Some political implications

The approach to macroeconomic intervention briefly discussed in the fore­going has encouraged a technical interpretation of the work of the state vis­a-vis the economy. Given the objective of stabilizing a private enterprise economy, some economists attempt to treat the methods of stabilization as “tools.” Political process and political judgment need not play a role.

Treating stabilization as a technical problem fits nicely into the classical agenda of depoliticizing society. Even when we need the intervention of the political authority, we can drain politics as much as possible out of that intervention. Is stabilization an essentially nonpolitical matter? Debate over this issue has inspired a number of contributions to political economy. Here we briefly summarize two: the political business cycle and the crisis of legit­imation.

One difficulty encountered by the Keynesian approach derives from lim­itations in its conception of the state. If we interpret the state as (or as potentially) a competent economic manager, we need not employ an explicitly political context to consider what it does. We can think of economic man­agement as an economic activity even if that activity is undertaken by a political authority. However, if economic management impinges on the po­litical process, and if state intervention depends on politics as well, we cannot employ the image of the state as competent manager. We cannot ignore politics in thinking about stabilizing the economy.

The political business cycle literature emphasizes one important political dimension of demand management (see Kalecki, 1971). The state of the economy has a significant influence on the outcome of the electoral process.

A political dimension with even broader implications than those associated with the political business cycle is the challenge to the basic institution of the labor market. Some theorists see this challenge in the effort to stabilize the economy and protect incomes from the vicissitudes of the unregulated market (see Offe, 1984). The more functioning of the economy becomes an administrative-political matter, the weaker the hold the idea of self-regulation has over the population. The domain of commodity relations (especially in the older sense associated with more or less free markets, especially in labor) alters in ways that undermine assumptions about the legitimacy and inevit­ability of the dependence of livelihood on the wage contract. Thus “decom­modification” of labor leads to a crisis of legitimacy that raises a political challenge to the market economy. Demand management contributes to this crisis so far as it weakens the link between income, employment, and ag­gregate demand. The more economic management encourages expectations regarding incomes the free market can only satisfy intermittently if at all, the more demand management undermines the legitimacy of the self­regulating market.

Thus, demand management, even if made a depoliticized (administrative) process, has politically relevant consequences. It places the issue of the con­figuration of public and private on the political agenda.

If the process of demand management alters the definition of human ca­pacities as commodities on whose value must depend the welfare of the individual, it makes the boundaries of the market and the specification of the nature of a commodity problematic. This constitutes a lead-in to a political debate over market self-regulation. In other words, it suggests a (political) process of redefining the market as the primary social institution sustaining property relations and the pursuit of private interest.

It needs to be emphasized that this does not, strictly speaking, politicize the economy, if by that we mean making the economy a political system. Rather, it encourages collective rethinking of the nature and limits of the market. This rethinking is a political process that redefines the market, not a political process that takes the place of the market or does its work.

When some of the work of the market is taken over by a public authority, this does not in itself politicize that work. The political process can also transfer wants and their satisfaction from private to public (“reassign” them, in Walzer’s language [1986]), from market relations to administrative process. If politics is the assignment process, and administration the work done sub­sequent to reassignment away from the market, the market is not made po­litical.

In drawing this conclusion, we have assumed a clear distinction in nature between politics, administration, and the market. This distinction presumes a conception of politics and economics that restricts each to a domain rather than treating them as more general modes of action and interaction applicable in principle to all social domains.

Even within the suggested conceptual framework for talking about politics and economics, the administrative process may not be insulated from politics. If enough discretion remains in administration of outcomes reassigned from the market to the public authority, administration can contain a political dimension. It is not inevitable that it do so; administration is not in its nature politics. But it can become politicized.

We should observe, in addition, that if we define the economic as the provisioning process, reassigning dimensions of want satisfaction from market to administration makes the economy an administrative system. Framed in this way, the economy might be politicized if the administrative process allows sufficient discretion and is made vulnerable to a struggle between contending groups. The result is not an identification of the political with the economic, but the specification of a definition of the economic and the circumstances under which the economic process is politicized. It remains relevant to note that the political-administrative process that oversees the provisioning of wants contains distinctly economic, political, and administrative aspects. That these aspects come together in practice does not mean we will understand that practice better without clearly distinguishing between them and under­standing that each has its own imperatives, logic, and meaning.