capital speeches

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By ELEUTÉRIO FS PRADO*

The officials of capitalism's technocratic governance will have to operate within a social and economic framework that we can characterize as barbarism.

An article published as “working paper” by the IMF caused some astonishment among some left-wing economists in Brazil. Its title: Squatting Beliefs, Hidden Biases: Rise and Fall of Growth Narratives (crouching beliefs, hidden biases: rise and fall of growth narratives). Its authors, Reda Cherif, Marc Engler, Fuad Hasanov, despite being little known, managed to cause a small tremor in the field of economic theory. All economists who frequent the enclosure of the mainstream seem to treat the article respectfully. After all, he has the endorsement of the world's leading money holding organization.

The reason the content of this article resonated with left-wing economists is that it seems to expose economic theory as ideology. Furthermore, it also seems to indicate that there is a decline in the austerity policy which they vehemently combat. In this reception of paper, there is, however, an implicit assumption. If even economists at the center of the system abandoned this discourse, those at the periphery, less competent according to prejudice, should do the same. The officials of the technocratic governance of capitalism in Brazil need, therefore – and this is the argument – ​​to align themselves with those who are at the forefront, who operate at the center of the system.

But what's in this article? It is a study on the preponderance and performative force of certain capital harangues that appeared on the economic scene throughout the development of capitalism in the last seventy years. The commander of this mode of production, as is known, speaks and writes through the speeches of the economists who act as his support. The study examined a set of 4920 reports made within the scope of this organization which houses, as is well known, an important core of personifications of globalized capital. These reports analyze the economies and guide the economic policies of countries that submit to the guidelines and “advice” of this organization.

The performative force mentioned concerns the use of language as an action that is capable of producing changes in people's behavior, that is, in the discourse receivers. Now, it is precisely from this perspective that the authors of the article understand the role of “economic narratives”: “our world” – they say – “is shaped by ideas and the ideas of economists are particularly influential”. Keynes had observed – they point out – “that the ideas of economists and political philosophers, whether they are right or wrong, are more powerful than is commonly believed.” Indeed, he had said, "the world is ruled by them and by almost nothing else."

Keynes – it should be noted – still thought of this discipline strictly as a science. It cannot be forgotten that the General theory of employment, interest and money came to light in the form of a resurgence and renewal, during the depression of the 1930s, of classical political economy. If he was concerned, in that stormy time, with the macroeconomic performance of the capitalist economy, he did not avoid the issue of income distribution among social classes, like his predecessors in the first half of the XNUMXth century.

Class struggle to increase participation in the social net product is the inner driving purpose of Keynes's work. This is how, in this balance, effective demand is defined. Therefore, for him, the ideas formulated by economists concerned the internal conditions of the evolution of the economic system itself.

The authors of the article examined here made use of the ideas of Robert Schiller, a contemporary superficial economist, winner of the Nobel Prize in 2013, who had created and disseminated this theme in the econosphere. To this end, he wrote an article and a book with the suggestive name of economic narratives (narrative economics). As a good investor, he “emphasizes the important influence of popular narratives or stories on economic outcomes”. Unlike Keynes, however, he maintains that these free-floating narratives determine “the severity of a crisis or even technological unemployment”. If Keynes' statement already contains an idealist bias, the supposed ability to shape the world of diffuse economic opinions becomes notoriously fanciful in Schiller.

Why does this last author move from science to the economic narrative? The first always consists of supposedly rational knowledge about the nature and functioning of the economic system; the narratives, on the other hand, are engendered with the purpose of building consensus on the forms of governance of capitalism in historical conjunctures. It can be seen that these three authors seem to know, at least implicitly, that economic theory itself is now structured as technonormative knowledge that has abandoned the pretense of being scientific knowledge. And that it is today built in the laboratories of the empire, in the center and on the periphery, not to account for the phenomena as such – and even less their internal connections–, but precisely to legitimize specific forms of economic policy.

Economic theory – one cannot fail to note here – is a decadent form of knowledge, in itself similar to the old medieval scholasticism, but which always maintains an instrumentalist orientation that is better suited to capitalism itself.

Cherif, Engler and Hasanov, in any case, describe in their text four narratives that were spread, if not imposed on managers, in the last fifty years of the development of capitalism on a global scale. They call them “growth narratives”, but here – as has already become clear – they will be resignified as capital's harangues.

Here we intend to present in a summarized way the content of these speeches, showing the periods in which they predominated and why they become necessary in view of the development of capitalism itself. The aim is to show that they, far from being free-floating, responded to the objective difficulties of capital accumulation in historical time. There is no doubt that there is a certain autonomy of economic discourses in general, but it is also true that they are conditioned and even pressured by the objective conditions of capital accumulation.

As is known, capital is an automatic subject that tends to excess, overaccumulation and crisis; as it reproduces, it creates barriers to its own growth process, it usually overcomes these barriers, but only to create even higher barriers, which then hinder its own development. But that wisdom is currently somewhat lacking. This teaching that came from the XNUMXth century must now be complemented with the knowledge that the accumulation movement in contemporary capitalism no longer depends only on the spontaneity of capital; on the contrary, it always depends on the constant and fundamental intervention of the State, on the economic policies engendered by the institutions that support the reproduction of capital.

The history of capitalism in the post-war period can be summarized in the graph below, which shows a weighted average of capital profitability in the group of countries that make up the G-20, where around 85% of world GDP is concentrated . Even though there has been a downward trend in the rate of profit over the last 70 years, the period as a whole can be divided into four subperiods: golden age, crisis of profitability, neoliberal recovery and long depression.

What determines this periodization is obviously the ascending or descending behavior of this variable. Note that it is the very movement of the rate of profit that explains the succession of subperiods. It reflects the aforementioned logic of production and overcoming barriers: when the rate of profit falls, capitalism has to transform itself to continue prospering. By prospering, it ends up producing a further fall in the rate of profit later on.

For lack of space, the development of capitalism in this period will not be explained in detail here. This explanation, which does not dispense with many other theoretical considerations, historical facts and empirical evidence, is found in an important book by Michael Roberts. In The Long Depression: Why It Happened, How It Happened, and What Will Happen (The long depression: how it happened, why it happened, and what happens next), he presents an interpretation of the history of capitalism that follows here to a large extent. The chart shown below was constructed by this author based on statistical information from Penn World Table 9.1. In any case, the evidence there appears to be quite significant.

How the three economists manage to conceive the four mentioned speeches. They employ a statistical technique that consists of selecting a set of significant words, then discovering the frequency with which these words appear in IMF reports, to arrive at clusters of signifiers that are then taken as privileged manifestations of certain discourses.

In doing so, they identified four discursive waves, partly overlapping, which formed, according to them, typical “narratives”. They were named as follows: “economic structure”, Washington Consensus, “structural reforms” and Washington Constellation. Now, they were re-signified here as discourse of industrial capital, discourse of neoliberal shock, discourse of neoliberal structural reforms and discourse of overcoming stagnation, respectively. These waves are shown in the figure in sequence as colored lines on a time graph.

The discourse of industrial capital began before 1978; indeed, it predominated in the postwar period until the late 1970s, when it began to decline. What marked him out in the research were the terms productivity, industrial structure, competition, efficiency, etc. As an economic enunciation, it received the generic name of Keynesianism. Its withering occurred together with the profitability crisis observed precisely in the 1979s, which manifested itself through the drop in the GDP growth rate, the abrupt rises in oil prices, stagflation and union activism. It was succeeded by the discourse of neoliberalism and financial capital from the 1980s onwards.

The authors of the study identified the discourse of the neoliberal shock, a harangue that was projected internationally, with the name of “Washington Consensus”. The terms privatization and liberalization were its trademarks. The economic policy measures he recommended aimed, ultimately, at removing obstacles to the national and international circulation of capital. They allowed the process of globalization of industrial production and, at the same time, the weakening of unions and the working class. Ultimately, the objective was to force a recovery in the profit rate by reducing the wage share, which actually occurred, as shown in the previous graph.

At the same time, the discourse of structural reforms that aimed to promote the liberalization of markets and change the State's mode of action also grew. He recommended the reduction of workers' social protection so that the State could better attend to the accumulation of private capital, particularly in the financial sphere. This speech marked a central concern with the quality of institutions from the perspective of reducing the costs of accumulation conditions such as infrastructure, education, health, etc. Its central objective was to institutionally consolidate the regime of accumulation of neoliberalism.

Even when the shock discourse began to decline at the turn of the millennium, the discourse of neoliberal reforms continued to be increasingly important. It so happens that the rate of profit fell again after 1997, bringing back the concern with a persistent tendency towards stagnation that manifested itself in the core countries and in most of the peripheral countries. System economists themselves began to debate what they themselves called “secular stagnation”. In this fourth speech, a concern with the rise of income and wealth inequalities, with corruption, with the ecological issue, with the impacts of information technology and communication, as well as a Keynesian questioning of austerity began to appear.

The article by Cherif, Engler and Hasanov mentions in passing that objective reality can indeed impact the discourse of economists who write and speak in the name of capital – even if they say and think to the contrary. They claim, for example, that “the crises of the 1970s and 1980s may have accelerated the defense of policies with less participation and intervention by the State”. But they lack a greater audacity.

These authors do not deal with the future of capital's harangues. One can, however, conjecture that from now on a discourse marked by a certain crucial doubt will arise: if before the thesis that “there is no alternative” prevailed, now the question about whether “capitalism can survive” may prevail.

It is quite evident that this mode of production is now facing not only the persistent crisis of COVID-19, but also a generalized ecological collapse, the rise of racism and neo-fascism, a possible collapse of the sandcastle built by the international financial system. The prevailing neoliberal euphoria from the 1980s onwards can now be replaced by a depressive discourse that cannot be mitigated by the consumption of psychotherapeutic drugs, but which will sink with them, as well as with the generalized consumption of harder drugs. This discourse will have to operate within a social and economic framework that cannot fail to be characterized as barbarism.

* Eleutério FS Prado is a full and senior professor at the Department of Economics at USP. Author, among other books, of Complexity and praxis (Pleiad).

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