Deidre (then Donald) McCloskey’s “rhetoric of economics” movement was one of the most important, yet least celebrated developments in the field during the 20th century. Perhaps an even greater benefit is that it comes from a former University of Chicago economist. The idea that such an “establishment” school of economics, much less the one that produced Milton Friedman, could conceive of a non-monetarist, humanistic development in economics could conceivably lend more credibility to the movement. However, the movement seems to have lost steam due to resistance from the economic establishment. McCloskey’s critique, while important, doesn’t come close to addressing what we’ll call “the economics problem” of mathematicization, marketization, and synthetic commodification.
However, two contemporary issues problematize mathematicized economics. First, and unforgettably, the 2008 financial crisis revealed structural issues in the economy that had existed since Reagan and remain today: the mystification of the importance of monetary policy at the dawn of the postindustrial economy rent asunder the institutions (namely labor unions and information/education gaps) that play disproportionately large roles in the economy but cannot be harnessed for capital. Second, and with tremendous respect to Thomas Piketty, who argues this wonderfully in Capital in the Twenty-First Century, when rates of return on capital outpace economic growth rates over long periods of time, inequality of both income and wealth will increase. This is obviously a problem for the physical and material conditions of the world, as there is no viable, non-extractionary option to eradicate poverty globally if the United States renders itself functionless due to its own economic cannibalism. The absence of any metaphysics for economics renders this problematic academically, as well. The ruling ideology for economics casts out any non-market-oriented research that wouldn’t be publishable at Brookings or the American Enterprise Institute. Thus, a reworking of McCloskey’s critique that is informed by Kenneth Burke’s A Rhetoric of Motives is necessary. With such a critique, the underlying principle of economics is revealed to be not an abstraction such as the autonomous invisible hand of the market; rather, it is one of politics and rhetoric.
The Paradox of Substance, Rhetorical Identification, and the Subject:
When President Obama accepted the Nobel Peace Prize in 2009, in front of the Nobel committee, foreign dignitaries, and royal heads of state, he made a speech in which he invoked one of the most seemingly obvious, yet often overlooked traits of mankind:
War, in one form or another, appeared with the first man. At the dawn of history, its morality was not questioned; it was simply a fact, like drought or disease—the manner in which tribes and then civilizations sought power and settled their differences
Though well-read and surely more literary than his predecessor, the president (likely) unknowingly acknowledged what rhetorical theorist and literary critic Kenneth Burke put forward in his landmark treatise on rhetoric, A Rhetoric of Motives (1950): that humankind exists in a fundamentally divided, or contradictory, state. Such an observation reminds his audience that despite the better judgments of liberal enlightenment philosophers, parliamentary bodies, and his own Hegelian tendencies, to be human is to be at war.
At the core of the subject, the very thing which makes it what it is, is the very thing which makes it what it isn’t. This is what Burke, critiquing John Locke, refers to as the “paradox of substance”. If, etymologically, substance derives its origins from an Indo-Germanic tradition indicating “a concept of place, or placement,” and out of this, he argues, has arisen “a family comprising such members as: consist, constancy, constitution, contrast, destiny, ecstasy, existence, hypostatize, obstacle, stage, state, status, statute, stead, subsist, and system…[then] one could build a whole philosophic universe tracking down the ramifications of this one root.” There lies a pun, he notes, foreshadowed by the prefix sub-, denoting that which supports the thing, stands underneath it, or provides a foundation for it, but by its very existence is not the “thing itself”—to put it in Kantian terms.
Extrapolating from this, we can see how the process of identification—Burke’s precondition for rhetoric to unfold—is in fact the precondition for history, politics, and economics to unfold. By identifying, the subject asserts itself to have the general nature, be like—or be—a thing. Burke’s example of this is the “shepherd qua shepherd,” an example in which the shepherd, acting as a shepherd does, looks after and protects his sheep to keep them from harm. However, by the very act of doing so, or the very act of shepherding, he is preparing those same sheep for the slaughter. Language, being the way we materialize and conceptualize our thoughts and instincts, cannot prevent us from being contradicted within ourselves. Thus, we are in a state of logomachy, or a “war of words,” at all times.
Homo economicus as homo dialecticus:
So what has this to do with economics? If we take the point of departure for economics as the principle of scarcity, and how the subject interacts with society in a world of scarce resources, this presents us with an opening for a new, more primordial, and more complete understanding of the “rhetoric of economics”. The failure of homo economicus, or “the rational actor,” to act rationally provides a justification for rethinking the entire foundations for economics. By electing Donald Trump, by assuming the United States housing market will maintain its present value despite the institutional changes informing the market growth, by engaging in a 50+ year nuclear standoff with the Soviet Union, and by going to war—as Obama notes—since “the dawn of history,” we have no reason to assume the corrective function of the market or the supremacy of homo economicus as the subject on which to model our theories. Despite what we want to believe, there will always be a global community of fundamentally divided people, otherwise known as homo dialecticus, and this division must work itself out.
Hegel’s dialectic notes that there is always a contradiction that resolves itself. Every thesis is negated, by antithesis, so to be sure, Burke is operating within a Hegelian framework. This same principle works socially because a group of subjects at war with themselves will be at war with each other, by identifying, taking different rhetorical positions, et cetera. In economics, as in politics, any move forward will be followed by the same process of “tarrying with the negative.” Obama’s mention of war in his acceptance speech reveals what is essentially a meta-rhetorical stance. He’s critiquing war as something inherent to society, but by implying a possible moral stance, he is hoping to move forward to a postwar world. He’s hoping—although perhaps not in so many words—to progress through Hegel’s dialectical process to a state of world spirit, absolute knowing, or the end of history (Hegel basically refers—somewhat confusingly—to the completion of the dialectic as all of these things).
Such a tautology is tempting, and Burke understands this. His dialectic, although certainly informed by Hegel’s, has no predetermined completion. Similar to Max Horkheimer and Theodor Adorno’s argument in The Dialectic of Enlightenment (1947) stating that Hegel’s “negation” in the dialectic reduces tragedy to something predetermined and necessary, he observes that rhetoricians engaged in a war of words have the potential to cause unprecedented levels of destruction. Burke is writing the two works mentioned here, A Grammar of Motives and A Rhetoric of Motives, in the aftermath of the Second World War and the dawn of the Cold War. In Rhetoric, he critiques Hegel’s notion/thing itself dyad as consistent with “myth” and “ideology”. Myth in Burke’s terms consists of the non-conscious justifications an interlocutor makes to justify their actions in the “war of words,” and an ideology is the socio-cultural materialization of such a myth. In the rhetoric of economics, we find that economics itself is the myth. It’s a way for people competing with one another in a rhetorical conquest to justify their “rational self interest”, and the ideology in the West, is capitalism. For Hegel, his entire German Idealist philosophical project could be considered his ideology. His myth is the myth of the teleological completion of the world spirit—a thinly veiled philosophical take on Christian theological telos. But what Burke stresses is that it isn’t predetermined. It isn’t a tautology.
The tautology of economic liberalism that the market will work itself out and come to an equilibrium over time is surprisingly less liberal than glaringly Hegelian, but it is also rhetorical. After all, what is a market at its core but a group of subjects negotiating prices of scarce goods and resources with one another? But such equilibrium is also inherently destructive. When market participants fail to act rationally, which they undoubtedly will do, the cost is material. Not only is the wealth of the already-wealthy lost, but those whose labor and intellectual property are exploited to accumulate capital at the expense of wage growth end up with their livelihoods destroyed in the process, as seen in 2008. (We will not get into Marx now, but future posts will address this, to be sure.)
In the Burkean rhetorical dialectic, the telos is complete when the interlocutors reach what he refers to as higher or ultimate terms of engagement. He describes this in Part III of Rhetoric. What this means is that these terms are reached through a rhetorical procession, or as he says:
in a hierarchy, or sequence, or evaluative series, so that, in some way, we went by a fixed and reasoned progression from one of these to another, the members of the entire group being arranged developmentally with relation to one another. The “ultimate” order of terms would thus differ essentially from the “dialectical”…in that there would be a “guiding idea” or “unitary principle” behind the diversity of voices.
Burke’s dialectical terms amount to a series of demands at the lower range of the hierarchy onward. But what remains distinct from Hegel about the procession to ultimate terms is that it isn’t a guaranteed result. It leaves open the potential for actors to do things that are incredibly irrational, for institutions to leverage their asymmetric power and information to tilt the result, and for both the myth to be taken to the extent that instead of teleological market equilibrium, the other side of the telos is reached, and the market fails. Consider the following anecdote about the 2008–2009 global financial crisis, the effects of which are still felt today.
Homo dialecticus and market failure:
Under the liberal assumption of the properly functioning market, lenders don’t lend to non-creditworthy borrowers, because under economic orthodoxy, that is irrational in that it is more likely than not that a risky borrower will be unable to repay said loan. However, the governments of Clinton and Bush implemented policies intended to make home ownership more inclusive. Thus, mortgages became available to people who lacked sufficient credit to receive them before. With the dawn of the aforementioned financialization of the 80s and 90s and its cousin, securitization, mortgages—both good and bad—were no longer held on the books of the lenders. They were sold to investment firms that turned such mortgages into collateralized debt obligations, or CDOs—intended to spread the risk around in various tranches. High-credit mortgages were combined with “subprime,” or low-credit mortgages (itself a financial paradox) and sold on secondary derivatives markets. Eventually, the chickens came home to roost and borrowers defaulted en masse; however, because there were fewer high-credit mortgages to go around, the CDOs were supplied with disproportionate numbers of low-credit mortgages that were being granted—but they were not rated as such by the ratings agencies, thus deceiving other economic actors in their risk management practices. These secondary derivatives markets became troubled by the securities to which these defaulted mortgages were tied, and soon enough the governments, insurance companies, pension funds, banks, and businesses that had invested in them became susceptible. We all know the aftermath.
The answer to why this happened lies in the rhetorical condition in which economics is practiced. Politics, the rhetorical activity par excellence, dictated that Clinton and Bush implemented such a risky but politically rewarding mortgage policy. While well-intentioned, it was by definition irrational because the risk outweighed the reward. The inclusive lending, especially under Bush, lent itself to predatory lending practices by companies such as Countrywide and IndyMac. Now, the reverse argument of this is the typically conservative argument of caveat emptor, but such an argument fails on its face because of the rhetorical implications within economics. Through specialization, we rely on people who are supposed to have our best interests at heart. In many cases, we have ethics laws that dictate this. This is the rhetoric of economics at its most manifest level because specialization is, essentially, an ethos-based argument, but even the core of lending practice in general is itself rhetorical: the rhetorical subject is engaged in what amounts to a debate between giving someone money in exchange for a promise to repay it. What obscures the rhetoricity here is the asymmetric information level and socioeconomic power of the lender leveraged against the bare precarity of the borrower. This problematizes the “free” market narrative, and is fundamental in disguising the fact that, beneath economic jargon, the lender, in the very act of offering a loan and growing the economy on the microcosmic level, provides the very means for defaulting on a loan and economic collapse. One might argue with this conclusion, yet it has repeated itself since the dawn of capitalism. It brings to mind the scene at the end of the film, Margin Call, where Jeremy Irons’ character lists every major economic collapse since the Dutch tulip bubble, chalking it up to “it’s just money. It’s made up.” Extrapolating from this, the same thing occurs at the policy level and on Wall Street on the trading level. The flaw in financialization was the confidence in placing the most crisis-prone sector at the heart of the economy.
What remains is a question that is far from positivistic—indeed, it is ideological: why do we assume our economy operates autonomously, to be explained away by math? Such an assumption rests on a false assumption of its own, that economic actors are acting rationally, when in fact such “rational” action is itself irrational—inherently so. It benefits those in power to rely on such assumptions when making policy in both the private and public sectors. By obscuring the rhetoricity on which economics, if not all human action, is premised, the capital accumulation and power leveraged thereof will continue and more disregard for the victims who suffer most from economic crises—the poor—will continue to be chalked up to market adjustment.