Economics and Utopia: Why the Learning Economy is Not the End of History

"Yes. One of the starting points for the book is to say that utopia is often associated with socialism and that with the end of communism—and books like Francis Fukuyama ’s The End of History —there was the idea the we can’t be utopians anymore because socialism has failed. His basic point is that the conventional economic view of the world—neoliberal or market-based or whatever you want to call it—is a utopia as well, and is actually as unfeasible as the socialist one. I think this is a really powerful and important idea. It’s often forgotten and not realized that these free market visions are as utopian as their alternative. Again, what I really liked about the book is that’s he someone who is steeped in the history of thought and uses all that history of ideas narrative to critique those two utopias and show why they’re problematic. Right. He’s not denying the need for utopian thinking at all, in fact quite the opposite. He’s saying that if we refuse to engage in utopian thinking, then we just end up with unexamined utopias. We actually do need to be explicit about it. It’s a very skillful, rich argument, going through critiques of these two utopias. He sets out a possible future that is neither socialist nor capitalist, but some other thing, a different kind of system. He calls it the ‘epsilon scenario.’ He’s trying to get away from thinking about this stuff on a single line with capitalism at one end and socialism at the other and maybe some mixed economy in the middle. Those two things are not the primary colours. There are other possibilities out there. The fundamental issue here is to do with knowledge and learning. Standard economics is about me selling you a banana, for example. In that context, knowledge and learning is a very, very paradoxical thing. There’s this nice image he has, which is that knowledge is basically like a candle. You light a candle with a candle and you don’t diminish the flame. You still have the flame on the first candle, and you can light as many candles as you want. Knowledge is like that. A banana is not like that. Once I’ve given you that banana, that’s it. You’ve got the banana and I don’t have it anymore. Both the mainstream, market-based way of thinking about it and the socialist planning way of thinking about it are both quite conventional in that sense. The planner, in the socialist utopia, assumes away any problem of information and knowledge because he assumes that the planners have it all. Information and knowledge are basically like a load of bananas and the planners have them all and there isn’t a problem. The market-based utopia assumes that individuals know everything, so there isn’t really a problem at that end either. Both of those are very problematic in thinking about the real economy. It’s becoming increasingly problematic because the economy is becoming much more knowledge-driven and learning-driven than it’s ever been. Marx said that the introduction of machines would lead to de-skilling so that, in a sense, knowledge would become less important. In fact, the opposite seems to have happened. Knowledge and learning has become more important as the economy has become more complex and more mechanised. That really creates problems for both these visions of the economy. He’s certainly not trying to put forward a blueprint. He’s saying that these two utopias, the market and the socialist, are basically static utopias. They’re saying there’s an end game, and they’re also saying that it’s a pure endgame. To simplify, for the market-based, you’ll have pure markets everywhere, and, for the socialists, you’ll just have pure planning. There are no impurities in the system. He’s saying that, in practice, there are always impurities in the system. So even if you look at the most free market capitalist societies, there are huge areas of life, even within the economy, that are non-market. So, if you think about what happens within a firm, there are no markets within a firm. That’s like a little planning system. There’s nothing being bought or sold. He’s also making another claim, which is that for a system to work, you need impurities. It won’t work without them. You need structural diversity and impurity for a system to work. That’s a fascinating idea. So those two utopias are literally unfeasible, and that the one that is going to be feasible is the one the somehow embraces those impurities in particular ways, in ways that will serve us. “The market is not this natural free-floating entity that will just settle here and emerge naturally. It needs to be created, imposed and built up. ” In terms of his intellectual lineage, he’s very much rooted in a school of economics that flourished in America in the early 20th century, which is institutional economics, people like Thorstein Veblen. They were very different from neoclassical economists. They were talking about the role of habit and customs and the way that institutions carry the residue of history with them. They are barnacled with what has come before. They are bits of bric-a-brac. They are created out of the bric-a-brac of the past and hence are full of variety and diversity and maturity and so on. That’s the sort of things he’s saying. He then connects that to learning. Economies are increasingly about group learning and experimentation and so on. You need that diversity and that variety for people to experiment with and learn together. And that will lead to a different kind of economy, possibly. That’s right. If you think about something like the ‘work-to-rule,’ when people go on strike, what they’re doing is fulfilling the contract exactly . But if you fulfill the contract exactly, it just doesn’t work. A contract, in itself, depends on all these little impurities around it. You cannot have a purely contractual-based society because it requires all these impurities of trust and things that economists don’t normally want to talk about, in order to function. As economies get more developed, the need for that sort of impurity and diversity becomes even greater. An attempt to force us into one market-based or planning-based society will just fail. It’s quite a rich, complex argument, but I think that’s what he’s saying. He defines capitalism as a system where the central thing is an employment contract. You’re selling your labour to an employer. But this shift to knowledge and dynamic and group learning—all this tricky stuff—you can’t codify that very easily in a contract. It’s not like buying and selling bananas anymore. Hence, the employment contract will start to become a shell. To make the contract work, you need all this other stuff around it, like trust. That will become more and more accentuated until the employment contract is a shell with all this other structure around it. The employment contract becomes less important as you start to move to a system that isn’t really capitalism anymore. Although there will still be private markets. There will still be commodities being bought and sold. That’s what he means by this ‘epsilon scenario.’"