The Revolution Will Not Be Pomo-icized

Why Critics of Economics 
Can Ill-afford the “Postmodern Turn”
Yanis Varoufakis (University of Athens and University of Sydney)
Reposted from Post-autistic Economics Review 2002 Issue 13.

 The dissident’s nightmare 

 It is a sad irony when the activities of dissidents help shore up the establishment they set out to subvert. The point of this piece is to warn the ‘economic’ dissident: Beware the Postmodern Turn! The argument will turn on the thought that postmodern criticisms of economics serve the twin purpose of (a) releasing pent-up frustration with the profession while, at once, (b) reinforcing its ideological backbone.

 Every era has a tendency surreptitiously to guide young dissidents toward a specific ‘umbrella movement’; one that ends up shaping their milieu. Existentialism, structuralism, neo-Marxism, etc. have given their place, in our era of devalued political goods, to Postmodernity and Deconstruction. Without wishing to discuss the ‘postmodern condition’ generally, I shall concentrate entirely on its likely effects on the struggle to ‘civilise’ economics. In this regard, the problem with postmodern thinking is that it stands no chance of success.

 Postmodernity’s criticism of grandiose Theory may be terribly satisfying to those who adopt its grandiose pronouncements. However, the satisfaction at having lambasted all Theory is momentary and the ensuing subversion short-lived. To paraphrase Marx, the subverters will be, eventually, subverted and, tragically, the neoclassical establishment will come out stronger and better equipped to obfuscate social reality than ever before.(2) If I am right, the task of the PAE movement must be to clear the way for radical criticism that avoids the postmodern trap as resolutely as it opposes economic autism. 

Dissidents or the economists’ handmaidens? 

 Modernity marginalised Religion, but retained religious transcendence by worshipping Theory. Economics emerged as the highest form of this secular creed and enchanted all of its practitioners; free-marketeer and protectionist, liberal and Marxist, Keynesian and monetarist. It now seems that some economists are breaking ranks; joining the ‘other’, the postmodern, side which defines itself in anti-theoretical tones that exude an atheist’s anti-religious fervour. The danger is that the legitimate anger of students (which has given rise to the PAE movement) will draw them to an apostasy without a future. For despite its considerable oeuvre, postmodern criticisms of economics are doomed to shrivel and be absorbed by mainstream economics; the predator turning into unsuspecting prey. I risk this prediction for two reasons.

 First, postmodernists allow economics to parade as equally scientific as the natural sciences (albeit on the grounds that no discipline is truly scientific). They are right of course to think that all theory resembles religion, since it also seeks to give meaning to the practices and expectations of whole communities. However some theories are capable of transcending religion and approaching objectivity better than others. Nature’s habit of working independently of our beliefs about it means that the natural scientist can devise experiments which have the power disinterestedly to discard falsity and thus forge knowledge and progress. Society, on the other hand, is corrupted to the very marrow of its bones by our collective beliefs about it, and can therefore provide no objective test of social theory (the latter being part of the very web of beliefs that society is made of). Thus social theory, unlike thermodynamics, is condemned to remain untestable, and stuck in the realm of opinion. Economics valiantly attempts to extricate itself from this fate with a touching commitment to mathematics but, sadly, it only ends up as a religion with equations.

 Postmodernity errs in thinking of this as the inevitable failure of all Modernist enterprises. It lambastes economists’ churlish reliance on an Outer Wall of Algebra and an Inner Wall of Statistics but overlooks their success at never even coming close to the nature and the dynamics of contemporary capitalism, thus shielding the latter from rational criticism. But such is the fate of all idealisms which give language an existence independent of the material conditions of social life and reproduction. If only postmodernist critics understood theology and mathematics a little better! Perhaps they would have recognised in economics the greatest proof that Modernity is saturated with its negation.

 Which brings me to the second part of the argument: Postmodernity not only lets neoclassical economics off the hook but, more worryingly, reinforces it copiously before dissolving into it. Consider what the postmodern rejection of metanarratives means at the individual level: It means the loss of any capacity to scrutinise one’s private urges rationally on the basis of some collectively constructed notion (or metanarrative) of the Good. Stripped of those capacities, the individual fragments into a community of selves, a bundle of ordinal preferences, and ends up with no one self whose preferences those are.

 In this Empire of Ordinal Preference the only possible data that social theory can go to work with are the differences in individual whims and freely-chosen identities. These data are then, courtesy of their ordinal properties, impossible to compare across persons (for this would require a metanarrative) or procure a view of capitalism as a system. Thus in a fully-fledged postmodern schema, social relations are confined to interplay, voluntarism, tolerance and exchange; society is the playground where the latter unfold; and discussions of the General Will, exploitation and developmental freedom make no sense. Does this all sound familiar?

 If it does, the reason is that neoclassical economics went down that alley decades ago. The asymptotic limit of postmodern fragmentation is the neoclassical general equilibrium economic model. Both Neoclassicism and Postmodernity espouse a radical egalitarianism which is founded on the rejection of any standard or value by which either individual action or the institutions of late capitalism (e.g. the labour and capital markets) can be subjected to rational criticism. In short, whereas the problem with modernist mechanism was that its view of our world excluded value from the outset, the problem with Postmodernity is that it ends up having no view of the world and becomes easy-pickings for a similarly viewless/valueless tradition, one which bears the additional weaponry of intricate mathematics and endless econometric ‘evidence’.

 For Oscar Wilde the supreme vice was shallowness. For Postmodernity it is the New Jerusalem. Its playfulness allowed it to thrive in the friendlier waters of literary and cultural studies at a time when ‘margins’ were becoming central and classical stuffiness was going out of fashion. But now postmodernists have entered shark-infested territory. Neoclassical economics, another purveyor of shallowness, threatens to bend them to its will,(3) gain strength from them and subsequently reinforce hierarchies more oppressive and totalising than those the postmodernists set out initially to dismantle. 

When the IMF dictates its policies to some hapless Third World country, there is a strong whiff of the radical egalitarianism shared equally between general equilibrium and Postmodernity. The same whiff accompanies, and legitimises, the inexorable devaluation of political goods, the vulgar commodification of human bodies and values, the impossibility of conceptualising freedom-from-the-market, the depiction of Central Banks as ‘independent’ only when under the thumb of financial capital, the confusion of liberty with the freedom to exploit and to demean and, above all else, the portrayal of coercion as tâtonnement. Thus Postmodernity unwittingly blows fresh wind in the sails of neoclassicism, the undisputed champion of the deconstructed human agent. While warning us correctly that new authoritarianisms will be born when we get caught up in our own rhetoric, it offers no resistance to the current authoritarianism of neoclassical economics and, more so, the socio-economic system that it serves.

 Conclusion: The dissidents’ dilemma 

 When a fresh wave of criticism is unleashed, it picks up along the way pre-existing discontents, hitherto bopping along hopelessly near the surface, and propels them toward the shores of exposure and respectability. Lonely dissidents suddenly find a new ‘movement’ that will have them. New hope of escaping obscurity is thus born.

 In recent years many dissident voices had to adapt themselves to postmodern-speak in an attempt to be ‘included’ on the postmodern bandwagon. The PAE movement must release such voices from this obligation. Social criticism of economics must reclaim an awareness that to reject the scientific status of economics is not to reject science in general or to espouse postmodernism.

 Indeed irony and ambiguity were utilised, long before Postmodernity, by thinkers eager to come to what a more confident past once knew as the truth. To re-establish irony, ambiguity and indeterminateness in the discourse of economists would be a triumph of the spirit. But it would not be a postmodern turn. For the latter has no monopoly on an appreciation of the radical indeterminacy of social processes (as Hegel would be all to eager to remind us) or the importance of not taking our selves, and our theories, too seriously. On the contrary, Postmodernity undermines itself by offering Modernity’s most awful purveyor another means of extending its dominance.

 So, we have arrived at the dissident’s dilemma. The postmodern kernel within neoclassical economics forces a stark choice: Submit to homo economicus and model our messy world’s dynamic as if a series of suburban disputes between postmodern neighbours. Or, seek an historically-grounded understanding of how systematic patterns of power and economics are the joint products of the continual feedback between technological developments and evolving social formations. The difference between the two options is not theoretical; it is ideological. The postmodern turn will be chosen by pseudo-dissidents whose prime interests lie in acquiring a chic image; one that the self-effacing postmodern criticism is good at imparting. The less-fashionable option of working towards historically-grounded knowledge will appeal to the truly ‘unreasonable’ dissidents; those driven by an unbending commitment to a rational transformation of society.

1. Department of Economics, University of Athens, 8 Pesmazoglou Street, Athens 10596 and Department of Economics, University of Sydney, Sydney, Australia. Email:
2. Recently, Routledge published a volume on the nexus of Postmodernity with economics edited by Jack Amariglio, Stephen Cullenberg, and David Ruccio (2001). The following thoughts have been extracted from my review of that book (forthcoming in the Journal of Economic Methodology)
3. Courtesy of a more sophisticated take on the same type of philosophical shallowness.
Cullenberg, S., J. Amariglio and D. Ruccio (2001). Postmodernity, Economics and Knoweldge, London and New York: Routledge
Varoufakis, Y. (2002). ‘Deconstructing Homo Economicus?’, Journal of Economic Methodology, forthcoming.

The reason why political economists see idealist postmodernism as superficial and epiphenomenal is because there’s no ontological depth to idealism, see the critique in critical realism & Bhaskar.  In a 2-D world of epistemological surface viewed from different points on that surface, liberation looks methodological individualist, methodological instrumentalist, and in methodologically-imposed equilibrium. But that is exactly what bondage looks like in a critical realist, historical materialist world of ontological depth.

A further note to self–explore this hypothesis:
The Kantian rejection of ontology and elevation of epistemology does not solve the problem of human reflexivity, when studying social relations.

Coming attraction:

Though engaging or convincing postmodernists is not germane to my life’s intellectual (or otherwise) projects (I’m simply not in that social location–though I am in that geographic location.), I’ll post notes on Zizek, Badiou & Agamben’s niche efforts to explain leftist traditions to postmodernists. Unlike other leftists, I don’t mind the Z-B-A niche. There’s a real problem in the Anglosphere with superficially-liberatory postmodern misunderstandings and distortions of leftist thought that bolster the hegemony of ideological conservative economics and the adoption and diffusion of neoliberal governance. …Just as there’s the persistent problem of the neocon swerve (from a leftist base) within the Anglo-American Zionist intellectual community. Where there’s network, status- and/or resource-access incentive, humans are great at rationalizing, even if it is ugly; and how they do it, how they are motivated, and the demonstrable telos of those rationalizations are of some interest.


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