03 March 2009

Roberto Unger on the World Economic Crisis

I've just come across this recent piece ~ "Using the Crisis to Remake the Market" ~ by Roberto Mangabeira Unger about whose work I've posted pretty regularly. He starts as follows:
The financial crisis of 2008 provides an occasion to advance two projects of vast consequence. One project is to revise the post World War II settlement for the purpose of making international arrangements more hospitable to national divergence, experiment, and alternatives than they are today. The other project is to reshape some of the institutions that define market economies so that they can afford more opportunity to more people.
And he concludes this way:
Such initiatives would represent a small down payment on a large shift in the focus of ideological controversy. It is not enough to regulate the market economy. It is not enough to counterbalance inequalities generated in the market by resorting to compensatory redistribution through tax and transfer. It is necessary to change piece by piece and step by step, the institutions that relate finance to the real economy if we are to recover from the present crisis in a way that helps us avoid future crises. Other ideals, of inclusion and opportunity, will require us to enlarge the scope of this practice of institutional reconstruction. The crisis is a chance but it is also a crutch. The task of the imagination will be to do the work of crisis without crisis.
In between Unger notes that, among other things, the projects he identifies require that we recognize something that I have pointed out here before, namely that financial markets have little to do with providing capital to productive economic activity that might benefit large numbers of people and lots to do with rewarding risky speculation by a very few. So, our stock markets - as they are currently configured - hardly are necessary to the functioning of a market economy. They can be reformed and made more useful. That is the aim of experimenting with political-economic institutions [1] [2] [3]. The question is whether an organized political constituency will emerge to push that agenda. Given the sheer mal-distribution of income, wealth and opportunity in the U.S. (to say nothing of other palces) such a constituency exists, but remains, in Dewey's words, "inchoate." What is needed is for it to recognize itself as a pubic and act as one.

Labels: , , , ,


Anonymous Anonymous said...

My question to Mr. Unger is this: what are you offering? It's easy to say: "We need to reorganize institutions." That seems to be the academic one-line response to virtually every societal challenge. I feel like that's basically just a bunch of words, though. I don't think it's possible to engineer economic institutions and frameworks. Our systems are the results of an organic, historical process. If you try to institute experimental, alternative programs, on a macro level, and in one broad stroke, the result will likely be chaos and failure. This is not to say we shouldn't think about reforming our institutions and making them more fair and efficient, but broad and vague statements about reorganizing the whole system is a bit juvenile, in my humble opinion.

03 March, 2009 18:14  
Blogger Jim Johnson said...

D, The problem is that we have engineered political economic institutions. They do not, in general, simply "evolve"; we do not have spontaneous order in some Hayek-ian sense. Take, for instance, the shape of the Federal Reserve system int he U.S.; that was engineered and not for the sake of efficiency or fairness. that does not mean that we can have wholesale replacement of what we've got. And Unger doesn't actually advocate that. But we can start from where we are, recognize that the institutions we have are neither "necessary" nor, for various practical or normative reasons, attractive, and experiment with alternatives. JJ

03 March, 2009 23:50  
Anonymous Anonymous said...


You're right: we have engineered and introduced institutions into society, but I would argue that there is nothing conceptually new about most of them. The Federal Reserve, for example, is just a central bank, and banking has been with us since the birth of civilization. The same with the BIS, the IMF, and the world bank... these are new spins on an old formula. I mostly agree with you, though. The global system we are now faced with does call for new ways of organization. I was just thrown off a bit by Unger's language. It almost sounded like he wants to use society as a test tube. I read the piece more carefully this time, however, and found him to be quite reasonable. I jumped the gun. My bad!

04 March, 2009 19:08  

Post a Comment

Links to this post:

Create a Link

<< Home