Citizen Economics

by burtenshaw

6263217601_1193d1cbd7_bDemocracy or the markets – you decide.

Budget time is really the only window where citizens in Ireland are encouraged to engage in economic debate. Even then the space of time is too short and the range of topics too narrow to make much impact. When it ends, and for the other eleven months of the year, economics is the preserve of technocrats.

That is a serious problem. Economics is the study of how things in our society are produced and distributed. Leaving it to experts comes with a big cost for democracy. Yet, while many people feel comfortable engaging in debate about politics in the Middle East or presidential elections in the United States, there is a reticence to talk about economics.

Part of this is down to economics as a discipline, which has become increasingly removed from day-to-day life. The primacy of the market as a means to resolve problems has led to the rise of ‘market scientists’ – the authoritative voices on running an efficient economy. The language deployed by these experts is deliberately exclusive. Certainly they are unlikely to start discussions of economics with parables about pin factories, as Adam Smith did in The Wealth of Nations.

Yet they dominate economics discourse. When economics is discussed with any substance in the mainstream press ‘market scientists’ from universities, think-tanks and finance houses are given extensive reign to make objective statements about the common good. Research by Julien Mercille has shown that between 2008 and 2012 77% of commentators on austerity in mainstream newspapers were from “elite institutions”.

Another factor leading to the retreat of ordinary people from economic debate is the narrowing space for democracy in the economy. The democratic sphere only extends to areas where there is or could be public or common ownership. Outside of this decisions are made by private individuals or organisations. As wealth concentrates into fewer hands, fewer economic decisions are made with public participation.

This has bred a cynicism about what can be achieved by discussing economics. With capital increasingly breaking free from the claws of democracy – and mobile enough to defeat strikes – people have come to accept that social problems can only be resolved by appealing to private individuals and organisations to solve problems profitably through the market. And so we accept our diminution from citizens to consumers.

But this must be reversed if we are to build a politics in Ireland that can reclaim our society from the political establishment, gombeen businessmen and international finance. Joan Robinson, one of the great economists of the twentieth century, was once asked why people should study economics. She replied, “so that economists can’t fool you.” What she was calling for was a kind of citizen economics.

If we are to construct a movement where people are agents as opposed to pawns in the hands of power we will have to create space for a broader, more emancipatory discussion of economics. To that end I suggest five assertions citizens can make in the economic sphere that can help alter the direction of debates:

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1. Economics is political

Mainstream economics discourse thrives under the pretense that power in the economy lies only with the policy wonks and business suits. This is not true.

On policy, take the commodification of a public resource in the water charges. There is widespread opposition to this policy – and this Saturday’s demonstration is expected to be large. It is possible to suggest quick fix solutions to provide for the abolition of these charges. The €300 million they will take in could be accounted for by the kind of wealth and capital acquisitions taxes proposed by Unite and the ICTU’s pre-Budget submissions, for instance. But that won’t happen. Why?

Because economics is political and power concedes nothing without a demand. An organised opposition is far more important than any shovel-ready alternative. A mass water charges campaign that imposes costs on politicians for continuing on the current path stands a chance at having them overturned. Making a compelling argument to Enda Kenny doesn’t.

Similarly, the question of the national debt. Ireland’s media has been in thrall to various government attempts to get “a deal” on the debt in Europe in recent years. Yet, in 2014, here we sit with a national debt over 120% and €8 billion in interest repayments alone this year (more than the total cost of the last two Budget adjustments combined!).

By contrast, in Spain and Greece popular movements have propelled political parties to the cusp of power who have debt audits in their programmes. This is likely to open up the question of debt in Europe again in 2015 – something which no debate with Mario Draghi could achieve.

2. There is more than one way of thinking about the economy

In recent years students of economics across the world have been challenging the narrow nature of discourse in their universities with campaigns for what is called “post-crash economics”. Ireland could desperately use a post-crash economics movement – especially as so many of the experts invited to discuss our economy today are the same ones who advised us off a cliff in 2008.

But the aim of the post-crash movement is broader than exposing the spectacular failure of mainstream economics during the recent crisis. It is to argue for diversity in the discipline. The kind of ‘market scientist’ approach I described above is a product of a particular way of thinking about the economy – the neoclassical school. That is only one school among many. In fact, in a recent book Cambridge economist Ha-Joon Chang identified seven schools of economic thought.

So why does one of these schools have such predominance – especially after it was proven to be flawed so recently? Citizens should demand a diversity of economic analysis from their media and education institutions, especially public ones. No more single experts being given free reign to make objective claims about the economy as if there were no competing ideas.

3. Wealth is created by us

One of the most pervasive aspects of mainstream economics discourse is the idea that wealth is privately created and then expropriated by the public through government taxes. This is the notion that underpins the narrative of ‘wealth creators’ and ‘job creators’, whose taxes we must constantly cut to make our societies run.

This is a nonsense – and particularly important to any kind of citizen economics. If we truly believe that wealth is created by these people, how could we but see ourselves as insignificant in the economy? If the economy grows by providing the wealthy with bigger and bigger shares of the pie and then letting wealth ‘trickle down’ on us, then what kind of worth could we have?

The truth is the inverse of this. Wealth is publicly created and privately expropriated. Our planet provides it through resources. We create it through our labour. Our governments create it when they invest to improve the productive capacity of our economies. Business people might do some useful co-ordination – getting factors together at a given place and time – but this function wouldn’t be too hard to replace, if we really wanted to.

What’s more likely – that the 1% of the world who own nearly half of the world’s wealth created it? Or that that they managed to take it from the people who did?

4. No democracy without economic democracy

The most important project of right-wing politics in the modern era has been to divorce economics and politics; property rights and political rights. This divorce may have made sense when the opposition to democracy were feudal aristocrats who ruled by decree – but it doesn’t make sense when the greatest barrier to democracy today is organised business interests.

After the last great economic slump the British Labour Party produced a manifesto which accused big business of behaving like “totalitarian oligarchies within our democratic State”. Much the same situation pervades today. The concentration of wealth at the top of society has restricted democracy and made clear that democracy is only really possible where the people have ownership. If you don’t have the capacity to own something in common, you can’t decide its direction in common.

The greatest mistake progressive movements ever made was accepting this right-wing division between the economy and politics. When social-democrats stopped talking about the essence of the economy – who owns what, what kind of things are to be produced, how they will be distributed – and focused instead on redistribution in the form of taxes, democracy started on a long downward trend. Consensus developed that the key decisions in our society would be made by private wealth.

Real citizenship means the right to decide. You can’t have that if economics – which determines work, pay, the quality of services, etc. – is off the table.

5. Economics doesn’t have to be hopeless

As democracy retreated in recent years it took with it the horizon of the possible. This has left many people feeling that they have little agency over social problems – something austerity governments have emphasised to their own ends. But actually there are plenty of possibilities, we just have to get organised to make them come into being.

Take Budget 2015, for example. Minister Noonan is promising there will be no “giveaways”, the Fiscal Advisory Council is cautioning “prudence”, Fine Gael and Labour are locked in debate about which kind of tax cuts to introduce. Meanwhile Unite has produced a proposal to: abolish direct provision, abolish the water charges, invest €500 million in social housing, create 10,000 public childcare places, and put thousands of unemployed people back to work. Sounds pretty good, right? And they are operating within the narrow confines of the Austerity Treaty.

A great deal is possible if we make them do it.