of Sociology, edited by George Ritzer. Blackwell Publishing, 2007.

Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. W. Strahan and T. Cadell, 1776.

Santoro, Marco. “Production of Culture.” In The SAGE Encyclopedia of Economics and Society, edited by Frederick F. Wherry and Juliet B. Schor. Sage Publications, 2015.

Ingy Higazy
Department of Politics, University of California, Santa Cruz

Politics, often considered the exclusive realm of the discipline of Political Science, has been to a great extent de-centered by contemporary social and critical theory. No longer does theory perceive politics as the domain of a single discipline or of a single realm of life, namely of the state and its institutions. This becomes more clear when we engage in the work of Michel Foucault, who wrote and lectured extensively on the development of modern power and regimes of control. For Foucault, modern power is disciplinary. His theory of modern power thus moved beyond the personalization of power in a single entity or person, namely the sovereign (from sovereign power), to a more capillary form of power (Foucault 1975, 198). Central to Foucault’s thinking about modern power is the concept of biopolitics. Foucault was interested in what he called “biopolitics and the problem of life” (Foucault 2008, 78). Etymologically, we can construe biopolitics as the politics of life. In the summary to his lectures at the Collège de France for the year 1978-1979, Foucault defines biopolitics as “the attempt, starting from the eighteenth century, to rationalize the problems posed to governmental practice by phenomena characteristic of a set of living beings forming a population: health, hygiene, birth-rate, life expectancy, race … We know the increasing importance of these problems since the nineteenth century, and the political and economic issues they have raised up to the present” (Foucault 2008, 317).

Integral to biopolitics, in both its theory and its function, is the place of sovereignty. For Foucault, sovereignty denotes the mode or régime of power that preceded—but that still arguably exists alongside—disciplinary power. In Discipline and Punish: The Birth of the Prison (1975), Foucault traces a genealogy of disciplinary power, to argue that it “arranges a positive economy” (Foucault 1975, 154). In this respect, as Michael Hardt and Antonio Negri note in Empire (2000), “Foucault… attempted to bring the problem of social reproduction and all the elements of the so-called superstructure back to within the material, fundamental structure and define this terrain not only in economic terms but also in cultural, corporeal, and subjective ones” (Hardt and Negri 2000, 27). 

Perhaps the statement that best captures Foucault’s conception of biopolitics is “make live and let die,” which refers to the mechanisms and capacities of modern power to organize minute details of life, of individuals and populations, according to power’s efficient and positive economy (Davies, Isakjee, and Dhesi 2017, 1268). In his discussion of the development of the biopolitical, Foucault accordingly engages the modern state and governmentality, what he calls “the art of government” (Foucault 2008, 28). In Foucault’s view, the functioning of biopolitics rests on the liberal governmental regime (Foucault 2008, 22). He contrasts this liberal governmental regime, essentially governmentality, to the raison d’état or the reason of the state (Foucault 2008,  21-22 and 28). Thus, modern power, through the art of government, disseminated through both state apparatuses and society, is geared toward the productive governing life. In biopolitical regimes, life thus becomes an object to be controlled and instrumentalized.

Postcolonial thinkers, most notably Achille Mbembe, have critically engaged with Foucault’s ‘theory’ of biopolitics to expose the centrality of race to its functioning, and thus its conceptual flipside, necropolitics. In his widely cited piece, “Necropolitics” (2003), Mbembe writes that he “[starts] from the idea that modernity was at the origin of multiple concepts of sovereignty—and therefore of the biopolitical” (Mbembe 2003, 13). In doing so, Mbembe traces the forms of racism embedded in the practice of biopolitics, especially on the colonized body and in colonial/colonized spaces. Thus, for Mbembe, some populations are not governed according to a logic of life, but to a logic of death (Mbembe 2003, 18-20). Mbembe further decenters biopolitics, this time from the grip of a Eurocentric view of history and experience of modernity. Mbembe is thus able to argue that “race has been the ever-present shadow in Western political thought and practice, especially when it comes to imagining the inhumanity of, or rule over, foreign peoples” (Mbembe 2003, 17). Mbembe’s intervention complicate Foucault’s view of a biopolitics that is in many ways centered on an analysis of state and power formation that unfold in tandem with, or that seek to produce, a liberal subject.

(See Geopolitics, Governmentality, Liberalism, Neoliberalism, Ordoliberalism)

Bibliography

Davies, Thom, Nick Isakjee, and Hannah Dhesi. “Violent Inaction: The Necropolitical Experience of Refugees in Europe.” Antipode 49, no. 5 (2017): 1263-1284.

Foucault, Michel. Discipline and Punish: The Birth of the Prison. Vintage Books, 1975.

Foucault, Michel. The Birth of Biopolitics: Lectures at the Collège de France, 1978-1979. Edited by Michel Senellart. Translated by Graham Burchell. Palgrave Macmillan, 2008.

Hardt, Michael, and Antonio Negri. Empire. Harvard University Press, 2000.

Mbembe, Achille. “Necropolitics.” Public Culture 15, no. 1 (2003): 11-40.

Lucia Vitale
Department of Politics, University of California, Santa Cruz

Human capital in its most basic form can be defined as skills confined within the body. For the purposes of the larger history of the political economy, one might define human capital as the purchasing of humans and the degradation of their labor for capital gain. This particular form of domination has arguably been the major factor determining which countries are labeled, from a Western perspective, “developed” and “undeveloped”. Often denied or given little explanatory significance by literature on development in the liberal political economy cannon, centuries of human capital(ism) had led to drastically divergent paths for former colonizers such as France, and former colonized slave societies such as Haiti.

More normative ideas around human capital are often attributed to Gary Becker, especially to his 1964 publication Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education in which he develops a framework for human capital investment. By building towards a general human capital theory, Becker investigates phenomena such as the sunk costs of on-the-job training, and the return-on-investment that an individual receives if they decide to pursue trainings or education outside the workplace. He defines human capital as the acquisition of skills or abilities which are accumulated through training and education in order to yield future monetary returns to the individual worker. In Becker’s mind, human capital is a means of production in that investment yields additional output, and is subject to similar calculations of rate-of-return. In this way, it is not a fixed capital, but rather can be substitutable.

While this is one of the more normative ways to understand human capital, the skill set of workers can be traced back to Adam Smith’s (1776) Wealth of Nations where he differentiates between circulating capital and fixed capital. The fourth type of fixed capital that Smith defines is the set of ‘useful abilities’ found in the members of a society. He writes that “the acquisition of such talents, by the maintenance of the acquirer during his education, study, or apprenticeship, always costs a real expense, which is a capital fixed and realized, as it were, in his person” (368). This particular type of capital, that exists as skills confined in the body, is one component of Adam Smith’s fixed capital.

Becker and Adam Smith may disagree on whether human capital might be fixed or unfixed, but they share the basic view that human capital is confined in the body of the laborer and that more of it can increase productivity yields for whomever purchases the labor. Alternatively, in the examples of unfree and slave labor we turn to next, we see how labor is not always rented out, but rather can be purchased and owned by, for example, a 21st century company using prison labor, or a 16th century slave master. As Goldin (2016) notes in her entry on human capital in The Handbook for Cliometrics, “Slavery provides the most extreme form of the market for human capital. Human beings were rented and they were sold” (63). Considering the term ‘human capital’, then, from a subaltern perspective, we are met with a distinct understanding.

Invoking Descartes’ “cogito ergo sum” (I think therefore I am), decolonial thinker Ramón Grosfoguel (2007) explains how Descartes attempted to claim a non-situated, universal, God-eyed knowledge. Using Santiago Castro-Gómez’s (2003) “point zero”, Grosfoguel critiques the notion of so-called universal knowledge, writing that it “…hides and conceals itself as being beyond a particular point of view, that is, the point of view that represents itself as being without a point of view. It is this “god-eye view” that always hides its local and particular perspective under an abstract universalism” (8). While Gary Becker’s rational choice-informed theory on human capital (in some ways informed by Adam Smith’s early thoughts on fixed capital) is perhaps the most well-known, engaging epistemically with the subaltern side of the colonial perspective, as Grosfoguel urges us to do, decidedly points “human capital” as a term in a different direction. Using the term “coloniality of power”, Grosfoguel considers how the persistent centering of Western thought has given rise to a colonized globalization studies, political-economy paradigms, and world-systems analysis. For example, centuries of centering a European colonial analysis has privileged economic reasoning and the logic of making profit via the extraction of surplus value over all other power relations. Grosfoguel makes the point that the contemporary world-system would look different if the locus of enunciation was an Indigenous woman in the Americas (9). Or, as Eric Williams suggests, a slave stolen from the commons and sold as a unit of human capital to be not just exploited for capital gain, but to be violently dominated.

Indeed, Eric Williams sets out in Capitalism and Slavery to explain how slavery made British industrialization, and therefore capitalism, possible and highly lucrative. Indeed, Williams argues that the economic circumstances of the sixteenth century were such that slavery was a necessity for large-scale production of sugar, tobacco, and cotton (6). Britain faced a labor problem in both the Caribbean and the New World, argues Williams, to which the enslavement of Africans was the answer (29). The need for a labor force large enough and cheap enough to benefit seventeenth century capitalist endeavors led to the development of what Williams refers to as the “triangular trade,” that involved England, France and Colonial America supplying the exports and ships, “Africa the human merchandise; the plantations the colonial raw materials” (51). Williams uses the Royal Africa Company to support his argument. The Royal Africa Company was created in 1672 and had a monopoly over the English slave trade until 1698 when the slave trade was opened to free trade among Englishmen (Williams, 31-32). Wool was the leading export (akin to what cotton later became) used to justify the slave trade (Williams, 65). The Royal Africa Company was a major player in the wool trade to the extent that the debates about whether the slave trade was necessary or not were fought between the Royal Africa Company and all the other smaller wool traders (Williams, 65-66). In addition, the Royal Africa Company also had a monopoly over the iron and gun trade that led to similar petitions from other traders both for and against the company’s monopoly over these industries (Williams, 81-82). Though he does not discuss nationhood explicitly, Williams does discuss how conceptions of nationhood played a role in broader societal support of the slave trade. Williams explains that while the shipping industry differed on their opinion as to whether the Royal African Company should continue to monopolize the slave trade or whether free trade should be allowed, “on the question of abolition the industry presented a united front, arguing that abolition would strike at the very roots of Britain’s naval and imperial supremacy” (59).

Though the slave trade has been abolished and slaves emancipated from their forced labor conditions, unfree labor continues to play a role in the capitalist labor market. LeBaron and Philips articulate a compelling argument that states have played a central role in creating the conditions that have allowed for the “emergence and persistence of unfree labour” globally (2). Neoliberalism has shaped the forms that unfree labor has taken as well as the mechanisms that allow for its profitability in recent decades (5). As Lebaron and Philips argue, states, as the “key architects of neoliberalism” nationally and globally, they create the conditions necessary for the flourishing of unfree labor (5).

Along with Williams, historian Edward E. Baptist (2014) also argues that slavery was part and parcel of the development of capitalism in the United States despite the construction of a national historical narrative that states otherwise (3). By showing historically how slavery made it possible to transform the Cotton Kingdom of the Southern states into a global market economy – the returns of which modernized America through development of the capitalist economy and industrialization – Baptist is telling the half of the story that has never been told (7). In addition to telling the half of the story that has never been told, Grosfugel also urges us to place the subaltern (in this example the body of the African slave) at the center of history. By doing so, we get a different understanding of not only political economy, but also its related terms, such as human capital.

The Black Jacobins, written by Trinidadian Marxist historian CLR James, complicates The French Revolution with his account of the Haitian Revolution. While they occurred during similar times, 1789-1799 and 1791-1804, respectively, and each fought for liberty and equality (and to complete the famous slogan “fraternité), from the time of their respective independences, the two countries have followed remarkably divergent paths. Due to a confluence of factors stemming from their opposing positions of “colonizer/slave owner” and “colonized/slave”, the accumulated labor from human capital has produced two nations on opposing sides of the “development” spectrum in contemporary times. Writing on the Haitian Revolution from the 1940s, CLR James titles the first two chapters of his book The Black Jacobins, “The Property” and “The Owners”, and gives a visceral account of the market for human bodies, and the capital that was extracted from them. In contemporary times, this capital is being claimed in the form of reparations by fourteen Caribbean nations, Haiti included. In 2013, regional organization of the Caribbean community, Caricom, brought a series of lawsuits against England, France and the Netherlands before the UN’s International Court of Justice for the “lingering legacy of the Atlantic Slave Trade”. When the lawsuits were announced in a 2013 United National Assembly meeting, then chairwoman of the national reparations commission in Jamaica remarked: “Our ancestors got nothing,” Shepherd said. “They got their freedom and they were told ‘Go develop yourselves.'” The lawsuits have not reached a conclusion. 

Bibliography

Baptist, Edward E. The Half Has Never Been Told: Slavery and the Making of American Capitalism. New York: Basic Books, 2014.

Becker, Gary. Human Capital; a Theoretical and Empirical Analysis, with Special Reference to Education. New York: National Bureau of Economic Research: Columbia University Press, 1964.

Grosfoguel, Ramón. “The Epistemic Decolonial Turn: Beyond Political-Economy Paradigms.” Cultural Studies 21, no. 2–3 (2007): 211–23. https://doi.org/10.1080/09502380601162514.

Goldin, Claudia. “Human Capital.” In Handbook of Cliometrics, edited by Claude Diebolt and Michael Haupert, 55–86. Berlin, Heidelberg: Springer Berlin Heidelberg, 2016. https://doi.org/10.1007/978-3-642-40406-1_23.

James, C.L.R. The Black Jacobins: Toussaint L’Ouverture and the San Domingo Revolution. 2nd ed. New York, NY: Random House, 1938.

LeBaron, Genevieve, and Nicola Phillips. “States and the Political Economy of Unfree Labour.” New Political Economy 24, no. 1 (2019): 1–21. https://doi.org/10.1080/13563467.2017.1420642.

Marx, Karl. Capital: Volume One, The Process of Production Capital. 1867.

Mullins, Dexter. “Caribbean Nations Sue European Countries for Slavery Reparations.” Al Jazeera: America, 2013. http://america.aljazeera.com/articles/2013/9/27/14-caribbean-nationssueeuropeancountriesforreparationsoverslaver.html.

Smith, Adam. “An Inquiry into the Nature and Causes of the Wealth of Nations.” Vol. 13. Accessed via https://www.journals.uchicago.edu/doi/10.1086/251119, 1904.

Wilkinson, Bert. “Caricom Demands Slavery Reparations from More European Nations.” The Philadelphia Tribune, 2019. https://www.phillytrib.com/news/caricom-demands-slavery-reparations-from-more-european-nations/article_9fbdc2c1-ad38-53a9-b9b9-05538f7124b4.html.

Williams, Eric Eustace. Capitalism & Slavery. Chapel Hill: University of North Carolina Press, 1994.

Alberto Ganis
Department of Politics, University of California, Santa Cruz

The focus is on the word narrative, and the word economics is associated in order to underline the framework through which the term will be discussed and defined. According to Merriam-Webster, a narrative can be defined as a “way of presenting or understanding a situation or series of events that reflects and promotes a particular point of view or set of values word derives”. It originates from the Latin verb narrare, “to tell”, which is derived from the adjective gnarus, “knowing” or “skilled”. Acknowledging the Latin roots of the term allows us to put it into context: narration is a skill, a tool to be used to frame an event or a situation in a specific way. The importance of narrative as intertwined with the daily practices and sense-making activities of the people is discussed by Amy Skonieczny in “Trading with the Enemy” (2018). The implementation of relatable narratives is crucial in policy-making processes because they place a particular policy in line with the national identity of a country, which plays a role in defining who the state is and why the proposed policy action fits within a certain conception of how the state should legislate, function, interact with other countries, etc. Ultimately the stories are told based “on existing assumptions and stereotypes about partner country identities to make sense, and activate plausible stories that craft states as characters acting in human-like ways to give meaning to economic issues” (Skonieczny 2018, 442).

Yet, a question has to be raised, why are narratives so important to appeal to the people? And how is this relatable to economics? Robert Shiller does a great job in connecting the importance of narration for humans to the economic sphere:

The human brain has always been highly tuned towards narratives, whether factual or not, to justify ongoing actions, even such basic actions as spending and investing. Stories motivate and connect activities to deeply felt values and needs. Narratives “go viral” and spread far, even worldwide, with economic impact. The 1920-21 Depression, the Great Depression of the 1930s, the so-called “Great Recession” of 2007-9 and the contentious political economic situation of today, are considered as the results of the popular narratives of their respective times. (2017, 1)

Nancy Folbre (2009) focuses on the development of capitalism through the lenses of women’s relation to labor, wealth, and caste. Through an assertion that sounds like a stab to Adam Smith, she pinpoints the hinge of one of the social implications of the industrial revolution: “the shift from family-based production to an individual wage system reduced social recognition of those aspects of women’s work that took place outside the market, such as the care of children and other dependent family members” (4). Arguably, this moment initiated the spread of a narrative that encompassed western society at large, a story that reasserted the patriarchal ideology also in the new capitalist landscape. The rise of individual occupation to the loss of the patriarchal family business exacerbated the “employability” problems of women and youth. Being female represented a lack, a lack of strength, a lack of business acumen, and most notably, a lack of morality due to the identification with the lusty Eve bestowed by the Christian faith. The narrative constructed on the basis of the story of the “Original Sin” informed the writings of several ecclesiastic thinkers; no matter their affiliation, the Smiths – the Calvins fed into this discursive construction that unfortunately still exists today. The power of the subaltern status of women as a way of framing the economy can also be seen in the use and promotion of specific terminology aimed at defining the lesser qualities of a concept by connecting it to femininity. The term ‘‘nanny state’’ for example, was and is often used to deprecate public policies that seem fussy, intrusive, and expensive, policies that would perhaps be unnecessary if individual women were more virtuous inside and outside the house (Folbre, 2009, 268).

Whilst this specific narrative is still present, it has found resistance through the organization of feminist and “humanist” groups. John Stuart Mills, for example, became a sort of a champion of women’s equality through his writings on the “Principles”, where he emphasized that values and narratives were culturally constructed and therefore changeable. By means of this understanding, he pushed for gender equality also as a way to improve the well-being of the working class because a greater economic independence for women would mean the realization of self-interest as the main force behind economic growth and welfare. Elias and Roberts (2016) pick up this idea of malleability of value creation in their paper about the intersection of International Political Economy (IPE) and Feminism. They discuss the concept of social reproduction as a key for the daily acts of resistance against the narrative of the patriarchy. They describe social reproduction as those activities usually centered on the household that are central to the production and reproduction of life yet go unaccounted for in conventional economic analysis (791). Elias and Roberts are not the only ones who speak of the importance of daily activities, in fact Hobson and Seabrooke argue that “small but important types of agent practices can contribute to the reshaping of material, institutional, and paradigmatic structures”(in Widmaier 2009, 946), adding that the understanding of narratives regarding IR and IPE should be understood in an interactive context that surpasses the classic top-down imposition of values.

Bibliography

Elias, Juanita, and Adrienne Roberts. “Feminist Global Political Economies of the Everyday: From Bananas to Bingo.” Globalizations 13 (2016): 787-800.

Folbre, Nancy. Greed, Lust, and Gender: A History of Economic Ideas. Oxford: Oxford University Press, 2009.

Shiller, Robert. Narrative Economics: How Stories Go Viral & Drive Major Economic Events. Princeton, NJ: Princeton University Press, 2019.

Skonieczny, Amy. “Trading with the Enemy: Narrative, Identity, and US Trade Politics.” Review of International Political Economy 25, no. 4 (2018): 441-462.

Widmaier, Wesley. “Economics are Too Important to Leave to Economists: The Everyday – and Emotional – Dimensions of International Political Economy.” Review of International Political Economy 16, no. 5 (2009): 945-957.