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Economy and state

Why is the state so eerily absent from economic theory? Connections between economy and state are far from invisible: government iconography on money, debates on COVID relief spending, the regulation of monopoly and finance. Political discourse frequently makes reference to claims regarding economic performance as a means by which well-being is maintained or improved. A range of stances about the appropriate form or extent of the relationship between state and market is represented in such discourse, to be sure, but there is no one who seriously argues that the state is anything but a major economic force.

Yet the student of economic theory is hard pressed to locate anything approximating the actually existing state in economic theory. In macroeconomics, the state's functions are mostly confined to adjustments in government spending or taxation, or through the central bank's ability to influence a small number of policy variables, for example a short-term interest rate or, since the great balance-sheet expansion that began in 2008, asset purchases. In microeconomics, a similarly small range of mechanisms of the impact of government is accommodated—the imposition of a minimum wage, for example, or regulatory penalties, or wealth transfers.

None of these representations has much to do with the complexities or substance of actual states that intersect with actual production, accumulation and exchange. A modern state's bureaucracy is a huge apparatus involving countless layers of decision-making, patterns of rules and norms, representational and interpretative behaviors, histories, and conflicts, not to mention buildings, capital and infrastructure. All of these form a context within which many individual and social phenomena play out. At each point, the interactions between state and non-state is intense: through employment, procurement, financing (in both directions), taxation, regulation but also supervision, and through symbolic and discursive interventions.

Marx himself, and Marxist theorists, are an exception to this pattern. They surely do see the state as critical for the operation of market activity. Indeed through any number of disciplinary approaches (historical, anthropological, sociological), the dependency of the market on the state has been well established. There is no market without the state. (Whether there can be a state without a market seems less clear.)

That it is only in Marxist discourse where the state appears in a recognizable form seems telling. Marxist discourse within economics is marginalized to an extreme degree: it is safe to talk about the state in a Marxist space because that discourse is already neutralized by exclusion from jobs, from publications, and from access to platforms and audiences. Conversations that take look closely at what the state actually is are allowed to happen only where they can have little effect.

I am not trying to reject radical discourse on the state; far from it. But here I am trying to look more closely at why non-radical economic discourse happens in a certain way at our moment in history. If the state is largely absent from economic discourse, and those strains of thought that take it seriously are confined to the margins, one conclusion (which itself is quite Marxist in character) is that the confinement is a way of concealing the inconvenient fact that the state is not absent but rather is ever-present in relations of production, accumulation and exchange, just as they seem at first glance. The state, it seems to me, carefully evades its own representations so as to remain at a distance and thus less of an irritant, less of a source of resentment. It keeps itself out of the discursive so that it can dominate the material.

The problem is that the stateless discourse of economics has a stranglehold on administration and management: a discourse which largely denies or amputates the state organizes much of the operation of the state. To simply reject this discourse is to cast oneself to the margins. Again, maybe there is nothing to be lost by being on the margins, maybe it has all already been lost.

It does seem better, however, to actually deconstruct the manufactured absence of the state from economics. State and market must be brought more closely together in our consciousness, in theory, so that one cannot be allowed to simply compensate for the other.