Actually some of these questions are ones I’ve invented, and some are rarely asked questions that should be asked more often, but if you pose some in response to my blog posts, and they’re questions shared by others, I’ll add them to this list.
Q. What’s ‘moral economy’? (This is the approach I use in Why We Can’t Afford the Rich.)
A. Like the word ‘psychology’, ‘moral economy’ can refer to both a discipline or kind of study of the world, and an object of study (individuals’ psychology).
In the former case, moral economy studies the way in which all economic practices are affected by moral and ethical considerations about what is fair or unfair, right or wrong, good or bad, and how such practices affect the morality and ethics of the wider society. For example, is the extension of markets into more and more areas of life making us more selfish and less empathetic? Most centrally, it identifies and assesses the moral justifications of taken-for-granted economic institutions and practices: who is allowed to do, get, or control, what, and why? For example, it asks questions like:
- why is it shareholders rather than employees or consumers who are considered the main stakeholders of firms?
- why should land be owned by private individuals rather than by the state?
- why is the work of childcare and eldercare largely unpaid?
- who should pay for the costs of educating students?
- who should pay for pollution?
But while moral economy evaluates whatever justifications are given for such things it does not imagine that they explain why things are like they are: when it comes to explaining why economic arrangements, it’s mainly a matter of power. Our main economic institutions were not created on the basis of open, democratic deliberation on what is good and fair. Usually the best explanation of what people do and what they get in economic matters is because they can. Those who control existing resources like property and money can use this power to impose charges – rent and interest in these cases – on those who need them. Those who don’t have any such resources to use in this way often get less, because that’s all they can get paid. More on this in Why We Can’t Afford the Rich.
As an object of study, all economies are moral economies in some respects; they embody justifications of their arrangements and practices which help to perpetuate them, and they impact on people’s behaviour towards others – their ethics in other words. We may not agree that the justifications are legitimate, indeed we may think some are immoral, but they are generally defended as moral by those with interests in them.
Q. What is this thing called ‘neoliberalism’?
A. It’s a new form of capitalist economy, society and culture that’s emerged over the last 35 years. It’s strongest in the English speaking rich countries, but has spread (unevenly) round the world, indeed it’s actively promoted by organizations such as the World Bank and International Monetary Fund. Though the basic ideas were developed during the 1940s, they only became influential in politics in the late 1970s. It was adopted aggressively by Margaret Thatcher and Ronald Reagan in the 1980s, and consolidated with more stealth by their successors, New Labour as well as Conservative, Democrat as well as Republican. Now, after the crash of 2007/8 and in the ensuing recession – exactly when it has most clearly failed – it is being imposed with renewed vigour.
It has 3 bundles of characteristics:
- Markets are assumed to be the optimal or default form of economic organization, and to work best with the minimum of regulation.Competitive markets supposedly reward efficiency and penalize inefficiency and thereby ‘incentivize’ us to improve. Governments and the public sector, by comparison, are claimed to be inferior at organizing things – monopolistic and prone to complacency, inefficiency and cronyism. Governments should therefore privatize as much as possible. Financial
markets should be deregulated, and there should be ‘flexible labour markets’ – political code language for jobs in which pay can fall as well as rise and in which there is little security. Where parts of the public sector can’t be privatized, league tables should be established and individuals, schools, universities, hospitals, museums, etc., should be made to compete for funds, and be rewarded or penalized according to their placing. Democracy needs to be reined in because the ballot box can’t match markets in governing complex economies; people can express themselves better through what they buy and sell. Unsurprisingly, neoliberals keep their anti-democracy agenda under wraps.
- The rise of neoliberalism also involves a political and cultural shift compatible with its market fundamentalism. Through a host of small changes in everyday life, we are increasingly nudged towards thinking and acting in ways that fit with a market rationality. More and more the media address us as self-seeking consumers, savvy investors, ever-pursuing new ways of supplementing our incomes through ‘smart investments’. Risk and responsibility are transferred to the individual. Job shortages are no longer acknowledged, let alone seen as a responsibility of the state: there are just inadequate individuals unable to find work: ‘skivers’, ‘losers’. No injustice, just bad choices and hapless individuals. Those unable to find jobs that pay enough to allow them to cope and who still need the welfare state are marginalized, disciplined and stigmatized as actual or potential cheats. State health services and pensions are run down and replaced by private health insurance and private pensions. You’re on your own, free to choose, free to lose, depending on how you navigate through the world of opportunities and dangers. Instead of seeing ourselves as members of a common society, contributing what we can, sharing in its growth, pooling risks and providing mutual support, we are supposed to see ourselves as competing individuals with no responsibility for anyone else. Want to jump the queue for medical services? Click here. Want to give your child an advantage? Pay for private tuition. We should compete for everything and imagine that what is actually only possible for the better off is possible for everyone; everyone can win simultaneously if they try.
We are expected to see ourselves as commodities for sale on the labour market, indeed as ‘entrepreneurs of the self’. Hence the rise of the cult of the curriculum vitae (résumé) and self-promotional culture. Education is increasingly debased by efforts to turn it into a means for making young people in this mould. Some people may want to resist these tendencies, but in a neoliberal society it is impossible to avoid them totally, not least because in so much of life, using markets (disguised as ‘choice’) and competing in league tables have become the only choices we can make.
- Neoliberalism has ushered in a shift in the economic class structure of the countries it has most affected. It involves not only a shift of power and wealth towards the rich, marked most clearly by the weakening of organized labour in industrialized economies and the enrichment of the 1%, but a shift in power within the rich: from those whose money comes primarily from control of the production of goods and services, to those who get most of their income from control of existing assets, which yield rent, interest, or capital gains, including gains from speculation on financial products. The traditional term for members of this latter group is ‘rentier’. Many of the changes noted in 1 and 2 above benefit them. Neoliberalism as a political system supports rentier interests, particularly by making the 99% indebted to the 1%.
Q. Where can I get one of those badges?
A. I ‘made’ it myself online. There are several sites that do this. I used ‘badgeplanet‘. You can design your own badge and order as many as you like and they send them through the post. (They’re not cheap but the price falls the more you buy.)
I wish more people would make badges and wear them. I know it’s just a little thing, but a good slogan can make other people think, and embolden others to express their own political views instead of having them handed down from above. In the days of Thatcherism lots of people wore badges with political messages resisting the government, like ‘Vegetarians support the miners’ or ‘No cruise missiles’, or my favourite: ‘Competitive Men Against Each Other’.
Anyone with a computer and printer can also design their own posters to go in windows, including car windows. Let creativity flower!
Q. Isn’t what I’m saying driven by ideology – so whether people accept it just depends on their values?
A. Whether this is a hostile question or not, it serves as a way of stopping discussion and dismissing reasoned arguments. By labelling someone’s arguments ‘ideology’ or ‘merely based on values’ you imply there’s no way of reasoning with them. They must be ‘biased’, so they can be dismissed forthwith, or put away in a box marked ‘taboo’.
Consider this: conservatives in academia say ‘value-judgements’ are a problem so we should exclude them from our reasoning about the world, especially if we want to be objective; radicals answer them by saying everyone has values and can’t avoid them, so we can’t be objective. These may look like polar opposites but they share the same questionable assumption – that values and objectivity cannot possibly be compatible, and that values must always ‘contaminate’ science and reason.
Imagine going to see your doctor, and asking her to take your blood pressure. She does this and tells you the result by giving you two numbers, one over the other. When you ask whether they are good or bad, she refuses to tell you on the grounds that that would be a value-judgement and hence unscientific, not objective. What would you think? Or imagine a social worker claiming that a child was being abused, only to be told that that was ‘just a value-judgement’. Or if I claimed that millions are suffering in Syria, only to be told that my statement was not objective (i.e. untrue), because it contained a value judgement.
These are examples of where a rigid fact-value distinction doesn’t work. Words like ‘suffering’ or ‘abuse’ are simultaneously descriptive and evaluative, and we can usually make a reasonable judgement about whether they’re warranted. We do this in everyday life and try to present reasoned arguments for our judgements. Saying ‘that’s just your ideology’ is a way of ducking these processes of reasoning. I want readers of Why We Can’t Afford the Rich to engage with the reasoning. And if they think it’s wrong, that’s fine, but it would be useful to everyone if they set out their own reasons for disagreeing. You’re welcome to put forward such reasoning on my blog.
I say a lot more about this issue of values, reason and objectivity in my 2011 academic book Why Things Matter to People: Social Science, Values and Ethical Life.
A Question about earned income.
Q. Isn’t my definition of earned income in the book too broad? (p.41).
A. There I define it as income that is conditional upon work that contributes directly or
indirectly to the production of goods and services – ‘use-values’, in the language of political economy – like farming, providing transport, making washing machines, teaching, doing physiotherapy or running a cinema, plus all the backroom jobs that are needed to support these, like accountancy, personnel (or “Human Resources”) or record keeping.
As I point out, it’s possible to work without even indirectly contributing to the production of use-values. In the book I discuss examples of ‘active rentiers’, of whom many of the so-called ‘working rich’ are examples, whose work involves collecting rent, interest, capital gains and other speculative gains and seeking new sources of all these (p. 104ff). These are extracting wealth from the economy rather than creating it, indeed following Churchill’s description of rent as a payment for a disservice, they could be said to be producing negative use-values. Some financial ‘services’ – particularly those that merely extract income from others and create economic instability and insecurity – would also fit this.
But isn’t there another, clearer kind of unproductive work, producing more visible products of negative value, like cluster bombs, or heroin, or others, like patio heaters, SUV and luxury power boats that cause serious damage to the environment? This implies an additional criterion for identifying earned income: the goods and services to which the work contributes should not be damaging to society or environment.
We could indeed add this as a criterion for delimiting earned income or earned income based on productive work from that based on unproductive work (as I acknowledge in a footnote in the book). I chose to omit this in order to keep the argument simple, and to avoid having to mention this qualification dozens of times throughout the book. Especially as the prime target of the book is unearned income based on control of assets that others need, and this additional criterion doesn’t affect that line of critique, I felt this was justified.
But I do accept that the additional criterion is an important one, which readers may want to add. Such a distinction is very much in keeping with the goals of moral economy to assess the value and legitimacy of economic practices and rules. Deciding where to draw such a distinction is of course likely to be contentious in many cases. You can bet mainstream economists will say it’s just a matter of subjective judgement, and so it should be left to individuals to decide through their purchasing choices. Never mind that people and the planet may get seriously harmed by some such ‘choices’, individual liberty is apparently all that matters, including the freedom to limit others freedom. That may be OK for innocuous things, but when it comes to technologies and products that threaten human life and climate we are talking about objective harm, not mere subjective preferences.
Finally, those who know their Marx may be wondering how all this relates to his distinction between productive and unproductive labour. Well, the above distinctions are different from his. Marx was interested in what such a distinction meant in the framework of capitalism, for capitalists. For capital ‘productive’ labour is that which contributes to the production of surplus value (most clearly, for them, in the form of profit), whereas unproductive labour does not. If a worker only produced goods and services worth no more than to cover her pay, then from the point of view of the capitalist, it would be pointless, – ‘unproductive’, though of course it would be productive for the worker and the product could be useful for the buyer. That’s OK, on its own terms, but in the book I’m not interested in what capitalists see as productive from the point of view of their own self-interest, but what is productive in terms of the good of society. In other words, I’m interested in finding rational, defensible evaluative judgements that are governed by considerations of human and environmental well-being (which include but are not exhausted by issues of individual liberty).
Q. Do I support private property?
A. I was surprised to be asked this by an eminent accountant who seemed to be shocked by my critique of unearned income derived from control of key assets. If you question the current definition of property rights, you’re likely to be accused of wanting to abolish private property.
Well, let me make it clear, I’m very much in favour of private property. I’m also in favour of social property, where it’s appropriate. What I’m against is improperty.
Let me explain.
Private property is stuff that you own and use for yourself in working, consuming, and living; from your socks to your sofa, your CD collection to your car, your photo albums to your pots and pans, your harmonica to your home. All of these things provide you with what political economists call ‘use-values’ – things whose qualities and use enhance your well-being.
Improperty is stuff that you own but do not use yourself, and instead allow others who lack such stuff to use it in return for a payment. A house that is your home is property. A house that you own but which is not your home but merely a source of rent for you – unearned income – is what J.A. Hobson called ‘improperty’ or R.H. Tawney called
‘property without function’. Similarly, land that you own, not to use, but merely to rent out to others who have none, is improperty. For this to be possible, clearly some people must lack even basic property in the form of a home, otherwise they would not need to rent from anyone. It depends on inequality.
If you have enough money to buy a firm, you can use it as improperty. In this case your unearned income is based on ownership and control of the means of production – buildings, equipment, materials – which others need to make a living, but lack: you hire them on condition that they produce enough not only to pay for these things and their wages but to provide you with a profit.
If you become a working capitalist, also managing and directing the firm, then your firm is property insofar as you are contributing to the production of goods and services, and improperty insofar as you are merely using your power to make dependent, property-less workers produce a profit for you; you have a mix of earned and unearned income. The more power relative to the workers you have, the more of the latter you can extract, whereas, strongly organised labour can restrict it.
Social property is property whose ownership and control is shared by those who use it. It might be a community centre or a cooperative. Or it might be something bigger like a national railway or a water board. Inevitably, in the latter cases of nationalised industries, control has to be delegated to a minority. But that minority can be democratically elected so they serve others, and not merely themselves – which would lead straight back to improperty.
I think enterprises – certainly where they employ more than a handful of people – should be social property. In other words, those who work for them, together with key consumers or users, should be the prime stakeholders in them, not absentee, uncommitted shareholders whose only interest in them is in using them as improperty. How ridiculous – and unfair – it is that you can work for a firm for decades and have no say in how it is run or what is done with the wealth you have helped to create, while anyone with money can just buy the firm and do what they like with it for their own self-interest. This is where property rights do need changing: workers must have representation and real power at management level. Such enterprises can still compete in markets. They don’t have to be national, state monopolies.
Social housing is also fine, on condition that tenants have some control over the running of the housing, and that any rental income that exceeds construction and maintenance costs is fed back to the council or other organisation and subject to democratically-accountable control.
Some goods and services are ‘natural monopolies’ like railways, public utilities or health services. They form interdependent systems: the different railway lines forming the rail network need to be coordinated centrally; likewise the complementary branches of health services like gerontology and social care need coordination. Privatizing these is disastrous. It creates internal markets that need large bureaucracies to run, as we see in the health services, and services which need to cooperate end up competing. In the case of private utilities, privatization is disastrous because it creates the worst forms of improperty, allowing firms to extract sums from consumers massively in excess of the costs of providing the services. If you want a good read on this, see James Meek’s new book, Private Island: Why Britain Now Belongs to Someone Else.
So don’t worry, I’d like to see more people have basic private property, and more social property where low cost housing and enterprises are concerned. But, echoing Keynes call for the ‘euthanasia of the functionless investor’, I’d like to see the same for improperty generally, either by outlawing it or taxing away the unearned gains it yields.
 The problem is that for most people, becoming a home-owner involves providing unearned income in the form of interest payments as a condition for borrowing from banks. If you wondering about whether interest payments are unearned income, see chapter 5 of my book.
Q. Do I put too much emphasis on rentiers?
A. When giving talks on my book, I have found that some people are doubtful about the emphasis I give to rentiers and their unearned income.
These doubts seem to come from 3 very different sources or sets of concerns:
First, some protest that most rich people belong to ‘the working rich’ and get most of their income in the form of salaries, rather than the classic rentier form of rent, interest, dividends and capital gains. But as I point out in my book, many work for rentier organisations, and receive a salary paid out of rentier gains. Many others – top executives – control positions of power in which they can effectively determine their own salary.
Second, some people are disturbed by the fact that a significant proportion of the population receives money from property, again in the form of rent, interest payments, dividends, private pensions invested in securities, etc., and hence might be called rentiers, at least small-time ones. Given their numbers it seems politically less threatening to ignore this than to face up to it. Many people, mainly the better off half of the population are in this position, but:
- whether wealth extraction based on control of assets is a problem doesn’t depend on how many people can do it. If a practice is wrong (e.g. exploitative, free-riding) then it’s wrong whether 1% do it or 20% or 50%.
- actually, most of those who get small amounts of such unearned income also pay out as much or more to big-time rentiers. For example, only the top 10%, and within them mostly the top 1%, receive more interest than they pay out.
- OK a few people on otherwise inadequate incomes might find a bit of rent or capital gains provides them with a pension, but if they’re in that position they’re probably not the worst off, and in any case the problem here is inadequate transfers in the form of state pensions. If we voted for better state pensions and were willing to pay the taxes for them (a kind of intergenerational transfer), fewer people would need to seek out sources of unearned income to provide them with an adequate pension.
Third, Marxists tend to be disturbed by the emphasis given to rentiers relative to capitalists in the classic sense. Am I not aware that profit in production lies at the heart of capitalism, not rentier income, so isn’t an emphasis on the latter a distraction? And weren’t some critics of rentiers – Henry George for example -pro-capitalist?
I am indeed well aware of these points, and I acknowledge capitalist profit as a source of unearned, undeserved profit based on control of means of production in Chapter 6 of my book. If I had been writing a book on the nature of capitalism I would probably have started with that, not with rent and interest. But while my book is indirectly about capitalism, it’s directly about the return of the rich, and that has very much to do with the expansion in recent decades of sources of rentier income relative to profit from production. (There are hundreds of books explaining Marx’s political economy: another one wasn’t needed.) And I am well aware that in Marxist terms, rent, interest, dividends, etc., must come ultimately from surplus value produced in the sphere of production of goods and services. This is what I argue in the book, though not via the labour theory of value, which in my view is too flawed to use, and unnecessary for my main arguments. (I intend to say why I reject Marx’s theory of value on another occasion.) Also, rent and interest are much simpler things to explain than capitalist profit, especially as regards their lack of ethical justification, so it seemed more reader-friendly to start with them.
But in any case, I’d want to say to Marxists, don’t worry, my critique of the rich complements your critique of capitalism, providing a partly ethical critique – capitalism is unjust as well as dysfunctional – that intersects with Marxism’s traditional ‘engineering critique’ of capitalism as a contradictory system.