Posts Tagged ‘Karl Marx’

What happens instantaneously on a pinhead that exists nowhere and everywhere? Most economic activity according to the dominant strain of economics. The absence of space and time is just one reason why such economics is so unhelpful in addressing questions of justice, equality and the environment.

Cities grow in particular places and over certain periods in history, forests grow somewhere and when they are cut down this happens one day at a time and, even in the age of the internet and global trading, most markets still have locations and goods take time to be delivered – from China or elsewhere. Like the movement of the planets, the changing weather, animals hunting and plants growing, economic activity happens in space and time – it can’t do otherwise.

Space and Time play little role in Economics – though they are crucial in all economic activities

Given the absolute centrality of space and time for all things economic you might be forgiven for thinking that they would be important components in modern economic ‘science’. They are not. In neoclassical economics, which retains a vise-like grip on both academia and policy making and provides the intellectual support for the ideology of neoliberalism, space and time are almost totally absent. Why is this? Why does it matter for people and the planet? And are there more useful alternatives?

In the 18th and 19th centuries all economists were political economists – Adam Smith, David Ricardo, J S Mill, David Hume and Karl Marx. Even while they were constructing simplified models of the ‘invisible hand’ and international trade, they were profoundly aware of the negative consequences an unfettered capitalist system can and does have for great swathes of humanity and for the environment.

But economics wanted to be more scientific and ultimately that means more mathematical. Casting around to find a suitable mathematics in the physical sciences, the first neoclassical economists (Leon Walras and W S Jevons for example) adopted the best they could find: Newtonian classical mechanics. Though perhaps natural, this choice has been of crucial importance to how economics has developed since. Even as most other sciences have moved beyond a narrow mechanical view of the world, economics has stuck with it.

Many things in the physical world can be explained and predicted using classical mechanics: how far a bullet will travel or how planets move around the sun in an elliptical orbit. It still lies at the heart of much useful technology.

Billiard balls remain still, in “equilibrium”, until the player uses his cue and applies a force to a ball. The ball moves, bumps into other balls (and indeed into the edge of the table) before eventually everything settles down again in a new equilibrium. If you can specify exactly the starting positions, the masses of the balls, the forces applied and the properties of the materials then you can predict not only where everything will end up but also the routes the balls will take and how long it will all take – so space and time are not only explicitly included but also absolutely fundamental.

What neoclassical economics did was take this model and replace mass and distance with price and quantity.

Neoclassical economics adopted a stripped down version of classical mechanics it still uses to this day

A market is in equilibrium if it “clears”, this means that the quantity people want to buy at a given price equals how much people want to sell. This applies whether the market is for labour, for goods or anything else. Everything is stable until there is an impulse or shock. This is the equivalent to the cue hitting a billiard ball. These impulses might be changes in consumer tastes and preferences, suppliers using a new technology or a change in the price of labour or raw materials. Suddenly it looks as though the market might not clear and unemployment or stock shortages might appear. Of course in mechanical physics such “out-of-equilibria” are normal, the billiard balls are all moving through space and time till they settle down again in new positions.

But to make their models tractable the early neoclassical economists had to completely strip down classical mechanics and drop any concept of space and time. Where exactly is the market operating? Implicitly the answer is that it takes place at a point, but not a real geographic point, rather an abstract point. In this sense economic transactions happen on a pinhead that is both everywhere and nowhere.

It’s the same with time. In neoclassical economics if it takes time to move from one equilibrium to another, this would mean that markets may not clear, trading could take place at “false prices” and they might never settle down again. Initially this problem was overcome by the introduction of what later became known as a Walrasian auctioneer. This purely fictive being, analogous to Maxwell’s Demon in physics, “groped” his way to a solution by repeatedly calling out prices, checking the resultant demands and supplies until prices that will clear the market are found – only then can trading take place. Coupled with the later introduction of “rational expectations” – in which actors have perfect foresight and complete information – this enabled economics to ignore space and time. In a Pollyannaish way, following any disturbance or shock, the economy jumps instantly from one equilibrium to another – going through nowhere on the way – in a type of economic Quantum Leap.

Now in real markets there is no auctioneer; buying and selling is continuous, prices actually emerge from the dynamic interaction of different agents who don’t have perfect knowledge and often use rules of thumb or customs to guide their decisions.

Harold Hotelling looked at how ice cream sellers would space themselves on a beach

Even within the neoclassical tradition there have been many economists who have introduced space and time into their work. Starting with Harold Hotelling’s analysis of where how ice-cream sellers would “space” themselves along a beach, there have developed whole sub-branches of economics: spatial economics, economic geography and regional economics. Similarly with time; economists knew economic processes took time so they introduced various types of “lags” into their models – although these did tend to disappear once “rational expectations” were introduced and things happened instantaneously. Yet unfortunately it is true to say that such approaches have remained peripheral to the big issues of macroeconomics; being confined on the whole to micro, though important, issues like transport and schooling.

The absence of space and time is not the only unrealistic feature of neoclassical economics. It also tend to ignore most important aspects of scale, energy use, resource limits, how aggregate markets are not scaled up individual demand and supply curves, and how economic actors actually interact, adapt, behave and choose. There is also no concept of time’s arrow, i.e. the irreversibility of processes and how such “path dependence” is crucial for economic development. The point is that even though all these factors have been studied by some excellent economists (usually of the non neoclassical variety), they are still marginalised within academia, business and government policy making.  Stripped down classical mechanics still rules the roost.

In 1954 Milton Friedman argued that it doesn’t matter if the assumptions made by economics are unrealistic as long as the models make accurate predictions. The sad fact is, however, that these models have not only proved spectacularly unable to make predictions, and not just of periodic financial and banking crises, but much more importantly they haven’t even been able to explain such events after the fact. When something happens that shouldn’t have been able to occur according to their models, neoclassical economists rush around trying to retrofit their theories – mostly without success.

All complex adaptive systems create inequality as seen in Zipf’s Law

As economies and other social systems evolve through time and space major inequalities emerge, in income, wealth, population densities and so on – all manifestations of Zipf’s Law. Approaches to economics that start with people, firms and institutions interacting with and adapting to each other in space and time can generally “explain” this phenomenon; inequality is endogenous or, better said, an emergent property of all complex adaptive systems.

On the other hand, neoclassical economics struggles with inequalities – they are rather mysterious. Free trade, arbitrage, the invisible hand of the price system plus economic growth “trickling down” to the poor should tend to eliminate them. Obviously they never have, so the answer must lie in making the world better fit the stylised economic models rather than changing the models to better explain the world; a completely unscientific approach that has appalled natural scientists. So, for instance, the IMF and the International Trade Organisation impose “structural adjustment” and free trade with never ending alacrity. The contention is that they will bring about economic growth and ultimately lead to a reduction in poverty and inequality. Of course it never happens and millions suffer the miserable consequences.

Nicholas Georgescu-Roegen an economist who took entropy seriously

Turning to the environment, in scientific terms neoclassical economics is a “closed system”, consumers consume, firms produce and money circulates to oil the wheels. It’s a circular flow. Implicitly a boundary circle has been drawn around the system. Things outside this circle, such as finite energy or resources, the environment or even other species, either don’t exist or are treated as “externalities” and very often not even “priced”. Energy and resources can be had in limitless quantities forever, though the input price may vary. This completely misunderstands the two laws of thermodynamics – the conservation of energy and the entropy law – both of which operate in space and time. All economic wealth is created by energy and resources. These often take eons to accumulate in specific locations and are not limitless, yet they can be used up very quickly indeed in a mass entropic civilisation such as ours. The consequences are there for all but the blinkered to see.

It’s very unlikely that neoclassical economics will ever be able to make a real contribution to alleviating poverty, tackling ecological despoliation and moving us towards a more just and sustainable world. But there are many other sorts of economics in which human and planetary justice matter. It is to these that we must look.

This is a two-part essay. In this first part I would simply like to emphasise or reiterate that conducting any investigation into what happened in the past, in any type of historical writing (historiography), choices need to be made. Whether the choices, and the reasons for such choices, are made consciously or not, they are not optional. I also argue that historians should be as explicit as possible regarding their choices. All historical writing involves subjectivity, and is even in some way always ideological. Yet if we want to say something with meaning and relevance, and not just produce another literary text, then we need to make clear the distinction between what we have chosen as our subject and perspective (and why) and what we believe to be the facts that we have used as evidence for our interpretation. This might appear to be self-evident but it is still only a minority practice.

Sicilian Vespers

Sicilian Vespers

In the second part, which I hope will follow shortly, I will try to illustrate some of these issues by contrasting two very different historical approaches to the same event – the Sicilian Vespers of 1282. These approaches are those of the famous British historian Sir Steven Runciman and the nineteenth-century Italian Michele Amari. They both produced books called The Sicilian Vespers. Although each wrote his work in the form of a conventional narrative, it would be difficult to find two more divergent interpretations and ideological presentations of seemingly the same event. Amari sees the episode as an early and popular revolution. Ordinary Sicilians tried to throw off the yoke of a brutal foreign ruler. On the other hand, Runciman portrays it as the result of just another Great Conspiracy between various kings, nobles and popes, each jockeying for more power. For him the Sicilian Vespers had some important repercussions to be sure, but it wasn’t much about ordinary Sicilians.

Part 1: Making Choices in Writing History

History is not a science, although in practice it is and should be a discipline. Historical research and the writing of history more resemble a craft skill. Such skills build on an existing body of knowledge. They can be taught and their refinement and mastery needs lots of practice. In the right hands the end-product can even on occasion become an art form. Yet spilling more ink questioning whether history is a science, an art or a skill, or a mixture of all three, isn’t going to get us very far. On a less philosophical level the question is in some way similar to epistemological debates that have raged for over two thousand years. How do we gain knowledge and what is the nature of truth?  We’re still no nearer to an answer than was Aristotle. The trouble starts when we start spelling words with an initial capital letter: Knowledge or Truth for example. The Germans have a wonderful word for this, they call it Verdinglichung. This literally means making something, usually an abstract concept or idea, into a real thing. In English it is usually called reification.

Regarding the writing of history, I would argue that there are indeed facts about the past as well as many historical statements that are either true or false, but there really is no reified ‘Truth’. Some post-modernists would even argue with the first part of this statement and suggest, following the lead of such French thinkers as Lyotard and Derrida, that there are no historical facts at all. I disagree. There will be just a little more to say on this subject later on. But this essay is not primarily philosophical and it certainly isn’t designed to address the question of post-modernism’s so-called challenge to the practice of writing history. For that I can do no better than recommend both Keith Jenkins’s book Re-writing History and Richard Evan’s In Defence of History. My subject is of a more workaday variety. It concerns how historians make and indeed have to make the choices they do. Why are these choices important? Why should they be made explicit?

Leopold von RankeRegardless of their political persuasion most historians today would no longer adhere to a strict ‘Rankean’ approach to history. This holds that we can find out what actually happened in the past (‘Wie es eigentlich gewesen’) only from a close study and critique of primary sources and documents. A real and true historical story will somehow emerge from the documents. Even those historians who strongly propounded this view didn’t actually apply it consistently and rigorously in their own work. In Britain, we might name Sir Lewis Namier and Geoffrey Elton; elsewhere Leopold von Ranke himself.

Events in the past are the same as events today: we need to interpret them if we what to draw out any relevance or meaning at all. In writing history the fact of the events’ remoteness in time, and sometimes in space, makes the historian’s job even harder. As Saint Paul once wrote to the Corinthians: ‘For now we see through a glass, darkly.’ Unless we are content to write a mere chronicle, present an interesting antiquarian fact or simply write an entertainment (and there’s nothing the matter with any of these) interpretation is crucial.

How do historians come to their interpretations? Interpretations come about because of the choices historians make, both in conducting their research and presenting the results. Here four such choices will be highlighted and discussed: the choice of subject, the choice of perspective, the choice of method, and the choice of telling. You could extend this list, name the choices differently or shuffle what is included in each. Yet it remains undeniable that writing history can’t be accomplished without making choices. These choices are not optional. Consciously or unconsciously they must be made. To be sure, they don’t follow each other in a linear or sequential order. It’s not a question of first deciding on the subject and then on the perspective we will adopt; followed by what method we will adhere to and then, finally, how we wish to tell the story. The flows of influence are multi-directional and reciprocal. Very often, though not invariably, the choices are all made simultaneously – during the act of creation.

The Choice of Subject

What is the subject or topic that I wish to research and write about and why?  

The subject the historian chooses to investigate might be a specific event, such as an illuminating court trial, a particular case of eviction from the land or, as is still often the case, a decisive battle. It might equally well be a period in history (even over the longue durée), a social or political movement or the history of an idea. How and why do individual historians make these decisions? The answers are as numerous as historians themselves. Although I would contend that there really is such a thing as ‘authorial intent’, we might never know what these intentions are unless the author explicitly tells us. That’s often the best we can hope for.

As the history profession has grown, and as more and more ‘pieces’ of the past have been examined, many historians (as every doctoral student will know) choose subjects or topics, or have them chosen for them, that attempt to ‘fill in gaps’ in our historical knowledge. Such gaps might be glaringly obvious or they might only appear or be created by the discovery of new or unresearched documentary sources. It is easy to scoff at or parody such endeavours. Do they not lead only too frequently to ‘knowing more and more about less and less until we know everything about nothing’? Perhaps.

For others, the choice of subject matter might just be driven by the fact that the topic has always been their own speciality or interest. There are many historians who, for whatever reason, have always specialized in the English Revolution, or the Third Reich, or the earliest Chinese civilisations. They would hardly dream about writing about something else. Others might see the possibility of shedding new light on an old question – by re-examining the existing documents or sources available on a specific event, period or movement from a fresh angle. Finally, and I mean this in no way as a criticism, yet others will decide upon their subject by looking to what will be most popular, what will sell. One only has to take a quick look at the History section in any bookshop to see that this is the case. The English-speaking history reading public is far more interested in the Battle of Britain or the American Revolution than it is in Concepts of Femininity in Ancient Greece or The Enclosure Movement in Cumbria. It’s sad but true.

E P Thompson

E P Thompson

Ultimately the choice of subject is driven by the questions the historian wants to ask and to answer. If I am interested, as was Edward Thompson, in how the English working class arose, I am much more likely to research 18th and 19th industrialization than the Norman Conquest – although the later may have a tangential bearing. It is well known that the same documentary evidence can be used to answer multiple questions. This doesn’t need to be demonstrated again. More important is that the choice of question, and therefore to some extent the choice of subject, is a subjective one. This is even the case when the questions themselves only occur to the historian during the research process and not beforehand. What unites nearly all historians is that they believe that the questions they are asking and the subject they are writing about are both important and relevant. Why otherwise would they bother writing about it? Surely this is the first reason why historians should be explicit about why they have chosen to explore a particular subject. If it doesn’t have an importance or relevance to how we live today then what is the point in anybody reading it? Except perhaps for distraction, escapism and entertainment? Maybe it’s just a ripping yarn!

The Choice of Perspective

What’s my point of view or perspective on this subject?’

Any historical subject, topic or event can be explored, probed and illuminated from a wide range of points of view, or from what I prefer to call different perspectives. As with the choice of subject, the choice of perspective is subjective – there is no such thing as an impartial perspective.

If one believes that how the vast majority of ‘common’ people lived in the past and how they experienced their lives is of most importance, then one could choose to write a history with a perspective ‘from below’. On the other hand, quite a number historians still subscribe to the view that history is driven not by economic or social forces but more by the acts of great people – even just ‘Great Men’. This is bound to (and does) lead to the perspective being that of the powerful or famous, and to a prevalence of military, diplomatic and political history.

Sir Steven Runciman

Sir Steven Runciman

What I think is critical is not which perspective is chosen – there is surely enough space for all – but rather that the choice is made explicit. What perspective is the historian taking on the subject and why? At least historians such as Sir Lewis Namier, Geoffrey Elton, and even (as we shall see in Part 2) Steven Runciman were quite explicit in this regard: little people don’t matter in history so we’ll not bother considering them at all.

So writing history certainly involves making choices about events or topics, as well as choices regarding how we want to interpret them. We might even accept that these choices are ultimately all ideological – or at least moral -choices. My own ideology or morality leads me to believe that what is important is how power and dominance impinge on individuals’ attempts to lead their own lives free from oppression. In addition, if it comes to the question of making a choice between Henry VIII’s struggles with the Papacy or how Henry’s policies affected great swathes of the English population, I will unashamedly plump for the latter. In my ideology Henry VIII was just another in an interminable line of armed thugs, concerned only with maintaining and extending their power or with their own sexual peccadilloes and dynastic reproduction. Why should I have any interest in him except insofar as his actions and decisions had very real repercussions for the English people in general? But you can take a different view – at least he makes a good television series!

The Choice of Method

Do I have an historical method and what is it?

Let’s turn to the hoary question of historical method. If I were to write a history of the early sixteenth-century it would most likely be a history from below or a ‘micro-history’ of a particular place. You might wish to write a history of the place of women in early Tudor England or even the ‘mentalities’ of torture. While each of these perspectives comes with a definite ideological slant, does that mean that we can ignore the facts of ‘what happened’ in the past? That anything goes? That all history is just a text? That all history is historiography? Certain currents of post-modernist or post-structural thought suggest just this. Many, though not all, post-modernists will admit that there are such things as facts about the past, but such facts are deemed trivial. As the post-modernist ‘historiographer’ Keith Jenkins has written: ‘Such facts, though important, are ‘true’ but trite within the larger issues historians consider.’

I suggest that this view is in part just a question of semantics. We usually use the word ‘history’ to describe both ‘what happened in the past’ and the output of historians’ labours. This can indeed be a little confusing and unhelpful. But even if, for the sake of argument, we accept that it might be better to make a distinction between history and the past, this does not mean that facts, which are transformed into ‘evidence’ to support a particular perspective or interpretation, are trite. What happened in the past really happened, however we may chose to interpret it. The past is not a tabula rasa.

Rather than use a literary analogy, I think an artistic one is at least as useful. Children enjoy ‘colouring books’. These generally consist of general outlines of things that the child can then fill in as they desire. Imagine the outlines of a face. You can use whatever colours you choose, or no colours at all. You can fill in blocks of colour precisely following the lines or you can deliberately go over the lines. You could use a pointillist technique or even decide to colour only one eye. You can try to make the face represent a person you know or you could produce something that looks a bit like Munch’s The Scream. You might even want to paint in the background as a pleasant rural landscape or as a scene of ecological desolation. The number of possible choices you can make and the number of resultant works of art is truly enormous, but it is not completely limitless. If you choose to ignore the lines completely you can still create a painting, a work of art, but it won’t be a representation of a human face – however abstract. I’m sure we could debate whether this analogy is a good one or not. But as it relates to historical ‘method’ the point is this: If we write about the past, about history, without producing evidence based on facts about the past then we are not saying anything meaningful about the past at all. We are not writing history, we are writing fictional literature. Indeed this is precisely what some post-modernists insist all history is.

My contention is that this is wrong. While historical method isn’t only about the existence or otherwise of facts about the past, such facts, however hard they might on occasion be to establish, are absolutely necessary and indispensable. Without them then everything really is just a lot of signifiers signifying nothing. In this sense I am an English empiricist. So historians need to be explicit about their views on historical methods as well.

The Choice of Telling

How will I tell my history?

Once an historian has decided on the subject, articulated questions deemed worthy of answering, undertaken the required research and picked a specific point of view or perspective, the work is by no means over. He or she must also choose a way to tell the history.

Karl Marx

Karl Marx

Should it be presented using a conventional narrative voice? This was the natural choice of the majority of historians in the nineteenth century and in the first half of the twentieth century – and it is still a popular form today. Narratives have been heavily criticized and even somewhat marginalized in the Academy over the course of the last forty years. This has partly been the result of post-modernist criticism, which has (wrongly) tended to suggest that all narratives are master or meta-narratives – such as Gibbon’s The History of the Decline and Fall of the Roman Empire or even Marx’s Das Kapital. Such meta-narratives do not just use a narrative voice, they don’t just tell a story, they also try to explain the working-out or process of history over long periods of time. The causes and effects involved. Sometimes they even have a teleological slant – history is an unfolding of ‘progress’ or moving towards the inevitable victory of communism.

Yet the narrative form in no way implies a sweeping meta-narrative, nor does it necessarily lead to a conservative, bourgeois or reactionary history – as it has often been contended it does. It is equally possible to tell a radical and politically challenging story using a narrative voice. Many historians have done this to great effect. We could mention as examples the British Marxist historians Eric Hobsbawm and E. P. Thompson, or even the French Annalists Marc Bloch and Fernand Braudel.

Narration is only one way to tell history; there are many others. One could simply present an individual event or a person’s testimony. This can even be done without providing any historical context – one just lets the event or the testimony ‘speak for itself’. One can also play with time – reversing the conventional arrow of time or jumping from one time to another with or without any connections being made. Moreover, a historian can choose whether to present the story as a tragedy, comedy or farce. The possibilities of how to construct a telling of the past we want to present are endless, and all are welcome. In the final instance it is the readers who will decide on the success or otherwise of the historian’s endeavours.

Summary

Fernand Braudel

Fernand Braudel

Consciously or unconsciously, and whether they like it or not, all historians have to make at least these four choices: the choice of subject, the choice of perspective, the choice of method, and the choice of telling. The only normative point I have made is this: whatever choices have been made they should be made explicit. What are the questions that the historian will attempt to answer? Why are these questions important? Who are they important to?  How will the subject of the history help to answer the questions? Why is the chosen perspective and method the most relevant? Being explicit is important because it makes it clear that, however relevant,  the story being told is simply the interpretation of the author.

I would argue that being explicit in terms of the first three choices is always to be welcomed. Perhaps this is less so when it comes to the choice of telling – except perhaps in a very cursory way. After all in a book on history who wants to know all the thought processes the writer has gone through in deciding how best to present the work? The reader can make up his own mind as to the success or otherwise of the choice. This is not to suggest that works of history are cluttered up with too much authorial intrusion. There of many examples of such an unfortunate tendency, particularly from the post-modernist school, where the past seems to disappear and we are left with a rather tedious litany of ‘I’s.

The historian might claim that in some small way his or her history illuminates a truth about the past or a general historical pattern, but it can never be the Truth. As was mentioned earlier, almost no historian believes that history simply materializes unmediated from the sources themselves – without any act of interpretation. Yet there are many who present their work as though it does. As though their interpretation is the correct one, sometimes even the only one.

One final point: ‘Original’ history, as every doctoral student will know, should attempt to make an ‘original contribution to knowledge or understanding’ – difficult though this aim often is to achieve in practice. But writing history often has other purposes: to educate or to entertain. Many of the best histories, and certainly many of the most read, make no claim at all to be offering radically new insights into, or interpretations of, events in the past. They use no new primary sources and rely heavily on work that has been done by others before. Of course they can’t avoid interpreting things, and to that extent they need to make their choices explicit too.  It is a wonderful thing that such histories exist in such profusion today; whether in the form of books, articles or even little historical snapshots or vignettes. In many cases these more popular histories are more accessible, and often better written, than many of the rather turgid and impenetrable tracts produced in the Academy.

What happens instantaneously on a pinhead that exists nowhere and everywhere? Most economic activity according to the dominant strain of economics. The absence of space and time is just one reason why such economics is so unhelpful in addressing questions of justice, equality and the environment.

Cities grow in particular places and over certain periods in history, forests grow somewhere and when they are cut down this happens one day at a time and, even in the age of the internet and global trading, most markets still have locations and goods take time to be delivered – from China or elsewhere. Like the movement of the planets, the changing weather, animals hunting and plants growing, economic activity happens in space and time – it can’t do otherwise.

Space and Time play little role in Economics – though they are crucial in all economic activities

Given the absolute centrality of space and time for all things economic you might be forgiven for thinking that they would be important components in modern economic ‘science’. They are not. In neoclassical economics, which retains a vise-like grip on both academia and policy making and provides the intellectual support for the ideology of neoliberalism, space and time are almost totally absent. Why is this? Why does it matter for people and the planet? And are there more useful alternatives?

In the 18th and 19th centuries all economists were political economists – Adam Smith, David Ricardo, J S Mill, David Hume and Karl Marx. Even while they were constructing simplified models of the ‘invisible hand’ and international trade, they were profoundly aware of the negative consequences an unfettered capitalist system can and does have for great swathes of humanity and for the environment.

But economics wanted to be more scientific and ultimately that means more mathematical. Casting around to find a suitable mathematics in the physical sciences, the first neoclassical economists (Leon Walras and W S Jevons for example) adopted the best they could find: Newtonian classical mechanics. Though perhaps natural, this choice has been of crucial importance to how economics has developed since. Even as most other sciences have moved beyond a narrow mechanical view of the world, economics has stuck with it.

Many things in the physical world can be explained and predicted using classical mechanics: how far a bullet will travel or how planets move around the sun in an elliptical orbit. It still lies at the heart of much useful technology.

Billiard balls remain still, in “equilibrium”, until the player uses his cue and applies a force to a ball. The ball moves, bumps into other balls (and indeed into the edge of the table) before eventually everything settles down again in a new equilibrium. If you can specify exactly the starting positions, the masses of the balls, the forces applied and the properties of the materials then you can predict not only where everything will end up but also the routes the balls will take and how long it will all take – so space and time are not only explicitly included but also absolutely fundamental.

What neoclassical economics did was take this model and replace mass and distance with price and quantity.

Neoclassical economics adopted a stripped down version of classical mechanics it still uses to this day

A market is in equilibrium if it “clears”, this means that the quantity people want to buy at a given price equals how much people want to sell. This applies whether the market is for labour, for goods or anything else. Everything is stable until there is an impulse or shock. This is the equivalent to the cue hitting a billiard ball. These impulses might be changes in consumer tastes and preferences, suppliers using a new technology or a change in the price of labour or raw materials. Suddenly it looks as though the market might not clear and unemployment or stock shortages might appear. Of course in mechanical physics such “out-of-equilibria” are normal, the billiard balls are all moving through space and time till they settle down again in new positions.

But to make their models tractable the early neoclassical economists had to completely strip down classical mechanics and drop any concept of space and time. Where exactly is the market operating? Implicitly the answer is that it takes place at a point, but not a real geographic point, rather an abstract point. In this sense economic transactions happen on a pinhead that is both everywhere and nowhere.

It’s the same with time. In neoclassical economics if it takes time to move from one equilibrium to another, this would mean that markets may not clear, trading could take place at “false prices” and they might never settle down again. Initially this problem was overcome by the introduction of what later became known as a Walrasian auctioneer. This purely fictive being, analogous to Maxwell’s Demon in physics, “groped” his way to a solution by repeatedly calling out prices, checking the resultant demands and supplies until prices that will clear the market are found – only then can trading take place. Coupled with the later introduction of “rational expectations” – in which actors have perfect foresight and complete information – this enabled economics to ignore space and time. In a Pollyannaish way, following any disturbance or shock, the economy jumps instantly from one equilibrium to another – going through nowhere on the way – in a type of economic Quantum Leap.

Now in real markets there is no auctioneer; buying and selling is continuous, prices actually emerge from the dynamic interaction of different agents who don’t have perfect knowledge and often use rules of thumb or customs to guide their decisions.

Harold Hotelling looked at how ice cream sellers would space themselves on a beach

Even within the neoclassical tradition there have been many economists who have introduced space and time into their work. Starting with Harold Hotelling’s analysis of where how ice-cream sellers would “space” themselves along a beach, there have developed whole sub-branches of economics: spatial economics, economic geography and regional economics. Similarly with time; economists knew economic processes took time so they introduced various types of “lags” into their models – although these did tend to disappear once “rational expectations” were introduced and things happened instantaneously. Yet unfortunately it is true to say that such approaches have remained peripheral to the big issues of macroeconomics; being confined on the whole to micro, though important, issues like transport and schooling.

The absence of space and time is not the only unrealistic feature of neoclassical economics. It also tend to ignore most important aspects of scale, energy use, resource limits, how aggregate markets are not scaled up individual demand and supply curves, and how economic actors actually interact, adapt, behave and choose. There is also no concept of time’s arrow, i.e. the irreversibility of processes and how such “path dependence” is crucial for economic development. The point is that even though all these factors have been studied by some excellent economists (usually of the non neoclassical variety), they are still marginalised within academia, business and government policy making.  Stripped down classical mechanics still rules the roost.

In 1954 Milton Friedman argued that it doesn’t matter if the assumptions made by economics are unrealistic as long as the models make accurate predictions. The sad fact is, however, that these models have not only proved spectacularly unable to make predictions, and not just of periodic financial and banking crises, but much more importantly they haven’t even been able to explain such events after the fact. When something happens that shouldn’t have been able to occur according to their models, neoclassical economists rush around trying to retrofit their theories – mostly without success.

All complex adaptive systems create inequality as seen in Zipf’s Law

As economies and other social systems evolve through time and space major inequalities emerge, in income, wealth, population densities and so on – all manifestations of Zipf’s Law. Approaches to economics that start with people, firms and institutions interacting with and adapting to each other in space and time can generally “explain” this phenomenon; inequality is endogenous or, better said, an emergent property of all complex adaptive systems.

On the other hand, neoclassical economics struggles with inequalities – they are rather mysterious. Free trade, arbitrage, the invisible hand of the price system plus economic growth “trickling down” to the poor should tend to eliminate them. Obviously they never have, so the answer must lie in making the world better fit the stylised economic models rather than changing the models to better explain the world; a completely unscientific approach that has appalled natural scientists. So, for instance, the IMF and the International Trade Organisation impose “structural adjustment” and free trade with never ending alacrity. The contention is that they will bring about economic growth and ultimately lead to a reduction in poverty and inequality. Of course it never happens and millions suffer the miserable consequences.

Nicholas Georgescu-Roegen an economist who took entropy seriously

Turning to the environment, in scientific terms neoclassical economics is a “closed system”, consumers consume, firms produce and money circulates to oil the wheels. It’s a circular flow. Implicitly a boundary circle has been drawn around the system. Things outside this circle, such as finite energy or resources, the environment or even other species, either don’t exist or are treated as “externalities” and very often not even “priced”. Energy and resources can be had in limitless quantities forever, though the input price may vary. This completely misunderstands the two laws of thermodynamics – the conservation of energy and the entropy law – both of which operate in space and time. All economic wealth is created by energy and resources. These often take eons to accumulate in specific locations and are not limitless, yet they can be used up very quickly indeed in a mass entropic civilisation such as ours. The consequences are there for all but the blinkered to see.

It’s very unlikely that neoclassical economics will ever be able to make a real contribution to alleviating poverty, tackling ecological despoliation and moving us towards a more just and sustainable world. But there are many other sorts of economics in which human and planetary justice matter. It is to these that we must look.