Putting politics back in charge of the economy

[Celerity]

In the neoliberal era, economics marginalised the social sciences. But, Sheri Berman writes, only politics can tame capitalism’s chaotic gyrations.

https://socialeurope.eu/putting-politics-back-in-charge-of-the-economy

Decades of capitalist triumphalism following the collapse of Soviet Communism came to an end with the financial crisis of 2007-09. Since then, recognition of capitalism’s downsides has grown. Today, capitalism is attacked by a revitalised socialist left and parts of the growing populist right. Even establishment pillars, such as Bloomberg, the Council on Foreign Relations and McKinsey, regularly feature discussions about ‘the future of capitalism’—implying that is in question.

One clear reflection of the changing assessment of capitalism is the economics profession. During the early 21st century, as one influential study declared, neoliberalism was essentially hegemonic within it—and economists were accordingly sanguine about the ability of the economy to flourish relatively unfettered. But over the last decade or so scholars such as Thomas Piketty, Emmanuel Saez, Gabriel Zucman, Mariana Mazzucato, Adam Tooze, Anne Case and Angus Deaton have come to the forefront of debate by highlighting the economic as well as social flaws of capitalism.

Interpreting capitalist development

Into these waters steps J Bradford DeLong, an influential professor of economics in the United States, a former deputy assistant Treasury secretary and the author of a widely-read economics blog. DeLong’s Slouching Towards Utopia: An Economic History of the Twentieth Century provides an interpretation of capitalism’s development which reflects how much contemporary economists are grappling with its vicissitudes. Yet the book also makes clear how difficult it is to understand these things by looking at capitalism alone.

DeLong frames Slouching Toward Utopia around the assertion that the 20th century was ‘the first century ever in which history was predominantly a matter of economics: the economy was the dominant arena of events … and economic changes were the driving force behind other changes’. This perspective, which might be termed the ‘primacy of economics’, leads DeLong to periodise modern history in a particular way.

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