Alessandro Roncaglia – Finally, an Economist Takes on the Topic of Power

Alessandro Roncaglia has mulled the topic of power over his long and distinguished career – a topic most economists avoid

Alessandro Roncaglia is professor of economics, Sapienza University of Rome

Cross-posted from INET

Interview by Lynn Parramore

Power is a fact of life, but you might not know it by talking to today’s economists. Many tend to sidestep the subject, treating power as if it exists outside their primary areas of concern, such as market dynamics and fiscal policies. Yet undeniably, power shapes resource allocation in society, dictating who gets what, when, and how.

Alessandro Roncaglia, Emeritus Professor of Economics at Sapienza University of Rome, who came of age in Italy during an era of extremist ideologies and personally experienced fascist violence as a student, is a notable exception in his field. He goes where few economists have gone in recent decades, insisting that in a world marked by persistent inequality, the interplay of power and inequality demands urgent attention. His new study, part of INET’s book series with Cambridge University Press, explores the historical dynamics of power and asks how we can change its distribution today. Power, in this context, encompasses not only political authority but also the subtle mechanisms of influence, control, and access that individuals and institutions wield. By examining the historical roots and modern forms of power, Roncaglia explores the potential for reform and the path toward a more equitable future.

Roncaglia spoke to the Institute for New Economic Thinking about the hidden forces that mold our socioeconomic landscape.

Lynn Parramore: Why did you, an economist, decide to tackle the topic of power? What is lacking in the treatment of power in economics?

Alessandro Roncaglia: I decided to study economics precisely because I wanted to tackle the issue of power. When 17 years old, in April 1965, I was severely beaten by a Fascist squad in Rome after a conference. At the time, both the police and most judges were oriented to the right, which meant that Fascist squads were free to move around. Yet the majority of the electorate was center-left and the government was trying to follow a strategy of progressive reforms. So a clear problem arose: why is it that in a fully democratic regime, important power centers can practice reactionary policies? How can the distribution of power within society be modified? Power is an eternal central issue for anybody interested in politics, as is the issue of social coexistence.

When I was a student, economics was open to history and sociology. This was especially true for the professor I chose to study with, Paolo Sylos Labini. That’s why I chose economics rather than ancient Greek, which was my preferred topic at the lyceum. Over the years I kept thinking about the power issue, often discussing it with a friend from my university years, Roberto Villetti, who became a leading professional politician, to whom the book is dedicated. The conversation ended only when he died, in 2019. Then I sat down to write the book.

Over time, economics became progressively distanced from history, sociology, and political sciences. The topic of power became restricted more and more to the role of competition and non-competitive market forms. What I’ve tried to do is to open the boundaries to the other social sciences.

LP: Speaking of the ancient Greeks, I’m reminded of that pessimistic line from Thucydides on the Siege of Melos: “The strong do what they can and the weak suffer what they must.” He claims this is the law of human nature. What’s your view of this axiom?

AR: I absolutely disagree with it. What I actually liked about the Greeks was their positive attitude to life. Their music and poetry.

LP: So you’re optimistic?

AR: Yes. Maybe I got it from my mother, who was an optimistic person. There were a lot of difficulties in my life growing up, as in anybody’s life. When I was beaten and I was in the hospital after surgery, I overheard one of the doctors saying that I was going to die. But obviously, I didn’t. I’ve celebrated the day I was beaten every year since then. It helps me to be optimistic.

LP: In your view, how does the separation of economics from fields like sociology and political science impact our understanding of power?

AR: As Bertrand Russell wrote in his book on our topic, “Economics as a separate science is unrealistic, and misleading if taken as a guide in practice. It is one element – a very important element, it is true – in a wider study, the science of power.” That’s why in order to study power, we have to integrate economics with sociology, political sciences, anthropology, history, etc. Obviously, a purely sociological (or political, or historical, etc.) study of power will also miss the most important economic elements.

LP: How do the dynamics of power in the discipline of economics impact the slant of research and its use in policy?

AR: Research (and teaching) in economics is unfortunately often influenced by political and economic power centers, through biased research financing and selection rules for university careers. As a result, conservative (and wrong) economics theories are applied in economic policy, and – most importantly – are embodied in some basic institutional rules, such as limiting the role of central banks to fighting inflation or limiting the role of fiscal policy. We end up with asymmetric rules that push in the direction of restrictive policies.

LP: You saw the collapse of the post-war Italian Republic in the early 1990s, when the Communist Party and the Socialist Party rapidly declined, after which heterodox economics in Italy declined. How do you view the relationship between power and the realm of public discourse in this context?

AR: The decline of heterodox economics already began in the late seventies when, after the oil crises, we had a simultaneous explosion of inflation and unemployment. This meant the collapse of the Phillips curve – the trade-off between unemployment and inflation – which was a basic element in the then-dominant neo-Keynesian approach. The door was opened to monetarism, helped along (notwithstanding its theoretical feebleness) by the rise to power of two conservative leaders — Thatcher in the U.K. and Reagan in the U.S.

The Italian case is part of this more general trend, but certainly, there was an acceleration of the retrogressive trend in economic culture after the fall of the Soviet Union. The Italian Communist Party began a difficult, still uncompleted transition away from centralized planning, with some of its main leaders even shifting to neo-liberal positions. The Socialist Party was devastated by its inability to react to the corruption of part of its leadership.

All this opened the door to populist movements. And we do have to take into account the fact that Italian politics (as it too often happens also in other countries) is strongly influenced by mafia-like criminal associations that are able to influence elections, most often (though by all means not always) in favor of right- and center-wing politicians. The role of the illegal and criminal economy is rarely taken into account when discussing political events and the evolution of economic power, and this is a serious mistake on the side of economists and political scientists (while sociologists study the phenomenon, but remain in their own territory).

LP: What can you say about the problem of money and its influence on political systems?

AR: This is a difficult problem. The influence of money on the political game is unavoidable, but it is also limited in its corrupting power if there is a strong sense of morality among the politicians. Leaders with strong moral principles can have a great deal of influence. The example I could give is Italy, immediately after WWII. After the Resistance Movement, some of the leaders of the movement entered politics and they were not corruptible – they had risked their lives for their ideals. Even when they took money from one side or the other to finance their political movements, they were not influenced in their ideas because of this. This kind of morality has by now declined, but if you look back in history you can see cases where things turned around rather quickly. England in the seventeenth and eighteenth centuries was the most corrupt country in Europe. Then William Pitt (the Younger) came and everything changed. Sweden was at the end of the nineteenth century an extremely bigoted country, and then it became very quickly the most open society in Europe, in some measure due to a single person, the economist Knut Wicksell. He wrote about and discussed topics like freedom of thought, freedom of religion, birth control, and so on.

Culture also matters – fighting a battle against neoclassical economics, supremacist ideas, etc.

LP: Why is the division of labor at the root of your discussions of power?

AR: The division of labor, in its different aspects, is at the root of every social issue. It is there that inequalities in the distribution of power, and income, take shape, and it is the evolution in the division of labor that is at the root of most important changes in the distribution of power within society. By the way, it is central to gender issues. In the book, I discuss two opposite narratives on this subject, one by Adam Smith and one by Pownall, and the seminal work of Margaret Mead.

LP: In terms of the division of labor, how do the roles open to women impact the equality and prosperity of the general economy and society?

AR: It’s very important. If you look at countries like Italy and Denmark, you see that Italy has a higher level of productivity than Denmark but a lower product per capita because we have lower workforce participation of women.

LP: There’s a lot of concern now about the emerging field of AI. How do you see power operating in this rapidly growing area? What kind of interventions might be necessary to keep it from exacerbating inequality?

AR: This is a very complex issue. My brother has just published a book (unfortunately, by now only in Italian) on it. First, we should recall that AI research is conducted at different levels. Among high-level programs, some are financed by the military, and others are developed by private companies with closed and non-transparent policies (it is a curious paradox that the most important one is called OpenAI). There is also university research, which usually has less financing and is therefore less developed. High-end AI tools are often expensive and most AI tools still have unsolved problems which can lead the user to serious mistakes. When utilized in economic activities, they can work sufficiently well most of the time but can provoke serious damage when they go wrong. Also, AI tools can be used to influence and distort public discourse in social media, for example by creating fake images.

The best answer (even if by itself insufficient) is a stronger stress on education, both general and specific: within information literacy, there is now a new and specific need for AI literacy. We need rules on AI use in the field of new social media and we need to exercise great caution on the risks of their use in economic activities.

LP: In the book, you discuss the intriguing idea of Ernesto Rossi regarding how to distribute labor among people in society. How might such an idea apply to new and emerging technologies that are widely feared to destroy jobs?

AR: Rossi’s proposal of a ‘labor army’ was born in the cultural atmosphere of the immediate post-war period, when wide-ranging ideas of social reforms were considered a concrete possibility. It is the idea that each citizen, female or male, should devote a period, say a couple of years, of her/his life, to socially useful but often unpleasant work (collecting garbage, for instance) that should not be the life employment for anybody, thus earning the right to a basic salary for the rest of their lives. Then each one of us would be free to dedicate ourselves to out-of-market activities, such as composing poetry in ancient Greek, or to some remunerative (and in themselves meaningful) activities, such as practicing medicine, thus earning the possibility of a more expensive lifestyle. In principle, I think this is still a good answer to the issue of work in the context of emerging technologies: why not? It is quite far from the current discourse, and some aspects of the idea should be discussed in depth, such as the partly authoritarian rules necessary for a well-functioning labor army, that my friend Villetti feared. But it is a good example of how interesting it is to open our minds to the possibilities of different social institutions.

LP: What reforms do you see as most urgent in balancing the distribution of power globally?

AR: Many of the issues we are confronted with – most importantly, climate and environmental issues – originate at the state level in what in economics is known as market failure. Each country by itself has no incentive to tackle such issues alone since expensive policies are required: NIMBY attitudes (Not In My Backyard) or isolationists slogans such as Trump’s MAGA leave the road open to widespread inaction, with a progressive and devastating deterioration of the situation. This is also true for the existence of fiscal, financial, and regulatory paradises, which may be considered as part of a neoliberal strategy of reducing to a minimum the role of the state and destroying the welfare state where it exists. So the most urgent are those reforms that concern the rules of play in the international arena (or, at a lower level, within the EU).

There are, of course, many other important fields of action that should be considered not as alternatives but as complementary to this. For instance, in Italy the depressed condition of the magistrature, the law, and the legal system, is a serious problem both from the economic point of view and for the expansion of organized crime.

LP: What myths about power do you hope to combat with your book?

AR: There are two myths about power. On the one hand, there is the neoliberal idea that competition is the solution for power differences not warranted by differences in individual abilities and diligence (or bare luck, casually distributed). This implies that we don’t need an active policy concerning the distribution of power in society. On the other hand, there is the idea of an all-powerful (and hidden) world center that ultimately influences human events – so that any active policy is destined to fail.

The reality lies in the middle: power is very unevenly distributed, with strong self-reinforcing trends. But action aimed at reducing inequalities (what I call a strategy of structural reforms) is possible, and we should be conscious that unless we undertake these actions, inequalities will tend to increase.

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