II Configuring Power

The Business Cycle and Capitalist Social Regulation: The Origins of Economic Government

Matthew F. Hayes


The orthodoxy of economic austerity has become one of the greatest challenges facing contemporary society. A series of crises—the refugee crisis, the demographic crisis, the climate crisis, and the growing political crisis caused by entrenched inequality at different geographic scales—contrib- ute to a collective, subjective sense that a foreboding and uncertain future must necessarily be quite different from the past. Yet our representations of this future seem coloured mostly by post-apocalyptic scenarios, or even the end of civilization, rather than more hopeful projects for social change. Our collective inability to imagine alternative ways of organizing the economy and achieving higher levels of employment in a more egalitarian society premised on cosmopolitan values of openness and transborder social solidarity owes much to the lack of intellectual tools that would enable us to think about managing the economy differently.

M.F. Hayes (*)

Department of Sociology, St. Thomas University, Fredericton, NB, Canada © The Author(s) 2017

F. Kurasawa (ed.), Interrogating the Social,

DOI 10.1007/978-3-319-59948-9_5

This chapter serves as a contribution to a substantive rationalization of economic government, by historicizing and contextualizing the configuration of knowledge about the economy, underscoring the foundational principles of sociocentrism and social constructivism, which are core to this volume’s vision of critical sociology.

Macroeconomics presents itself as a true representation of the economy, and one which makes fiscal austerity appear the more rational course, despite significant costs that it pushes off into the future. Beyond being a mere representation of the economy, macroeconomics serves as a technical device that directs management of the economy in a specific way. As Kurasawa points out in his chapter “An Invitation to Critical Sociology” in this volume, the configuration of knowledge of the social world is also foundational to the configuration of power. A critical sociology that might contest this power must also attend to the socio-historical construction of bodies of knowledge that represent social life in ways that make particular types of action appear self-evident and natural. In this respect, I also attend to the tension between a normative critique of the economy and an analysis that grounds normativity in the scientific literature about economic representations, on the one hand, and critiques the adequacy of historical resolution of normative tensions between individual economic freedom and the collective interests of society as a whole, on the other.

This chapter proposes a critical sociology of macroeconomics that extends the post-structural turn in the social sciences to key objects and concepts in economics. While there has been much work in the history of economics that helps to clarify the historical emergence of quantification (Desrosieres 2003a, b), there has been decidedly less work that shows how economics constructs the economy as an autopoetic device, intended to temper the class divisions of an emerging capitalist society in the early twentieth century (but see Alchon 1985). Whether macroeconomics actually represents the economy—a key concern of many sociological and anthropological critiques in the twentieth century—is perhaps less important than how it performs real economies as a device or assemblage that orients economic action, particularly at an administrative level. Thus, as Kurasawa indicates, structural analyses of economic government also warrant attention to how economic experts and policymakers interpret their actions with the aid of technical devices, such as macroeconomic indicators. Moreover, understanding how economics performs that which it portends to represent is also cardinal to understanding how we might perform it differently, in ways that incorporate normative perspectives that have been marginalized by the discipline’s bias in favour of the interests of private capital.

I argue that the formulation of an economy of cycles that could be quantified through diverse measurements rendered economic life visible in a way that made it amenable to new types of administrative action. These economic cycles—which we now know as business cycles—were the key analytical object in the construction of a historically specific economy, one that reflected empiricist biases and the reified interests of private property owners, free to make decisions about their capital in the context of market competition. The social formation that business cycle theory brought into being was one that suited the liberal ideal of action at a distance and of non-intervention in the decisions of private property owners.

The argument is divided into four sections. The first section places the present study within the existing literature in economic sociology. As we shall see, there are currents in some of this literature which enable the development of a critical sociology as laid out in this collection. Economic sociology has a long history of de-naturalizing and de-centring economistic interpretations and categories of the economy. The study aims to further the work of economic sociologists along critical lines by de-naturalizing and historicizing the cognitive categories of macroeconomic analysis, which themselves naturalize the economy. The second section begins the empirical work of the chapter, demonstrating how business cycles emerged as a new object in economics in the early twentieth century. With this in hand, the third section outlines the social backdrop against which business cycle theory was developed, most notably the perceived social and moral costs of economic “depressions”. The fourth section outlines the moral liberalism that underscored this particular technical approach to the economy, which gave rise to a new terrain of visibility and administrative action. Here, I argue that cycle theory provided economists with a way to act indirectly on the social problems of the early twentieth century, without having to address liberal social relations, or hallowed property rights. I conclude by drawing attention to two important structural effects that resulted from the contingent context in which macroeconomic management arose.

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