Economic Informality in Kuala Lumpur, Malaysia - Brian Safran

              Kuala Lumpur, Malaysia is a Southeast Asian city that is rapidly becoming a major hub for finance, industry and commerce. (Richardson 1995: 1) However, in the midst of economic growth, there exists a prominent division in Malay society whereby a significant subset of the population lives in squatter homes and works in the informal or unregulated economy, standing in direct contrast to the formally employed, wealthy elite. (Johnstone 1983: 304) Being a multiethnic and largely segregated society, Malaysia has historically struggled to assimilate its indigenous Malay population with the substantial number of Chinese and Indian immigrants who came to the city during the Colonial period. (Gurowitz 2000: 864) These immigrants had skills that afforded them the opportunity to contribute to capital and labor intensive urban development; yet much of the comparatively unskilled Malay population living in cities were forced to work informally in the sense that they were not taxed, subjected to government regulations, or provided with any benefits that would accompany government oversight. (Gurowitz 2000: 866; Todaro 2000: 328) What is perhaps most interesting to Kuala Lumpur’s informal economy is the response taken by the government to its existence. Although at first, the government turned a blind eye to informal workers, seeing them as an effectively unemployed pool of labor that can be drawn from by modern industry on demand; policy later shifted toward recognizing informal workers and seeking to empower them with legitimacy. (Mustafa 2000: 4) This paper will analyze the growth of the informal sector in Kuala Lumpur, as well as examine the evolving government response to its existence.

            As a country located along the Strait of Malacca, a strategic waterway and transportation route connecting the West to the East, Malaysia at various times in history found itself under the colonial control of the Portuguese, the Dutch and the British. (Weightman 2006: 390) Under British rule in the late nineteenth and early twentieth centuries, Chinese and Indian laborers were brought to the country to supplement domestic labor and to engage in the labor-intensive production of tin and rubber. (UNESCO 2003: 1) Malay peasants were perceived to be “lazy,” whereas Chinese and Indian immigrants were seen as being “endowed with a capitalist sense and a profit instinct” (Ryter 2005: 4, 7). Although initially perceived as temporary, the immigrants established themselves as a permanent fixture of Malay society; having brought with them their own unique culture, identity, and skill set. (Gurowitz 2000: 874)

After Malaysia’s 1957 independence from Britain, immigration continued to be encouraged by the Malay government, which viewed the incorporation of knowledgeable and skilled foreigners into the Malaysian economy to be a method by which to promulgate industrialization in its early stages. (Castles 2003: 166) As a result, a stringent occupational hierarchy was created in which the indigenous population worked in the traditional, rural subsistence sector and as urban public sector employees, the Chinese worked in the urban commercial sector, and the Indians worked as urban professionals and in elite positions on plantations. (Blau 1986: 840) Thus, a legacy of Malaysia’s colonial era has been the importation of foreign laborers, and subsequently, their accumulation of capital. In modern times, it is clear that this ethnicity-based hierarchy has been perpetuated, and while indigenous elites have maintained a preponderance of political power, foreigners have continued to hold the predominance of economic power. (Ryder 2002: 14)

The migration of Malay peasants from rural areas to cities in the post-World War II era contributed to the growth of the informal sector. (Johnstone 1983: 302, 304) After Malaysia gained its independence from Britain in 1957, instability in commodity prices led many Malay peasants to abandon their traditional agricultural activities and seek employment in cities. (Weightman 2006: 395) Limited opportunities that became available to the Malay population were jobs in the police force, the armed forces, and the civil service; however many found jobs in commerce and industry to be unattainable. (Aiken 1981: 164) The majority of these peasants lacked the skills possessed by their foreign counterparts, and found themselves unable to secure positions in the formal workforce. (Mustafa 2000: 4) This system was perpetuated by a government of Malay elites, who saw it to be in their own best interest to afford formal jobs to Chinese and Indian immigration to promote industrialization and prevent Malay peasants from ascending in social status and challenging their authority. (Ryter 2005: 11) Nevertheless, many Malay peasants were satisfied by the prospect of participating in the informal sector as such activities provided them with a source of continuous and sustainable income. (Mustafa 2000: 7) The informal economic activities they engaged in included jobs that ranged from domestic service to construction to petty trading. (Gurowitz 2000: 865; Mustafa 2000: 2)

Street hawking is a prime example of an economic activity that has contributed to the growth and sustenance of Kuala Lumpur’s modern informal sector. (Zixin 2006: 1) Hawkers are those who peddle inexpensive foods, goods and services to urban residents; and they often engage in their trade without being subject to regulation and government oversight. (Aiken 1981: 161) The hawking business is composed largely of members of the economically depressed Malay peasant population. (Mustafa 2000: 4) Kuala Lumpur is believed to have upwards of ninety-six thousand hawkers residing in the city, half of whom are unregistered, and therefore part of the informal economy. (Kuppusamy 2006: 1) The primary reason for entering into this workforce has been insufficient availability of jobs in the formal sector, and the ability of informal work to secure them to the means to their own sustenance. (Mustafa 2000: 4) Many hawkers hope that their work as hawkers will act as a stepping stone in affording them the skills and training required to become attractive to formal sector employers and gain a better position. (Mustafa 2000: 4) Thus, the informal economy in Kuala Lumpur has thus been able to absorb a significant portion of migrant laborers that would otherwise go unemployed.

The Malay government has had a unique history of alternating support and admonishment for informal economic activities. After gaining its independence, the Malay government endeavored to control and limit the extent of street hawking by requiring that vendors be licensed, operate at certain times of the day and in specified areas, and be subjected to heavy fines if found to be in violation of such rules. (Mustafa 2000: 2) These oppressive measures served only to perpetuate the extent of inequality and limit the ability of hawkers to earn a living. However, by the late 1960s, this was no longer a reasonable strategy in satisfying the urban poor. In 1969, a series of race-induced riots were propagated by the underprivileged Malay citizenry, serving to propagate social instability and in the government, an understanding of its dire need to establish policies to reduce economic inequality and to help the predominantly unskilled, indigenous population ascend from the ranks of relative poverty. (Gurowitz 2000: 874)

In a seeming change of heart, the 1971 New Economy Policy (NEP) was established, and it advocated for improving upon the well-being of the poor indigenous population by increasing their access to formal housing, education and other public goods, while at the same time seeking to diminish the income gap as well as reduce the extent to which ethnicity determined economic outcomes and social standing. (Lim 1983: 620) In doing so, the NEP sought to reduce ethnicity-based differences in income by endeavoring to create a modernized business community in which the Malay population would own and operate at least thirty percent of the total number of businesses. (Weightman 2006: 393) The NEP also provided the Bumiputra, or Malay peoples with formal jobs by requiring that businesses adhere to a system of quotas, by expanding educational and training opportunities, and by giving them preferential treatment in the distribution of business licenses. (Gurowitz 2000: 874; Jomo 1991: 474) The intended goal of the NEP was to bring formal employment rates in line with the racial composition of the society at large, and accordingly, fifty-four percent of the jobs were expected to be afforded to the indigenous population. (Lim 1983: 620) Thus, the NEP sought to diminish the extent of the informal economy in favor of expanding the formal economy. The effect of this policy was that it instilled a perception of newfound job availability among rural citizenry; encouraging a flood of migration from rural areas to cities and serving only to accelerate the growth of the informal sector even though the formal sector was placed on a trajectory of expansion. (Murdoch 2007: 214)

Along with the expansion of the formal sector, the government began to change its policy regimen towards unlicensed street hawkers, realizing the extent to which such economic activities contribute to the well-being of the urban poor. Encouraging the continuance and growth of the informal sector, and legitimizing such activities with government support was believed to be a method by which to reduce urban poverty and improve upon the distribution of income between races. (Mustafa 2000: 4) Furthermore, government acknowledgement was granted based on the perceived ability of hawking to motivate entrepreneurial skills among the otherwise unemployed, with the hopes that such skills would later be used in the formal sector to promote economic growth. (Mustafa 2000: 4) Among the provisions that have been made in support of hawkers have included expanding the availability of business licenses, the establishment of improved housing programs, and affording them social services in exchange for taxes. (Gurowitz 2000: 874; Kirk 2006: 2) In addition, the government has established a series of “hawker centres” in order to afford vendors access to prominent marketplaces (Kirk 2006: 2). Thus, although the Malay government previously sought to marginalize the poor indigenous population by quelling the informal sector, it now saw such activities as conducive to the well-being of the poor and beneficial to the society at large.

The establishment and perpetuation of “squatter” settlements, or unregulated housing communities in which many informal sector workers live, can provide insight into the government’s response to those informally employed. In Kuala Lumpur, squatter settlements, or “kampung” arose in response to an increase in demand for a then limited amount of formal housing perpetuated by economic growth during the early twentieth century. (UNESCO 2003: 8; Murdoch 2007: 214) Contributing to their augmentation was rampant migration from rural areas to cities by the indigenous Malay citizenry, and the inability of newcomers to secure employment and produce sufficient income to afford legitimate housing. (Johnstone 1983: 292) As opposed to formal housing, squatter communities have often lacked basic amenities, including running water, electricity and waste disposal mechanisms; and as such, their existence has contributed to the spread of diseases and perpetuated unhealthy conditions. (UNESCO 2003: 9) Furthermore, squatter homes have been prone to floods and fires, making such homes prone to environmental destruction. (UNESCO 2003: 8) Squatter homes are often overcrowded, and in some instances have been known to each house upwards of fifteen people. (Johnstone 295)

The government’s response to the existence of squatter communities has traditionally been one of indifference, seeing them as technically illegal, yet providing cheap housing to low-wage workers, both formal and informal, and thus contributing to urban development. (Murdoch 2007: 214) However, by failing to make available safe and legitimate housing to a large subset of the Malay population, the government in effect perpetuated the marginalization of one economic class from the benefits of another. However, government policy by the early 1980s had shifted toward explicitly supporting squatter communities, realizing the extent of the contribution to urban development brought about by their residents. (Aiken 1981: 170) A series of policies were subsequently implemented, seeking to upgrade the living conditions of the urban poor by relocating them to new homes, or installing various vital services to existing squatter developments such as water pipes, sanitation and electricity. (Aiken 1981: 170) Thus, the Malay government’s transformative policy regimen toward squatter homes demonstrates a paradigm shift in its overall view towards informal participation in the economy.

Traditionally, a significant proportion of informal sector workers have been female. (Ludher 2007: 2)  Realizing their level of educational and skill attainment to be undesirable to formal employers, women have often joined the informal sector in an effort to supplement the income of their formally-employed husbands so as to better provide for the needs of their families. (Ludher 2007: 1) Taking into account the extent of female discrimination, the Malay government established a “National Policy on Women” in 1989, designed to increase the extent of jobs allocated for women in the formal sector, expand educational opportunities available to women, and provide funding to non-governmental organizations with women’s advancement as their intended goal. (Ahmed 2007: 1) In many respects, efforts to alleviate female poverty have been successful. In modern times, forty-seven percent of females have found work in the formal sector, significantly higher than the Asian average. (Chow 2007: 1-2) Furthermore, women in Malaysia have been able to attain a literacy rate of approximately one-hundred percent. (Ahmed 2007: 2) Even so, there has remained a significant portion of women that are employed informally, and as such, they suffer from a lack of government protection, a limited ability to loan capital from banks, and remain largely excluded from the policy-making process. (Ludher 2007: 3) Thus, government policy has allowed many women to ascend from the ranks of relative poverty and assume positions in the formal workforce; while at the same time, the majority of women have continued to be relegated to informal work. Nevertheless, it cannot be denied that progress has been realized in terms of women’s education and advancement over the past few decades.

In recent years, the government has continued in its effort to implement the goals of the New Economic Policy with a series of five-year plans designed to reduce poverty and race-based inequality by contributing to the economic well-being of the Bumiputra. (World Bank 2000: 1) By the early 1990s, progress had been shown, as the share of employment of ethnic Malays in the professions increased five-fold since before the implementation of the NEP. (Jomo 1991: 476) Furthermore, the indigenous population has been able to accumulate substantial wealth and place a significant share of its students in higher education. (Jomo 1991: 475) However, there is still substantial room for improvement. As a result of the economic instability brought about by the Asian financial crisis in the late 1990s, many lost their jobs in the formal sector and were forced to become undocumented street vendors, thus greatly expanding the size of this workforce. (Kuppusamy 2006: 1) The goal of affording the Bumiputra ownership and control of at least thirty percent of businesses has not been achieved, perpetuating the extent to which they must rely on the informal sector for work. (Weightman 2006: 393; Jomo 1991: 476)

Even in the midst of setbacks, the Malay government has continued to work toward achieving equitable goals. Embedded in its “Vision 2020” policy, the government outlines a series of goals for further eradicating poverty and improving employment opportunities for the Malay citizenry. (World Bank 2000: 1) Among its objectives are that Malaysia become a fully developed country by the year 2020 by expanding the reach of educational programs so as to accumulate human capital in the forms of technological know-how and entrepreneurial expertise. (Badawi 2007: 4) Recently, the government has sought to establish policies so as to ‘formalize’ Kuala Lumpur’s informal sector by increasing the number and extent of “hawker centres,” reducing the fees required of them to operate their businesses formally, and mandating that hawkers participate in educational programs to encourage cleanliness and hygiene. (Zixin 2006: 1) The issue of informal sector employment continues to be at the heart of current political debate in Malaysia, with Prime Minister Abdullah Badawi advocating for the expanded legalization and regularization of hawking to reduce the aggregate rate of unemployment, with his opposition alleging that the Prime Minister’s intention is simply to establish regulations so as to place the informal workforce under his bastion of control. (Kuppusamy 2006: 2) Thus, it cannot be doubted that the government’s response to the existence of informal labor has played a prominent role in public-policy formation, and its largely positive perspective on informal economic activities demonstrates the extent to which its existence has improved the lives of many underprivileged Malay citizenry.

            In conclusion, Kuala Lumpur can be seen as a city of dualisms. On one hand, its skyline boasts a series of modernized buildings, symbolizing the extent of its vibrant and growing economy; whereas on the other hand, significant proportions of its population work in the informal economy without access to government protection and labor benefits. Perpetuated by a legacy of colonization, ethnic discrimination, and a seemingly unmanageable amount of internal migration, Malaysia has struggled in its effort to close the gap between the rich and poor. Informal economic activities such as street hawking have provided the urban uneducated poor a method to secure survivable living conditions. Their activities have promoted the growth of industry by affording formal employers a source of willing and able laborers on-demand, and have provided informal workers with valuable skills. The income that the informal sector has brought to its participants has alleviated the extent of the burden otherwise placed on the government to provide them with social services. Although initially opposed to the continuance of the informal sector, the Malay government has gradually shifted its approach by endeavoring to support it. A series of policies since the 1970s evidence the extent of the government’s effort to incorporate informal workers into the formal economy by supporting women by providing them with formal education and jobs, legalizing hawking and licensing hawkers, and upgrading the living conditions of informal employees. An analysis of Kuala Lumpur’s evolving informal sector can provide insight into its benefits and drawbacks, and the role that government planning can play in its empowerment.

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Marxist Alienation in a Post-Modern World - Brian Safran

Karl Marx’s theory of alienation, although intended to reflect the inequities of nineteenth century Europe, is analogous to the plight of the worker in a contemporary capitalistic society. When Marx wrote his influential sociological theory, he believed himself to have been addressing an extremely specific audience. His writings were focused towards the upper class white elites of nineteenth-century Europe, in an attempt influence those in positions of power, and thus, impact the course of history. (20 Hughes) Marx directed his analysis at the challenges that workers faced during the Industrial Revolution, and his purpose was to educate and enlighten the society around him to the realities of the exploitation of the worker. (2 Levy) Although Marx’s writings were directed at a specific group of people living within a particular time period, he would not be surprised to find that despite major changes in the workforce, the social hierarchy of the modern capitalistic workplace continues to alienate its workers, demean their autonomy, and reduce them to mere machinery, much the same as it did in the mid-nineteenth century.

            Marx analyzed his theory of alienation from the materialist perspective, and focused on free wage labor to accentuate his argument. He referred to an important shift in ideology when he said that “labour produces not only commodities: it produces itself and the worker as a commodity” (35 Marx). With the onset of free wage labor, the worker as well as the products he created became exchangeable on the market. As a product, the worker himself became a machine that afforded monetary value to an employer. Thus, the employer saw the employee as something in need of control in order to increase his production revenue. As more control was exerted over the employee, he was robbed of his autonomy, and was subject to increasing degrees of alienation from himself, his product, the production process, as well as his managers and peers.

            As seen by Marx, the worker under capitalism felt alienated from the product because he was no longer producing it for its intrinsic value, but for the capital it generated. In essence, the ultimate goal of the producing the product became not the product itself, but instead, the money associated with its sale. The pride that one would take in craftsmanship or in the performance of “a job well done” was measured not by the actual accomplishment, but in the value of the monetary reward that it was capable of deriving. In addition, the object itself became an “external existence,” as no matter how great his need for the item, at the end of the day the worker must give away that which he had produced (35 Marx). Marx saw the worker as dominated by the product. (7 Cox) He wrote that “the worker puts his life into the object, but now his life no longer belongs to him but to the object” (35 Marx). The worker sold his creativity, and in exchange received money, with which he could buy products. But what he could not repurchase was his creativity; that was lost forever. (7 Cox) He had been both exploited and alienated- from his product and from himself.

            Marx furthered his analysis by citing an estrangement between the worker and the production process. The worker created products using machinery and materials that were not owned by him, and under rules and regulations of which he had no say in. (5 Bramann) He had no control of the process, and no ownership of its rewards. Furthermore the worker was forced to produce to the limits of his “physical and mental energy” (37 Marx). The “fragmentation,” or specialization of the labor process had allowed employers to gain increasing control over the workers, as workers were expected to perform highly specific jobs in exactly the same way, repetitively (8 Cox). This served to stunt intellectual and creative growth in the workplace and alienate workers from their mundane day-to-day activities.

            Marx felt that man has a natural need to be productive and creative. Depriving himself of his basic needs caused his labor to become external to him and resulted in an absence of his sense of self-identity through his work. He viewed himself as “at home when he [was] not working, and when he [was] working he [did] not feel at home” (37 Marx). Work was no longer a gratifying force in his life, thus requiring him to look elsewhere for self-gratification. He had been alienated from his human self, and “in his human functions [the worker] no longer [felt] himself to be anything but an animal” (37 Marx). Freedom could only have been achieved through the exercising of man’s most animalistic functions, such as “eating, drinking and procreating” (37 Marx).

            Alienation from one’s peers, co-workers, and superiors soon followed. Marx felt that the demand for ever-increasing productivity created a competitive environment in the workplace and beyond. All relationships became valued by how much they would contribute or take away from productivity. He felt that this “[served] to replace communal values with competitive individualistic ones” (36 Hughes). A “fundamental social antagonism” developed, and continuously perpetuated itself (41 Hughes). Under these conditions, workers lost their desire to produce and work became “not voluntary, but coerced; it [was] forced labour” (37 Marx). Work no longer brought happiness as it was perceived as an enslaving force, and was “shunned like the plague” (37 Marx).

The changing times have brought about a shift from an industrial-centered economy into a service-oriented job market. The middle class population is a product of that change. The standard of living of today’s capitalists is not as distinguishably different from that of the present day working class, and the boundaries between them are not as sharp. (2 Bramann) But is today’s middle class really so different from the proletariat class of Marx’s time?  Marx believed that social classes were grouped according to common relations to the production process, rather than economic worth. (1 Gingrich) This would thereby equate the middle class to the proletariat, as they both represent the working class of their respective times. Marx also felt that this working class was persecuted by the capitalistic system under which it existed. Modern middle class thinking portrays this group as having achieved a degree of economic and social independence not previously attainable. But does today’s middle class really enjoy an economic freedom that works to foster the individual’s sense of self worth and autonomy, or is it too victimized by a system that only rewards the elite? By analyzing the practices of capitalist institutions, one can gain insight into the application of Marx’s alienation in today’s society.

Modern capitalist governments pride themselves on their ability to maintain internal harmony while competing in a global economy. They place value on such things as low unemployment rates, rising corporate growth and low rates of inflation, and use them as measures of their prosperity as a nation. Marxist theory, if applied to this model, would likely argue that the while the fundamental concept of the need of governments to maintain domestic tranquility is correct; the mechanisms employed by capitalistic governments to achieve this goal are flawed. He would also probably argue that the measures of success utilized by these capitalists are incorrect and that success is only attainable when the individuals of a society are free of oppression. Marx would likely see the strategies that are used by these societies to advance themselves, as alienating the very individuals that they were designed to benefit.

In addition to the government as a capitalistic institution, capitalistic societies pride themselves on the strength of big business. The McDonald’s corporation has grown into a multi-billion dollar business, and exemplifies many of the characteristics of alienation previously shunned by Marx. Contemporary sociological theory has coined the practices of McDonald’s as “McDonaldization.” Under “McDonaldization,” advancements in technology are used to “deskill and control workers,” and follow the McDonald’s corporate model (53 Aronowitz). McDonald’s incorporates similar mechanisms of command at each of their 11,800 locations to increase productivity and ensure product standardization. (40 Leidner) Employees are given minimal to no individuality in their work. The various jobs at McDonald’s restaurants are specialized and repetitive to foster speed and efficiency, and employees are expected to conform to a predetermined set of rules and regulations.  To ensure their compliance, technological advances such as computers and cameras are utilized as monitoring devices. In addition, work schedules are adjusted to clientele volume in order to allow for the maximum amount of corporate productivity.  This economic model has been employed by various companies throughout the capitalistic world, in attempt to remove any individuality, creativity, and freedom in the workplace, thus placing the worker in an easily expendable and replaceable position. Marx would consider McDonald’s employees to be an “appendage of the machine” (81 Marx). As such, the worker fails to develop an allegiance to his job and the product that is being produced, serving to perpetuate the alienation. The result of this is a strong, rich and powerful corporation, and a poor, estranged employee. 

Scientific and technological advances have made communication and information easily accessible. Such innovations have “freed” workers from their previous constraints, but in doing so have made the workers more dispensable. Workers are no longer needed to work jobs that could now be done more efficiently by machines. Examples of this include the mass production technique known as “Fordism,” where large numbers of cars are produced by the aid of machines along an assembly line (53 Aronowitz). With job security on the line, workers have had to maintain their own competitive edge. This has often required expansion of work hours that previously were dedicated to pleasure. Employees have been forced to “transform every place into a work place,” and often work nights and weekends to remain competitive (54 Aronowitz). Women have entered the work force in amazing numbers and the anonymous nature of the computer generation has caused “differences of age and sex [to] have no longer any distinctive social validity for the working class” (81 Marx). While this has furthered the cause for women’s rights, with all family members working to their maximum potential, the family unit as a whole has undoubtedly been negatively impacted. Marx would potentially view this as the ultimate exploitation of the worker, removing from him the last freedom he has left, the freedom to manage his own spare time. (54 Aronowitz)

Analysis of the social structure in capitalist countries has shown the emergence of an “upper” middle class. This partly consists of the trained professionals that are commonly perceived to have risen in ranks from that of the salaried worker. However, Marx would not support this concept, but instead would argue that the opposite has occurred. Such professionals have actually taken a downward spiral back to that of a salaried worker. (59 Aronowitz) Physicians and attorneys are amongst those trained professionals that have traditionally been associated with independent entrepreneurship. An influx of bureaucracy has lowered their decision-making ability and technological change has depersonalized their work. (59 Aronowitz) They have had to face a change in practice that has constrained their autonomy. Job satisfaction has deteriorated as exemplified by “significant declines in medical school enrollments” (60 Aronowitz). Not even the upper-middle class is exempt from the dilemma of alienation facing the salaried worker.

Marx’s theory of alienation in a capitalist society is as relevant today as it was when he wrote it one hundred and sixty two years ago. Changes in social structure, technological innovation, and in the job market have effectively hidden it beneath the surface when compared concurrently with that of the nineteenth century. Perhaps today’s workers experience estrangement from their product, the production process, themselves, their employers, and their co-workers on an even greater scale than those of Marx’s time. Living under the shroud of a prosperous and protected society, hopes and expectations for success have been escalated. People are blinded to the subservient nature of their existence and appear unaware that their actions, or lack there of, only serve to perpetuate their entrapment. For the most part, they seem blinded to the reality that no matter how hard they try, they will never get ahead in the current system, as forces that they cannot control continue to dominate them. It will take a major structural re-design to successfully afford a sense of control and a reversal of alienation. Marx feels that as the proletariat class awareness continues to grow, it will eventually rise up “stronger, firmer, [and] mightier” than before (82 Marx). When reality sets in, despair and desperation will reign and revolution will result. This chapter in history has yet to be written, but if history continues to follow Marx’s theory, capitalism as we know it will face an inevitable challenge.

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Levy, Jerry. Marx's Goals and Ours. 10 Sep. 1995. Wake Forest University. 11 Mar. 2006 <http://ricardo.ecn.wfu.edu/~cottrell/OPE/archive/9509/0067.html>.

Marx, Karl. "Economic and Philosophic Manuscripts of 1844." Classical Sociological Theory. Ed. Craig Calhoun. Malden: Blackwell Publishing Ltd, 2002. 34-43.

Marx, Karl. "Manifesto of the Communist Party." Classical Sociological Theory. Ed. Craig Calhoun. Malden: Blackwell Publishing Ltd, 2002. 76-84.

How is justice possible? Marx versus Rawls. - Brian Safran

         Karl Marx and John Rawls are two of the most influential thinkers in modern philosophy. In his Economic and Philosophic Manuscripts of 1844, Marx asserts that moral principles can be equated with ideologies; created to further the interests of the dominant social class. He argues that under capitalism, the oppression of the proletariat, or working class will lead to their eventual rebellion; sparking the destruction of the existing socio-economic polity and rendering moral concepts meaningless. In A Theory of Justice, John Rawls assesses the proper role of justice and morality in society. He does so by analyzing the underpinnings associated with social agreements, seeing social justice as being attained by adhering to universally applicable principles that ignore the particular happenstance of their authors. In analyzing the works of both philosophers, one can see that the Rawslian principles of justice seek to justify capitalism by placing it under a shroud of altruism. Instead, the communist revolution as characterized by Marx is the only way for capitalist societies to truly attain complete social justice and moral equality.

            I will begin by first examining the theoretical framework from which Marx forms moral concepts. As a “historical materialist,” Marx views concrete historical conditions as responsible for forming one’s conception of moral ideas (Denise 193). He characterizes this view when he states that “the production of ideas, of conceptions, of consciousness, is at first directly interwoven with the material activity and the material intercourse of men, the language of real life” (Denise 196). Marx considers the economic mode of production to be paramount in shaping one’s viewpoint on philosophy; thus justifying his subsequent critique of capitalism. This view is demonstrated when Marx states that “what [men] are… coincides with their production, both with what they produce and with how they produce” (Denise 196) By extension, Marx perceives particular philosophical ways of thinking to be mere “forms of ideology;” bound to the socio-economic context in which they exist (Denise 193). He states that “the individuals composing the ruling class possess among other things consciousness, and therefore think;” arguing that the members of the dominant social class collectively determine which moral principles will guide society in accord with their own self-interest (Denise 197). Also, Marx criticizes social contract theorists for characterizing the essence of humanity by the biological strictures of human nature. Instead, Marx believes in the doctrine of generic essence, according to which the human experience can be fully examined only by considering man in the context of his relations with others, and not in terms of his physical nature. This point of view is evidenced when Marx states that “the essence of man is no abstraction inherent in each single individual. In reality it is the ensemble of [his] social relations” (Marx A 2). Marx’s conceptions of historical materialism, morality as ideology, and the generic essence form the theoretical underpinnings of his social and moral philosophy. 

            Now that we have established the framework of Marx’s theory, let us now examine Marx’s critique of modern society; namely, of the division of labor that arises under capitalism. Marx believes that in such an economy, two social classes arise with inherently opposed and irreconcilable interests; the capitalists, who own the means of production, and the proletariat who have no other means to sustain their lives but to sell their labor power to the capitalists. Being the only group that “possess[es] consciousness,” Marx contends that the members of the capitalist class are those who forge the prevailing ideals in capitalist societies (Denise 197). Thus, although the economic mode of production determines the dominant ideology of a given society, this ideology manifests itself in other segments of society; including politics, philosophy and science.

Marx then characterizes the members of the proletariat class as embodying a peculiar form of “alienation;” the doctrine according to which humans are hostile or alien in their relations with others (Denise 194). He states that the capitalists exploit the labor of the proletariat, forcing them effectively against their will to engage in monotonous work in order to sustain their very existence. The proletariat are enslaved to the capitalists, and the work that they do is unfulfilling, automated, externalized and routinized. Not only do the proletariat produce commodities that they do not own, but they themselves become an exchangeable commodity. This view is evidenced when Marx states that “labor not only produces commodities; it produces itself and the laborer as a commodity and that to the extent to which it produces commodities in general” (Denise 198). In addition to becoming estranged from the fruits of their labor, the proletariat become alienated from every other worker, with whom they share no common interests; thus serving to reduce each worker to a mere “appendage of a machine” (Denise 205). Labor becomes “compulsory;” and eventually, each worker “feels himself an animal in his human functions” (Denise 199). Labor serves “only to sustain life by stunting it,” and work becomes avoided “like the plague” (Denise 200; 199). Finally, each member of the proletariat class becomes alienated from himself; finding his life absent of freedom, independence, enjoyment, and fulfillment. Each worker thus becomes entirely subjugated to and dominated by the capitalists.

In addition, the greater the degree to which the labor of the proletariat is exploited, the better off the capitalist becomes. This relationship is codified by Marx’s conception of “surplus value,” the theory according to which surplus, or profits derived from production is seen as a measure of the degree to which the capitalists exploit the proletariat (Denise 195). Although surplus value is produced by the proletariat, it is nevertheless appropriated by the capitalists. Marx states that “as capital accumulates, the lot of the laborer, be his payment high or low, must grow worse” (Denise 205). The interests of the two classes are opposed, in that the capitalists will accumulate the greatest wealth by affording the proletariat the minimum wage necessary to keep them alive and able to continue working. A contradiction ensues in that a decreasing number of people appropriate wealth as it is produced by an increasing number of workers. In seeking to maximize profit, the capitalists will strive to keep wages as low as possible, and workers as efficient as possible.

Eventually, the proletariat will come to the understanding that the economic system in which they are subjected to is unfair, unjust and detrimental to their mental and physical development; at which point they will realize their need to “abolish the very condition of their existence hitherto, namely, labor” (Denise 202). This comprehension will undoubtedly and inevitably lead them to unite with one another in an effort to overthrow the existing social system; promulgating an end to the division of labor in the name of equality. Finally, being that moral conceptions develop as a tool for the dominant class to use to their advantage, they serve no purpose in the newfound classless society. Only after this “communist revolution” will true democracy be established; in which social production will aim to fulfill human needs rather than seeking to maximize profit, the generic essence will be reestablished, and individuality will be allowed to flourish (Marx B 23).

Let us now examine John Rawls’ theory of social justice. In A Theory of Justice, Rawls attempts to discern how to best arrange for a just society and what principles would render a society just. As a supporter of Kantian deontology, Rawls believes that knowledge is “a priori,” or independent of experience; and as such, can be deemed to be “universally applicable to experience” (Denise 146). Accordingly, Rawls concerns himself with devising principles of justice that subsist whether or not they are actually put into practice. By utilizing two principles of justice which will later be elaborated upon, Rawls believes himself to conceptualize justice as a universal and absolute doctrine “not subject to political bargaining or to the calculus of social interests” (Denise 321). In addition, although Rawls disagrees with the strictures of social contract theory, he nevertheless admits that their understanding of society provides him a useful framework from which to form universalized principles. This view is demonstrated when Rawls states that “however mistaken the notion of the social contract may be as a history… it does express, suitably interpreted, an essential part of the concept of justice” (Denise 330). Thus, in accord with social contract theory, Rawls presupposes that all individuals are “mutually self-interested,” “rational,” “egoistic,” “free” and “equal in power” (Denise 324-25).

Rawls continues his argument by setting up additional “formal conditions that it seems reasonable to impose on the conceptions of justice” (Rawls 112). He first asserts that guiding social principles must be based upon “reciprocity,” or the doctrine according to which the “mutual acknowledgement of principles by free and equal persons” allows them to become universally binding (Denise 327). Once these principles are established, every individual must adhere to their precepts; and only then can fairness and justice ensue. Secondly, those that deliberate about justice and attempt to craft universally applicable principles must do so behind a hypothetical “veil of ignorance,” wherein one must make sure that the decisions that they make are impartial, unimpaired and objective (Denise 326). In order to do so, the deliberators must theoretically devoid themselves of the subjective conditions that impair judgment and derive at principles without their having knowledge of the position that they will assume henceforth. In this way, the deliberators will be unable to mold a society that accommodates their particular happenstance. Lastly, the deliberators must seek to derive at an “overlapping consensus,” or minimum common ground consisting of “all of the reasonable opposing religious, philosophical, and moral doctrines likely to persist over generations and to gain a sizeable body of interests” (Vagallis 2). This common ground is to provide the basis for the principles of justice. Only when these various preconditions are met can one derive at objective and universal theories of justice.

Now that I have examined the basic conditions that must be satisfied before a universalized theory of justice can be established, let us now look at the actual principles of justice that Rawls derives at. Rawls’ first principle of justice, or the “equal liberty principle” states that “each person is to have an equal right to the most extensive total system of equal basic liberties compatible with a similar system of liberty for all” (Denise 320). In other words, Rawls is stating that for a society to be just, each citizen within it must be granted as broad a freedom as possible and be made to be as equal as possible. He provides an example of the utilization of this principle; arguing that justice is derived by adhering to the strictures of a particular legal code when the individuals subject to it are given extensive freedom, and granted analogous rights and privileges. For example, Rawls would likely have perceived modern China as an unjust society; as by virtue of its totalitarian government, the freedoms of its citizenry are severely restricted; and at the same time, its politicians maintain unequal and extensive powers that far exceed the concessions and privileges granted to the general Chinese populace.

Rawls second principle of justice; or the “difference principle” is subdivided into two parts. It states that “social and economic inequalities are to be arranged so that they are both: (a) to the greatest benefit of the least advantage[d], consistent with the just savings principle, and (b) attached to offices and positions open to all under conditions of fair equality of opportunity” (Denise 320). In the first part of this principle, Rawls discusses certain conditions in which socio-economic inequalities are to be deemed acceptable. He argues that socio-economic inequalities are justifiable to the extent that they serve to the benefit of those that are the least well-off. Thus, for example, if a particular government was to establish a policy that decreased the tax burden on wealthy entrepreneurs, that policy would be deemed justifiable if these individuals in turn were stimulated by the tax decrease to craft and construct new products that would serve to the benefit of even the poorest members of the community. The second part of Rawls’ difference principle can be understood as requiring that all positions in the social hierarchy be filled by fair and equal competition. Thus, Rawls would likely perceive the acquiring of a prominent corporate position by an individual with familial ties to the head of that organization to evidence the existence of an unjust society.

Rawls concludes his argument by noting some additional procedures that must be followed after the principles of justice have been decided upon by the people’s representatives. First, the principles must be “publicly justified,” or defended openly and honestly in front of those who are represented by them (D’Agostino 5). They must then be ratified in the setting of a constitutional meeting, within which deliberators must choose a particular constitution that adheres to the principles of justice. After this constitution is chosen, representatives must establish laws in agreement with the concepts embodied in the just constitution; putting the principles within it into practice.

I will now consider why is it that I believe Rawls’ theory of justice places the socio-economic inequalities inherent to capitalism in a positive light, and why I believe the Marxian communist revolution to be the only true way for capitalist societies to establish social justice and moral equality. Rawls states that practices based on inequalities are justified insofar as they serve to the “advantage of every person engaging in it” (Denise 324). However in making this assertion, Rawls does not differentiate between the degree to which the most advantaged will gain vis-à-vis the least advantaged. For instance, if a particular law were to improve upon the well-being of the best-off members of society, and only minimally improve upon the quality of life of the worst-off members of society; that law would nevertheless be deemed to adhere to the Rawlsian principles of justice. In accord with this understanding, it seems as though Rawls would deem vast income gaps between the rich and poor that develop under capitalism to be justifiable, so long as the existing hierarchy serves to improve ever so slightly upon the lives of the poor. Accordingly, Rawls’ theory seems to justify capitalism by placing certain minimum conditions upon it that place it in a more humane light. However, true social justice and moral equality cannot be derived in a system whereby the rich get substantially richer, while the impoverished become only slightly less poor than they started. On the other hand, Marx’s conception of the communist revolution provides a clear path for the subjugated members of society to fully and honestly overcome their subordinated position. Thus, the only way for justice to take hold in capitalist societies is for the subjugated proletariat class to unite together to overthrow the existing socio-economic polity and establish a new state in the name of true equality. Only then will the “original and free development of individuals [cease] to be a mere phase;” and will true justice and moral equality will flourish (Denise 202).

In conclusion, both Karl Marx and John Rawls establish cognizant and well-argued positions in defense of their views on morality and justice. In Economic and Philosophic Manuscripts of 1844, Marx makes the case that morality is a mere ideology designed to further the objectives of the dominant class; placing his argument into the context of the capitalist division of labor. He argues that true social justice and equality is achieved at the point in which the members of the subordinated social class unite together and abolish the conditions that foster their inferior existence. In A Theory of Justice, John Rawls establishes a universalized theory of justice; deriving at certain principles that must be adhered to if a society is to be truly just. It is argued that Rawls’ conception of social justice merely serves to justify capitalism and perpetuate the socio-economic inequalities that it propagates. Instead, the Marxist communist revolution must be undergone in order for true social justice and moral equality to ensue. Thoughtful consideration of the ethical doctrines of Karl Marx and John Rawls can lead one to a greater understanding of notions of justice and morality. This recognition can help formulate a knowledgeable and critically minded citizenry; capable of affecting societal change for the better.

Works Cited:

D’ Agostino, Fred. "Public Justification." Stanford Encyclopedia of Philosophy. 1997. Universiteit Van Amsterdam. 4 May 2007 <http://www.science.uva.nl/~seop/archives/fall1997/entries/justification-public/>.

Denise, Theodore C., Nicholas P. White, and Sheldon P. Peterfreund. Great Traditions in Ethics. 11th ed. Vol. 1. Belmont, CA: Thomson Learning, Inc., 2005. 192-330.

Marx, Karl. "Theses on Feuerbach." Marxists Internet Archive. Trans. Cyril Smith. 2002. Marxists Internet Archive. 4 May 2007 <http://www.marxists.org/archive/marx/works/1845/theses/index.htm>. [cited in text as Marx A]

Marx, Karl, and Friedrich Engels. "The Communist Manifesto." Comp. Rick Kuhn. 07 Oct. 2005. Australian National University. <http://www.anu.edu.au/polsci/marx/classics/manifesto.html>. [cited in text as Marx B]

Rawls, John. A Theory of Justice. Rev. ed. Vol. 1. Oxford: Oxford UP, 1999. Google Books. 4 May 2007 <http://books.google.com/books?id=b7GZr5Btp30C&printsec=frontcover&dq=A+theory+of+justice>.

Vaggalis, Ted. "John Rawls's Political Liberalism." Academic Dialogue on Applied Ethics. 1994. Drury College. 4 May 2007 <http://caae.phil.cmu.edu/Cavalier/Forum/meta/background/Rawls_pl.html>.

Who Was Milton Friedman? - Brian Safran

         In Who Was Milton Friedman?, Paul Krugman sets out to define the legacy of contemporary American economist Milton Friedman. In his writing, Krugman identifies some of the salient features of the historical context within which Freidman developed his ideas and which subsequently led to their ascendance in status to become a respected alternative to the Keynesian economic doctrine of the mid-twentieth century. Krugman examines Friedman’s view of human behavior and how it led him to the economic principles which formed the foundation of Monetarism. He concludes by arguing that while the intellectual climate and public opinion were ripe for the acceptance of Monetarism in the late twentieth century, certain economic occurrences in recent years can demonstrate the limitations of Friedman’s theory and can lead one to conclude that a “counter-counterreformation” against Monetarism is in order (Krugman 2007: 13). Two years after the article was written one can see that Krugman’s recommendations have largely come into fruition as evidenced by the measures taken by the United States and countries across the globe in response to the ongoing worldwide economic crisis.

Krugman begins his article by examining the socio-political zeitgeist within which Milton Friedman lived, thought and wrote. Although the early part of the twentieth century had been dominated by classical, free-market economics, by the middle of the century, Keynesianism had risen to prominence for its offering of both a salient explanation of and pragmatic solution to the Great Depression. (Krugman 2007: 1) However, by the later part of the century, classical economics was able to regain much of its lost esteem thanks in large part to the influence of Friedman and his assertions. (Krugman 2007: 1) Friedman’s influence was founded on his articulateness and ability to “correctly identif[y] Keynesianism’s weak points” (Krugman 2007: 2).

Whereas Keynesianism had sought to distance economic analysis from the rationalism of a hypothetical “economic man” and move towards attributing economic behavior to psychological considerations, Friedman instead believed that an “economic man” can in fact be identified irrespective of individual or group psychology (Krugman 2007: 3). Although economic models such as the Phillips Curve had previously lent support to the Keynesian notion of inflation as a necessary consequence of efforts to reduce unemployment, having presented inflation and unemployment as trade-offs, Friedman instead argued that this perceived trade-off was only temporary. (Krugman 2007: 3) In making his case, Friedman attributed the role of the “economic man” in arguing that in the long run, both inflation and unemployment can rise concomitantly (Krugman 2007: 4). He argued that while in the short-run, employers may perceive an increase in wages in response to rising inflation which may encourage the hiring of additional workers, with time, those workers will come to demand higher wages even before the full effect of inflation has been borne out by prices in the marketplace (Krugman 2007: 4). Therefore, even in a situation of rising inflation, in the long-run, employer’s expectations of rational employee and consumer behavior may actually serve to encourage reductions in the workforce. (Krugman 2007: 4). Thus, in effect, Friedman made the case that Keynesian advocacy of government spending, which encourages inflation and a temporary improvement to employment statistics, is not in the long-run the best mechanism for solving economic crises and for putting people back to work.

A major divergence between Friedman’s ideas and Keynesianism was with regards to the role of the money supply. Keynes had argued that an increase in the money supply had a negligible effect on improving an economy ravaged by a depression as interest rates in such an economy are already very low. (Krugman 2007: 5) In a situation where cheap loans are readily available, a further increase in the money supply was not believed to have a sufficiently beneficial effect on the economy, and as such, fiscal policy was advocated as the most effective means to reinvigorate an ailing economy. (Krugman 2007: 5) However, Friedman took issue with this assertion. As proof, he and his fellow Monetarists went on to argue that it was flawed monetary policy which caused the Great Depression. If the overall money supply had been increased and the government had stepped in to aid failing banks, the banks would have continued to loan and individuals would have been encouraged to hold onto bank deposits rather than seeking to convert their deposits into cash. (Krugman 2007: 6)

While during the post-war period Keynesianism had become the doctrine of the day and Friedman’s Monetarist approach had been regarded with disdain, the 1970s saw the emergence of sustained inflation unlike that of the past, and this afforded Friedman and his followers a breeding ground in which to test their hypotheses. (Krugman 2007: 4, 5) For the first time in recent history, inflation and unemployment seemed to share a direct correlation during this period. In addition to double-digit inflation, this period saw unemployment figures that were the most devastating since the Great Depression. (Krugman 2007: 4) Thus, the emergence of stagflation, as it came to be called, had its roots in the theoretical propositions set forth by Friedman and his followers and which stood in contradistinction to that which would have been predicted by the Keynesian philosophy of the day. (Krugman 2007: 4) Having demonstrated that its theoretical tenants could withstand empirical testing, in the 1970s the Monetarist perspective advanced by Friedman saw a windfall of newfound credibility. (Krugman 2007: 4)

Although many came to prescribe to Monetarist thought, Paul Krugman makes several points in his article arguing that much of this support was founded on unexamined misconceptions. For example, he criticized Friedman for his having fueled the widespread public misperception that Monetarism advocated a withdrawal of government from individual affairs. (Krugman 2007: 7) Rather, Krugman argues that Friedman and his followers were actually advocating an increase in government intervention- only in a different form than that with which the public had become accustomed. (Krugman 2007: 7) Another such criticism surrounds the assertion of Monetarists that the validity of their perspective can be demonstrated by considering their explanation of the Great Depression. Monetarists assert that a fall in the money supply was responsible for the Great Depression, and that its consequences could have been averted had the U.S. government increased its money supply and had the Federal Reserve acted quickly to lend money to failing banks. (Krugman 2007: 6, 7) Krugman notes that the flaw in this explanation reveals itself when one differentiates between the “monetary base,” which the Fed directly controls and the supply of which was actually increasing during the Great Depression, and the “money supply,” which includes deposits over which the government has no control (Krugman 2007: 6, 7). Furthermore, the idea that because the government “could have” taken measures which would have reduced the overall consequences of the Great Depression, this statement does not inevitably lead to the heavily promoted and often Monetarist-attributed conclusion that because such measures were not taken, the U.S. government necessarily “caused” the crisis itself (Krugman 2007: 6).

Krugman also argues that empirical evidence can demonstrate that Monetarism is ineffectual in bringing about its desired ends. For example, despite efforts in both the United States and Great Britain to increase the money supply at the end of the 1970s and start of the 1980s, these efforts did not serve to thwart deep recessions. (Krugman 2007: 7) The same is true with respect to Japan, wherein efforts to introduce Monetarist policy during the Asian Financial Crisis were proven ineffectual in restoring consumer confidence. (Krugman 2007: 8) Additionally, despite Friedman’s criticism that central banks should refrain from micromanaging the economy, since the 1980s, their contributions have actually served to soften recessions and reduce inflation. (Krugman 2007: 7) In the United States, Krugman attributes the relatively smaller gains in living standards after the introduction of Monetarist policy in the mid-1970s to increasing income inequality, a prospect which stands in contradiction to Friedman’s belief that no special protections would be necessary to ensure income equality under a Monetarist framework. (Krugman 2007: 9) Finally, a similar claim can be made with respect to Latin America, where Friedman-esque neoliberal policies have largely failed to spurn the economic growth and income equality that Monetarists promise. (Krugman 2007: 10) While the promotion of laissez-faire economics may in certain circumstances be appropriate, Krugman argues that Friedman’s greatest theoretical flaw is his unbridled, absolutist advocacy of deregulation. (Krugman 2007: 11) He ultimately concludes that just as a shift in public discourse led to a “counterreformation” against Keynesianism, perhaps what is needed now is yet another “counter-counterrevolution” against Monetarism (Krugman 2007: 12).

Krugman’s criticisms of Friedman and of his Monetarist perspective have continuing validity with respect to the modern financial crisis. Perhaps most striking is the fact that the 2008 arguably Monetarist-inspired large-scale “Troubled Asset Relief Program” aimed at rescuing failing banks has largely failed in its efforts to stimulate the underlying economy (FRB 2009: 1).  Despite government efforts to pump hundreds of billions of dollars into the ailing financial sector, unemployment rates in the United States rose from 6.0 percent in October, 2008 to 10.2 percent in October, 2009. (BLS 2009: 1) As a result of these failings, it can be argued that the United States has moved in a Keynesian direction against the backdrop of the previously-dominant Monetarist perspective. The 2009 Obama Stimulus Plan evidences a shift in thinking among political leaders, as its ultimate aims are not targeted at questions of monetary policy, but rather are aimed at direct fiscal spending to spurn the creation of jobs. Although certain economic indicators have shown signs of improvement, it is unclear whether they are signaling a rebound of the economy. (Flood 2009: 1) Similar measures are being taken abroad, such as China’s decision 2008 decision to authorize a five-hundred eighty-six billion dollar stimulus package aimed at providing direct government funding for infrastructure, agriculture, health care and other social welfare objectives. (Batson 2008: 1) While an end to the crisis will not prove the validity of one theory over the other, it certainly appears as though the current situation is providing a framework for policy-makers to carefully examine the consequences of Keynesian and Monetarist philosophy.

In conclusion, Milton Friedman was an influential modern economist who founded the so-called Monetarist school of thought, a perspective which gained traction in the late 1970s and early 1980s as an alternative to the previously-dominant Keynesian economic perspective of the day.  By disputing the theoretical proposition advanced by Keynes that inflation, brought about by fiscal spending, is a necessary evil in efforts to reduce unemployment and by focusing on the ability of policy-makers to increase the money supply during times of recession and depression, Friedman was able to create an intellectual movement in opposition to the Keynesian tax-and-spend model. Despite initial evidence from the 1970s suggesting that Friedman’s assertions had a degree of validity with respect to his assertions surrounding stagflation, in Who Was Milton Friedman?, Paul Krugman details a number of occurrences which demonstrate that Monetarist-inspired policies have not been shown to achieve their desired ends, and he advances the idea that a counter-revolution against Monetarism is in order. By analyzing the policy responses to the current global economic crisis, one can see that such a counter-revolution seems to be forming. If and when the economy rebounds, those on either side of the debate will inevitably argue that the policies in line with their perspective were the cause of the improvement, and as such, it is unclear which side will emerge as dominant in the coming years. However, what cannot be doubted is that the modern economic crisis is reinvigorating the debate between Keynesianism and Monetarism.

Works Cited:

Batson, Andrew. "China Sets Big Stimulus Plan In Bid to Jump-Start Growth." The Wall Street Journal. The Wall Street Journal, 10 Nov. 2008. Web. 25 Nov. 2009. <http://online.wsj.com/article/SB122623724868611327.html>.

Flood, Chris. "Economic outlook: Fed likely to upgrade its growth projections." Financial Times. The Financial Times Limited, 22 Nov. 2009. Web. 25 Nov. 2009. <http://www.ft.com/cms/s/0/b1d5eb9e-d623-11de-b80f-00144feabdc0.html>.

Krugman, Paul. "Who Was Milton Friedman?” The New York Review of Books Vol. 54, No. 2. (2007): 1-13. Who Was Milton Friedman? The New York Times, 15 Feb. 2007. Web. 25 Nov. 2009. <http://www.nybooks.com/articles/19857>.

United States. United States Department of Labor. Bureau of Labor Statistics. Table A-1. Employment status of the civilian population by sex and age. United States Department of Labor, 6 Nov. 2009. Web. 25 Nov. 2009. <http://www.bls.gov/news.release/empsit.t01.htm>. [cited in text as BLS].

United States. Federal Reserve. Board of Governors of the Federal Reserve. Troubled Asset Relief Program (TARP) Information. Federal Reserve, 6 Nov. 2009. Web. 25 Nov. 2009. <http://www.federalreserve.gov/bankinforeg/tarpinfo.htm>. [cited in text as Federal Reserve].

The Influence of Scholarship on the Atlantic Post-War Settlement - Brian Safran

          In A World Economy Restored: Expert Consensus and the Anglo-American Post-War Settlement, G. John Ikenberry analyzes the factors which led Britain and the United States to reach agreement on the basic rules of a redesigned international financial system following World War II. Whereas each country was beset by political cleavages and divergent interests so deep that one might have believed consensus to be a futile goal, Ikenberry argues that the predominating factor which encouraged and ultimately resulted in the post-war settlement was the emergence of a “middle ground” brought about by a group of intellectuals, economists and policy experts who despite their geo-political happenstance, were united by a shared set of theoretical conceptions based on a shared professional outlook (Ikenberry 1992: 291). He argues that this shared scholarly perspective came to become accepted by the two governments, and ultimately encouraged the formation of coalition-building within each state around these theoretical tenants, providing a foundation for the development of a public consensus. (Ikenberry 1992: 321) Analysis of Ikenberry’s findings can demonstrate that the consensus formulated by scholars had the effect of nurturing a Machiavellian conception of power based on consent, which helped to propel the United States into a position of hegemony in the post-war period.

            Ikenberry begins his investigation by setting forth the socio-political context within which the governments of Britain and the United States found themselves in the post-war era, and the objectives each sought to pursue through their economic policy. Whereas the United States was generally interested in pursuing a new international financial system based on the principles of multilateralism and free trade, Britain generally sought bilateral trade policies and the continuance of “preferential economic groupings” in an effort to fulfill its desire to provide for full employment (Ikenberry 1992: 289). Additionally, in each country there were stark divisions among political actors who supported opposed interests. In Britain, conservatives supported the continuance of the “imperial preference system” which provided for preferential duties on goods sold within the British Empire, whereas liberals supported restrictions on trade to ensure the stability of the welfare state (Ikenberry 1992: 305, 310). In the United States, prominent views included New Deal economic planners who supported Keynesian intervention in the economy, the State Department which supported the opening of the international trading system, the Treasury, which focused on monetary intervention, and the Congress, which was “domestically minded” and opposed to the expansion of free-trade (Ikenberry 1992: 305, 308, 316).

            In the midst of these competing views both within and between the countries on each side of the Atlantic, consensus was finally reached with the memorializing of the Bretton Woods Agreement. Ikenberry’s main question of analysis was to discern how it was that the two countries were able to reach a seemingly miraculous level of cooperation despite the opposed interests each polity brought to the negotiating table. Although past explanations have focused on the pursuit of power and self-interest at the state level, he finds that such an explanation fails to explain why the specific features of the international economic order arose as they did, and what served as the “glue” that helped sustain an Anglo-American coalition despite the seemingly opposed national and bureaucratic interests (Ikenberry 1992: 291).

            His answer to these questions lied in his belief that this “glue” was provided by a group of economic policy specialists and experts on both sides of the Atlantic who provided a framework for postwar consensus by shifting the focus from trade issues to less-contentious monetary issues and articulating a set of common objectives (Ikenberry 1992: 291). These specialists did not constitute an “epistemic community,” or an independently-operating, apolitical scientific community, but rather, were a group of scholars brought into their respective governments during the negotiating process (Ikenberry 1992: 293, 304). Furthermore, although policy-makers often deferred their decision-making to those they perceived as “experts,” the common ideas these specialists espoused were not based on their support of specific scientific, empirical or logical doctrines, but rather were rooted in their normative “professional orientation,” composed of an assimilation of beliefs formed in reaction to recent upheavals in the world economy (Ikenberry 1992: 293, 297, 318). The tenants of this professional consensus included the support of policies aimed at currency stability and currency convertibility, approval of short-term fiscal expansion to correct trade imbalances, and support of the idea of creating a global economy with international oversight over national economic policies. (Ikenberry 1992: 297-98) Scholars found themselves able to “break through various layers of conflict” by focusing initially on monetary cooperation (Ikenberry 1992: 319). Ultimately, Ikenberry shows how the policy recommendations espoused by these scholars culminated with the Bretton Woods Agreement, a compromise which created an international financial system combining aspects of Keynesian economic policy and social welfare objectives with free trade. (Ikenberry 1992: 292, 294, 315)

            In focusing on the concessions the United States made to Britain in its design of the new international financial order through the guise of policy experts demonstrates how the United States government sought to put into effect a Machiavellian-type view of power by balancing the interests of consent and coercion. Ikenberry argues that there was a sense among American officials that it was in their best interest to refrain from presenting the appearance that they were imposing a post-war order on Europe, and in doing so, sought the support of British elites. (Ikenberry 1992: 320) Among the most prominent concessions the United States made to the British included their providing for greater national flexibility in the management of exchange rates, and the articulation of a “middle ground” between a free trade system and a bilateral or regional trading arrangement (Ikenberry 1992: 315, 319). As a result of these concessions, the various previously-opposed groups including Keynesian planners, free traders and internationalists all joined in support of Bretton Woods, seeing it as a system from which all can benefit. (Ikenberry 1992: 317) Thus, through the making of Machiavellian-style concessions to British elites in the development of a cross-Atlantic consensus, the United States was able to secure Britain as an active and willing participant in the systematization of U.S. ascendance to and Britain’s fall from global hegemony.

            In closing, In A World Economy Restored: Expert Consensus and the Anglo-American Post-War Settlement, G. John Ikenberry offers a perspective on how it came to be that the United States and Britain were able to find common ground in the post-World War II era. Despite the fact that each country was beset by external and internal political cleavages, Ikenberry argues that consensus was forged primarily due to the influence of a group of scholars who shared a common professional outlook and way of thinking. It is through the suggestions offered by these scholars that their respective national governments formulated policy. In culminating the Bretton Woods Agreement, the governments of the United States and Britain incorporated a range of ideas appealing to the elites of both countries. Furthermore, by putting into effect a Machiavellian-type view of power, and making certain concessions to British elites, the United States was able to design a new international financial system which propelled them into a position of global hegemon. It is without question that the world would look quite differently than it does today if it had not been for the influence of the well-positioned scholars and policy experts who played a significant role in formulating a redesign of the global economic post-war order.

Works Cited:

Ikenberry, G. John. "A World Economy Restored: Expert Consensus and the Anglo-American Postwar Settlement." International Organization 46.1 (1992): 289-321. Print.