The Grand Challenge
Democratic market societies are in crisis. Broad-based economic insecurity, rising inequality, and a resurgent nationalism expressed as anti-immigrant sentiment and ever-more frank racism are underwriting a new illiberal populism in the United States and throughout the European Union.
Mainstream media, scientific expertise, andjudicial competence are challenged across these diverse countries. The 2020 pandemic has only brought these challenges into starker relief.The elite consensus that emerged after the fall of the Soviet Union—a view that embraced the free movement of goods, finance, and people; deregulation and privatization of government companies and some public functions; and a robust commitment to pluralism and liberal rights—is coming under sustained attack. In the middle of the second decade of the twenty- first century, parties representing this consensus lost major elections. Donald Trump's election was a rejection of both the Republican and Democratic elites. Brexit was opposed by both the Conservative and Labour parties. The second round of the 2017 French elections pitted against one another two candidates who rejected the historical major parties of the left and the right, with Emmanuel Macron's victory representing a victory for the mainstream but only under a new brand. By 2020, the Covid-19 pandemic laid bare deep divisions as a prolonged lockdown created economic and political pressures. Political identity came to dominate even basic beliefs about science, and the legitimacy of the US election came under attack in a way not seen since the defeat of Reconstruction. The 2020s seem poised for a conflict between parties dedicated to nationalist atavistic populism and those dedicated to a pluralist democratic project, but how that pluralistic side of the conflict will integrate economic policy and politics into its basic democratic commitment remains highly uncertain.
In the face of these deep challenges, academics have been reviving the concept of “political economy” across diverse disciplines in an effort to develop a new understanding of how the economy interacts with the polity, and how decisions about political economy intersect with understandings of justice, legitimacy, human flourishing, ethics, and moral commitments. Can we find a way forward to a just economy that neither doubles down on the eliteconsensus neoliberal political economy of the past four decades, nor reflects nostalgia for a golden age of capitalism, a “glorious thirty,” a progressivism that could survive only by ignoring racial and gender hierarchies?
Capitalism is not a “single-level system” consisting merely of property rights and markets but a “multilevel” system of economic governance involving economic markets that (1) are embedded in institutions created and governed by political authority, (2) reflect economic, political, and cultural power, (3) rest on social norms, and (4) instantiate specific values. Neoliberalism ignored these levels and insisted on a “one right path” packet, for many years called “the Washington Consensus,” built on the assumption that a single, universal rationality applied to all people as people; that all economic activity was best understood as rational pursuit of self-interest by self-interested rational actors; and that government functioned best when it receded, to the extent possible, from the economic sphere, limiting its role to defining and protecting clear property rights, providing impartial rule of law to enforce contracts around those rights, and reducing the ambition of the pursuit of collective goals through public action. The result was a transfer of power to companies, and these too were reconceived as best run by self-interested managers and owners whose behavior would best be governed by well-designed incentive pay systems rather than by any normative commitments. The result was an unusual degree of power in the hands of public firms, hierarchical organizations whose decision rights reflect a commitment to wealth maximization and to survival in capital and product markets dominated by conventional performance metrics.
The result was not stable, broadly shared growth and prosperity but repeated cycles of financial crises, dramatic increases in inequality, and the rise of illiberal, nationalist populism. And these results demand answers to the question of whether principles of legitimacy and justice—of rights, liberties, and a just distribution of resources—can best be served through these kinds of institutions or whether progress requires a fundamental rethinking of the basic rules that govern economic production and exchange, the nature of firms, and the institutions by which they are constrained.Merely recognizing these facts does not answer the questions of how to define justice and legitimacy in relation to economic and political questions in a world with high degrees of social heterogeneity in individual polities. There is a need to return to first principles—to explore the question of how political economy functions and what it is for in the first place. Only with direct attention to basic questions of the social values orienting the development of political economy can we revisit the building blocks of economic thought. Tackling questions of political economy from the root requires a sustained, hard-hitting, multidisciplinary conversation that bridges the normative and the positive. Such conversation is necessary, now more than ever, as the coronavirus crisis has thrown societies and economies into a state of uncertainty and anxiety—including about what the overarching purposes of governance should be.
This multidisciplinary volume offers a new framework for thinking about political economy and human well-being. We look squarely at how normative and positive questions about political economy interact with each other. From that beginning, we aspire to chart a way forward toward a just economy.
The chapters take up issues of human flourishing, ethics, and moral commitments; of democracy, system governance, and legitimacy; of corporate governance and legitimacy; of alienation and consumerism; of labor and quality of life; of social, political, and economic equality and opportunity; of the role of power and the social relations of production in shaping markets and their outcomes; of inclusion and sustainability; of globalization, cosmopolitanism, and tribalism.
Our collective work has come to consolidate around some shared themes, as well as ongoing points of debate. The shared themes include (1) a need to rethink the relationship between politics and the economy, with attention to democratic accountability and governance regimes; (2) a need to broaden the focus of justice from purely questions of distribution to encompassing the organization of production; (3) recognition of the value of markets coupled with diverse perspectives on how capitalism can be reformed or transformed; (4) emphasis on integrating and explicitly addressing the role of race, gender, and other dimensions of status-subordination in the political economy of market societies; and (5) a need to focus on broader definitions of human purpose and to build metrics for the economy around those broader definitions—for instance, around the capacity of an economy to produce “good jobs.” The central points of debate concern capital and growth. What is the place of each in a just economy in the twenty-first century generally, and after the coronavirus crisis specifically?