Our economic age of anxiety

men in hat

Developed nations are increasingly haunted by doubts about the legitimacy of their economic structures. This paralyzing anxiety crosses all lines of ethnicity, religion, class, party and ideology. It played a prominent role in the startling presidential victory of former fringe figure Donald Trump, and in the equally startling political success of former fringe figure Bernie Sanders. Before them, it fueled both the Tea Party and Occupy Wall Street, as well as economic attitudes among millions of ordinary, apolitical Americans.

This is not a mere selfish concern about who gets how much of what. It is a moral anxiety, a concern about what kind of people we are becoming. Is America still a country where it pays to “work hard and play by the rules,” in Bill Clinton’s famous phrase? Or have we become the kind of place where cheaters consistently get ahead and slackers get a free ride—where working hard and playing by the rules is for chumps?

All around us we see business practices that extract money without creating value for the customer. We see crony capitalism that uses illicit collusion or government favoritism to enrich big firms and political cronies at the expense of customers, investors, small business, and entrepreneurs. We see able-bodied people living in long-term dependency on handouts (from parents, from the state, from churches). People increasingly feel like those who have wealth—from the top to the bottom of the economic ladder—generally don’t get it because they deserve it. Working hard and playing fair doesn’t pay.

Moral anxiety robs people of their sense of dignity and purpose

A pervasive, persistent moral anxiety is one of the worst things that can befall a nation. Wars and disasters are immediately catastrophic, but moral anxiety robs people of their sense of dignity and purpose. People feel like their decisions don’t matter and their lives are without real meaning. Some respond with cynicism, injustice, and exploitation; others with anger, resentment, and political extremism; and others simply fall into a paralyzing state of learned helplessness and dependency (evidenced, for example, by our current opioid epidemic).

The worst part is that we keep trying to fix the problem, but nothing seems to work. Politicians in both parties keep touting America’s traditional economic virtues: diligence, honesty, entrepreneurship, opportunity for all, earning your own success by doing work that makes the world a better place. They promise us ambitious plans to preserve our way of life; sometimes they even implement those plans, or at least scaled-back versions of them. Yet the scoundrels always seem to stay on top.

Asking the right question

One reason for the unresolved debate over whether Trump’s success is more due to “economic” or “cultural” issues is because economics is a cultural issue. The whole question needs to be reframed without this false dichotomy.

Our need to sort issues into separate “economic” and “cultural” categories is historically abnormal. It is the culmination of developments in economic philosophy.

Our conviction, which we will spell out at greater length in our forthcoming book , The Keynesian Revolution and Economic Materialism: We’re All Dead (Palgrave Macmillan, 2019), is that the economic/cultural dichotomy not only dominates how we think about our problem; it is a key cause of the problem. A revolutionary change in the discipline of economics in the first half of the 20th century, known as the Keynesian Revolution, moved professional economists away from the robust set of moral presuppositions that had traditionally defined their discipline. Keynes led the way as economists distanced themselves from ethics—from a more fully rounded understanding of what counted as a flourishing human life—and described the economy in much more materialistic, amoral terms. A comprehensive reorganization of the discipline along these lines contributed, in turn, to a comprehensive reorganization of the economy itself—as well as our cultural understanding of economic activity.

Of course, John Maynard Keynes did not come from nowhere. The discipline of economics had been gradually moving in this direction throughout the “neoclassical”period that preceded his revolution in the 19th century. The original seeds of this movement can be identified in the works of Adam Smith and David Ricardo.

But the very popularity of the phrase “Keynesian Revolution” reflects the special role Keynes played in recognizing the full implications of this transition from moral to materialistic economics, and reorganizing economics comprehensively in light of those implications. While Keynes’s direct methodological influence was in the subfield of macroeconomics, his ethical and anthropological narratives were transformative for the discipline as a whole and society at large.

Cogs in a machine?

We are all Keynesians now, in a chilling sense. Through the cultural effects of the Keynesian Revolution, we have been taught to think of ourselves fundamentally as consumers, as bundles of desires striving to be satisfied, rather than as producers of good things that improve the world and serve humanity. We have been taught to think only of what satisfies present desires, not to build up good things over time so our grandchildren inherit a better world. “In the long run we are all dead,” Keynes said, banishing from our horizons any concern for what kind of world we leave our descendants when we go. And we have been taught to think of ourselves as cogs in a vast machine, under the control of managerial experts. To accommodate the experts’ demands we must all be ready to reorder our lives down to their very roots—since taking control of the economy necessarily involves exercising ever-greater control of all areas of human life.

In the long run, however, it is the Keynesian Revolution that is dead

There is a sense in which even the anti-Keynesians are all Keynesians now. The major schools of economic thought that have emerged to challenge Keynesianism—the Chicago and Austrian schools—developed within the amoral discourse incubated in the neoclassical period and consolidated by Keynes. They share, in a somewhat mitigated but essentially similar form, Keynesianism’s privileging of consumptive preferences over productive purposes, and its reductive inability to think cross-generationally. And while they strive to resist the Keynesian tendency to justify the encroaching powers of managerial technocracy, their acceptance of Keynesianism’s materialistic anthropology and morally shallow categories for thinking about economic activity leaves them unable to offer the effective resistance to creeping totalitarianism that is one of their primary goals.

As a result, within the profession of economics Keynes’s moral shallowness is so taken for granted—so deeply embedded in the structure of the discipline’s very thought—that for a long time it was difficult even to start a discussion of them. The language and the boundaries of discourse didn’t permit a challenge to these assumptions to be seriously heard, much less debated. Sociologist Peter Berger declared in his memoir that when examining moral issues, economists were “the one group of social scientists with whom it was generally impossible to work.” He recounts an exchange from a conference on economics and culture that he described as a complete fiasco. “Exasperated, the speaker asked, ‘Don’t you accept that some people act for reasons of conscience?’ ‘Oh, yes,’ said one of the economists. ‘Conscience—we call it ‘internal price controls.’”

In the long run, however, it is the Keynesian Revolution that is dead. Awareness of the limitations of dominant economic categories is growing. It is much easier now than it was fifteen or even five years ago to start a serious conversation about the inadequacy of the homo economicus model, or the tendency to overemphasize the importance of GDP growth and other aggregate quantitative outcomes to the exclusion of other outcomes that people also care about, such as unemployment, opportunities for cronyism, or suicide rates.

The only remedy for our moral anxiety about economics is a thorough repudiation of the influence of the materialistic model of homo economicus on our thinking and practice. That influence has been complex and extensive; uprooting it will be the work of a generation. We believe that it is the work of this generation, and a failure to undertake it will leave our nations unequipped to face the unfolding political, economic and social crises of our times.


Author: lifestyles

Am all about creativity

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