[OPE] Sebastian Mallaby on the remix of capitalism

Mallaby has quite an interesting piece in the Washington Post, grappling with the ideological shift:

"The point is that we have long been living in a mixed economy. Government is growing, but the shift is of degree, not kind. Moreover, there's no plausible escape from this trajectory. (...) Conservatives want to deal with this trend toward larger government by pretending we can reverse it, but that is unlikely to happen. Liberals want to celebrate the collapse of "free-market ideology," but free markets do a lot of jobs better than government. What we should do is embrace growing government but also be ruthless about making government and markets more efficient. http://www.washingtonpost.com/wp-dyn/content/article/2008/12/03/AR2008120303167.html

Mallaby is certainly right in that total public expenditure is in most cases not wildly different now from what it was before the neoliberal ideological era begun in 1980, or even larger on some measure, except that different groups of capitalists profit from it more (see further the research by Alan Turner Peacock, for example, "The growth of public expenditure", in Encyclopedia of Public Choice, Springer 2003, pp. 594-597). Indeed as Prof. Furedi emphasizes, in that sense the very notion of neoliberalism is something of a misnomer, insofar as it suggests that the role of the state has somehow drastically declined, and insofar as there isn't much liberality about neoliberalism beyond the desire to be able to invest and trade freely, anywhere in the world, so long as workers stay in their place.

Mallaby's notion of efficiency is of course ideological - there is no neutral concept of efficiency possible, for every definition of it, there are winners and losers. In reality, in the modern world "efficiency" means basically just the ability to extract maximum net financial income from an activity. The ideological presumption is, that if you are able to extract more net financial income from an activity, that it is therefore by definition also physically or organisationally more efficient - the greatest yield with the least effort, sort of thing.

But that is precisely what does not hold in reality. A New Zealand real estate millionaire, Bob Jones, who played a critical role in helping the NZ Labour Party to power in 1984 for a radical experiment in market liberalisation, admitted this quite frankly; he said, that just because an enterprise is either publicly or privately owned, doesn't mean it's going to be better managed because of it.

These days, when the gap between the ownership, control and use of enterprises and their resources has vastly increased, the very distinction between "public" and "private" ownership indeed becomes rather abstract. It is important only insofar as it has implications for who can extract and appropriate the wealth the workers create. In this situation, managers and skilled workers often become like honeybees, without much loyalty to the enterprise - they take a job to extract income and advance their career, and leave pretty soon for the next opportunity, leaving the rest with the consequences of their interventions (obviously in the current economic stagnation, labour mobility will decrease). The concept of efficiency logically cannot be specified without reference to a goal, but since the goals of an organisation can change and vary, all kinds of notions of efficiency are possible. But bottom line is only whether you can extract more income (or "shareholder value").

If you think that what I am saying is prejudiced, try reading a book such as Andre de Waal's "Strategic Performance Management" (Palgrave 2007). Interestingly he notes for example that the average time a CEO or managing director occupies his position is continually decreasing, from an average of more than ten years 20 years ago to two and a half years nowadays. The main reason for dismissal is underperforming, not ethical issues or illegal behaviour (Lucier et al., 2005). It's a very exciting world, in which people are constantly evaluating each other's performance every day and night, and rotate rapidly from one function to another.

The cutting edge in bourgeois theory actually does not concern anymore who actually owns an enterprise, this is important only for net income extraction, but rather the social-organisational forms which really get the results, so that more income can really be extracted. For this purpose, the organisation and its people have to internalize the commodity form "ruthlessly", often via input-output and process specifications, but since the laptop schemas often deviate from the reality, it more often empowers a certain "breed" of people with a certain personality type. The "strategic missteps and operational ineffectiveness" occur because of disputes about goals, the concepts of efficiency derived from it, and the consequences this has for the means-ends relationships structuring the organisation. Obviously you cannot realise exchange-value when there is no use-value, but about use-value there can also be a lot of moral disputes which get in the way of cooperation.

Jurriaan

What's the use of worrying?
What's the use of anything?

- Paul McCartney, Mrs Vanderbilt

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Received on Thu Dec 4 14:41:56 2008