The Political Economy Landscape

There appears to be a revival of the use of the term political economy and a reinvigoration of the field by economists from a range of rather eclectic approaches. Classical political economy in the 17^th and 18^th centuries understood the economy and explained economic activity as being mutually generated by social, cultural, and historical forces. The marginalist revolution of the early 20^th century and the subsequent emergence of neoclassical economics narrowed the scope of the economy to the market domain and its focus to the self-interested individual as the basic unit of analysis. More recently, new economic approaches, perhaps especially the new institutional economics (NIE), has renewed the focus on the relevance of social structures, contracts, transactions costs, and collective action. While this revival of interest is bringing back the social, historical, and political into economic analysis it does not necessarily mean that economics is returning to its roots. How would you define political economy and do you agree there has been a revival of interest in this domain?

Political economy is such a contested term. Almost everyone has their own definition of it. I am no exception. I like to highlight what my own theoretical efforts are reaching for: a clear understanding of the dialectic between individual choice, collective identity and action, and structural inequality. I am particularly interested in developing a paradigm of what Amartya Sen calls “cooperative conflict” and what Sam Bowles and Herbert Gintis term “contested exchange”: processes in which all players gain but some gain more than others. Bargaining models, game theory, and attention to non-optimal equilibria represent some of the more important tools that can be applied. I definitely see (and am a part of) a revival of interest in this domain. I think the conventional paradigmatic boundaries of economics are weakening and the field is gradually being reconfigured in ways that differ significantly from both classical and neoclassical approaches. Feminist theory is playing an important part in this process.

Do you think of political economy as a primarily heterodox project?

Yes, it is, by my definition, a heterodox project. But I think that word “heterodox” gets used mostly for lack of a better alternative. Traditional orthodoxies no longer offer very useful ways of thinking about the economic world, so a lot of mixing and matching, cutting and pasting, is now taking place. The real challenge is to develop a more unified approach from the new set of raw materials. In my view feminist theory is key to this project, because it calls attention to an important dimension of collective identity and action (gender) that is relevant to both production and reproduction. Also, it is important to note that modern feminist theory differs from traditional theory in its attention to intersectionality: the ways inequalities based on gender interact with inequalities based on race/ethnicity, citizenship, and class.

Yes I agree. Indeed what I find most attractive and compelling about your work is the openness at the heart of your thinking which allows you to engage with the best of what is on offer from a variety of approaches within economics and to incorporate feminist theory into your analysis. You are critical of both neoclassical and Marxist theory in relation to their neglect of gender, particularly as a form of collective identity and action. Your concept of “patriarchal capitalism” could be seen as a complement to theories of intersectionality insofar as it underscores the importance of and the contradictions within, and between, both class and gender in understanding contemporary economic systems. How relevant do you think the history of patriarchy still is to our current version of capitalism and/or to alternative economic systems?

I consider it enormously relevant because it helps explain how capitalism has evolved and therefore also how it is likely to evolve. But I would say the “history” of patriarchy is better developed than any economic theory of it. My current project tries to look at patriarchal contracts and property rights in more detail, emphasizing similarities and differences with contracts and property rights typical of slavery and of capitalism.

That sounds very interesting; issues of property rights, particularly in relation to gender, are still very relevant. And enforced labor remains a pertinent issue globally and has been at the forefront of debate in Ireland in the last few years in relation to the Magdalene Laundries. Will you be looking at current slavery issues – for example in relation to human trafficking – or is your focus more historic?

Honestly, I am not sure. Right now I am trying to formulate an analytical treatment of differences in individual and collective bargaining power that allow for the more powerful to extract resources from the less powerful. In a way, this approach breaks down the traditional distinction between production and distribution to argue that the institutional organization of production has implications for distribution and vice versa.

I know that you have long been interested in theoretical issues such as the traditional distinction between structure and agency in political economy. It seems as though this traditional division is weakening and that it is increasingly recognized that there are implicit structures in neoclassical models (such as pre-existing endowments which enable or constrain “choice”) and implicit agents in Marxist models (such as individual or group capacity to act). New institutional economics and behavioral economics explicitly recognize structures, show assumptions about rationality are incomplete, and show that preferences (and choices) are not purely exogenous but rather are shaped, or mutually implicated, by the structures in which we live. Revisionist Marxist theories pay more attention to agent-based decision making and to non-class based forms of collective identity and action. How do you think the attempts to revise neoclassical and Marxian theory succeed in terms of confronting their assumptions about structure and agency?

I really like your summary above. Neoclassical institutionalism is an effort to get beyond a purely choice-theoretic framework. Rational choice Marxism is an effort to introduce some choice into structural analysis. From my point of view, however, most institutionalists and Marxists remain gender-blind. So the problem goes beyond reconceptualizing structure and agency; you have to look at all the relevant structures and all the relative choices.

Yes, gender still remains on the margins of the conceptualizations. However, within the more mainstream neoclassical and Marxist approaches, do you think there is any significant level of convergence?

Yes, I think I have described some convergence above. Ironically, I think economists are often so identified with their particular theoretical perspective that they resist the notion that it is merging toward something they consider alien. All forms of orthodoxy have a kind of immune system, sending out antibodies to cripple invaders. But creativity often requires hybrid recombination. Purebred theories become sterile.

Yes indeed! In terms of creating hybrid models then how do you think heterodox political economy can appropriate insights from offshoots in neoclassical economics such as NIE and behavioral economics?

I am not sure I can suggest one way of appropriating them. But reading outside one’s own area of affinity is a starting point. Interacting and arguing with those who hold a different perspective is another. We all live in intellectually segregated worlds, because they are more comfortable. But they can easily get too comfortable. But I think neoclassical theory offers some useful insights into forces that can weaken collective identity and action, leading to free-riding and defection, as well as some useful warnings about the high transactions costs of democratic decision making. Those of us who would like to work together to establish stronger and more sustainable collective efforts should think creatively about how to solve such problems rather than pretending they do not exist.

The focus of most of the work of NIE is, as you say, on transactions costs, free-rider problems, and efficiency. However, the work on trust and social networks, which seems to go against methodological individualism, is in my view the more interesting and perhaps encouraging aspect of the NIE and behavioral economics. Do you think trust is being increasingly recognized as necessary to the successful functioning of institutions and to society?

Yes, I think that some very good comparative research indicates that trust has positive economic consequences. The devolution of the Russian economy, in particular, has dramatized the point that a capitalist economy requires a certain threshold of trust in order to perform. Both game theory and experimental economics have also demonstrated the role of trust in solving coordination problems.

From your graduate seminars it is clear you are fond of game theory as a heuristic device. You encourage students to spend time discussing scenarios where the game represents a structure, and where there is a narrative and a pay-off matrix based on individual choices. Do you think game theory offers us a better reflection of individual choice than economic theory?

It is not game theory versus economic theory. It is a game with only one strategist (the individual versus the market) versus a game where more than one person is making strategic decisions, which creates far more uncertainty about outcomes. The outcome of my choice depends on your simultaneous choice, which I cannot necessarily predict or control. It is just more realistic than a market choice.

What about the specific issue of trust in families?

This kind of goes the other way; traditional economic theory treated the family as a realm of virtually perfect trust and altruism. Now there is far more appreciation of inequality and bargaining in the family. One might even say that concerns about trust have been “redistributed”; we have underestimated its importance in the market sphere, and overestimated its importance in the family sphere.

Well that is definitely true for self-interest where the presumption of self-interested maximization in the market sphere transforms at the hall door into altruistic communitarian behavior. The accumulating body of intra-household research, both theoretical and empirical, demonstrates how cooperation and conflict co-exists in the family sphere just as they do outside it. And likewise how gender relations and inequalities permeate both spheres. What do you think the relationship is, if any, between trust and fairness?

Fairness is a social criterion that helps establish individual trust. In many situations, for instance, a 50/50 sharing rule provides a simple focal point for agreement and helps reduce distributional contention. Or a pie-slicing rule like “you cut and I choose” creates a kind of self-enforcing incentive for fairness and trust. As experiments like the Ultimatum Game show, people are often willing to pay a price for fairness, perhaps because they recognize its value for trust. On the other hand, opportunists can sometimes invade a cooperative community and undermine its success, especially if it is difficult to identify them.

Do you think Mankiw’s Journal of Economics Perspectives article “Defending the One Percent” is a good representation of the neoclassical view on just reward?

Yes, because it translates some rather abstract assumptions and principles into ordinary language. While it includes some very bad arguments, it also makes one very good one: critics of inequality within the United States should also condemn inequality between residents of the United States and residents of poor countries, which probably have even greater consequences for material well-being and political voice.

Do you think there is a gradual emergence/acceptance of a feminist perspective within political economy especially in relation to gender, age, or race?

I think so, but it is hard to say. I think that paradigm shifts are almost by definition uneven, even spasmodic. On the one hand, economics in the United States is becoming a more intellectually open discipline. On the other hand, fiscal pressures on U.S. universities are creating an increasingly hostile environment. The most important progress, I believe, lies in the intellectual contributions of feminist political economists, which have become quite significant even if underappreciated.

I think I am a little more pessimistic. Ferber and Nelson’s Feminist Economics Today, which reviewed the development of feminist economics over the decade since their landmark publication, suggests very uneven progress. They find that feminist economics has had very little impact on mainstream economics in terms of what is taught in economics courses and even less impact in terms of how it is taught. Likewise in relation to indicators such as the proportion of female faculty in economics departments there has been poor progress. More recently, the Committee on the Status of Women in the Economics Profession argues there have been setbacks in attaining tenured academic positions for female economists especially in comparison to sciences and humanities. Why do you think economics has been more resistant to incorporating feminist theory than other disciplines?

I would make a distinction between career patterns for women academics and openness to feminist theory, though the two are related. I wonder sometimes if economists have a greater intuitive understanding of the vulnerability of their theoretical paradigm and are more defensive of it. It could be that the stakes are higher in the real world as well, because feminist economists pose a more direct challenge to the economic status quo than feminist theorists in other disciplines.

Yes, and feminist economics also poses a direct challenge to conventional economics theories. For example, what is your critique, from a feminist perspective, of the neoclassical theory of human capital?

From a feminist perspective, I would say that the neoclassical theory of human capital largely ignores distributional conflict over the costs of caring for dependents, overlooking important links between gender inequality and family decisions. In part this results from too much emphasis on individual choice, and not enough on the economic, legal, and cultural constraints that provide an institutional matrix for human capital provision. Finally, I would say the theory puts too much emphasis on “investment” and not enough on the importance of collective provision and mutual aid for the care of dependents in general. I see a family investment in human capital as a subset of efforts to develop and maintain human capabilities for intrinsic as well as instrumental reasons.

How do you think the tension between the Marxist view of the development of capitalism and women’s economic empowerment can be best understood?

This depends on which tension you are referring to. I think that Marx himself saw capitalism as a contradictory force that would sweep pre-existing forms of inequality away. That proved overoptimistic. Yet the more modern view that capitalism has intensified gender inequality is too pessimistic. I think capitalism has contributed to the empowerment of some women, but not others, and has also proved more successful in giving women new rights than in redistributing any of women’s responsibilities for care.

What I meant was women have become more economically empowered and capitalist development has provided the opportunities for their empowerment albeit not for all women and without redistributing social reproduction roles for any women. The tension is between the different allegiances and constraints within gender and class (and race, etc.). What do you think theories of intersectionality offer as an approach to group conflict?

More than anything, I believe it helps explain why particular groups—especially those that are disempowered—often find it hard to mobilize in ways that can advance their position. The strategic complexity of intersecting interests stabilizes levels of inequality that would not be sustainable if they were merely one-dimensional.

It seems to me that the complex way in which institutions, power relations, and exploitation are embedded in all manner of care relations is underestimated in most economic approaches and that care needs to be forefronted in the project of political economy. As you, Joan Tronto, Eva Kittay, and others have argued, we all have urgent care needs at various stages in our lives as a consequence of infancy, illness, impairment, or other vulnerabilities. But we need relations of care at all stages of our lives to establish a basic sense of importance, value, and belonging, a sense of being appreciated, wanted, and cared about. One of the central concerns of contemporary feminism has been to emphasize the degree to which all societies rely on care, and feminist scholarship played a key role in taking issues of care out of the privatized world of the family. Your work, in particular, has drawn attention to the salience of care as a public good. You have identified the importance of caring as a human capability and highlighted the importance of caring as work, work that needs to be rewarded and distributed equally between women and men and on an intergenerational basis. How do you think the costs of social reproduction, largely ignored in national accounting systems, might be valued more explicitly?

For a long time it seemed as though the logjam was empirical and a great deal of political effort was put into the development and administration of time-use surveys. What a success. There is now a huge accumulation of time-use data across many countries. Now it seems to me that the logjam is more theoretical. How do we use this data in ways that can get the attention of those who continue to ignore the importance of unpaid work? I am approaching this issue in three ways. First, developing more detailed and disaggregated measures of the value of time devoted to non-market work, especially the care of children and adults, in the United States (in collaboration with my student Jooyeoun Suh). Second, developing an accounting framework for incorporating the value of intrafamily transfers and government transfers, as well as unpaid time, in a measure of individual living standards (a paper I recently drafted for U.N. Women). Third, demonstrating the implications of these measures for policy-relevant debates over inequality and trends in living standards over time. For instance, I believe that non-market work has important implications for the equivalence scales that are commonly used to adjust family income for differences in family size and composition.

How do you think we can embed care into the project of political economy?

This falls into the category of questions that are really too big to answer briefly! But on a strategic level I look for opportunities to take what I think is important about care and explain it in terms that are accessible to economists, especially those far enough outside the mainstream of neoclassical orthodoxy to be interested in this “translation.”

I think you do accessible communication very well and not only to other economists but to the wider public. For example, your book the Field Guide to the US Economy aims at a broad coalition of students, activists, and academics. Likewise your New York Times blog, Economix, “translated” in an accessible and topical way many economic ideas and policy issues to a very general audience. What role do you think public intellectuals, such as yourself, can play in making change?

It is so hard to determine what kind of impact any of us have in the short run. I think public intellectuals, like activists, do what they do because it feels right, whether or not it is likely to play a big role. We need to be strategic enough to consider where we might be most effective. But we cannot be too strategic, because we cannot know, in advance, whether we will be successful or not.

I know you have a soft spot for the Utopian Socialists and in particular like the work, and the working relationship, of the Irish socialist feminists William Thompson (1775-1833) and Anne Doyle Wheeler (1785-1848). Can you give us a little background on them?

Thompson and Wheeler both came from the landlord class, but found themselves alienated from their families, and got caught up in early efforts to apply the new vocabulary of political economy to the cause of economic reform. When James Mill authored an entry in the early Encyclopedia Britannica in 1820 explaining that women did not need the right to vote because their interests were adequately represented by their fathers, brothers, and husbands, they responded with a fabulous polemic entitled Appeal of One Half the Human Race, Women, Against the Pretensions of the Other Half, Men, to Retain Them in Political, and Thence in Civil and Domestic Slavery. In many ways their arguments anticipate those made by John Stuart Mill (son of James) later in the nineteenth century.

What contribution do you think they make to political economy?

Most intellectual historians describe them as Owenite utopian socialists. But in my view (elaborated in more detail in my book Greed, Lust, and Gender: A History of Economic Ideas) they went far beyond Owen, offering a more radical and more feminist critique. They argued that a competitive economy penalizes those who take responsibility for the care of others, grounding their vision of socialism in the need to provide adequate support both for dependents and for those who care for them. In many ways their work anticipates current interest in analyzing the “care economy.”

There has been a huge change in the policy landscape over the last three decades. The economy has become the over-riding concern of governments with a huge rise in the importance of (some) economists in influencing public discourse. The neoliberal project reduced the scope of political economy to one in which “there was no such thing as society” and where, I would argue, narrow technical understandings of the market have facilitated the political project of sidelining social concerns. The financial and economic crash of 2008 has not dislodged the dominance (hegemony) of neoliberal beliefs. It seemed, briefly, to offer an opportunity to change tack but that has not materialized. Weisskopf suggests that it is not in distributional issues and civil conflict that the possibilities for change lie, but rather the biggest challenge for contemporary global capitalism is in mobilization against ecological deterioration and environmental destruction. Olin Wright suggests that the most viable route for change is direct social empowerment over production and distribution, and he details alternative ways of organizing economic activity. They seem to me to suggest incremental changes within the existing economic and political environment rather than any major ruptural change. What are your thoughts on these ideas as likely routes of change from where we are now?

It is always best to have several escape routes rather than just one. I am attracted to both Weisskopf and Wright because they think seriously about alternatives to capitalism rather than just whining about neoliberalism.

Yes, they seem to positively advocate working within what exists at present. On that note, do you think the current model of capitalism is here to stay or in what direction might it plausibly evolve in the near future?

Honestly, I have no idea, only an intuition or maybe, more accurately, an apprehension, that the current system is neither socially nor environmentally sustainable. We need to develop a better understanding of human conflict and institutional failure even as we struggle, on a pragmatic level, to keep things from getting worse.

Piketty’s recent book has generated a lot of attention. As our conversation focuses on political economy it seems topical to mention his work. He argues that rising inequality, especially in the wealth of the top percentiles, is not a temporary phenomenon but a reflection of the historical trend for the rate of return to capital to exceed the rate of growth. Thus mature capitalist economies do not inevitably move towards greater economic equality. He suggests that current inequality is determined by differences in financial capital rather than human capital and he calls, rather sceptically, for a global taxation of capital. What is your reaction to his general thesis and to what he calls his “utopian idea?”

I think it is great that Piketty is calling attention to the causes and consequences of greater concentration of financial wealth.

Do you think it adds to our understanding of broader forms of inequality other than income and wealth?

No, I do not and you have correctly anticipated my dissatisfaction with his overall argument. I think it is too narrowly focused on issues of income and wealth inequality.

Are there any overlaps between Piketty’s idea of “patrimonial capitalism” (meaning wealth accrued through inheritance rather than earnings) and your concept of “patriarchical capitalism” insofar as it relates to patriarchal institutions and property rights?

Not any that I can see. Piketty is kind of warning the capitalists than their system is turning feudal. He may be right, but he is not interested, as far as I can tell, in anything related to patriarchal systems.

You have remarked that one of the most compelling arguments Marx makes is the idea of animated social science, i.e. that social science can change the world, and you use the following quote from Oscar Wilde (another Irishman!) in your seminar: “A map of the world that does not include Utopia is not worth even glancing at, for it leaves out the one country at which Humanity is always landing. And when Humanity lands there, it looks out, and seeing a better country, sets sail. Progress is the realization of Utopias.” Do you think a more Utopian version of capitalism is a possibility or is the function of Utopia to always be on the horizon?

I heartily believe that another world is possible. Whether we will get there in our lifetimes is uncertain. But it is so much better to set sail for a destination than to just get washed back ashore.