Noi Restiamo: in the Western World neoclassical economics has been completely dominant in the last 30 years. Also the visions over the crisis and the economic policy share a common ideological origin.
Hence, how should an heterodox theorist position him/her self today? That is, does it make sense a “war of position” inside the academy, does it make sense to participate to the process of crisis management? Is it meaningful to participate in the institutional debate on what it should be done, or is it better to work in other places or spaces?
This reduces to one question: is capitalism reformable and thus do we have to participate in its management, hopefully in an egalitarian direction, or not?
Jan Toporowski: In the first place I think a heterodox scholar should not call herself or himself a heterodox scholar, because if you do this then you immediately let a very large number of other scholars leave the room since they do not consider themselves to be heterodox. You should call yourself an honest scholar and try to be an honest scholar with an open attitude towards other economists and towards power. My view is that you should always engage and you should talk with people who are involved with power and with finance; certainly I have tried and I had to do this. You have to do it for a very simple reason: they know a lot more about power, about finance and about the practical operations than an academic does. Therefore if you are a critical scholar you need to engage and discuss with them. The second reason why you need to engage and discuss with them is that they are not crooks or running dogs of capitalists. By and large they try to be honest and they try to work in an objective and honest way with integrity, although in their understanding of what is happening. If you do engage with people like them, you will find they are more than happy to discuss with you about the problems that they face. That is very important because a critical economist needs to understand what the practical problems at every level of economic activity are.
In my opinion a critical economist should express herself or himself in a very simple way: you show the benefits of socialism. You show them not in a utopian way, asserting that socialism would get rid of all problems, but asserting that is a better system. Secondly, you sow doubt in the minds of the enemy, showing what the inconsistencies and problems with mainstream and neoclassical analysis are.
In brief I think this is how a heterodox scholar should behave, but I emphasize that you cannot do this unless you engage with mainstream scholars. I also want to emphasize that you should not put your stuff forward as representing a particular school of thought. You should not exclude the people that you talk to, if you’re a critical scholar you have a duty to be able to engage with everyone.
I conclude with something which I have once read about Rosa Luxemburg. She believed that socialism would liberate not just the working class, but it would liberate the capitalists as well because it would take them out of this servitude to the market and to the irrational forces in capitalism. I think this is a fairly correct view; this is what a critical economist should do.
NR: May a comment on this? About the fact that we should show mainstream economists the faultiness of their theories. My doubts arise from the conclusion of the “Capital Debate”: at the end even Paul Samuelson had to admit the solidity of the argumentation against aggregate production function, that is at the very core of orthodox macroeconomics. He kind of “raised the white flag”. Yet, later on neoclassical economists just went around it, and pretended that nothing ever happened, and now the Capital Debate is just a page on History of Economic Thought textbooks, while they still go on using Cobb-Douglas production function in the manuals. My point is that if even from a theoretical point of view your argumentation is right, there may be little point in engaging a debate with a party that does not listen to you. If they went around so easily to such a big question, why should they listen to us in other matters?
JT: The theoretical production function, the Cobb-Douglas production function and all this kind of things, they are serious problems in this approach to capitalism. It is a view of capitalism in which there are no markets and no market process, but instead you see the economy as it was just one giant firm. It isn’t, and I think one should criticize this influences, the political and the policy conclusions that are drawn from it. For example if from this theory you conclude that the economy exists in a state of full employment, well this is quite clearly nonsense. It is clearly only true under very specific assumptions. But if there are people who want to believe in the aggregate production function for the purpose of their academic research, you know, I am not sure it makes any difference. Let me bring to you as an example Robert Solow. He is a kind, humanitarian, old-fashioned Keynesian, and he deserves respect for this. If he wants to support his views by using a Cobb-Douglas production function, let him do it. I wouldn’t, but if he wants he is free to do it. For the academic theory is the means by which we work. I know they’re very important for those who work by those theories, in the universities, but I don’t think they are very important outside the university, where the rules are those of capitalist economy, the way in which the capitalist economy operates policies and politics. That it seems to me far more important that to quibble on something. I’ve expressed my disagreement with some heterodox ways of viewing the crisis of capitalism. But I’m not going to argue with those people because in a sense it doesn’t really matter. By and large the conclusions we come to are fairly similar, so if a person chooses to come to a good conclusion in a different way, to me they should be allow to do so.
NR: from your point of view, where do you see the movements and/or the most interesting contradictions in capitalism, whit a potential of breakage? We are thinking, for instance, to the logistic sector in Italy.
JT: First from most of the potential breakage points in the capitalist economies in general -since we are talking about an international system- is the issue of what happens in China.
China has been the engine of much economic growth in the rest of the world, but now that engine is coming upon serious difficulties and constraints which are not yet apparent. In particular, the fact their trade position is deteriorated, that they no longer have [trade] surpluses. The financial consequences of this would make them more cautious in the future. Moreover, adding to this the problems with the labor force and the environmental difficulties, China is going to be a major problem.
A second breakage point is the war on poor people in Europe which is particularly on workers and union rights and it is holding back the recovery of the economy. With respect to this, I think that the supporters of under-consumption are partially correct in their views.
I think the result of both of these facts would be the political consequence: the raise of nationalism in Europe and the raise of xenophobia and what comes with it, and a greater willingness to engage in wars. Indeed, we have already seen what’s happened in Middle East, I think the problems in the Middle East can only get worse at the moment.
I think all of these are causes for deep worry, in particular as the growth of the economy slows down, this will have effects on many of the developing countries, who have been stabilized up to now by high commodity prices. I don’t think that those could be guaranteed in the future, and this will poison the politics of those countries.