Zombies and Luddites

One of the defining features of political economy since 2008 has been the persistence of ideas that were discredited by the global financial crisis. Paul Krugman popularised the term "zombie" to describe them, prompting the title of John Quiggin's 2012 book, Zombie Economics, which examined "how market liberalism depends on ideas that have failed", such as the Great Moderation, the Efficient Markets Hypothesis and DSGE. Quiggin starts by acknowledging both Krugman and Keynes, which shows that the zombie trope has a long pedigree. His epigraph is one of Keynes's more famous quotes: "The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back".

It's worth extending the quote, as Keynes then defines the problem more mundanely in terms of institutional conservatism - i.e. people in positions of power are usually middle-aged and have adopted much of the existing orthodoxy during their ascent: "I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas. Not, indeed, immediately, but after a certain interval; for in the field of economic and political philosophy there are not many who are influenced by new theories after they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest. But, soon or late, it is ideas, not vested interests, which are dangerous for good or evil". The coda suggests that good ideas will triumph in the end, which in turn implies that vested interests have little staying-power (Keynes ended up in the House of Lords, which suggests otherwise). Paul Krugman is essentially battling to reinstate ideas that came to the fore as far back as the 1930s (e.g. the Hicks-Hansen IS-LM Model), so he appears to be up against more than just a generational lag.

Insofar as wrong ideas live on until they are refuted, the high percentage of zombies in the field of economics reflects the nature of a social science whose theories are not easily falsifiable. Much the same is true of history, though there the zombies tend to be myths, which are perhaps better thought of as ghosts - i.e. claims that are easily disproved but survive because we like a good story. A real zombie idea in history is usually a claim about process that can be abstracted as a general rule from a specific historical event. For example, in a routine bleat about the ethical decline occasioned by social media, Rafael Behr claims: "It has been said many times that the communications revolution we are experiencing is analogous to the disruption of old European authorities caused by the invention of the printing press. The capacity to knock out thousands of pamphlets in vernacular German and English broke the monopoly of the Latin-writing class on interpretations of scripture and law". In other words, technology directly triggers social upheaval, which is naive determinism.

The suggestion that Latin went into decline among the clergy and lawyers after the mid-15th century is obviously nonsense, as is the implication that the vernacular was excluded from political life before then. English supplanted Latin (and more importantly French) in most areas of public life a hundred years prior to the first printing press. Chaucer preceded Caxton. It was the Renaissance that saw the wider adoption of Latin as a technical and literary language, a process that was accelerated by the dissemination of classical texts in printed form. Behr is pushing the zombie idea that the Reformation was essentially the product of the printing of vernacular bibles, though he is using the idea to emphasise the distorting power of technology as a caution against the enthusiasms of social media (i.e. Corbyn-mania). He ignores both the possibility that the Reformation may have had other causes and the role of vernacular printing in the Counter-Reformation.

Zombie ideas are not merely myths, or the sort of pseudo-science favoured by dictatorships, such as Lysenkoism, far less the tenacious conspiracy theories that mutate over time from The Protocols of the Elders of Zion to black helicopters. A prime-cut zombie idea has the flavour of a natural law, and is often supported by explanatory parables. Thus naive technological determinism (which ignores the social determination of technological development and assumes that progress is the uniform advance of knowledge) is proven by the printing press dethroning Latin. The persistence of a zombie idea, in the sense of it being taken seriously and having an influence on public policy, is the product of the ruling ideology. This is why most zombie ideas appear to emanate from the political right. For example, the Laffer Curve is obviously a reflection of the interests of the elite, even down to the story that Art Laffer sketched it on a napkin, proving both its simplicity and revealing its social context (rich people enjoying lunch).

In fact, Zombie ideas are to be found across the political spectrum. An example of a lefty zombie in mainstream economics would be the job guarantee, an idea that should have been buried in the 1970s as structural unemployment took hold. The idea is kept alive mainly by Modern Monetary Theory (MMT) advocates, who believe that the state can employ a "buffer-stock" of workers to control rates of both unemployment and inflation. Jeremy Corbyn's proposal for "People's QE", whereby the Bank of England buys the bonds of a national investment bank that in turn funds infrastructure projects, is a variant on this. The most persistent zombies are those that are commonly advanced by both left (i.e. respectable centre-left) and right (i.e. non-lunatic right). Naive technological determinism is one example, which in turn reflects the breadth of neoliberal ideology and the power of its supporting parables of progress, disinterested science and the marketplace for ideas. A classic ecumenical zombie, that never appears to lose it charm, is the Lump of Labour Fallacy and in particular its supporting parable, the Luddite Fallacy.

Katie Allen in the Guardian gave us a textbook run-through this week in an article entitled "Technology has created more jobs than it has destroyed, says 140 years of data". This turns out to be the work of "economists at Deloitte" who have analysed the job titles reported in UK census data since 1871. There are some obvious methodological issues with this, chief being that the normalised index of occupations encodes assumptions and that these change over time. The modern era has seen not only job title inflation (e.g. "manager") but occupational ambiguity (e.g. the application of "analyst" to a raft of clerical roles). Allen starts with the stock parable: "In the 1800s it was the Luddites smashing weaving machines. These days retail staff worry about automatic checkouts. Sooner or later taxi drivers will be fretting over self-driving cars. The battle between man and machines goes back centuries. Are they taking our jobs? Or are they merely easing our workload?"

The Luddites did not fear that they would be replaced by weaving machines, but that the new technology would be used to de-skill their job and thus force down wages. They were motivated by the falling returns to skill rather than technophobia. The broader imputation is that workers instinctively subscribe to the Lump of Labour Fallacy, the belief that there is a fixed amount of work in the economy, so that if technology (capital) directly substitutes for labour, this will reduce the demand for workers. Both the Lump of Labour Fallacy and the Luddite Fallacy are strawmen - i.e. their critics are many while their advocates are largely mythical. Ironically, the true believers in the idea of a fixed amount of work were the proto-capitalists of the 17th century, who were influenced by both mercantilism (the idea that there is a fixed amount of trade in the world, justifying state power to seize and secure it) and the debates on poor relief that started after the dissolution of the monasteries (notably the fear that outdoor relief would deprive others of work, which lives on today in that other zombie, the public sector "crowding out" the private sector).

By the late nineteenth century, the Lump of Labour Fallacy had been refashioned to resist demands for a reduction in working hours, the new strawman being the claim that a general reduction in work-time would require more workers to be employed. In fact, the agitation for reduced hours reflected the understanding of workers that increases in productivity both justified and were a consequence of reduced hours. Pressure for a reduction in work hours continued through the twentieth century, but by the 1960s the priority of organised labour was increased wages (and overtime), which reflected the profusion of commodities. During the neoliberal era, debt has increasingly substituted for wages and systemic under-employment (i.e. involuntary reductions in work hours) has grown. The strawmen have now been repositioned in support of creative destruction and technological disruption: the robots will do the shit jobs and we'll be freed up for creative and caring roles. The common feature throughout this history is the reluctance to address what the changing composition of roles means in terms of power, and specifically the impact on wages - the Luddites original concern.

Allen exhibited the ability to hold (or at least report) conflicting views on the subject the following day, when she penned a piece on the falling returns to education: "UK graduates are wasting degrees in lower-skilled jobs - Over-qualification has reached saturation point". Larry Elliott helpfully glossed this with a reference to the economics canon: "So much for Say's Law. The expansion of higher education in Britain has been based on the law espoused by the famous French economist that supply creates its own demand. So increasing the number of graduates should increase the jobs that need a degree". This implies that there is a fixed number of graduate jobs, which is no less daft than supposing that the total number of jobs in the economy is fixed. This is an example of (to borrow Keynes's term) a vested interest. The middle classes are conditioned to believe that society and economy are inescapably constrained, necessitating competition and sharp elbows for limited school places and nice homes. This constraint now extends to graduate jobs, with scare stories about unpaid internships jostling in the media with the trusty standby of property prices.

While the tribunes of the middle classes would never concede the lump of labour theory for the economy as a whole (they'll still insist the poor should accept that crap wages and insufficient hours are the price we must pay for progress, while the unemployed will be told that there is always work to do), they will accept that there is a fixed amount of material success in society and this should be reserved for those who have invested in their human capital. The concern over "graduate saturation" looks like a harbinger of a further shift in the political wind towards the pricing-out of lower class students (to "maintain standards"), which will probably be effected by fully commercialising student debts, limiting means-tested state support, and allowing universities to balance the books by removing the cap on course fees. In other words, we'll end up much like the USA. To judge from the steeply rising cost of student digs, this process is already well under way. The zombie shuffles on.