ARPA: I think therefore it is

Rene Descartes (1596–1650) has cast a long shadow. In key respects Descartes was extremely cautious: the ‘knowledge’ that he could accept with confidence was his self-knowledge as a thinking being. Ergo, cogito ergo sum. However he was extravagantly speculative in securing knowledge of the material world—in the spirit of the times, he posited a rational God to fill the epistemological void.

Three hundred years later the inheritors of rationalism have thrown caution to the wind. Still relying on introspection for knowledge of the world, they have replaced God with the God Professor. Extravagant propositions about the material world are commonplace, at least in the study of society. Indeed, their enunciation appears to be a passport to easy membership of academic communities.

Fordism

What happened after 1945? On many sociological accounts, society was packaged into a structure labeled ‘Fordism’. Mass production became generalised. Standardised production techniques churned out high volumes of standardised products into ‘mass markets.’ The masses consumed, materially empowered by the higher wages afforded by increased productivity, if spiritually disempowered by deskilled and hierarchical workplaces.

There are components of the post-war structure that resemble this ideal-type. But was Fordism universal? Michel Aglietta’s seminal A Theory of Capitalist Regulation (1976) constructs a story about conditions in the U.S.A. Later writers loosely impose the label on the first world in general or, by default, on the global economic system.

And where is the complexity? Post-war buoyancy was underpinned by military and military-related spending. Cold War politics helped keep first world dissent in check, conveniently skewing wage/profit shares in favour of capital accumulation. Workers in a growing service sector experienced decidedly non-mass production conditions; the fact that many such workers were females further constrained wages. First world agriculture was being mechanised, but this was not standardised production in the industrial mould. The non-Metropolitan countries underpinned first world buoyancy with cheap raw materials (especially oil), and goods produced with non-standardised techniques.

But when a critical mass of academics agrees that the post-war boom period was ‘Fordist’ then Fordist it was. Then along come some Americans and ‘discover’ Emilia-Romagna—an Italian region of family-based firms with flexible productive techniques, supported by pragmatic linkages with other enterprises and public institutions (cf. Piore & Sabel, 1984). Here was the ‘Third Italy’, thriving in the 1970s though elsewhere the Fordist system appeared to be in crisis. The concept was taken up with enthusiasm but for peculiar ends. Knowledge of the Third Italy ought to have been the vehicle to revise understanding of the post-war period, to make concessions to complexity. The German equivalent of the Third Italy (the ‘Mittelstand’) might have been brought in as complementary evidence.

On the contrary. The Third Italy becomes pertinent not to the past, but to the future. Post-Fordism has arrived. Universal mass production now gives way to universal flexible specialisation. Post-Fordism provides the productive base for a post-industrial society, members of which understand their condition through post-modern eyes.

No matter that mass production techniques have continued in their traditional haunts. Plants might have moved location—from Michigan to Alabama to Mexico, from Osaka to Thailand, but they are still operating on comparable technical rules. Some of the traditional mass production arenas might have made concessions to flexible specialization (boutique steel mills), but mass production has expanded in other industries. In agriculture, techniques fostered in the chicken industry are now being applied in pork, beef, dairying, and even (recently in Australia) in fine wool!

But no. Fordism is true, and now Post-Fordism is equally true. What will characterise the succeeding era? Is a later era conceivable? By what rigorous research techniques will we discover its advent? What will we call it?

The Keynesian Welfare State

There is a high probability that any academic book or article one reads on the post-war period will characterise it summarily as the era of the ‘Keynesian Welfare State’. Sometimes Fordism is involved, sometimes not, but this is inconsequential to proponents of the KWS as an alternative essence.

For good or ill, these axioms do not capture the essence of any national economy after 1945. Some were accepted in some countries, some in others. John Maynard Keynes gave little thought to the welfare state; why his name has been appropriated is anybody’s guess. Post-1945 Great Britain had a welfare state, but it should have been named after its dominant progenitor, William Beveridge. Australia did not have a welfare state (except for war veterans), which is why Gough Whitlam had so much to do after 1972.

Policy circles in Great Britain and Australia were influenced by Keynesian ideas, but Keynesian theory, ideology and techniques had to compete with other agendas, and were ultimately absorbed within them. Post-war U.S.A. was both anti-Keynesian and opposed to welfare. A welfare infrastructure was developed belatedly in the mid-1960s as an opportunist response to the flames arising from the black ghettoes. But a welfare state in the U.S.A. was not constructed and never will be.

Perfect Competition

Economists are typically less extravagant than grand social theorists from sociology or political science, probably because economists are less concerned with describing the real world. The concept of ‘perfect competition’ is at the heart of economic theorizing, at both introductory and advanced levels—large numbers of scale-constrained firms facing the tyranny of an impersonal market mechanism represented tangibly by given prices.

The conservative Austrian émigré, Joseph Schumpeter, had been complaining about perfect competition since the 1920s. Schumpeter had more intelligent things to say about capitalist competition (a dynamic process labeled ‘creative destruction’, typically driven by large businesses rather than small), but economists paid little attention until recently.

Some take heart by presuming that perfect competition describes economic life in a ‘purer’ nineteenth century. However, the most important form of competition then and before was not that of comparable neighbourly entrepreneurs sparring over minutely differentiated profit margins. The serious competition was between modes of production and modes of existence. At the global level, English cotton goods machinofacture was decimating Indian cotton goods manufacture. At the domestic level, factory-centred machine-based weaving and spinning was decimating cottage-centred weaving and spinning. The desperate people who invaded factories in Nottinghamshire in 1811 under the leadership of a symbolic ‘Ned Ludd’ knew that competition was revolutionary (Sale, 1995). The process evokes Schumpeter’s creative destruction—detached commentators were later to extol the creative aspects, but the Luddites experienced only the annihilation of their livelihoods and their culture.

In the present, there still beats hope in the collective breast of economists that persistent theorising on the crude theme of the textbook market might have relevance to real-world structures. In a representative undergraduate textbook, perfect competition is emphasised because it is claimed as a common market structure, and an achievable ideal when markets are found to be ‘imperfect’ (Perloff, 2001).

At advanced levels, there is increasing attention to conceptualising strategic interdependencies of business firms. But the imperative of analytical closure negates attention to institutional detail, and the inevitable indeterminacy of potentially useful modeling of interdependency has theorists scuttling back to simple assumptions to ensure determinate ‘solutions’. Game theory’s threatened complexity is too dangerous to be unleashed and its practitioners confine themselves to playing games. Moreover, its lack of ideological underpinnings keeps the more serviceable ‘perfect competition’ in the forefront of pedagogy in economics.

Much of the public service in Australia, at both federal and state levels, is possessed of this mentality. Bureaucratic reports perennially map neoclassical economic abstractions onto real processes (cf. Parliament of NSW Public Accounts Committee, 2001). Official advice on economic policy in Australia is now steeped in a scholasticism that we thought had been eradicated by the Enlightenment.

Stages of Development

Of the disciplines other than orthodox economics, grand generalisations often take the form of schemas of evolution—history is sliced up into stages of development, each stage being characterized by a presumed monolithic character. There is merit in acknowledging qualitative change, and merit in attempts to capture the ‘essence’ of particular periods. Yet the simple stories tend to get adopted uncritically—tentative heuristic devices come to be accepted as accurate and comprehensive descriptions.

Feudalism gives way to capitalism. Pre-modernity gives way to modernity, then to post-modernity. Orthodox Marxists have carried on Marx’s stages theorisation by sub-dividing capitalism itself. First we had competitive capitalism (providing sustenance to the caricature of the nineteenth century by orthodox economics at the other end of the ideological spectrum), to be followed by monopoly capitalism. Ernest Mandel chimed in with another stage, Late Capitalism. Mandel’s label lacked the substantive content of its predecessors, but one can see his dilemma. And given the resilience of capitalism, defying Mandel’s Trotskyist optimistic pessimistic scenario, the naming dilemma is compounded. What now and next—Late Late or Very Late Capitalism?

Marxists don’t monopolise the turf. J. K. Galbraith has an abiding penchant for simple stories, which partly explains his popularity. In The New Industrial State (1967), he posited that power attaches to control of the scarce factor of production. Under feudalism it was land. Under early capitalism it was capital. Under modern capitalism the scarce factor was information or knowledge, which put the managerial ‘technostructure’ in command. In The Anatomy of Power (1984), Galbraith opined that command attached to the monopolisation of the dominant source of power. Under feudalism it was the sword (coercion); under early capitalism, material rewards for the sacrifice of freedom inherent in wage labour (compensation). Under late capitalism, it is a labyrinth of bureaucratically imposed rules (conditioning). Not only do we have simple stories, but inconsistent stories coming from the same hand.

These ‘stages of development’ stories have been complemented by stories of ‘long waves of economic development’. In the 1920s, Russian economist Nicolai Kondratiev did insightful work on the ‘lumpy’ character of capitalist evolution. Nicolai was shunted off into obscurity for not coming up with the right answers, but his name has been adopted as the generic label for long waves. The literature displays variations on a theme regarding supposed causation and substance (Marxists can mingle with Schumpeterians). But there is a disquieting unanimity regarding timing—roughly, long waves began in 1790, 1850, 1895 and 1945. The dates have been inherited and updated from Kondratiev, in spite of the fact that Kondratiev dealt in price movements whereas latter-day long wave theorists deal in production statistics. Long waves are true.

For each of the long wave theorists, their dominant causes are also true. David Gordon and co-authors, in Segmented Work: Divided Workers (1982), have the long waves in the U.S. from mid-nineteenth century onwards driven by successive blocks of monolithic experience in the labor process—proletarianisation, homogenisation (deskilling of craft labour), and segmentation (differentiation by white collar skill, ethnicity and gender). There is a germ of substance in these generalisations, but they have been elevated as grand drivers of the system for each period.

Gordon et. al. provide myriad statistics to support their case for long waves of boom and bust in terms of differential figures for value added or gross surplus. A reviewer of Segmented Work pointed out that the differentiation of figures for the periods of so-called booms and bust disappears if the beginning and end points of the postulated long waves are changed only slightly (Wilkinson, 1983). No regularity of booms and busts. The generalisation regarding the existence of long waves is prior rather than antecedent to the statistics. The statistics are constructed to support the prior generalisation. Long waves are true.

The Priorities of Academic Life

Fordism, the Keynesian Welfare State, perfect competition, stages of development and long waves, and so on. Why do these grand generalisations acquire so much currency in academia?

Perfect competition is there because it can be handled mathematically, and with elegance. Perfect competition is a creature of the demands of a preferred technique. It has the added attraction of being ideologically sound—it abolishes power in the system—but this dimension is complementary to the main game of analytical tractability. The nineteenth century has been appropriated as the Golden Age for orthodox economists and economic libertarians—supposedly entrepreneurial competition and the small state—at least in Great Britain, the model for other countries to follow.

The appeal of the Keynesian Welfare State is different. One can only infer that its appeal is ideological. The post-war period is seen as a near-Utopian period for those of social liberal persuasion. Keynesianism delivered the full employment, and the welfare state delivered the complementary trickle down. The twenty-five years after 1945 were the Golden Age for liberal reformists.

Fordism has no obvious ideological baggage. Its attraction appears to be as a quintessential ideal-type, a collection of ‘stylised facts’ with a semblance of coherence. Fordism brings a powerful mental image. The articulation of Fordism does vary, but there is the presumption of a monolithic and unifying process, with other characteristics of the period being inconsequential.

There appears to be a pervasive desire for simple stories, and behind that, laziness. Of course, one can’t know everything. One has to take ‘on faith’ the judgment of specialists in other disciplines, and of specialists in one’s own discipline. But there are limits. Behind the drive for simple stories is disdain for history and historical study. A close examination of events, institutions, and processes in time and place renders the grand generalisations first approximations at best. But historical study and historians have little status amongst the social sciences. Succeeding generations of academics learn where the kudos lies, and it does not lie with a negotiation with the subtleties of interaction of social actors and social structure, endlessly differentiated across time and space.

Economists have disregarded history since the ascendancy of the neoclassical school at the turn of the century. The institutional battles in England were decisive for English-language economics. Under the strategic direction of Alfred Marshall, in particular, economics was being constructed as a separate discipline (Jones, 1994). Historical economists were marginalised. Economic history survived only as a subordinate sub-discipline, a lowly status it bears to this day.

Sociology is the home of the grand generalisation. This is excusable, as the dramatic currents of social transformation at the turn of the century demanded interpreters. But important projects become sclerotic. The American Parsonian trajectory and European schools (both right and left) imposed transatlantic dead weights on the discipline, individual talents notwithstanding.

Fortunately, sociology has spawned its own historicist renaissance—through toilers such as Charles Tilly, Immanuel Wallerstein, Herbert Gutman, Michael Mann, Martin Sklar, Joan Scott, Alan Wolfe, Peter Katzenstein, and Theda Skocpol. These and fellow travellers have brought a reinvigorated historical consciousness to social analysis. Yet their meritorious labour remains a specialist occupation; and innovative projects can be readily neutralised in academic exchange. A recent review of multiple works on the status of sociology highlights the continued domination of grand narratives (Holmwood, 1996). Worse, the theorists are quibbling over the conceptual architecture of the discipline as if it mirrored the architecture of society(ies). ‘Crisis’ and ‘order’ are more linguistic playthings in the sociologists’ sandpit than referents to social processes and institutions.

The Costs of Ignorance

The ignorance embodied in cemented simple stories has its costs. They are first visited upon the young—succeeding generations of students who treat the simple generalisations of their teachers as authoritative (even if their teachers are contemplating more complex stories behind closed doors). Ignorance is compounded by the centralisation of ‘knowledge production’ within accredited institutions and the discounting of the practical experience of outsiders, including participants in the periods whose character is at issue.

Ignorance is also disempowering: a poor understanding of the past is an inadequate basis for confronting the present. Those who believe that a monolithic post-Fordism is about to replace a monolithic Fordist era have been ill equipped to explain and to influence recent developments in the character of capitalist employment.

The cost of simple stories is relevant to the ‘post-war as Keynesian welfare state’ fraternity. If the object is to generate sustainable material growth, given present constraints, the origins of material success after 1945 ought to be the subject of compulsory detailed study. Keynesian theory carried the cachet of embodying workable policies for harnessing the beast of capitalism for morally progressive ends. Yet in claiming the boom as their child, Keynesians have also assumed parentage of the end of the boom. Thus have sympathetic academics unreasonably disempowered their own ideology and politics.

Similarly, if the welfare state is in dire trouble, it behoves interested scholars and activists to understand the balance of forces that generated an entire spectrum of welfare structures during the post-1945 period, not a one-size fits all success story.

Uncritical attachment to idealist stories by academics is a bad habit. Breaking bad habits is hard work. But think of one’s more productive contribution to students, official policy circles, and the broader community. A return to the cautionary strain in Cartesian rationalism is in order.

REFERENCES

Aglietta, Michel (1979) A Theory of Capitalist Regulation, New Left Books, London.

Gordon, David et. al. (1982) Segmented work, divided workers: the historical transformation of labor in the United States, Cambridge University Press, Cambridge.

Holmwood, John (1996) ‘Abject theory’, Australian and New Zealand Journal of Sociology, Vol. 32, No. 2, August, 86–108.

Jones, Evan (1994) ‘The Tyranny of A Priorism in Economic Thought’, History of Economics Review, No.22, Summer, pp. 24–69.

Parliament of NSW, Public Accounts Committee (2001) Industry Assistance, Report No.130, June.

Piore, Michael J. and Charles F. Sabel (1984) The Second Industrial Divide, Basic Books, New York.

Sale, Kirkpatrick (1995) Rebels against the Future: The Luddites and their War on the Industrial Revolution, Addison-Wesley, Reading, Mass.

Wilkinson, S. F. (1983) review of Gordon et. al., ‘Segmented work, divided workers’, Contributions to Political Economy, Vol. 2, March, 92–98.

Dr Evan Jones is Senior Lecturer in Political Economy in the School of Economics and Political Science, University of Sydney. As an undergraduate, Jones found history confusing and fell into economic theory because of its robustness yet openness to problem solvers. Belatedly he has concluded that it’s the other way around.

View other articles by Evan Jones:

A Paean to the Keating Legacy (Digest, Oct 2008)
Galbraith’s Lessons in Death (Digest, 11 Dec 2006)
The Evolution of Industry Policy under Howard (Digest, 23 Feb 2006)
On First Looking into Edwards’ Keating (Digest, 17 May 2004)
Nugget Coombs and his Place in the Postwar Order (Journal, Jul 2003)
Movers and Shakers of Australia’s Economic Miracle (Digest, 15 Feb 2002)
The Politics of Australia’s Postwar Trade (Digest, 23 Jan 2002)
Economic Utopia and its Handmaidens (Digest, 8 Sep 2000)