Book Overview: Economy, Organizations, and the Role of Government

The themes of a just economy, organizations, and government structure the three sections of the book. They are also themes that weave throughout. This structure recognizes that the economy is structured by organizations and in­stitutions.

Yochai Benkler opens the volume by introducing the theme of production and productivity, linking it to power. He offers a revival of “political econ­omy” as a frame for understanding the relationship between productivity and justice in market societies. In his framework, political economy reinte­grates power and the social and material context—institutions, ideology, and technology—into our analysis of social relations of production, or how we make and distribute what we need and want to have. Organizations and in­dividuals, alone and in networks, struggle over how much of a society's pro­duction happens in a market sphere, how much happens in nonmarket rela­tions, and how embedded those aspects that do occur in markets are in social relations of mutual obligation and solidarism. These struggles, at the micro, meso, and macro levels, involve efforts to shape institutions, ideology, and technology in ways that produce trade-offs in productivity and power, both in the short and long term, including through the production and exploita­tion of atavistic status-hierarchies, primarily race, gender, and immigration. The outcome of this struggle shapes the divergent paths that diverse market societies take, from oligarchic to egalitarian, and their stability as pluralistic democracies.

Dani Rodrik and Charles Sabel also ask us to turn our attention to produc­tion. They view the shortfall in “good jobs” not just a source of inequality and economic exclusion, but as a massive market failure—a kind of gross economic malfunction, caused by the gap between the private returns to in­vesting in good jobs and the public benefits of doing so. They argue that standard regulatory responses to this externality, such as Pigovian subsidies, fail in this case. Pervasive uncertainty, dependence on differentiated local conditions, and the evolving nature of the goals call for a high-dimensional policy space and an iterative model of highly contextualized or place-based problem solving grounded in strategic collaboration between private actors and the state. They illustrate the governance principles and organizational framework they have in mind first by examples from two analogous policy domains, where they are already established: fostering of advanced technolo­gies in the context of US Departments of Defense and Energy (DARPA and ARPA-E) and regulation of diffuse sources of water pollution (in Ireland). They then show how these ideas are contributing to successful reform of workforce development in US community colleges—a core area of an even­tual good jobs strategy—where traditional approaches have failed.

Glen Weyl then proposes a way to move beyond the standard tension between markets and democracy. As he sees it, this tension stands in the way of building a political economy commensurate to the challenges tech­nology poses to the twenty-first century. Democracy flexible and responsive enough to provide the public goods we require today must harness market mechanisms, he argues. Markets capable of coping with a world pervaded by networks must rely on democratic governance throughout. Weyl's argument is not only theoretical. He is one of the contributors connecting his ideas to a social movement. The RadicalxChange movement seeks to build a new political economy based on these principles, as part of a broader process of social innovation commensurate to technological change.

Deva Woodly, too, is also closely engaged with social movements, in her case as a scholar of the Movement for Black Lives. Like the Movement, Woodly takes the view that people's lived experience can help us find the path to jus­tice. She critiques philosophical liberals and modern conservatives who have long used Aristotle's thoughts on eudaemonia or, flourishing, as a justification for a limited state and the primacy of negative liberty because they read the Nicomachean Ethics (Aristotle 1893) as a treatise on the possibilities of indi­vidual moral development. On this version of an Aristotelian account, people are best able to achieve their highest good without the interference of the state. Woodly argues, however, that if we take Aristotle seriously and respect his methodological edict, we must begin philosophical inquiry with “what is known to us,” then we must acknowledge that in assessing the flourishing of a polis, we cannot look at the isolated individual but must instead observe the individual-in-context. Through a discussion of the concepts of flourish­ing and well-being in philosophy, psychology, and economics and a look at the empirical indicators of what increases well-being in a polity and how we can measure it, Woodly proposes a political economy that prioritizes people and their lived experience over graphs recording the infinite increase of the gross national product.

Like Woodly, Julie Rose too seeks to displace a focus on gross national or domestic product and to anchor a new political economy in a different hu­man aspiration. As she sees it, economic growth is almost universally treated

18 as a central policy aim and measure of societal success, yet challenges to the growth paradigm are increasingly prominent. These challenges have spurred searches for alternative indicators of social progress and raised fundamental normative questions about the values and aims that ought to guide a society. Though these questions are foundational to current discussions of whether and how to move “beyond GDP,” or indeed, beyond the perpetual pursuit of economic growth itself, contemporary theories of justice have given these questions little sustained attention.

Having laid out a wide-ranging set of reconsiderations of the basic goals of political economy, the second section of the volume then turns to the ques­tion of how particular institutional building blocks of the economy might be reconceived, ranging from the prison to the firm to the platform.

Tommie Shelby tackles the question of whether the conventional associa­tion of neoliberalism with privatization can suffice to answer the question of when functions should be controlled by the state and when by private actors. To tackle this question, he takes up the theme of prison abolition. One of the core objections of prison abolitionists and radical prison reform­ers to incarceration in the United States is that it is an immoral alliance of ineffective crime control measures, the privatization of public functions, and the maximization of corporate profit. Abolitionists, such as the philosopher and activist Angela Y. Davis, seek to abolish prisons partly because they view them as components of a vast and destructive “prison-industrial complex.” This designation is meant to draw attention to the fact that prison construc­tion, prison administration, and inmate labor attract large amounts of pri­vate capital and that commercial profit from imprisonment is a driver of prison growth and mass incarceration.

Rebecca Henderson also argues that the private sector could be an im-

portant ally in addressing the great problems of our time. As she sees it, the private sector has a strong collective interest in containing the threat of cli­mate change, in addressing inequality, and in strengthening the institutions that keep markets free and fair and provide the public goods on which every firm depends. Acting on this interest presents significant challenges since it requires overcoming the free-riding problems inherent in any form of col­lective action, but these challenges can be overcome. Authentically purpose- driven firms—firms that have committed themselves to prosocial goals be­yond simple profit maximization—have the potential to trigger a reinforcing process of change that could lead to the rewiring of finance and to a signifi­cant fraction of firms actively advocating for strengthening government and rebuilding democracy. Catalyzing this process will require keeping a careful balance between supporting those firms that are authentically committed to change and ensuring that progress against these commitments is measured, audited, and ultimately enforced.

Malcolm Salter also sees potential in the private sector, but only with a dramatically different approach to corporate purpose. Like Woodly, he draws on Aristotle. As Salter sees it, the canonization of shareholder value maxi­mization as the only legitimate expression of corporate purpose has contrib­uted to a widening gulf between what markets value and what people value. Narrowing this gulf in a post-Covid world requires a very different concep­tion of corporate purpose based on moral and economic principles that chal­lenge the theory underlying shareholder value maximization. To this end, he first explains what the theoretical underpinnings of shareholder value maximization are, how this conception of corporate purpose has become so deeply ingrained in our capitalist system, and what practical and conceptual problems this widely accepted doctrine presents.

20 substitute guideline for corporate purpose: (a) how “reciprocity practition­ers” can survive in a world dominated by shareholder value maximizers, and (b) what those with the most power to foster change in corporate purpose and governance—namely, large asset holders and asset managers—can do, and increasingly are doing, to encourage public corporations to retreat from their paramount focus on shareholder value maximization.

Christopher Eaglin follows Henderson and Salter with a cautionary note, warning about the risks of capture that flow from corporate efforts to partici­pate in political processes or addressing social problems. He proposes that such engagement by firms would need to be accompanied by more demo­cratic governance within firms. A large literature posits that firms can en­gage in political processes to improve their financial performance. However, the question of whether they should do so and under what circumstances remains critically underdeveloped. In his chapter, Eaglin argues that if we wish to mitigate the risk of corporate capture we ought to consider either meaningfully introducing the voices of external stakeholders to decisions about political actions that firms might undertake or democratizing the shareholder structure of the firm itself. He proposes that if we find a close relationship between firms and political processes advantageous to them, then new theoretical and practical tools should be developed to guide firm behavior.

Finally, Juliet Schor and Samantha Eddy take us into an exploration of the possibilities and limits of the platform economy. The sharing economy emerged with enthusiasm about its ability to provide economic opportunity, fairness, and autonomy for earners. Yet, after a decade, its results have been decidedly mixed, with many earners suffering from low wages and a lack of self-determination. Their findings suggest that while the sharing economy is operating reasonably well for casual earners, the experience of dependent workers is much less positive. At the same time, nonprofit sharing initiatives have failed to scale. For this reason, there has been growing interest in plat­form cooperatives that are owned and governed by earners. Schor and Eddy report on the first academic study of a platform cooperative, Stocksy United, a stock photography company. They find it has been able to offer better earn­ings for platform workers, robust governance, and satisfied members and therefore argue that platform cooperatives can be an important component of a just and democratic political economy.

With intensifying climate change, widening inequalities, and in the af­termath of Covid-19, everything is up for grabs in political economy in a way that we have not seen for generations. The second section of this volume provides a powerful sense of how much flux and dynamism there is in the

private sector presently, offering visionary pictures of an alternate landscape of firms that might populate our economy. It then turns to politics, and to the question of how political decision-making ultimately provides the frame for the real economy.

Marc Stears leads off by directly asking a question about change and ac­tion strategy. As he points out, even before the virus broke, an increasing number of thinkers and activists were calling for a whole new economic sys­tem, and they were being taken seriously when doing so. But if we are going to shape a new economic system, what kind of democratic politics are called for in its construction? What kinds of constraints should structure its cam­paigning style? How should activists consider themselves, and how should they think about their opponents in these bleak and often highly partisan times? His chapter addresses those questions in three parts. First, it looks in detail at the ways in which contemporary system change thinkers and activists themselves understand their democratic position. Second, it then considers whether those desiring system change might better be advised to focus on creating real, lived experiments that are immediately accessible and address the practical concerns of the every day. Third, it asks whether such apparently “small scale” solutions can ever be expected to rise to the enor­mous challenges that we currently face.

Sabeel Rahman takes us from the small to the structural. As he puts it, one of the foundations for the pursuit ofjustice is the construction of state insti­tutions that are capable of tackling and dismantling root causes of injustice. Because of how critical state action and state capacity is to the pursuit of justice, battles over the scope and operation of governmental authority rep­resent one of the most important battlegrounds for justice. Often, projects for hoarding economic wealth and inequities of power have been advanced through proxy fights over the scope and nature of state authority; by disman­tling state capacity, interest groups are able to perpetuate structural injus­tices. Conversely, building new state institutions is central to the project of advancing structural justice.

Leah Downey, in a sense, combines the positions of Stears and Rahman. She highlights an ordinary, everyday decision taken by members of Congress not to revisit their powers of delegation to the Federal Reserve. She explores a recapacitation of democratic politics and the democratic state that would flow from teaching legislators to know and show their own power. The Federal Reserve is an independent agency with the power to govern the US money supply. Congress delegated these powers to the Federal Reserve System in 1913. Downey argues in favor of regularly rechartering the Federal Reserve. In the absence of regular rechartering, we are more likely to see an ossification

22 of who wins and who loses from monetary policy. This is in direct contradic­tion with the democratic principle that the people hold ultimate political power. She also argues in favor of transitioning the regional Federal Reserve Banks to regional state investment banks—a provocative proposal to demon­strate the sort of creative thinking that rechartering could engender. Finally, she concludes by considering how this reawakening of democratic power and control over monetary policy could help address climate change.

Lastly, Danielle Allen takes up the thorny politics of immigration. Rec­ognizing that the membership and migration policies of the world's states in fact set the terms of the global labor market, Allen drives home the point that politics steers the economy and establishes the parameters of politi­cal economy. She tackles the job of articulating an approach to membership policies that could align with the values articulated in the volume of non­domination, anti-monopoly, political equality, freedom, egalitarian plural­ism, and community.

Conclusion

This is not a conventional edited volume—the product, for instance, of a single conference at which participants arrived with completed papers and then edited them modestly for publication. This project emerged, first, out of the identification of a grand challenge too big for any single scholar or discipline to address and, second, from the constitution of a team of scholars, with diverse expertise, to address it. From chapter to chapter, you will note different citational styles. Some chapters use in-text author-date references; this is the style of the sciences and social sciences where research findings change rapidly and citations are used to track the development of lines of analysis. Other chapters use footnotes; these are the chapters from humanis­tic disciplines where the original text of the cited material matters and where enabling readers to find the cited passages is critical. These diverse citation styles reflect the varying intellectual tools that we believe are necessary for tackling any grand challenge—intellectual tools that permit us to achieve positive descriptions of our contemporary social world and intellectual tools that permit us to trace the architecture of normative and jurisprudential ar­guments over time, and to modify those for present purposes.

Contributors met three times over the course of eighteen months for ex­tended conversations running through multiple days. We began, at our first meeting, by formulating questions together. We used our second meeting to present drafts of papers developed in response to our initial conversations

and to reflect directly on the three themes that had emerged from our ini­tial conversation. We reconsidered our essays and revised. We used our third meeting, then, for synthetic discussion—to trace the points of convergence and dissonance within our essays and to come to a clearer understanding of their theoretical implications. And we continued our conversations in cyberspace.

In its merger of the empirical and the interpretive, of the positive and the normative, this volume exemplifies a working method that we think is im­portant for the future of the social sciences generally. As empirical scholars develop their descriptive accounts, they inevitably do so with reference at the very least to implicit ideals. The questions of what “works” or of “how” something “works” cannot escape reference to our aspirations. Good work in the social sciences, then, will be self-conscious about the role of ideals in directing the critical gaze of the empirical scholar. Good work will make implicit aspirations and ideals explicit. But then scholars must also be self­conscious about the source of those ideals and critical with regard to their caliber. These ideals are most valuable when they develop closely bound to direct analysis of their consequences for lived human relations and mate­rial social relations. The work of building and assessing ideals itself requires delving into social realities. Then, the conversion of work on values and di­agnoses into changes in our world requires a focus on both prescriptions and action strategies. In this volume we have, in short, employed a four-step ana­lytic method, which we recommend as a way forward for other hard ques­tions in the social sciences. Importantly, this four-step analytic method is perhaps best practiced as a collective endeavor. Such teamwork is what we have sought to achieve.

While we have been ambitious in this volume—seeking to link normative foundations of political economy to economic models, emblematic policies, and new vernaculars—we have by no means tackled all the questions that are on the table for all those interested in a new political economy. More might be said about the debate about what should be the province of the state ver­sus civil society. We left largely unaddressed the question of when it is pos­sible to rely on moral motivations and when we need to design mechanisms to structure incentives. We largely skirted around the all-important debate about the relation between labor and property. We conducted our analyses mainly with reference to a nation-state frame, even as the structure of the global economy was also always very present to us. Finally, we only glancingly engaged with questions of temporality, short-term versus long-term inter­ests, and climate change. Clearly, those are topics that merit a frontal look.

24 D. ALLEN, Y. BENKLER, L. DOWNEY, R. HENDERSON, AND J. SIMONS

We hope that others might perhaps follow the method used here to address the subjects we failed to come to grips with.

Notes

1. Philip Pettit, Just Freedom: A Moral Compassfor A Complex World (New York: W. W. Norton, 2014); Philip Pettit, Republicanism: A Theory of Freedom and Government (New York: Oxford University Press, 1997); Melvin Rogers, “Race, Domination, and Republicanism,” in Difference without Domination: Pursuing Justice in Diverse Democracies, edited by D. Allen and R. Somanathan (Univer­sity of Chicago Press, 2020), 59-89.

2. Samuel Bowles and Wendy Carlin, "Shrinking Capitalism,” AEA Papers and Proceedings 110 (2020): 372-77, DOI: 10.1257∕pandp.20201001.

3. Cf. D. Allen and R. Somanathan, eds., Difference without Domination: Pursuing Justice in Diverse Democracies (University of Chicago Press, 2020).

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