AdeRemi Medupin
As to vulgar economics or vulgar political economy, the term was first coined by Karl Marx, presumably on the grammatical pedestal that by vulgar, we mean that it lacks sophistication, nuance, subtlety, erudition and philosophical depth.
How best to introduce the Parrot personality’s allegory is not exactly straightforward because the background to the subject as couched above is truly long and windy. To start with and of central relevance to the discussion we’re about to kick start is the initial name of the discipline, Economics, referred to by a critic as ‘the dismal science’; now, more blatantly referred to as the discipline of Demand and Supply, a description that is the very inspiration for this discussion.
It was decades back, while preparing for qualification for admission into university that yours sincerely ran into a provocative caption in one of the modules of Rapid Results College manual, popular then as an academic coaching institution of our time, which runs as follows: Teach a parrot how to say demand and supply and you’d have made an economist of him. What? A parrot? I did not make much of this allegory until half a decade later when I matured to the point of realizing that Economics was indeed initially not known or called by that name but by another: Political Economy. With the change in nomenclature came its now popular, even if vacuous, definition offered by Lionel Robinson as: the study of scarce resources and their allocation in the face of unlimited wants-or something in that hue.
As rendered by Wikipedia, “Political Economy is the study of how economic and political systems are linked. It studies macroeconomic phenomena such as growth, distribution, inequality, and trade, and how these phenomena are shaped by institutions, laws, and political behaviour.” While this definition may be allowed to pass, it is somewhat clumsy and indirect by failing to highlight explicitly the centrality of the government in the process of allocating values among the extant interest groups in the society-which is the kernel of political economy. Its reference to “institutions, laws, and political behaviour” is like a circuitous route to the core of the subject definition. This is why one finds an alternative definition offered by Britannica, to be preferable as it explains: The term political economy is derived from the Greek polis, meaning “city” or “state”, and oikonomos, meaning one who manages a household or estate. Political economy can thus be understood as the study of how a country-the public’s household-is managed or governed, taking into account both political and economic factors.
The later separation of ‘political’ and ‘economy’ can be justified on the strength of the need for specialization among political scientists and economists respectively but their initial combination remains logical even as we speak given the practical reality that economic power remains the bedrock of political power-both within and between countries- and the fact that one of the biggest concerns of political agitation and political alignments is the protection of economic interests. At this point, we may recall Adam Smith’s famous Glasgow Lecture delivered in 1776-the year of the publication of his popular text, Wealth of Nations- in which the lecturer made the instructive argument that the abiding role of government anywhere you have society divided into classes is the protection of the rich who control the state apparatus-against the poor, physically and or ideologically.
Ironically, it was in the hands of classical economists, notably Adam Smith and David Ricardo that the primary attention to markets gained prominence under the name, ‘invisible hands’. The irony lies in the fact that it was these same classical economists on whose shoulders that Karl Marx built the foundation of his intellectual edifice of what developed to be known as Marxian economics. So, one will be right to classify Marx among the classical economists but with an acknowledgement that the same Marx transcended the perspective of his predecessors who were limited by their bourgeois orientation as opposed to his worker-affiliated model. Expressed differently, there is simultaneously a linkage and disconnect between Karl Marx and his classical economists predecessors, based on the fact that Marx saw himself as both the heir and the critic of classical political economy. The status of the invisible hands of market forces was elevated literally to the supreme level of having the ability and mechanism for guaranteeing full employment and economic stability at all times as equilibrium is recorded across markets and sectors of the capitalist economy. It was Adam Smith who coined the invisible hand as a metaphor to describe the essential nature and mechanisms through which all economic agents in a system benefit from their exchanges with one another in a supposedly freely competitive environment, spurred by the pursuit of self-interest and division of labour as well as the accompanying specialization. An extension of the invisible hand metaphor is the argument that under free markets binding economic agents acting self-interestedly, the best possible economic and social outcomes are delivered.
As to vulgar economics or vulgar political economy, the term was first coined by Karl Marx, presumably on the grammatical pedestal that by vulgar, we mean that it lacks sophistication, nuance, subtlety, erudition and philosophical depth. In short, by the term, vulgar, the economics/ he had in mind was fundamentally defective and inadequate. Why? How? Because it deals with appearance as against the essence of the economy in focus. For Karl Marx, a scientific analysis of political economy or of social reality in general is one that is able to penetrate the surface of social phenomena to unveil the essence behind the phenomena. Here is how the statement, “teach a parrot how to say demand and supply and you’d have made an economist of him”, emerged as the focus of this discussion because the whole engagement about supply and demand is basically limited to market operations-as if that is the real essence of an economy. This point needs a footnote for clarification-which is that market is not a peculiarity of capitalism as there were markets in various non-capitalist African societies prior to the enthronement of capitalist economic system; of course, their operations differed such that for example, based on prevailing trust, merchants displayed their wares and without being present, buyers pick their choices and drop the required payment. The important point being made is that these were markets all the same.
As the online Econlib.com explains somewhat combatively Karl Marx’s viewpoint on vulgar economics: “The market system (under capitalism) appears obvious, and simple, and neutral, but all along it conceals the fact that people are still condemned to alienation, an alienation even more cruel than that of a master-slave relations, because the system encourages them to believe that they are exercising their freedom of choice in the boss-worker relationship. At least most slaves-to their advantage- knew they weren’t free”. In essence, vulgar economics-by focusing on demand and supply-as it were in the abstract- hides more than it reveals about the true character of the capitalist economy. This is the basis on which the online Free Dictionary notes that: Vulgar Political Economy is “a system of anti-scientific bourgeois economic theories which provide a description of the outward appearance of economic processes with the purpose of advocating capitalism”. Indeed, Marx was often critical of both Smith and Ricardo because they were apologists for the capitalist class. Whereas, in the beginning, the classical economists combined scientific rigour with ideological fidelity to the capitalist order, over time, however, the apologetic aspect of bourgeois economic theory became dominant over its scientific aspect. This led to the rise of those writers that Marx labelled as vulgar economists who tended to narrow their focus on what he regarded as surface phenomena such as prices, wages, interests and profits while ignoring what he considered to be the underlying essence of the system, notably exploitation in the process of creating value with its attendant conflicts between classes.
As an illustrative diversion, students of Economic Systems are prompted to recall the three basic questions to which answers help to ascertain the nature of an economic system as well as the bases for distinguishing between economic systems; namely: i) who owns what? ii) who does what? and iii) who gets what? It is easy to see that these questions are more concrete than the generalizing notions of demand and supply of limited explanatory value in understanding the working of the economic system in which we live.
So, Mr Parrot merely becomes a particular type of economist, the vulgar genre when all he knows is to sing: Demand and Supply. The moment we extend consideration to the context and content of these forces, real challenges emerge and the relevance of that severely limited song comes into bold relief. Take for example the subject of international trade. Following the classical theory of international trade built critically on the principle of comparative advantage, developing countries such as Nigeria are encouraged to specialize in the production of primary products for export while relying on foreign markets for the importation of industrial goods. As already demonstrated in another piece, specialization in primary production is economically unhealthy and unsustainable, especially in the contemporary age of rapidly advancing ICT.
Let us take the issue of employment. Classical Economics teaches that the system is characterized by free competition-as well as freedom of choice. The essence of free competition is premised on the assumption that every producer (supplier of a given commodity) is a price taker, being responsible for just a relatively small proportion of the total output. But what do we find in reality? What we find is the rise and rising prominence of oligopoly –that is few producers- and in more uncommon situations, monopoly-with a single dominant player at the supply end. That is how producers/suppliers transform from price taking to price making/dictating. What is to be noted here in particular is that under the system in focus, people are hired not because the importance of the economic and psychological benefits accruing to the workers so hired but primarily because the private business owner has calculated that the worker will generate outputs in excess of the wage paid for labour power as inputs into the production process.
If we stretch illustration to housing-just as an example which can be extended to other social issues such as education and health-we see how the demand and supply mantra turns out to be useless and indeed socially harmful and ridiculous. A visit to a typical urban centre in Nigeria-especially Abuja, will reveal the co-existence of the homeless alongside boldly displayed notices of ‘For Rent’ in various districts of the city. The perennial reference to the reality of housing deficit in the country is official confirmation of the cited paradox. Clearly, invoking demand and supply here borders on open acknowledgement that the system lacks a human face to which the invisible hand does not give a hoot.
It is pertinent to draw attention to the origins of the word, competition, which derives from the Latin word, ‘competere’- meaning: to work together- and its transition to its present practical application as working against each other up to the point where competitors in the brewery industry do not feel any qualms breaking the bottles of their rivals where feasible (that is, avoid being caught) as a way of hiking the cost of production on the part of their victim rivals. This crude method of attack is a close relation of what is referred to diplomatically as business espionage.
Whereas the intention behind this piece is far from being an attempt to give a full blown submission on the limitations of bourgeois scholarship, it would be improper not to highlight the dangers inherent in its purveyance. Approached in a simple and direct way, we pose the question: why are the policy recommendations of our respected gurus of economics proving inadequate before the key challenges of national development? I propose that we attempt an answer to this big and necessary question by recalling the standard macroeconomic objectives typically placed at the front burner of leading public officials across the globe-explicitly or implicitly articulated. There are six of such objectives in modern times, namely: 1) attain full employment; 2) ensure rapid economic growth; 3) maintain price stability; 4) maintain external balance; 5) ensure fair income distribution; and 6) institute sustainable development initiatives.
The developmental relevance of the above-listed macroeconomic objectives can hardly be contested. For example, everybody acknowledges the dangers of unemployment as spanning economic, political and social spheres of national space. Not only does a nation lose the potential contributions of the idle hands, the notorious reference to the devil being the workshop of the idle hand sends a threatening message with the associated psychological injury suffered especially if the youths are the victims. The objective of rapid economic growth touches on the need to grow the national cake and as obvious, the bigger the better-without prejudice to the fact that the profile of the distribution of the cake among the various constituencies also matters. Which is to allude to the point that these objectives are interwoven thereby requiring that their pursuit be taken holistically and programmatically; the issue of trade-off being a challenge at the level of managerial competence of policymakers and implementers. A country needs to maintain external balance in order for her to be able to pay for her imports without recourse to credit; on this score, the IMF has laid down a guiding principle of foreign reserves to cover six months importation as benchmark. Price stability is about controlling inflation given its negative impact on standard of living especially those on fixed incomes. The objective of sustainable development has more recently become the overarching goal of nations as spelt out in the 2030 Agenda known as the Sustainable Development Goals (SDGs). Each of these objectives will be taken up more robustly in separate future outings.
With the imperative of these standard macroeconomic objectives clearly spelt out and justified, the question of direct relevance to the discussion is: how far have nations- in particular Nigeria-gone in achieving them and what factors account for the observed performance? The most immediately tenable answer is that performance has been poor based on official data provided by the increasingly proactive National Bureau of Statistics (NBS), especially since the ascent to its headship by the immediate past Director General; fortunately the patriotic momentum has been sustained after his exit. Take any of the objectives as case study and the empirical result would hardly be cheering. So, what causal factors can we isolate for blame? Without hesitation, the most critical causal factor is the structure of the economy which, unfortunately at the intellectual front, is understood essentially based on the Parrot’s paradigm of surface analysis. From this surface analysis to policy advice, the cancer is magnified rather than cured. This judgment is not about deriding any academic, after all, it is one thing to give advice and another for the advice to be taken on board. At the same time, however, there is the fact that even the bulk of the privileged top advisers have been schooled in the tradition of neo-classical economics, the modern-day version of the vulgar economics of the Parrot paradigm, hence the undeniable disastrous outcomes that we see all around us.
In closing, I borrow a leaf from the growing culture of amusement across WhatsApp platforms by declaring with honesty: I come in peace, please.
Comments powered by CComment