03 August 2010

The Value of Nothing -- The Review

This anti-market, anti-capitalist screed falls within a tradition that includes The Communist Manifesto, Polanyi's Great Transformation, and various works by Naomi Klein and Maude Barlow. It is essentially a tirade against all that is wrong with this world; how all of that can be traced to greed, money, markets, and economics; and how all we need to do is try harder to overthrow the forces that work against us, The People.

Unfortunately, many readers will see reason in Raj Patel's deluge of words, ideas and catch phrases -- everything from infant formula to labor exploitation to pollution offshoring to Wall Street greed -- without seeing the holes. It's hard, after all, to know what happened at a crime scene when there's only one witness.

I am another witness, and my perspective includes elements that Patel either omits or misunderstands.

First, the title of this book is misleading. I thought I was going to get a deep discussion on the issues with valuation, why some things are worth more or less than they cost, and how to integrate these values into prices -- similar to the discussion on morals I got here. Instead, I got a lot of rhetoric about things (nature, family, happiness) that are worth more than money. Ok, fine. Now what? Well, not much. In many places in this book, Patel says "we need to do more" but doesn't offer a cogent rule, institution or action plan. This is especially distressing when he says "markets [for labor, carbon, healthcare] don't work..." but then fails to offer more than "we need to look out for humans, the weak" and so on...

Second, Patel goes after his "artificial people" -- governments and corporations -- as if they are really people. Of course they aren't! People are inside corporations and governments, fighting over what to do. Even when there is a clear goal (profit maximization), people still fight over the means of pursuing it. Patel needs to do a second edition of this book, with extensive revision to include Buchanan and Tullock on Public Choice and Schumpeter on Methodological Individualism. I do not make this recommendation to pick nits, but Patel's very broad background reading appears to have missed a literature that is absolutely central to his thesis -- that people need to regain control over the institutions affecting their lives. Speaking of institutions, he needs to read more from Douglass North [PDF].

Third, Patel needs to upgrade his caricature of economic thinking from a straw-man version of Gary Becker to something reflecting thought in the past 20-30 years. He does himself no service calling Becker a crank pushing an absurd neoliberal agenda in service of corporations. Please. He lauds Marx and Keynes but fails to consider the implications of their policies. Give workers control of capital! Stimulate the economy! Fine. And then what?!? His caricature of a capitalist economy is so pathetic that he claims that only people with money will get health care. That's not true in the ("capitalist") US, although it may be in ("communist") China. I wish that he would at least concede that government policies for safety nets and redistribution are not in contradiction to markets and capitalism, but a complement to capitalism, divvying up a bigger pie.

Fourth, Patel mixes up economics (the study of efficiency, often via markets) with politics (the study of equity, often via laws and policies). He constantly attacks markets, money and corporations for sins committed within a political framework. Patel needs to spend more time criticizing the rules of the game, instead of blaming winners. He discusses, e.g., the problems with subsidized beef without pointing a finger at the USDA. He blames corporations for externalities -- an area where government intervention is critical. He claims [p. 49] that "corporate capitalism has yet to prove that it can operate without these kinds of [environmental and social] subsidies," which is ridiculous. He goes out of his way to find fault with every advertisement -- "Coke is a cocktail of chemicals" or "Visa encourages debt" -- in such a hysterical manner that I think he's drunk a little too much of Klein's No Logo Kool Aid. For example, he got this [p. 167] wrong: "...the fetters placed on democratic society by the market." That's backASSwards. Society puts fetters on markets.

Fifth, this book was endorsed by Michael Pollan and Naomi Klein -- two public intellectuals without strong economic background. That's not important for their work (I agree with the central theses of The Omnivore's Dilemma and The Shock Doctrine, and Patel praises them in his text), but it matters for Patel's. They are not highly-qualified witnesses for this work.

Sixth, Patel talks a lot about righting all the wrongs of unfair distributions or property, money and other things. (He does not seem to see how that contradicts his recommendation that we stop worrying about money and things.) But how does such a redistribution work? Who takes direct action? If we reject property rights, then who gets stuff? The folks with guns? How does that affect the incentives for work and innovation? I understand his affinity with Small is Beautiful and the leisure of a hunter-gather lifestyle, but we cannot force people to end their greed. (Polanyi made the same mistake. He denounced wage labor but failed to allow for labor that WANTED wages.) And no. People are not socialized to greed, neither by McDonalds or the Federal Reserve!

Seven, Patel talks (a LOT) about NEEDS and things we NEED to do. That's fine, but who pays for these needs? Who will pay if farmers all switch to organic production methods. Even without subsidies, non-organic farming produces cheaper food. Will poor food consumers in "The Global South" be better off with organics?

Eight, on a positive note, I liked Patel's example of participatory budgeting in Porto Allegre, Brazil (and other places) as well as his examples of direct, deliberative democracy. We need more of that, in more places, if we are going to get good policies affecting markets or redistribution of wealth.

Nine, "We need to admit that prices don't signal what we believe" [p. 192]. Oh really? So what's that barrel of oil worth, then? And who is "we"? if not all of us? This is the kind of bullshit that made me want to throw this book out the window, but I forced myself to read to the end, to see if Patel ever gave a hint of how to do things -- other than "trust us to do the right thing" -- and I never got that hint. I got to the end of this book thoroughly convinced that Patel has strong beliefs and outrage but little grasp of what causes it or how to change things.

Bottom Line: I give this rant TWO stars for outlining a number of problems and suggesting a few solutions but absolutely FAILING to give any useful analysis of how political-economy works. I only recommend this book to people who need confirmation of their opinions (NOT a need to understand them) or analysts looking for easy arguments to demolish. This review has a value of greater than nothing if it leads you to spend your time and money elsewhere.


Eric said...

Thanks for laying out the details of your review. Non-economists like me need to know where to go to find facts.

Given how much you liked this book, here is a paraphrase of what Carl Sagan wrote in review of Erich von Daniken's "Chariots of the Gods"

'A clear winner. More scientific errors per page than any other book I have read.'

TragerWaterReport.wordpress.com said...

Excellent review. Patel spent a lot of time in Zimbabwe, so he should know what happens when a government assaults markets and totally debases its currency. The keys to prosperity are sound money, free markets, low taxes, and reasonable regulation.

W.E. Heasley said...

Dr. Zetland:

Maybe Milton Friedman best summed up Patel’s position : “Underlying most arguments against the free market is a lack of belief in freedom itself.”

Anonymous said...

Thanks for the review.