It has been pointed out numerous times that neoliberalism, the prevailing orthodoxy of governance, grew off the carcass of neo-classical economics. That this intellectual paradigm has failed is obvious to most people except for politicians in the Anglo-Saxon world and the EU. A new paradigm that brings together rigorous rationalistic thinking based on empirical evidence is needed to bring economic thinking back to where it should always be: in the service of the society/environment as a whole.
Such a paradigm is suggested and foreshadowed in a new book, The New Enlightenment. On Steven Pinker & Beyond, (Australian Scholarly Publishing, Melbourne, 2019) by Brian Ellis, Professor Emeritus of Philosophy at La Trobe University. This rich book steps back behind the fundamental paradigms of knowledge that defined eighteenth century Enlightenment thought and which have fed into the kind of thinking that has produced the neoliberal conception of an economy and government.
Characteristic of Enlightenment thinking was a kind of abstract mechanistic theorizing of the universe dependent upon some untestable a priori axioms, now overturned on the basis of more recent scientific knowledge. This was transmitted into neoclassic economics in the late nineteenth century, and such theorizing has resurfaced abundantly in the writings of those who believe in the unquestioned axiomatic status of the so-called free market.
The economic theory neoliberals have adopted and proclaimed is one they consider highly rationalistic. For them the market is a communications system conveying millions of rational decisions between individuals (including corporations) about buying and selling, acquiring and transferring. It is rational because it assumes people are self-interested and have as close to perfect knowledge as possible. It is sublime in that ideally in its purest manifestation it is free flowing without external intervention.
In this understanding the market becomes a paradigm for human behaviour and culture writ large, a view accepted unquestionably in the halls of government, the large consultancy firms and the phalanx of business economists as well as much of the mainstream media. For three decades it has been the conceptual foundation on which all other aspects of behaviour, individual, institutional, and governmental function.
In the first half of the book Ellis describes how this form of a priori thinking ultimately comes out of the eighteenth century Enlightenment. Against it he argues for a theory of scientific realism, according to which hypotheses must be tested empirically if they are to be accepted: “The concept of scientific knowledge has changed significantly since the eighteenth century. The demand for axioms, as required by episteme,has been dropped in favour of testable hypotheses. A testable hypothesis is, like an axiom, a basic postulate. But, this kind of postulate has logical consequences that are testable. … if the consequence is false, then by logically valid contrapositive reasoning, the original hypothesis must also be false.” (P.48)
Axiomatic acceptance of the centrality of the “market” as the economy has been achieved historically without any kind of testing of the hypothesis that the market is efficient, always moves to an equilibrium state between buyers and sellers, and is the most effective and transparent method of distributing goods and services. However, such is the amount of raw statistical data available now, and the capacity provided by digital technology to analyse it, that the hypotheses about the superiority of the free market can easily be tested.
But tested against what criteria? Here again, using insights gained from moral philosophy, Ellis argues for a new kind of social contract that would provide a benchmark against which testing could occur: “… it must be well adapted to the people it serves, and to the environment in which they live. … A global social contract would allow for the extension of this concept of a good country to that of a good world—one in which people may flourish as individuals in their own societies, and yet live in harmony with people from most other countries.” (p.142) As quoted this is very general, but it is spelled out in detail in the second half of the book. Above all the contract must be fair to everyone in society.
More specifically this contract would be worked out in response to such questions as: “What kinds of things should be freely available to everyone?; What kinds of things should be within the reach of all working families?; How should people be rewarded for the work they do?; How should business people be rewarded for their products?; What roles, if any, should governments have in creating the fairest and most productive kinds of society they can?; What institutions should exist, and what roles should they have in the overall project of creating the fairest and most productive kind of society? “(p.259)
Arising from this, the role government should play is to create “(a) the fairest and best social contracts they can for the people over which they are charged to govern, with the aim of enabling their people to live the best, and most satisfying lives of which they are capable, and (b) be a good global citizen: i.e. have due respect for the UN charters on human rights and governance, …” (p.140)
Both roles are discussed at length in the book, as are some practical means as to how they could be achieved, especially in supporting the organization of resources and jobs to sustain full employment. If necessary, this may require cutting working hours to enable everyone to work and to lead a full life, however this might be defined. This forms part of the explicit social contract where society (and government) as a whole fosters social development based above all on fair allocation of resources, quite the opposite of a neoliberal society where everything is predicated on the sanctity of the individual.
This is not to say that every one will be the same, individual preferences can still be expressed, but the overarching goal of society will be one which establishes fairness of opportunity and allocation of resources, something that cannot be left to the market.
Ellis also argues that the first Enlightenment, being fundamentally a European phenomenon, though subsequently translated to other countries through colonization, should embrace Asian countries where literate civilizations extend back three to five thousand years. These civilizations have a rich history of literary reflection on the ideal society and the behaviour of individuals and social classes within that society. Hence the book includes chapters on China and India, in an attempt to cover some Asia civilizations. Clearly this is of fundamental importance given the extent to which globalization has pervaded the world over the past forty years, creating an interdependent world economy, replete with trading rules that attempt some degree of fairness.
But his book is not just about overturning the existing paradigm and creating an economy more equitable than present. This would be just tinkering at the edge. In the long term Ellis supports the idea of a kind of world government, one that could coordinate national resources to confront such fundamental issues as climate change and systemic poverty in underdeveloped parts of the world, whilst also enabling individual national differences to be maintained. It is a book very rich in detail that is surely the beginning of a project for the development of a New Enlightenment.
Greg Bailey is Honorary Research Fellow in Asian Studies, School of Humanities and Social Sciences, La Trobe University. Formerly Reader in Sanskrit.