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A Star Economist Warns of Social Collapse

Branko Milanovic reassures us that social bonds exist and are worth saving. But are today’s bonds strong enough to resist the pressure of a pandemic?
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Chengdu, China on 1/23/2020 © B.Zhou / Shutterstock

March 23, 2020 12:13 EDT

In an article for Foreign Affairs, “The Real Pandemic Danger Is Social Collapse,” the economist Branko Milanovic, noted for his groundbreaking work on income and wealth inequality, takes a close look at the choices governments and societies are faced with today as the entire world organizes its defense against the coronavirus, known as COVID-19. Whatever form that defense takes and however it plays out, the author sees in the offing an inevitable “profound shift” in both the economy and society. Things simply will not be the same, even if we manage to avoid the danger he signals of social collapse.

Social Distancing or the Danger of Life With Others


Milanovic offers this pertinent warning: “Advanced societies must not allow economics, particularly the fortunes of financial markets, to blind them to the fact that the most important role economic policy can play now is to keep social bonds strong under this extraordinary pressure.”

Here is today’s 3D definition:

Social bonds:

1. An idea traditionally considered irrelevant by an entire school of economists who managed to convince an entire society that all human relations were reducible to the logic of monetary transactions and governed by the instinct of self-interest, producing an imaginary being they call “homo economicus,” shorn of any need for affective relationships beyond the nuclear family and specifically designed for the consumer economy

2. The factors that draw together groups of people through a combination of cultural habits and a shared respect for laws, customs and values, making it possible for groups of people to live together cooperatively

Contextual Note

No one has formulated the deep meaning behind the reigning economic orthodoxy more clearly than Margaret Thatcher when she famously commented in 1987: “And, you know, there is no such thing as society. There are individual men and women and there are families. And no governments can do anything except through people, and people must look to themselves first.” Some presumably serious people actually took Thatcher’s pronouncement seriously. Reminding readers of the Financial Times of the uncompromising wisdom expressed by the recently deceased former British prime minister, noted journalist Sir Samuel Brittan in 2013 quite simply affirmed in the title of his article: “Thatcher was right — there is no ‘society.’”

Are there many people who would agree with that today? Milanovic doesn’t seem to think so. A mere seven years ago, Thatcher and Brittan were expressing what all “responsible” citizens were persistently cajoled into believing, even if no one dared to say it as boldly as Thatcher. There is no point in talking about social bonds if we accept the idea that society doesn’t exist. Thanks to COVID-19 and governments that compel their citizens to self-isolate and practice “social distancing,” even CNN reminds us that social bonds are what defines society: “As we retreat into our homes, we can lose sight of our essential connections to one another and forget about the plight of those most vulnerable to the fraying of social bonds.”

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Even if most politicians in the West — especially in the US — continue to make their political decisions solely in terms of the monetary value rather than the social needs of individuals and families, the fact that Milanovic invokes the importance of keeping “social bonds strong” tells us that at least for some of the most respected economic thinkers, homo economicus has, in recent years, had to descend from his pedestal.

In Milanovic’s reckoning, social bonds may not be directly comparable with measurable indicators of productivity, but they represent a value to be factored in alongside and — as the world seems now to be realizing — prior to monetary value. Especially in times of a massive historical crisis, it becomes clear that the quantitative value of social bonds actually can translate into monetary terms. At the same time, in terms of qualitative value, social bonds supersede considerations of cost and monetary balance.

If we accept that un-Thatcherian thesis that society exists and that social bonds have a structuring role even in the economic relations between individuals, the next question we need to ask for any given society in a time of crisis is: How strong were those bonds in the first place?

That the political culture of modern capitalist society could entertain, even for a limited time, the idea that society doesn’t exist would seem to indicate that whatever bonds continued to exist must have been extremely weakened by the reigning ideology. Nothing illustrates that better than what we have seen as the coronavirus crisis set in: brawls in supermarkets over toilet paper and the speculative hoarding of much-needed medical supplies.

Milanovic is right, but shouldn’t he also be asking whether the feared collapse wasn’t already on its way even before the pandemic?

Historical Note

Nevertheless, the fact that the renowned London-based economist has evoked the danger of shattered social bonds indicates that perhaps thinking among economists has changed in recent years, even in the nation once administered by Margaret Thatcher. Could it be that Western society has already weaned itself off the Reagan-Thatcher orthodoxy inherited from a tradition established and inculcated by the likes of Ayn Rand, Friedrich Hayek and Milton Friedman? They all maintained an idea they wanted others to believe was some kind of metaphysical truth or at the very least a law of nature: that the free play of decision-making between millions of self-interested individuals is the best — though they themselves would admit imperfect — means of ensuring optimal economic and social relationships.

Interestingly, some 200 pages into his influential book, “Global Inequality,” published in 2016, Branko Milanovic makes his own there’s-no-such-thing-as statement. In contrast to Thatcher’s “there’s no such thing as society,” the author affirms that “there’s no such thing as global equality of opportunity: a lot of our income depends on the accident of birth.” Although in the context he was discussing the question of inequality between nations, he relates this fundamental truth to the reality within the core of every society.

Milanovic makes some important points about the consequences for politics. He describes how economic inequality in the US has morphed into a machine that not only accelerates the trend toward inequality. He also shows how it is designed to cripple democracy. He somewhat grudgingly cites the originally Marxist notion of “false consciousness” to prove his point. Similar to Edward S. Herman and Noam Chomsky’s notion of “manufactured consent,” “false consciousness” describes the effect of political stratagems magnified by the media in the interest of the wealthy, forming the cultural basis of oligarchic rule.

Milanovic explains how it works. Political authority and the media combine to focus the public’s attention on artificially-defined cultural issues that distract from the much more fundamental economic issue. Milanovic explains that the function of the culture war that has been so prominent in US politics in recent decades is “to mask the real shift of economic power toward the rich.” In so doing both inequality and a weakened democracy — from which the notion of solidarity has been removed — create the conditions that may, on the slightest provocation, lead to social collapse. The coronavirus may turn out to be the catalyst.

In “Global Inequality,” Milanovic explored in considerable depth the political and psychological strategies, the lines of reasoning and even the pragmatic actions that have permitted ever-increasing inequality. He didn’t go quite so far as Thomas Piketty has in his latest book focused on the ideological foundations of capitalism that have made the trend toward inequality inevitable. The phenomenon of growing inequality explored by both economists has been accompanied by a campaign of indoctrination of the population in a belief system that enthrones the idea of disconnected multiple individual economic agents each pursuing their self-interest, leading to Thatcher’s explicit denial of the existence of society.

The culture war approach to politics that Milanovic mentions allows, for example, Republicans in the US to use supposed religious values as a litmus test for inclusion in civilized society, while the Democrats focus obsessively on “identity politics.” Both approaches distract from economic reality and can be read as a not so subtle variation on the reigning homo economicus thesis. Instead of all individuals seeing all other individuals as competitors for the same pool of resources, culture war politics designates arbitrarily-defined interest groups as competing economic agents. Thus, there may be social bonds within the groups but not between them.

The subtitle of Milanovic’s article is, “As the Global Economy Comes Apart, Societies May, Too.” There is little doubt that the global economy has just begun to “come apart” and, after three years of sitting on Donald Trump’s wall, like Humpty Dumpty, society is falling and may need not just the king’s horses and men, but perhaps a bit more to put it together again.

Yet even with the strongest cement, the cracks will remain glaringly visible. Society may require that we work on hatching a new egg for fear that the old one, even if repaired, may come apart again at the cracks. Worse, if and when that happens, everyone will finally see that, despite expert mending, the old one is no more than an empty shell.

*[In the age of Oscar Wilde and Mark Twain, another American wit, the journalist Ambrose Bierce, produced a series of satirical definitions of commonly used terms, throwing light on their hidden meanings in real discourse. Bierce eventually collected and published them as a book, The Devil’s Dictionary, in 1911. We have shamelessly appropriated his title in the interest of continuing his wholesome pedagogical effort to enlighten generations of readers of the news.]

The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.

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