At Interfluidity, Steve Waldman recently wrote about his frustration over technocratic Keynesian economists' efforts to advance policy without framing their case in moral terms, as the advocates of austerity so eagerly do. Despite the patronizing insistence of Krugman, DeLong, etc., "human affairs are a morality play," Waldman writes, "and economics, if it is to be useful at all, must be an account of human affairs." To make the case against austerity and the "hangover theory" of recessions (that after the party there must be a sober time of deprivation) and the sense that government stimulus efforts help the "undeserving poor" (those who, conservatives like to argue, were too stupid or lazy to acquire skills the economy needs, and those who defaulted on their debts), one should stress the ethical irresponsibility of creditors and lenders during bubbles and argue for their carrying their appropriate share of the post-bubble burden -- i.e. they should suffer losses rather than be bailed out. Waldman argues that "ethical lending for yield always involves risk-sharing: lenders must understand if the enterprise to which they lend fails badly, costs will be borne by both borrower and lender."
Waldman clarified his argument in a follow-up post:
My evaluation is based on a view of how human beings regulate social conduct. I think we do so primarily via moral heuristics. Those heuristics both shape and are shaped by reason. But our moral intuitions are more durable than reasoned conjectures, and more pervasive in guiding how we actually behave. Importantly, I think that moral heuristics are socially determined and malleable. I think we all become very different people when we immerse ourselves in different communities, and that individually and collectively our moral heuristics do change over time."Moral heuristic" seems to be econospeak for ideology: The point he is making here mirrors that which social theorists try to articulate when talking about how ideology functions: as a decisionmaking mode that preempts rational calculation (arguably an ideology itself, but that's a different question) and relies on what we reflexively identify as common sense without questioning why. Because of the social-class climate we are raised in and the institutions that structure our everyday life and the prevailing "relations of production" and so on, certain moral ideas will feel instinctively right, and biases in our reasoning, in what we choose to argue or assume as postulates, often derive from these unexamined principles. These intuitions can change, but that process is usually obscure, semiconscious -- it requires changes in one's milieu, in those institutions in which we are embedded, as well as some recognized personal volition to think and believe differently, to resist what had been common sense. It is a social and individual process simultaneously, and those changes are in dialectical tension, etc., etc.
I suppose some people continue to regard ideology as mainly political and something that is explicit. This merely hides the way ideology actually works to situate our perceptions, color our thoughts with what seem like moral intuitions, to make contradictions cohere as the expectations of us change as we shift between contexts and roles. To change policy, as Waldman suggests in his most recent post, a "better approach would be to understand the way in which the theory might in fact be true and useful, and to craft a morality tale that both captures what is accurate in the story and leads to more productive and just intuitions about how we should behave."
That post focuses on ideological notions about work and prosperity and how production is valued. Lots of ideological questions in economics can be resolved into ideas about value -- how it is defined, created, measured, justly distributed. It seems like common sense (something somebody wants has value, right?), but Marx, for one, wrote several tomes trying to get to the bottom of it (Theories of Surplus Value, Grundrisse, Capital) that seemed only to make the issue more obscure. (See this article by Anders Ramsay for more on Wertgegenständlichkeit vs. Verausgabung.) Usually it just gets postulated as equivalent to GDP, to growth, which raises the issue of whether GDP captures public well-being. Growth is only as good for society as the distribution of it is held to be just. That's the substance of another endless ideological battle over what are fair returns to various kinds of property and labor.
The debate about what the financial industry produces is about whether they create value/growth, or merely shift money around to their own benefit. And who needs to be coddled to help the economy create more value -- capital or labor? Further questions arise when you look at how value changes as goods circulate. Does consumption create value in any socially meaningful way, or does it destroy it, as the word consumption implies? What is the relation of value to price? Is work valuable in and of itself to workers?
These ideological questions obviously shape the macroeconomic story that gets told. Conservatives tend to tell a story about the economy that stresses "structural unemployment" (unemployment is the result of skills mismatch, not a cyclical lack of aggregate demand for goods and services) and overconsumption during bubbles (the wrong sorts of people spent too much on things they didn't deserve to have). They extend no pity to those overconsumers who suffer (losing their jobs, homes, etc.) in recessions they regard as necessary to clear the debt overhang and forestall inflation.
Economist Karl Smith points out that it makes no sense to punish overconsumption with unemployment but goes too far, in Waldman's view, when he suggests, as many liberals tend to, that prosperity is a matter of full employment, the most people making the most stuff.
Waldman, attempting a sort of synthesis of Austrian and Keynesian views, responds by basically questioning the nature of the "value" of work: is it in the products they make, or is it a matter of keeping people busy and allowing them to feel as though what they do is socially meaningful? "We should never, ever measure prosperity in terms of consumption, but always in terms of production, weighted, importantly, by the strength of financial arrangements that allow us to convert unconsumed production into credible options to consume later." That is, production that can be turned into and out of savings without losing too much value. (This relates to the issues of overproduction or miscalculation, of an economy making stuff people don't want down the road.) Waldman continues, "However, we do not measure prosperity in terms of how much work people are doing. That is a terrible error and the most vulgar form of Keynesianism. Make-work is not a path to prosperity, and effort is not production." Effort has to make something that can be exchanged to qualify as production -- it has to be "socially necessary" in some sense. Someone must want to consume it. (The question usually debated is whether the government can be that someone.)
Then Waldman gets to what I see as the crux of the matter:
Employment is a more complicated issue than output. Under current (foolish) institutional and ideological arrangements, for most people, employment is our main source of claims on current or future production, and also a measure of our respectability and value as human beings.... The degree to which the production of any given thing is tethered to traditional employment is variable and technology dependent, and the ability to confer value through purchase could be distributed via means other than employment. Employment and prosperity are different things.What's revealed here is a sort of neutron-bomb mentality built into our received ideas of prosperity. We measure prosperity in prices, which stem from buying, not making or even consuming things. Value is ultimately assigned not but what people do or use but by what they are willing to pay for. Human effort, human being, has nothing to do with value -- despite our sentimental moral attachment to hard work, and our hedonistic delight in consumption.
We measure prosperity by production, not by work, and we measure production by value, by what people are willing to pay for what is produced.
That seems to vindicate the worst aspect of consumerism, that what we buy is more important to the grand scheme of things than what we do, which is important only insofar as it it gives us purchasing power. But this is the implicit ideology of the wage system, which makes all forms of work commensurable; this is the "foolish arrangement" that makes employment the "main source of claims on production." Consumerism -- a society devoted to circulating goods for the sheer sake of their circulation, which produces "value" (where Marxist "valorization" occurs) -- inevitably follows from a system that abstracts labor from its context, from the satisfactions it supplies to the worker and from the needs it ultimately satisfies. Consumerist values -- novelty, convenience, daydreaming, vicariousness, passivity, obsessive collecting -- all follow from this.
When Waldman suggests that "the ability to confer value through purchase could be distributed via means other than employment," he seems to be hinting at the possibility of a social wage, of something akin to universal welfare payments -- an idea almost unthinkable in the current ideological environment. But it may be the only way we escape a system that reduces all forms of value to expressions of individual consumer preference and that allows us to conceive of prosperity without people doing anything.