After the New Economy

Doug Henwood is the most useful economics commentator I know. He regularly calls the professional economists, both liberal and conservative, on their bullshit; he knows enough about the nitty-gritty of mainstream (mathematizable) economics to argue with them on their own terms, while at the same time pointing to how we really need to revive what used to be called “political economy,” instead of treating economics as if it were somehow autonomous from the rest of society, culture, and politics. I liked Henwood’s previous book, Wall Street, for the way it both demystified financial manipulations, and for how it pointed up the bizarre theoretical blind spots in mainstream economic theory, and particularly in its assumptions about the wisdom and perfection of the “free market.” The so-called monetarists, for instance, basically assume that money is of no importance in itself, since they see it as just a neutral and transparent medium of exchange; it needs Marx, or at least Keynes, to call attention to the fact that the medium matters, that the existence (and the ubiquity) of money itself has consequences, all the more so in an age of widespread credit, the fluidity of electronic transfers of money around the globe, and the increasing importance of such bizarre and arcane financial instruments as derivatives. The mathematical and logical language of mainstream economics is based upon highly dubious, and at times flat-out empirically false, premises.

Henwood’s new book, After the New Economy, is far less ambitious and theoretical than Wall Street; but it is still a useful volume. Half of it is statistics, showing pretty conclusively how the “new economy” — so-called globalization, new communications and computing technologies, what David Harvey calls “flexible accumulation — has in fact widened the gap between rich and poor, led to more exploitation and more poverty, etc. The other half is a polemic against all those thinkers (including ones on the left) who have, in Henwood’s view, exaggerated the social and economic changes that have resulted from that new technology and those new modes of organization.

The book suffers a bit from the fact that it was evidently conceived in the late 90s, at the moment of the great infotech boom and bubble; but Henwood evidently didn’t write and publish it fast enough, so that the bubble had already burst, the boom collapsed, before his (entirely correct) critique of its delusions came out in print. Henwood missed his moment, in short, and what the book gains in being proven unequivocally right it loses in polemical force. The cheerleaders for the New Economy have already been shown up as fools, and nobody really believes their hype anymore. I sympathize with the difficulty Henwood faces here, because, as a slow writer myself (much slower than Henwood, if we are to judge by page count) I know how difficult it is to write about timely matters, before they cease being timely (the difficulty is compounded by the slowness of the publishing industry — one reason why blogs are becoming such an important alternative — Henwood doesn’t have a blog as far as I know, but his monthly newsletter Left Business Observer similarly picks up the slack).

What stands in Henwood’s favor is that the delusions he skewers (the ideas that a period of prosperity will go on forever, and that new technologies will by themselves solve all the world’s problems, thus obviating the need for political change; the tendency of a wealthy elite — in this case the yuppie “digiterati” — to imagine that their experiences are universal, even though 90% of the world’s population cannot afford to share them) seem to be recurrent features of capitalism; so that another technologically-driven boom and bubble is sure to come around, at which point people will forget the lessons of the last one, and the same inane hype will propagate itself again, once more making Henwood’s points overwhelmingly relevant.

The most original and provocative part of Henwood’s polemic has to do with his critique of the very idea of “globalization.” Henwood rightly points out that “capitalism as a world system” is nothing new; he has cogent criticisms both of the excessive claims that have been made for the difference of our current era, and for the often regressive positions taken by anti-globalization activists of a certain stripe (he rightly skewers both Ralph Nader and David Korten, for instance, for their tendencies towards nationalism and/or a sort of ecofascism — sentimentalizing the “local” and seeking to turn back technology will not help anybody, especially not the global poor). I couldn’t agree more with Henwood than when he writes: “Yes, Nike’s shoemakers are hideously exploited — but is there really anything fundamentally wrong with the desire to wear stylish shoes?” (165). This is why Henwood wants to call attention to “the ownership and organization of production,” rather than making moralistic denunciation of ‘wasteful’ Western consumption. I think it’s entirely in Henwood’s spirit to insist that luxury is not the problem, and a Veblenesque critique of luxury and “conspicuous consumption” is pretty much beside the point. It’s not that “we” (the western more-or-less prosperous) have too much, but that so large a portion of the world’s population is denied comparable access. The scandal of capitalism is that, at the same time it produces astonishing plenty, it imposes rigid regimes of scarcity on so many people. In the midst of more abundance (even per capita) than has ever been known in the entire history of the world, we are told that we ‘cannot afford’ the welfare state here in the United States, let alone poverty and security for the multitudes of the ‘Third’ or ‘underdeveloped’ world. That’s what’s truly obscene: not bling or the precession of simulacra.

Henwood sometimes goes too far in his denunciations of techno-utopianism. I don’t think he is right to (almost) equate Fredric Jameson’s claim that “capital has become both deterritorialized and dematerialized in this ‘globalized’ era” (27) with the inane hype of Wired magazine circa 1997. Of course Henwood is right that electronic financial transactions have not somehow eliminated actual industrial production; but I think that Henwood underestimates both the ways that informatics and communications technologies have reorganized (dare I say “revolutionized”?) industrial production itself, and the extent to which “dematerialized,” flexible and highly “liquid” finance capital has itself become a real material force. Henwood himself admits to overstating his case somewhat: “I’ll admit that I sometimes get carried away with making that point [about the continuities with earlier periods], and I come dangerously close to arguing that 2003 is essentially 1913 plus fiber optics” (174). He goes on to praise Hardt and Negri’s Empire, despite the fact that theirs is pretty much the logic that he had criticized earlier in the book. I’m inclined to think that Henwood’s problem here is that (to use a phrase I almost never have recourse to) he is being insufficiently “dialectical.” It is simultaneously true, I think, 1st) that the new computing and communications technologies of the last thirty years or so have pretty much changed everything, even for the large numbers of people in the world who lack direct access to these technologies (or, to put the point more accurately, these technologies are not the cause of the change, but one aspect of what will be — since it is still in process — a massive political, social, cultural, and economic change) AND 2nd) that the result of this enormous change is to give us a more pure and undiluted form of capitalism than has ever before been the case (which is why so much of Marx’s theorization of capitalism is more uncannily relevant, and necessary, today than it ever was before being ‘discredited’ by the privatization movements of the 1970s and 1980s, and the fall of communism in 1989). Henwood denies the first of these observations, in order to affirm the second. But the trick is to see how both of them work together, how they are both in fact the same process.

One Response to “After the New Economy”

  1. This weekend, please

    Check out The Pinocchio Theory off of my link list- there is a great, informative (and, informed) review of After the New Economy by Doug Henwood.

    If you’re even slightly interested in economics, that is 🙂