Theoretical Antecedents

The new political economy challenges three core theoretical moves that an­chored neoliberalism. First, it replaces transhistorical assumptions about human nature with historically grounded explanations of social relations.

Historical versus Transhistorical Explanations of the Human Condition. From Smith to Marshall and neoclassical economics, markets are conceived as the natural outgrowth of human nature left to its own devices. Individuals in­teract freely according to their nature, pursuing their rational self-interest and coordinating their desires and abilities through the price system toward ever-more productive arrangements to satisfy their needs and desires. The explanation flows from human nature rather than from any particular his­torical set of facts that could have been otherwise. It explains larger struc­tures (the division of labor in society; production and allocation of resources) as the aggregation of microfoundational choices of these individual agents.

Marx is the fountainhead of understanding economic relations as his­torically specific results of earlier struggles, but the twentieth century saw a sustained flow of economic history that explained the emergence and di­vergence of market societies as products of struggles along dimensions of class, race, and gender. As Stuart Hall put it, “Appeals to ‘human nature' are not explanations, they are an alibi.”¹¹ Other works—Webb's History of Trade Unionism in 1894; Weber's Protestant Work Ethic in 1905; the Hammonds tril­ogy and Beard's Economic Interpretation of the Constitution of the United States in the 1910s; Du Bois's Black Reconstruction and Pinchbeck's Women Workers and the Industrial Revolution in the 1930s; and Polanyi's Great Transformation in 1944—offered sustained analyses of the development and shaping of social relations through struggle over institutions and ideology in the emergence of capitalism.

Agency versus Structure. Perhaps the thorniest problem in social science is teasing out the roles of individual agency and social structure in shaping

human behavior and patterns of social relations. Neoliberalism was commit­ted to explaining patterns of economic and social behavior in purely micro- foundational terms: the aggregation of individual choices driven by exog­enously given preferences. The intellectual roots of refuting this position are deep and broad. Rejecting the determinism of both early Marx materialism and Durkheim's social facts, the twentieth century saw a flow of efforts, across disciplines, to reconcile the lived experience of individual choice with the obvious force of social structure. In economics, the clearest articulation was Veblen's.¹⁴ But his insistence that beliefs and preferences were always struc­tured by the same institutions that structured markets and were therefore endogenous to market actors' preference-shaping investments destabilized the entire project of welfare economics and so was ignored. Contemporary behavioral economics has only flourished by bracketing preference forma­tion and focusing on well-behaved “deviations from rationality” and “misper­ceptions,” ignoring the fact that preference shifting is the object of massive investments by firms (Google and Facebook's business model depends on selling preference-shaping services to advertisers). Sociology has struggled with this question since its inception. Some will emphasize a line from Goff- man's frame analysis to the new institutionalism in sociology.¹⁵ Others will point to Foucault's governmentality or Bourdieu's habitus and fields as the clear genealogy of understanding individuals as both made by their context and retaining their individuality within it. And of course there is the line of critical theory from Adorno and Horkheimer's “culture industry,” through Althusser's interpellation and ideology, to Gramsci's ideology and hegemony.

Understanding the self as socially embedded and always grounded in a specific historical moment allows us to identify individuals as neither inher­ently selfish nor other-regarding, but as socialized. Experimental psychology and economics of the past 20 years have shown that in no society do subjects conform to the behavior of self-interested rational actors.¹⁶ Patterns of trust, trustworthiness, conflict, and cooperation vary substantially across societies, and motivations and orientations toward cooperation or competition and conflict are endogenous to the institutional setting within which individuals engage each other.¹⁷ In this volume, Henderson, Salter, and Schor and Eddy each offer interventions in organizational practices that harness the social­embeddedness of “preferences” for cooperation and depend on the possibil­ity that a change in institutions will foster a change in levels of cooperation and trust.

Power and Conflict. The final major theoretical feature that the new politi­cal economy emphasizes is the need for a systematic integration of power into the analysis of economic relations. Again, Smith versus Marx is the basic framing, with Smith standing for a natural progression toward optimal divi­sion of labor through mutual coordination in the absence of coercive regula­tion, and Marx putting conflict at the heart of how social relations of pro­duction are created. Parallel to continued work in the Marxian tradition, the twentieth century saw sustained non-Marxian efforts to explain economic relations as shaped by the acquisition and use of power. In the 1920s and 1930s, some of the Legal Realists, most prominently Robert Hale and Morris Cohen, emphasized the central role of law in shaping power and exploita­tion in economic relations. In his 1936 Black Reconstruction, W. E. B. Du Bois explained the role of racism as a strategic investment by capital designed at once to undermine worker coalitions building economic and political power and to produce a steady flow of underpaid workers to put downward pressure on wages of all workers. This perspective was later taken up and extended by others, including Stuart Hall, Cedric Robinson, and Barbara Fields. Simi­larly, Ivy Pinchbeck's work in the 1930s formed the foundation of decades of work that emphasized the ways in which patriarchal relations in home and care work were translated into economic power. Work by Barbara Wert­heimer, Angela Davis, Maxine Berg, Nancy Folbre, and Nancy Fraser devel­oped historical, sociological, and economic understandings of how capital­ists leveraged the status-subordination of women to create divisions within the workforce, providing a steady flow of both unpaid care work and low-paid workers to be used to ramp up production in times of war and tight labor markets and be pushed back to the home when demand for labor receded. To oversimplify drastically, in Marxian terms we can think of the Black Radical tradition anchored in Du Bois's Black Reconstruction as explaining how West­ern capital exploited Black and brown labor domestically and internationally as the quintessential stagnant reserve army of labor, while the feminist au­thors explained how women were forced to become the quintessential latent reserve army of labor.

Within mainstream economics, the study of power was strictly cabined to the state. Markets were an arena where power occurred in well-defined exceptional circumstances, such as essential facilities or other sources of monopoly. The primary object of the state, however, was the deployment of power, and rational self-interested actors vied to maximize their own payoffs by capturing the institutions of the state. These efforts generally result in inefficient defeat of people's natural tendencies toward efficiently ordering their affairs. Hence, Buchanan or Stigler and even the more sophisticated and historically informed versions, like Acemoglu and Robinson, insist on state coercion as the primary source of extractive power and the locus of power-seeking, rather than integrating power into an analysis of the nor­mal operation of the economy. The primary exception was Schumpeter, who based his theory of growth on continuous innovation (creative destruction), specifically aimed at creating market power, and who expressly credited Marx as having been the only classical economists who understood this fact. To this day, “neo-Schumpeterian economics” remains the leading discipline in the economics of innovation. But, following Schumpeter's example, this line of work has simply ignored the implications of the insight that power­seeking is the driver of innovation and hence the core dynamic of capitalism: continuous productivity growth.

As with agency and structure, there is a long and rich tradition within cultural Marxism, from Benjamin to Adorno and Horkheimer to Althusser and Gramsci, that focuses on the production and maintenance of power in society, with a clear focus on class exploitation. And, as with agency and structure, both Foucault and Bourdieu developed their own distinctive ver­sion of the construction of power and domination in society, in institutions, in their habituation in body and disposition in ways that convert their me­diation of agency and structure into a society that reproduces hierarchy and domination. Scholars who have dedicated their lives to one or another of these traditions or authors will undoubtedly treat my whirlwind tour and collapse of nuance, emphasis, and intellectual innovation with distaste. My purpose, however, is to identify opportunities for intellectual alliance across diverse and radically different traditions all of which, for all their differences, coalesce around core insights useful in diagnosing the flaws of, and provid­ing alternatives to, neoliberalism.