Age of Economics – Barry C. Lynn: Why does economics matter?

Barry C. Lynn addresses eight questions about economics today

Barry C. Lynn is Executive Director of the Open Markets Institute in Washington, author

1. Why does economics matter?

Well, I guess to answer that you first have to define what economics is. I come out of a background where I worked as a journalist for many years. I worked covering business, I worked covering politics, I worked in South America, I worked running a magazine called Global Business. And so my background is what we used to call political economics.

It’s where you’re actually looking at what’s happening in the real world, looking at the laws, looking at the results of the use of power in various ways, on how it affects production systems, how it affects the distribution of well-being within a society.

My take on economics is that it’s all political. It’s all a matter of power. Going back to when I really started to write about the problems of concentration of power, I’ve had many interactions, hundreds and hundreds of interactions with economists over those years and with people who were more in the neoliberal tradition of economics, or even certain kinds of pre-neoliberal economics that are very math-centric. And what I found is that the folks who tend to take a math-centric approach to economics understand very little about how the real world works.

So I think if we’re going to define economics as the kind of math-centric economics that has really dominated the discourse of debate, the academies that are celebrated by the Nobel Prize, then economics has been a complete disaster.

2. What are the differences between economic science (academic economics) and economic engineering (policymaking)?

I wouldn’t use necessarily either those terms. I don’t see economics, math based economics as being scientific at all. I think that’s a claim that has been made.

And I think that in many ways modern economics is very unscientific. In certain ways an anti-scientific profession. It’s anti scientific because it excludes facts. It excludes what’s actually happening in the real world and focuses instead on representations of what’s happening in the real world. And to make the representations function, these scientific economist, they exclude more and more facts, more and more reality. It’s almost the exact opposite of what the Enlightenment was all about, which was to focus on what’s really happening in the world.

And I said a moment ago that economics has been a complete disaster. Why has it been a complete disaster? It’s a complete disaster because the economics profession has not only failed to help the people of the United States, the people of Europe, the people of the world to understand the great challenges of our time, challenges such as the supply chain crisis we’re dealing with right now, challenges such as the concentration of control by China over fundamental sources of supply on which we depend in very intimate ways, understanding the ways in which hydrocarbon vendors have exploited monopoly power to keep us addicted to coal and oil and gas when we could have moved towards other technologies much more rapidly.

The radical, radical remaking of our societies due to the extreme concentration of wealth in the hands of a few, the disruption of our political system by concentrated power and control, the disruption of our discourse by corporations like Google and Facebook and of our commerce by corporations like Amazon. Economists have done zero to warn us about any of this. Zero.

Worse. That’s right. They’ve actually done worse because economists have actively, actively worked, actively worked to hide how power is exercised, actively worked to hide the effects of how power is exercised. So economics profession as we have known it, as it was really recreated in the period after Reagan and Thatcher, after the period beginning with the neoliberal revolution in the late 70s and early 80s, economics as a profession is to a very large degree responsible for all of the great economic, structural, political, environmental crises that we face. It’s on the hands of the economics profession.

3. What role does economics play in society? Does it serve the common good?

We can go back and we could look, if we pull the lens back and we look back to someone like an Adam Smith, Adam Smith, Wealth Nations published 1776, was published just a couple of months before the Declaration of Independence in the United States. It was one of the great works of the Enlightenment.

And what was the purpose of Adam Smith? His purpose was to demonstrate power, how power is being used to affect people in ways that were harming the ability of societies to create a better life for the people that lived within them, to create a better political life, to create a better material life. So if we widen our frame to go back to an Adam Smith, then we have there a true hero who presented himself as an economist, a political economist. Our is modern society, like in the United States, the achievements of the first 200 years of our nation were, to a large degree, made possible by, say, the insights about power of Adam Smith and a few other of the thinkers and writers of that era.

I work a lot on competition policy. That’s sort of the core work of the Open Markets Institute. It’s the core focus of my three books. And I look at how the changes in competition policy, which is really changes in how we regulate power, how we deal with power, how we see power, have unleashed this consolidation that has led to the offshoring and the concentration of power by antagonistic regimes over industries on which we depend. We’ve used this lens of competition policy to understand the rise and predatory and destructive behaviors of Google, Facebook and Amazon.

So we’ve developed a lens through which to look at the world that has allowed us to address directly and actually have a real effect over the great challenges, the great threats of our time. And in doing that, we’re actually operating within the framework that was established in the United States at the foundation and which was in effect, really, until Reagan came to power in 1981. The reason that we’re effective, in fact, is because all of our work depends on our efforts to overthrow the neoliberal revolution of 1981, the neoliberal revolution that was supported by Reagan and that later was supported by Bill Clinton, and that was exported around the world to, at the time, unwilling and unwitting countries across Europe and elsewhere.

The economist and this vision of a market structure as being in some ways superior to the political and power issues within society, this vision and this means for promoting this vision were established. It’s a reaction between economics and society, it’s boiling it down. It’s when we’re actually talking about power, when we’re talking about political economy.

Economics is fantastically useful when we are trying to establish this vision of markets as self regulating mechanisms, of understanding how these mechanisms function, of basically positing the existence of forces that are kind of running metaphysically parallel to human society. Then we’re in the realm of nonsense.

No, no, no, no, no and no. Economists, in their personal lives when they wake up in the morning, they live in a town, they vote for this city mayor, they vote for the governor of their state or their province, as individuals many of our leading economist are wonderful people who mean very well, and they use their votes and they use their political voices in ways that help make society better place. But the profession, the profession that they have created, because it is designed to exclude reality and rewards those who do the best job of excluding reality, as I said before, not only does it prevent us from actually addressing the great crises of our time, it has for many years hidden those crisis. And it has sort of allowed those crises to become vastly worse than they would otherwise have become.

You know, you can be an economist who is absolutely against carbon, absolutely against racism, you can be the most enlightened economist in the world, and yet when you pick up your computer and start to work, the work that you do through your profession can actually exacerbate all of the problems that you mean to fight as an individual. The profession is fundamentally corrupt, not in terms of money – there is some money corruption in the profession, but I’m not talking about that – it’s intellectually corrupt. And until the fundamental intellectual corruption of economics is eliminated, the profession as a profession cannot help our society address any of the fundamental problems.

There may be one exception to this, which are the economists who work in banking, economists who work in finance, economists who work on monetary policy, economists who’ve actually studied structures within the banking and the financial and the monetary system, and who have looked at the ways in which these structures can either concentrate or de-concentrate risk and make the world more dangerous or less dangerous. There are a few economists who’ve worked in that space, but the reason that they’re able to bring some value to the debate is because they’re looking at the engineering of power within the financial and banking systems.

They’re looking at the engineering. If you ain’t looking at the engineering, you ain’t looking at nothing.

5. As we live in an age of economics and economists – in which economic developments feature prominently in our lives and economists have major influence over a wide range of policy and people – should economists be held accountable for their advice?

Well, I’ve certainly advocated holding economists individually and as a group accountable for their advice. Again, most of our work takes place within the framework of competition policy, of antitrust, of anti-monopoly. And there’s a subset of economists who specialize in working in this space. This is an area where we do hold the economists accountable. And what we see time and again is economists, basically, even when they’re working with the government to block a merger that clearly is going to create multiple harms on multiple planes for the public, harms that could affect our ability to communicate with each other, harms that will concentrate greater wealth, harms that will lead to less innovation.

The arguments that they make about pricing, because they will concentrate only on arguments about pricing, they have lost us cases that we should have otherwise won.

And that was a problem. Not the lawyers in the room, that was a problem of the economists and their role within those lawsuits. So that’s a specific instance. In terms of the larger accountability of economics for all of these much larger crises in our society, we don’t need to hold people accountable. We just need people to change how they operate. We just need people to wake up. We need the people to face up to the fact that their profession is fundamentally corrupt intellectually.

It makes false assumptions. It’s based on a series of false assumptions, including that their profession is scientific in nature. So the idea here is not to make people feel bad. The idea here is not to sort of put people in jail for these crimes – they are crimes against humanity in many cases, in key respects – there’s no need to do any of that. But we have this major problem: we’ve got some of the smartest people in our society, people who want to do right, people who want to make the world a better place. I’d say like 98% of economists when they wake up in the morning, they want the world to be better at the end of the day than when they woke up. They want to have had that effect personally on the world, and they can do the right thing.

But what they need to do is be honest about the intellectual corruption, the foundational intellectual nonsense on which they’re professional based, and they need to understand how powerful actors hide behind the work of the economists in ways that allow them to smash things that we need. Smash social structures that make the world a better place, smash systems of communications that allow us to make sense of how the world works, and free themselves from the shackles of their profession to actually become productive and constructive citizens of the world.

6. Does economics explain Capitalism? How would you define Capitalism?

I’ll leave economics actually out of this. At Open Markets and my own work, I’ve repeatedly sort of said, I don’t really believe in -isms. Once you start talking about an -ism, you’ve kind of started down the slippery slope towards metaphysics. And I think that one of the things that we see when people use the word “capitalism” is we enter a realm in which there are ten or twelve different definitions of this, all of which are kind of imagining a particular metaphysical directionality to life, to how people operate in the economy.

I mean, capital exists in all societies. Capital existed in the Soviet Union. Capital existed in Pharaonic Egypt. So the issue is there’s nothing inherent in capital. There’s nothing inherent in a society that concentrates capital to achieve certain political and economic ends that would lead to the kind of destruction that we see today throughout our society – social destruction, industrial destruction.

I think it’s actually useful if you want to talk about capitalism, to just look at the way the American political economy was structured between the early 1930s and the early 1980s, and compare it to how it’s structured now. Between the early 1930s and early 1980s, shareholders had very little say over the actions of corporations. They had very little power over the actions of corporations. Beginning in the 1980s, there was this effort to put the shareholders into control over corporations. And there’s a whole series of actions.

We’re actually doing article about this right now, and we’re showing how the shareholder capitalism that was established the United States between about 1982 and the year 2000, how that basically has resulted in the destruction of the semiconductor production in the United States, because the capitalists within our system, the shareholders, destroyed the industry. They broke it apart, they sold it off so they could stick billions and billions and billions of dollars in their own pockets. And now today we wake up and this fundamental tool, we don’t have control over this tool anymore because we gave power to the wrong people.

That’s not the way we used to operate. That’s actually not the way Japan operates. Japan has become a little bit more subject to that kind of power, but it’s still largely a managerial approach that sort of prizes the contributions of the engineer and the scientists. Germany is certainly less that way. It’s like the German approach prizes more the contributions of the engineer and the scientists.

But the American system – there are some exceptions – but the American system is largely predatory, it’s largely deconstructionist. And this stands in radical contrast, revolutionary contrast to the way we structured our industry during the heart of the 20th century, and for that matter in the heart of the 19th century.

7. No human system to date has so far been able to endure indefinitely – not ancient Egypt or Rome, not Feudal China or Europe, not the USSR. What about global Capitalism: can it survive in its current form?

If we define global capitalism as the rule of the financier of concentrated capital exercised through someone like Danny Loeb, our friends at Black Rock, like Mr. Paulson, if we focus on rule by hedge funds managers, no. It’s their power that has been concentrated over the last 40 years, and it’s their power having been concentrated that has broken so many of the systems in which we depend. And it’s their power that continues to prop up the neoliberal vision of economics because their power hides behind the neoliberal vision of economics. That’s why in our work we concentrate on pulling out the old tools, the old weapons that we used to deal with concentrated power, the swords of anti-monopoly law, so that we can use these against these concentrations of power and control today.

And my work has made this absolutely clear. I got into this business 20 years ago with an article in Harper’s magazine which was based on a study of TSMC, Taiwan Semiconductor Manufacturing Corporation, and the concentration of power and risk in that one corporation. So my work for 20 years has been based on watching how the effort to concentrate capital in the hands of financiers was destroying the physical infrastructure on which we depend as human beings.

And I’ve been warning about this. A few other people were warning about this. Here we are in the year 2021, waking up and we see American capitalism, the American political system under siege from a fascist party. We see our political or public square sort of being under siege by Google and Facebook. We see the industries on which we rely, the semiconductor industries, they’ve been wiped off our lands, and power has been concentrated in a few foundries in Taipei and in South Korea. We see the chemical systems on which we depend for our food systems, for our crop systems having been offshored, put into the hands of China. We see the medical devices and drug ingredients, the production of those things destroyed in our own land and concentrated in the hands of the Chinese Communist Party within the boundaries of their state.

The rule of Davos Man, the rule of the American capitalist has been catastrophic for the world already. And we are on the verge of major breakdowns of systems.

So the longer the present system remains in place, propped up by the various institutional lies of neoliberal economics, the more likely that we will cross that precipice.

8. Is Capitalism, or whatever we should call the current system, the best one to serve the needs of humanity, or can we imagine another one?

In our work, we’re very focused. Some folks call us who are promoting anti-monopoly policy and the use of anti-monopoly law, some folks called us socialist, but actually in many ways just as strongly as we oppose the concentration of power over the distribution and use of capital by a few funds, by a few fund managers, we would equally oppose the concentration of control over the use of capital by the state, even a perfectly democratic state, which doesn’t exist anywhere.

What we are in favor of is the wide distribution of capital, of property, real property in the hands of as many people as we can get it, and the making of as many people in the world as can be made truly independent to operate within the political economy and operate within the political system. Vote as they choose and work as they choose, and bring the ideas that they have into the marketplace. So what is this system called in the United States? It worked this way for 200 years, from 1776 until basically Reagan came along.

This was the system that we achieved with great pain, with great sacrifice, overcoming terrible things like the enslavement of human beings.

But the thing is that this system in which you basically use the power of the state to do one thing mainly, which is to break any dangerous concentration of power and control at home, or any dangerous concentration of power and control abroad, and then to stop and then to let the people thus made free, live their own lives and make their own goods and have their own thoughts and deliberate as a community of independent individuals, equal individuals, if we can rebuild that kind of political and economic democracy, we can save this world.

We can save our democracies and we can save our material world. And the good news, and it’s been bleak thus far, partly because of the nature of the debate, of the questions, but it’s very important that folks understand that I would encourage anyone who watches this to focus, to spend a little time researching what we at Open Markets have achieved. We have a former employee as the chair of the Federal Trade Commission in the United States, which is one of the two main anti-monopoly regulatory agencies in the United States.

A very close friend and ally has been nominated to chair the antitrust division of the Department of Justice. President Biden gave a revolutionary speech in support of an executive order to fight concentrated power and control in the United States. This was back in July, a revolutionary speech in which he says neoliberalism, Borkism – Robert Bork, the antitrust scholar of the late 70s and early 80s who was the father of much of neoliberal competition policy – President Biden said Borkism is a failed experiment, and the north stars for our competition policy shall be democracy and human Liberty.

So there’s a revolution that is actually taking place in the United States in thinking about these issues. It’s taking place right now. It is supported by the White House, by Joseph Biden. It is supported by probably a majority of members of Congress. But then, of course, Congress is so disrupted in the United States by outside actors. It makes it pretty hard for Congress to get things done because you got the Coke monopolist and you got the Google and Facebook monopolists interfering in their business in such a way every day. But this revolution is real. It is potentially transformative. It is something that people around the world can all join in.

Europeans have been very happy with their competition policy. They’ve seen themselves as the leaders of the world and I will tell you right now, Joseph Biden and people like Lina Khan and Jonathan Kanter have lept so far in advance of where any of the regulators in Europe are, with a few exceptions – Andreas Mundt is a real hero on this. But Europeans can move this stuff along at a vastly faster level.

And there’s another aspect about this. This is not simply sort of a new approach to regulation. This is a moment for intellectual awakening or reawakening. The Enlightenment, 1776, 1789. Those were fights to throw off old ways of thinking. The corporations, to destroy the corporations or to break the power of the corporations that held us in intellectual awe, the monarchy, the Church, and the results of breaking the power of these corporations that held us an intellectual awe was this awakening to the power of human beings to make the world a better place.

For the last 40 years, as we’ve seen power concentrated in these corporations, as the economists in our midst have been the priests for the corporations, hiding their power, hiding their predation, we, as people have been locked into tighter and tighter intellectual structures, into a black box created by the monopolists. What we’re doing right now, by the monopolists and their partners, the neoliberal economists, what we’re doing right now is we’ve broken that black box open and people are walking out into the light of day, and we have the ability, all of us, if we throw off this thinking that has been imposed on us, on these political strictures, we can use our own minds, our own reason in ways that we have not used in our lifetime.

It’s time for us all to reawaken. And if we reawaken to the true nature of power, we can structure power in ways that set us truly free and allow us to truly remake the world in a way that is sustainable for centuries to come.

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