The economy is the combination of all of our collective work – all of the paid and unpaid work that is necessary for us to live and to produce the goods and services that we need and want. So the economy includes all of the decisions about what we will produce, how we will produce it, and how it will be distributed.
Social norms shape all of these economic decisions, as does technology, such as machinery or even our financial system. Capitalist economies are marked by private ownership of the means of production, and the fact that most of us are obliged to sell our labour for a wage. The surplus created by that work mostly flows up - but some is distributed according to the law (taxes, wage and labour legislation, regulations governing production, trade, property rights).
Because of this structure, the economic rules that we make - like labour laws and employment standards, protection of private property, regulation of banks and financial exchanges, have a huge role in determining the shape of the economy and what the day-to-day experience is for most people’s lives.
While economists sometimes talk about the economy as if it operates according to fixed rules similar to the laws of gravity or thermodynamics, in reality we are always changing both the technology and the norms that govern economic decisions and economic dynamics.
Economist Clara Mattei has a book called The Capital Order: How Economists Invented Austerity and Paved the Way to Fascism – where she makes the case that following the first world war capitalists and technocrats came together to develop a seemingly neutral and technical economic theory that, happily for the capitalists, squashed burgeoning worker’s movements and preserved the capitalist economic system.
I find her frame of the “austerity trinity - fiscal, monetary, and industrial austerity” – incredibly useful as a way of thinking about the various ways that the status quo is upheld at the expense of workers, and understanding how we can shake things up. Mattei’s writing explains why zombie economic ideas can be so pervasive even when they’re proved empirically wrong - their purpose was never to provide an accurate model of the economy, but only to uphold the power of technocrats and capitalists. And this model has been very successful in that purpose.
How do we fight back? Ellen Merskins Wood describes how capitalism evacuates social content – these technocrats, in order to get the answers they wanted, had to discount respect for natural resources and biodiversity, they had to discount the value of unpaid work, they had to discount power and social relationships. I believe that in order to develop an equitable and equally resonant economic model we have to re-insert social content into our understanding of how an economy functions. Two great examples use food as a metaphor - Hazel Henderson’s layer cake, and Kate Raworth’s donut economics.
Building the Economy We Want
In November I spoke at the Parkland Institute’s 27th Annual Fall Conference, and that talk is now available online.