Rather than evoke a notion of ‘great transformations’ shaping the rise and fall of market economy in the tradition of Karl Polanyi, Economic Ideas in Political Time by Wesley Widmaier offers an enticing argument on the construction of political economic orders across time.
Focusing on ideas and institutions across three orders of US economic policy—the Progressive era, the Keynesian order, and the Neoliberal period—the clear message of this book is that the respective onset of the Great Depression, Stagflation and the Global Financial Crisis unfolded not as a result of a great transformation but as a consequence of iterative transformations across time shaped by the construction and conversion of orders of stability that then led to instability and crisis as misplaced certainties result in overconfidence and punctuated change. The construction of economic ideas in political time and processes of conversion to those principled ideas, therefore, ultimately leads to crisis. Construction, conversion and crisis thus emerge as key stages in the iterative transformations of the rise and fall of economic orders, which are continually marked by the recurring paradox of stability causing instability.
Economic Ideas in Political Time is a major statement on political economy processes entrenched in the construction, conversion and crisis conditions of market economy orders. The iterative approach to crisis is compelling and the book offers a bold and innovative concluding chapter on economic policy to pitch a general theory of the role of stabilising and destabilising ideas across time. The book should be read as a pivotal continuation of agent-centred constructivism, referring to a focus on understanding elite agents’ constructions of wars and crises as iterative transformations or turning points for policy change with a causal role granted to intersubjective consensus formation, persuasion and legitimatisation.
Peppered with epigraphs, statements, addresses and policy interventions by ‘interpretive leaders’—public intellectuals and political figures—the book traces shifting iterative discourses across time to blend constructivist and social psychological institutional analysis. Principled debate, principled leadership, principled arguments, principled appeals and principled foundations across the Progressive order, the Keynesian order, and the Neoliberal order are all evident whether drawn from the Federal Reserve Board, the National Recovery Administration, the Council of Economic Advisers, or intellectuals of statecraft linked to fine-tuning economic policy. The result is a compelling text that is essential reading within constructivist circles and is especially appealing to dominant mainstream audiences centred in rationalist and ideationalist political economy.
A gem of a chapter is the focus on the iterative transformation provoked by the Global Financial Crisis (Chapter 8) in relaying how Rahm Emanuel, then chief of staff to President Barack Obama, famously opined in the wake of the crisis that “You never want a serious crisis to go to waste”. But as Widmaier details, the response to this crisis, as in previous eras, was punctuated change, through iterative shifts of retreat and advance. The Global Financial Crisis resulted in iterative transformation, as much as the outcome of previous crises following the Great Crash or the Great Stagflation similarly resulted in iterative transformations. Therefore ‘the Great Financial Crisis is best seen as advancing iterative change, as the need for a “great accommodation” undercut any “great transformation”’ (180-1). In sum, ‘the Global Financial Crisis may represent less a failed “great transformation” than a moment in an ongoing “iterative transformation”—in which intellectual stability inhibits adjustment to economic instability’ (202). This evaluation harks back to the core significance of the book: that experts of economic policy associated with statecraft can blind policy-makers to undertake more drastic adjustment and such fine-tuning merely fuels excesses of technocracy and the next crisis.
However, the blinders cannot be reduced to policymakers alone. The political economist, referred to elsewhere in an idiom relevant to tracing the social function of ideology as the ‘theoretical interpreter’ for capitalism, can equally be subject to iterative transformation, partial accommodation, and equivocal fine-tuning that fuels misplaced certainty. Rather than encompassing order-subverting insights that could be destabilising, the rigidity of academic intellectual ideas may equally obscure and repress more challenging frameworks in the advance and retreat, the punctuated iterative challenge, of ideas across time. The hegemonic stability of constructivism itself may therefore be seen as having its own blinders that are wedded to fine-tuning and synthesising beliefs, creating misplaced certainty and confidence in shaping self-reinforcing orders. In attempting to spur a crisis in the hegemonic stability of constructivism, to raise a set of reflections about the misplaced certainty of ideas, and thereby appeal for greater instability within the stability of the discourse, my critical commentary has two skeins that cascade into wider issues provoked by Economic Ideas in Political Time.
1) The content of norms and causality matters
There is brevity to the engagement in Economic Ideas in Political Time with cognate arguments on the origins of international norm dynamics and the role of norm entrepreneurs (as generators of norms with platforms within states, international organisations, and networks) linked to debates on ideational causation. After all, Martha Finnemore and Kathryn Sikkink, in asking ‘where do norms come from’, attempt to trace the origins of ideational causation through norm emergence (based on the persuasion of norm entrepreneurs); norm cascading (linked to the socialising-, legitimatising-, and conformity-inducing actions of norm entrepreneurs); and norm internalisation (leading to a taken-for-granted universalisation of norms). As alluring as this entrée might be into the social construction of norms, a fuller critique could have been undertaken. On norm emergence Finnemore and Sikkink argue that, for example, the World Bank ‘though not tailored to norm promotion, may have the advantage of resources and leverage over weak or developing states they seek to convert to their normative convictions’. On norm cascading they argue that while there may be norms that are congruent between capitalism and liberalism such ‘a formulation is too vague to be useful’. Finally, on norm internalisation there is the position that there is supposedly ‘no good way of treating it theoretically’ although ‘persuasion is central to politics of all kinds and we need a good theoretical apparatus for understanding it’.
Is it convincing to argue that the World Bank is really not tailored to norm promotion following decades of structural adjustment after the debt crisis in developing countries? How can a focus on the social construction of norms in the contemporary world elide any connection to modern capitalism on the basis of a charge of vagueness? Does constructivism in this variant collapse into what Damien Cahill would recognise in The End of Laissez-Faire? as an ideas-centred approach to the development of capitalism? The questions to ask here would be does constructivism address: which agents shape the core intersubjective beliefs of underlying social and world orders?; how values and beliefs become embodied in state economic policy-making?; and why a particular set of ideas become part of structural conditions and not others? This is no small issue given Widmaier’s ‘general theory’ of the construction and collapse of economic orders and his argument that self-reinforcing stability can cause self-reinforcing instability, which is a viewpoint extended to international economic policy orders too (206-7). For example, there is the statement that (211, emphasis added):
It was not therefore an exogenous shift in hegemonic resources that undermined the Bretton Woods order so much as the intellectual conversion of a Keynesian global order into a Neoclassical alternative that came to reply uneasily on fine-tuning.
Perhaps the biggest missed opportunity in Economic Ideas in Political Time was therefore the chance to remove its own blinders and engage with wider debates in and beyond constructivism. The particular oversight that I want to draw attention to here is the lack of engagement with arguments on norm life cycles and the global promotion of gender equality, articulated by Mona Lena Krook and Jacqui True.
For me, Krook and True have developed one of the most nuanced engagements and critiques of norm construction and the emergence, evolution and impact of norm life cycles. Arguing against a static conceptualisation of norm creation, or a linear model of norm emergence and diffusion, they instead propose an understanding of norms as processes elaborating sources of dynamism behind norm definition, their fraught contestation, and development, as well as reversal. Pertinently, an acute critique is developed of literature on international norm dynamics and political change, especially in its excising of power from accounts of norm diffusion and for asserting a static view of norm content inattentive to shifts and modifications in the content of norms over time or how norms as processes emerge and change. To reinforce their point, Krook and True argue that scholars such as Finnemore and Sikkink ‘do not explore the contested space within and among norms and how it may result in the fluidity or evolution of norms themselves’. Temporality is crucial here to assessing the origins and transformations of norms as processes. To cite Krook and True once again:
norms do not necessarily remain stable once they have been constructed: their content may be revised in the course of attempts to extend or challenge their meanings, or as a result of shifts in the broader universe of norms.
One quibble to raise, then, is that it is therefore not exceptional to stress norm emergence and conversion over time or highlight iterative transformations in norm life cycles to reveal both progress and reversal along a continuum of construction, convergence, and contestation in crisis moments. Actually building these cognate links between kindred constructivist stances could have widened and reinforced the arguments of Economic Ideas in Political Time.
2) State action in economic policy
The second skein of literature that could be seen to experience the blinders of constructivism outside of constructivism itself is the landmark scholarship on fiscal crisis, the state and economic policy across different stages of capitalist development from within the tradition of historical materialism. My concern here is not with the crisis theory of capital accumulation leading to a rise in the organic composition of capital that begins to depress the rate of profit. Others such as David Harvey can make the case for reading Capital, Volume 2 on capitalist disequilibrium, the decline of the rate of profit and how that depresses productive investment and leads to both a crisis of over-production and a fall in the rate of capital accumulation leading to the devalorisation of capital. If one turns to the pages of Volume II of Capital one can experience clear emphasis on the reproduction schemas of capital that show that equilibrium (or stability) is the exception and not the rule under capitalism. As Marx also tries to forewarn us, ‘what appears as a crisis on the money market in actual fact expresses anomalies in the production and reproduction process itself’ (Capital, Volume II). But, no. In attempting to make the case that there needs to be a necessarily historical materialist moment of engagement within more mainstream political economy, my plea here is a simple one. It is that when it comes to issues of state action in economic policy two go-to sources from the dusty 1970s deliver substantive arguments germane to the rise and fall of economic orders addressed in Economic Ideas in Political Time.
The first is James O’Connor’s The Fiscal Crisis of the State (1973) that classically tracks in its first pages the discourse of Arthur F. Burns, Chairman of the Federal Reserve, to stress the tendency for government expenditures to outrace revenues, which are then constitutive of the ‘fiscal crisis of the state’. The result is that the capitalist state has to pursue at least two mutually contradictory functions, namely accumulation and legitimisation. Proffering an expansive theory of the state that delves into its sociological foundations, the contradiction—or one could add the recurring paradox—between accumulation and legitimisation entails pursuing two simultaneous conditions of state intervention. The first is securing expenditures of social capital required for profitable private accumulation, indirectly expanding surplus-value, through social investment of projects and services that increase the productivity of labour-power and the rate of profit. The second category is social expenses or projects and services that are required to maintain social harmony to fulfill the state’s legitimisation function. To cite O’Connor directly:
Because of the dual and contradictory character of the capitalist state, nearly every state agency is involved in the accumulation and legitimisation functions.
Moreover, The Fiscal Crisis of the State delves into the anatomy of the US state, budgetary principles, the conditions of social capital investment and consumption, the production of the warfare-welfare state, state debt and financing, and the limits of institutional reform. Additionally, one of the principled arguments is that ‘the accumulation of social capital and social expenses is a contradictory process which creates tendencies toward economic, social and political crises’. A dynamic theory of the state, the contradictory (or paradoxical) challenges of harmonising both accumulation and legitimisation, and a theory of crisis are thus all on offer. Lifting the blinders of constructivism that constrains Economic Ideas in Political Time would therefore have enabled a productive opportunity to engage alternative Marxist sources on US economic policy, not least in relation to similar foundational periods in the economic development and crisis tendencies of the United States and its post-World War II economic policy.
The second dusty book from the past of the 1970s that is still present in terms of its originality, relevance and classic status in political economy is Suzanne de Brunhoff’s The State, Capital and Economic Policy (1978). She self-described the volume as a ‘knotty text’ but it is a definitive contribution to understanding the capitalist type of state, in order better to confront it. Norms of regulation in managing labour-power and money are the concern of The State, Capital and Economic Policy to reveal apparently purely technical choices of monetary policy as aspects of strategic class relationships. Once again harking back to a policy context that animates Economic Ideas in Political Time, state management of labour-power since the 1930s within the New Deal of the United States is the focus, which involved the regulation of the direct nominal wage as a strategic variable to treat disruptions or disequilibria as one aspect of capitalist regulation of employment and wage levels. This is classed as the ‘core of contemporary economic policy’ designed to ‘reinforce capitalist control over the labour market’, implying regulations inclusive of monetary policy and financial policy that appear as technical policies and preconditions just as the purely public ‘political’ aspect of the capitalist state itself ensures its appearance as spatially separate from the private ‘economic’ sphere of appropriation within the market. For de Brunhoff, the public sanction of economic policy appears as a technical precondition ‘whose application presents purely technical problems of “fine-tuning”’ in terms of fiscal policy, monetary policy and social policy.
The different forms of state regulation are then addressed by assessing different state practices and social regulations in relation to neo-Keynesian advisers within the Council of Economic Advisors (CEA) and the “fine-tuning” of the New Economic Policy of the 1970s and the rise of monetarism through the state management of money by the Federal Reserve. ‘The replacement of a public financial policy’, argues de Brunhoff, ‘by a policy of exchange-rate management in order to obtain an economic structure more favourable to capitalist growth is only possible if the dominant form of economic policy is adapted to the needs of a general strategy, itself determined by class relationships and their expression within part of the state apparatus’. What would later be recognised as processes of depoliticisation are therefore anticipated in this argument, which addresses how the removal of forms of economic policy from the sphere of public debate and regulatory public control are enacted. According to de Brunhoff, the field of action of ‘the capitalist state seeks constantly to adapt itself to the present and to regulate the different temporalities of its various cycles in time and space’. Or, returning to O’Connor, the fiscal crisis of the capitalist state is one consequence of the gap between social capital spending agreeable to capital investment opportunities and social expenditures amenable to social harmony, or the dialectic between accumulation and legitimisation. These classic texts of Marxist political economy therefore speak to the construction, conversion and crisis conditions of political orders across time in ways that would offer an expansive theory of the state; a contending focus on norms, discourse and economic policy in the making of orders; an appreciation of market-mediated conditions of commodity exchange, including labour-power and money, in relation to the state; and how state management of economic conjunctures generalises the conditions of the exploitation of labour-power by capital.
Conclusion: the ‘knotty text’
In sum, Wesley Widmaier’s book Economic Ideas in Political Time is a major achievement in contributing to its carefully demarcated horizons. However, if the book is inserted within a social context of its own making, namely the hegemonic order of constructivism, it is itself subject to its own blinders. These omissions exist in terms of literature that centrally contributes to constructivist debates on norms as processes of emergence and iterative transformation as well as scholarship that focuses on the very same eras of economic policy construction, convergence and crisis from the perspective of historical materialism. Fine-tuning and synthesising principled ideas, creating misplaced certainty and confidence in shaping self-reinforcing orders, is as much a dilemma for economic policy-makers as its theoretical interpreters.
Finally, lest any of the above suddenly precipitate a cry and charge of “economism!” against the use of terms such as the state and class, my closing comment will be Suzanne de Brunhoff’s rebuke.
Far from being one of the features of Marx’s concepts, economism is more frequently to be found nowadays in the way in which analyses of different social practices have become contaminated by references to economic norms. The “political economy” of signs, of the body, the family, the state; the primordial importance attached to the logic of equivalence and the category of exchange, together with the notion of micro-economic techniques of power—all these theoretical developments pay homage, in one way or another, to the economic theory of the commodity, if not to the rules of optimum management.
Critiques of economism as much as critiques of hegemonic orders can mirror that which they seek to overthrow.