Economics as Social Provisioning

The study of economics is questionably applicable to the real world. When we ask why, and especially when we historicize the field, we are confronted with a discipline split in two between an almost religious orthodoxy and its heterodox detractors.

On the one hand there is the neoclassical paradigm of rational expectations, market clearing, and perfect competition. It takes as its default a utopian, rather static world where individuals trade goods for goods with one another under the cover of money transactions, and where fluctuations in prices automatically adjust supply to demand in a way that leaves everyone fully satiated. At least, as its starting point. Perhaps, when we are allowed such things as a treat in our model-building, we can talk a little about the all-too-human but regrettable deviations from such perfection into offhand incidents of imperfect competition, information asymmetries, irrationality, etc. But these are (realistic) exceptions to the (unrealistic) rules of the main neoclassical theory. And, we are quickly reassured by the economists, the world is ultimately supposed to act like the model in the long run, inconvenient temporary deviations aside. Eventually.

Then on the other hand there are models that focus on interdependent production processes taking place in firms, households, and the state; on the way these perpetuate themselves over time as reproductive circuits; on the social classes produced by different positions within this structure, and the heterogenous levels of agency granted to agents depending on where and how they fit into the system; on the way autonomous agents express their agency all the time through both cooperation and competition; and how this shapes everything from supply chains to financial market instability to inequality to economic development to world trade to the ecological impact of industrial society.

Sounds more like the real world, no? But this second, more empirically defensible way of looking at things doesn’t exist in most economics departments. It lives in the Marxian, Post-Keynesian, Ecological, Institutionalist, Feminist, and other dissident schools of economics, whose critiques are confined to their generally underfunded and marginalized departments and journals.¹ While interest in the heterodox perspective has grown considerably since the 2008 crash, especially among movement people, 18 years later the rebels have still failed to dislodge the orthodoxy. Most ordinary people remain unaware of the debates – and meanwhile the heterodox models go unstudied, their prognostications unheard by those who stalk the halls of power. Readers of the magazine’s economics pages know this story well; it’s one we’ve done our fair share to popularize.²

So you study economics. You read and digest all these little debates. Important though that all is, however, what does one do with all this information? The question is especially urgent for socialists and other leftists who want to move beyond capitalism into something better. One answer is to take action and actually build the types of institutions and communities that you’d like to see in the world. It takes more than guts to do this, though. You need to know enough at the outset about how the world works to act in it effectively. Once you’ve acted, you need to study the results to gain deeper knowledge of that world and adjust your ideas accordingly. It’s not enough to point at vague structural laws that supposedly force everyone’s hand and say, “capitalism makes us do things, it had to have been this way, and that’s that.” After all, the ruling class coordinates, plans, and executes its goals just fine – how do they do it? They operate within particular institutions – what are these, how are they designed, how does that design affect what’s possible within them? They have limits, sure – but what are these? Only by answering these questions can we begin to think about the kinds of actions we’d like to take, the kinds of institutions we think we can get away with building, and how these can distinguish themselves from the capitalist ones we inherit. And to find some very promising provisional answers, you could do worse than study the works of the heterodox economist Tae-Hee Jo.

Born in Korea to working-class farmers in the aftermath of the war which split that country in two, Jo was the first in his family to go to college. He came of age in the final years of South Korea’s military dictatorship, when movements of the democratic left toppled a regime that had forced the country down a narrow, authoritarian road to economic development. In the 1990s he cut his teeth on the classics of heterodox political economy, inspired perhaps by a social milieu shaped by just such political movements. At the same time, he began his scholarly career studying the Asian Financial Crisis that ripped through the Pacific Rim, a crash which among other things laid some foundations for the rise of China.

But ultimately, his interests drew him abroad. Between 2004 and 2007 he went to the University of Missouri–Kansas City (UMKC), a mecca of the heterodox schools of economics that Strange Matters readers will have heard much of already. In those days, it was a place where not only old theories were preserved but new ones were continually being developed – often across old party lines that once divided the dissident schools. This short period would have a lifelong impact on Jo’s thought and career. For it was there that he committed himself to a tradition that ran from certain aspects of Marx’s thought through Thorstein Veblen, Adolph Berle, Gardiner Means, John Maynard Keynes, and Alfred Eichner – a single thread of ideas woven through three of the great heterodox schools (Marxianism, Institutionalism, and Post-Keynesianism). Ultimately, this tradition reached its culmination in the work of Frederic S. Lee – Tae-He Jo’s UMKC colleague, mentor, and friend. After Lee’s death in 2014, one could say that Jo became its guardian and steward.

Image: Heterodox Economics: Legacy & Prospects. Edited by Lynne Chester & Tae-Hee Jo, 2022.

Jo’s academic work is a sober analysis of power and how it develops in the capitalist world, an honest look at their agency and conscious action that isn’t found even in other parts of heterodox economics. He has studied the way firm management changed in the transition from postwar social democracy to neoliberalism, welfare economics, business cycles, and much else – all from a concrete and empirical point of view. At the same time, like his mentor Lee, he has dedicated himself to clarifying and elucidating the intellectual history and methodological problems of economic research itself, in papers and books that refute the neoclassical price mechanism, recover the history of past heterodox traditions, and debate the present state of the field. In this last connection his recent edited volume, Heterodox Economics: Legacy & Prospects (2022), will be of particular interest to many of our readers, as it deals with the thorny question of why, despite the discrediting of the neoclassicals after the 2008 crash, the heterodoxy has failed to replace them.

And indeed, Jo is not just a scholar: his life’s work is equally dedicated to the task of institution-building. An enthusiastic collaborator, he has worked with such leading lights of the heterodox schools as John F Henry, Zdravka Todorova, Mario Seccareccia, Lynne Chester, Louis-Philippe Rochon, Carlo D’Ippoliti on bold and interdisciplinary projects. He has at various points been the co-editor of the Heterodox Economics Newsletter, a Board member of the Association for Evolutionary Economics and Association for Institutional Thought, a co-editor of the definitive and multi-volume Routledge Handbook of Heterodox Economics, and a referee for many of the leading journals and presses of the heterodox econ world, among other things. After Fred Lee’s death, Jo took the initiative of posthumously editing Lee’s final book, organizing his papers, and making them as accessible as possible to scholars on his personal website. He even started and helps to administer UMKC’s Frederic S. Lee Heterodox Economics Scholarship Fund, which to this day awards tens of thousands in need-based funding to economics students attending heterodox doctoral programs. Today he is a professor in the Department of Business, Economics, and Public Administration at the State University of New York, Buffalo.

We caught up with Jo on a Zoom call with two of our editors. The story of how we got there is amusing: Jo had very generously promoted an essay of ours on the history of heterodox economics when he came across it, and we wanted to invite him to one of our print issue launch parties in New York. When Jo, politely neglecting to point out how geographically challenged we were for making the suggestion, informed us that the six-hour drive from Buffalo for a weeknight bash might not be practical, we settled on an interview as a fine alternative. Dressed elegantly in a light-blue cardigan and thin circular glasses, flanked on all sides by mahogany bookshelves reaching up to the ceiling, Jo immediately seemed the very embodiment of a serious scholar who has dedicated his life to exploring deep and difficult subjects. At the slightest prompting, spontaneously and seemingly without much in the way of preparation, he spoke not in the usual stutters and uh-ahs of an unedited interview, but in eloquent speeches that seemed to have already arrived fully formed, and which a lesser mind would have had to spend an evening preparing.

Image: The Routledge Handbook of Heterodox Economics: Theorizing, Analysing, & Transforming Capitalism. Edited by Tae-Hee Jo, Lynne Chester, Carlo D’Ippoliti, 2018. A key essay in this volume is “Social provisioning process: a heterodox view of the economy” by Tae-Hee Jo and Zdravka Todorova.

But he was more than just a font of wisdom. Throughout our wide-ranging conversation, Jo not only made sharp critiques of the mainstream order, but insisted on a practical and applied perspective. As somebody deeply embedded in the institutional infrastructure of heterodox economics itself, he has strong and cutting opinions about how best it should be conducted – and you may be surprised to hear some of what he has to say. Jo is motivated by principles of activism and action, the goal of building one’s capacity to act in the world. In theory, this means not just criticizing capitalist ideas but building out our own model that leaves them in the dust. In practice, it means putting our money where our mouths are (when we have money, anyway) to construct institutions in the here and now that can contest capitalist power. More than anything else, the unity of these endeavors is what he would like us to pursue.

INTERVIEWER

What got you into economics?

TAE-HEE JO

The story dates back to the early 1990s when I started university in South Korea, choosing economics as a major because it seemed interesting. As a high school student, like many others, I was concerned about securing a job after university, which influenced my decision to study economics. As I delved into the subject, I found it more fascinating than expected, particularly because it addressed the economic aspects of society that I wanted to understand.

The early 1990s in South Korea were a dynamic time politically, marking the end of the military regime and the formation of a new government, yet still reflecting elements of the previous regime. This period was ripe with social movements, including labor and student movements. Entering university at the tail end of these movements, I was surrounded by students deeply engaged in social issues, demonstrations, and scholarly activities.

While studying economics, I sought to understand the fundamental problems causing Korea’s economic and social issues. However, the main challenge was the dominance of mainstream economics in university curriculums, which didn’t offer alternative approaches. To broaden my perspective, I joined a reading group where we studied works by Adam Smith, Karl Marx, David Ricardo, John Maynard Keynes, and, as he gained prominence during that period, Hyman Minsky. This exposure to heterodox economics was crucial for my understanding of the field.

As a young student, I was primarily concerned about my career, which led me to continue with a master’s program at the same university, still focused on mainstream economics. During this time, the 1997 Asian financial crisis struck, affecting not just South Korea but also Taiwan, Singapore, and Hong Kong. This crisis sparked widespread academic interest in understanding its causes and finding recovery solutions. My master’s thesis addressed the Asian Financial Crisis using a mainstream framework, though I attempted to approach it critically.

After earning my master’s degree, I worked at a government research institute for a few years before deciding to pursue a PhD. However, due to my limited knowledge in heterodox economics and career concerns, I enrolled at Texas A&M University—a decision I would later regret. The program was intensely focused on traditional economic models with little relevance to real-world economics. After two frustrating years, I left the program but remained committed to studying economics.

Seeking a program aligned with my interests in heterodox economics, I reached out to economists at Notre Dame and UMKC [the University of Missouri–Kansas City]. Martin Wolfson, a Marxist and Post-Keynesian scholar at Notre Dame, advised against joining their program as it was under threat from mainstream influences. Consequently, I chose UMKC, which was known for its strong focus on Post-Keynesian and Institutionalist economics, making it an ideal place for my studies.

At UMKC, I was introduced to Fred Lee, who greatly influenced my understanding of heterodox economics. This exposure was transformative, revealing a broader perspective on economic theory beyond traditional microeconomics, which typically focuses on individual decision-making processes. This marked the beginning of my journey into heterodox economics, affirming my belief that my background as a first-generation student from a working-class farming family may have destined me for this path.

INTERVIEWER

What was it like growing up in Korea, then – particularly as someone coming from a working-class background?

JO

I was born in a very small town in the Southwest of South Korea. After the Korean War, people learned to work very hard to survive because there was nothing left. You might have heard how the Korean economy experienced rapid growth in a short period. However, this economic boom was shadowed by numerous social and economic issues due to the prolonged military regime, which lasted about 30 to 40 years. During this time workers’ rights were heavily suppressed by a strong authoritarian government. Economically, this approach succeeded in fostering rapid growth; but it came at a significant social cost, as many people had to sacrifice their well-being for the sake of economic development.

Korea still faces problems related to this era, such as unequal income and wealth distribution, and power concentrated among a minority class – particularly in large corporations like Samsung and LG. This scenario reflects a complex relationship with capitalism.

Changes began to emerge, especially during the 1990s with regime changes, which also influenced societal shifts. The significant impact came with the Asian Financial Crisis, which forced the Korean government to adopt neoliberal policies. This event marked another critical juncture in Korea’s economic history, aligning its economic system more closely with neoliberal principles, similar to those of the United States.

INTERVIEWER

In this time, was the productive matrix of Korea – as Ha-Joon Chang might put it, describing the technological configuration of its industries – furthered along, while the working classes were left behind? Class antagonism seems kind of baked into the entire process – both within and between the going concerns that made up the linkages which affected that economic growth.

JO

Ha-Joon Chang is indeed one of the most renowned Korean economists, known for arguments that often highlight the role of the state in economic development. While I agree with many of his perspectives, his focus on the effectiveness of an authoritarian state in driving economic growth has been met with criticism from various scholars.

As I previously mentioned, if the sole objective is economic expansion, an authoritarian regime can be highly effective, as was the case in Korea for about 30 to 40 years. This approach enabled Korea to rapidly transition from a developing to a developed status, a feat that is considered unprecedented compared to other nations.

However, this economic success story is also marred by significant social issues. The aggressive push for development led not only to an unequal distribution of income but also to regional disparities, where certain cities and areas progressed much faster than others. This has resulted in ongoing conflicts between different regions, and between urban and rural areas – problems that the country continues to struggle with.

While a strong state can indeed be instrumental in catalyzing national growth, it does not necessarily lead to the prosperity of all its citizens, particularly those from working-class backgrounds. The heavy cost of this growth is often borne by these communities, leading to adverse effects on society, particularly for the working class. Thus, while Ha-Joon Chang’s acknowledgment of the state’s role in economic growth is valid, the broader implications of such governance on societal well-being are also crucial to consider.

INTERVIEWER

I wanted to focus on the social problems because it seems that your reasons for becoming an economist were closely tied to the concerns of working-class social movements in Korea, on the eve of the transition to parliamentary democracy.

Could you elaborate on which movements these were, if you’re comfortable doing so?

We often discuss in our magazine that many economists are driven by political missions – which isn’t inherently negative. They engage in research because they believe it can benefit certain causes. For instance, Lee was an anarcho-syndicalist; many Marxists are social democrats or communists; and neoclassical economists often lean towards neoliberalism. I was wondering which social movements in Korea inspired your work and how these political views intersect with your research interests.

JO

During the authoritarian military regimes of the ’60s, ’70s, ’80s, and into the ’90s, the labor movement in Korea was quite strong. Despite suppressive actions from the state, workers and students resisted because they recognized the issues in Korean society and sought to instigate change. Social changes were primarily driven by these working-class and student movements.

In academia, Marxism was perhaps the most prominent radical ideology and probably the only heterodox economic approach that survived. Today, Marxism, rather than Post-Keynesianism or Institutionalism, still influences many academics. As a result, Marxist economics continues to be a significant focus within Korean academia.

[Here there was an interruption in the interview due to a connection issue in the Zoom call. After some fiddling, the interview continued; the political train of thought continues later on below.]

INTERVIEWER

This might be a good time to discuss one of your more recent books, which seems particularly relevant since you were just talking about heterodox economics in South Korea.

The book you co-edited with Lynn Chester, Heterodox Economics: Legacy and Prospects (2022), is quite a firecracker. It delves into the ongoing debates about the viability of heterodox economics, both as a label and a movement. This discussion is intriguing, almost serving as a sequel to Fred Lee’s History of Heterodox Economics, which chronicles the field up to around 2010, just before the Global Financial Crisis of 2008. This crisis inspired a new generation, including us in the magazine, to explore heterodox economics.

One might have expected the heterodox schools to overthrow neoclassical dominance during the social movements of the 2010s, but that shift did not occur – and your book explores why.

In the introduction that you and Chester wrote, you discuss various perspectives, including those from heterodox thinkers like Geoffrey Hodgson. He in particular not only points out external pressures such as blacklists, purges, and censorship by neoclassical economists, but also identifies internal flaws within the heterodoxy that might be hindering its progress. He suggests that these endogenous issues are partly why heterodoxy hasn’t overtaken neoclassical economics in influence.

My question, especially for those who haven’t read the book, is about Hodgson’s criticism of these internal flaws. Do you think he has a valid point, or is it more a case of victim-blaming?

JO

The book project we published last year began with Geoffrey Hodgson’s provocative 2019 book, Is There a Future for Heterodox Economics?. Hodgson’s book is a collection of essays he presented at various conferences before publication, which is where we first encountered his unique perspective on heterodox economics.

In response to your question, Hodgson, along with other heterodox economists, has criticized the field for being marginalized and underdeveloped – overlooking the extensive efforts made by heterodox economists over many decades. Lynn Chester, John Henry (who passed away a few years ago), and I disagreed with Hodgson’s arguments. We decided to create a set of counterarguments, which formed the basis of the book we published last year.

Image: Is There a Future for Heterodox Economics?, Geoffrey Hodgson, 2019.

In the book, Hodgson criticizes prominent heterodox economists like Fred Lee, Tony Lawson, and Joan Robinson, attempting to reshape heterodox economics in his own image. We disagreed with this approach, which motivated us to speak up. Hodgson has also tried to align his interpretation of Institutionalist economics, particularly [its subfield or specific approach of] Evolutionary Economics as advocated by Richard Nelson and Sidney Winter, with mainstream economic theories, which we view as essentially Social Darwinian. We believe these are fundamentally incompatible, which is why Hodgson’s approach has faced criticism from many in the heterodox and Evolutionary Economics communities.

In the book, I contributed a chapter on heterodox economics and ideology. It’s important to recognize that economics cannot be separated from ideology. Everyone has their values, which influence how they perceive the world—this forms the basis of our ideologies. Joan Robinson once argued that economics is part science and part ideology, highlighting that it’s impossible to completely disentangle economics from ideological influences.³ Although Fred Lee’s theories were informed by his radical values, his approach to theory was objective and aimed to reflect real-world occurrences. His work was not an ideological statement but an interpretation of historical events he observed.

Everyone knows that Lee was probably one of the most radical heterodox economists because he was a member of the IWW, an anarcho-syndicalist. However, this doesn’t necessarily mean his theories were solely based on anarcho-syndicalist principles. While you can build a theory that might imply some anarcho-syndicalism, Lee was adept at distinguishing his theories from his political ideology. This doesn’t mean that one must completely set aside one’s own values. The issue isn’t entirely straightforward, but Lee was very clear in his approach.

INTERVIEWER

Having read Lee myself, I think you’re absolutely right. The proof of the pudding is in the eating, as evidenced by the bibliography. For instance, P.W.S. Andrews, known for his oligarchical competition theory, which is a central component of PKPT [Post-Keynesian Price Theory (1998)], was a right-winger and pro-capitalist.⁴ And although Lee doesn’t cite him extensively, much of his framework also draws from Schumpeter—not the crisis theory part, but his theory of the firm. Interestingly, at the funeral, John Henry joked that he used to call Lee a “crypto-Austrian,” which connects Lee to Marx in terms of practices.⁵ Similarly, if you look at the footnotes in Das Kapital, Marx critiques what he calls “vulgar economists,” yet he cites bourgeois economists he respects, like Ricardo and Smith, chapter and verse, with the utmost reverence. (Quite unlike his approach to competing socialists, whom he often critiqued without citation in pamphlets, Marx was incredibly respectful towards these bourgeois economists.)

Image: The cover of Fred Lee’s Post Keynesian Price Theory, 2008.

Lee, similar to Marx in this respect (if less of an asshole), was open to a scientific paradigm regardless of the contributor’s background. This approach suggests that if they’re examining the same phenomena and grounding their theories in observable data, then even a right-winger can offer insights useful to an anarchist, and vice versa – as in, perhaps disturbingly, an anarchist can contribute ideas beneficial to a capitalist or even a fascist. Do you think I’m far off the mark with this assessment, or does it align somewhat with your argument?

JO

You’re right, and you have a solid grasp of Lee’s ideas and his stance regarding the theory in relation to political ideologies and core values.

I’m glad you brought up P.W.S. Andrews, who was pro-capitalist and advocated for big business structures. Another significant influence on Lee was Gardiner Means and his administered price doctrine. Although Means wasn’t radical, his idea of administered prices was indeed radical. Similarly, Andrews’s notion that big businesses did not adhere to neoclassical principles was [economically speaking] a radical idea in the 1940s and 1950s.

Lee, regardless of an economist’s political values, aimed to understand and evaluate their ideas based on his observations of the real world. This is why his theory is historically grounded: it insists that a theory must reflect what’s actually happening in the real world. This approach sets him apart not only from mainstream economics but also from many heterodox approaches.

For example, Lee made it clear in the preface of his 2018 book that he dismissed both Marx’s labor theory of value and the Sraffian long-period approach.⁶ The main reason is the practical difficulty in measuring the true intrinsic value of a commodity. While theoretically, we might assume that the essence of value is labor or labor time, it’s nearly impossible to measure this in reality. Instead, he advocated for an objective standpoint, focusing on how prices are actually determined by business enterprises or trade associations and cartels. He spent his time explaining how prices are determined rather than proving the theoretical real value.

Lee also adopted the Sraffian input-output framework in structural economics but rejected the long-period approach, which presumes a central economic “gravity” that the economy fluctuates around. While we can imagine such a scenario, proving the existence of this center of gravity is almost impossible. Thus, he favored an approach more aligned with historical analysis of the economic system, reflecting his commitment to grounding economic theory in observable reality.

INTERVIEWER

One aspect of Lee’s work that I find especially interesting is his approach to value theory. It’s unfortunate that he never wrote a treatise on value theory itself; I guess he didn’t want to waste his time on it because he was more interested in analyzing the actual economy. However, I’ve always thought it was a missed opportunity because a philosophical essay on the purpose of value theory would have been very clarifying.

Marxists who have read our essay on Lee, which often served as their introduction to him, tend to get upset because they feel he dismisses the labor theory of value (LTV) as false. They’ll say, “Hey wait a minute: since the markup theory of prices considers labor as one of the most significant costs of production, and LTV is essentially a cost of production theory of prices, what’s the issue? Isn’t this just the LTV?” And then I’ll tell them: well, it’s not that the LTV is useless, especially as a loose rule of thumb. But then the question is, can it explain the inflation of 2020? Did that have anything to do with labor-values changing? And then the Marxists will get really mad at me, and they’ll say, “Well that’s a short-term thing!” But what’s short-term and what’s long-term? In the long run aren’t we all dead? And so on and so on.

Anyway: given your personal connection with Lee, what do you think was his ultimate attitude towards Marxism?

JO

He’s mentioned it before, I think. Perhaps not explicitly in print, but he did so in one of his microeconomics classes. He made it very clear that he rejected the theoretical aspect of the labor theory of value, specifically the transformation of value into price, which many Marxists are still attempting to prove.

However, he emphasized that this does not mean rejecting Marxian ideas altogether. He agreed that it is basically the labor of the working class that creates value, and that the capitalist mode of production is based on a fundamentally antagonistic relationship resulting in worker exploitation and alienation. These implications are evident in Fred Lee’s microeconomic theories.

What he rejected is the theoretical aspect of the labor theory of value – similar to what Sraffa did. Sraffa, like John Robinson, had an objectivist approach; he rejected the labor theory of value not in its implications but in its particular theoretical form, which was worked out to a great extent by Marxists and not Marx himself. This distinction is crucial. If you look at Fred Lee’s 2009 book chapter,⁷ he concludes that it is possible to show [without the strict theoretical formulations of the LTV] that the capitalist economy is grounded in antagonistic class relations, highlighting that workers have significant tasks to undertake if they wish to abolish wage labor, slavery, and capitalism. He also noted that it is theoretically possible to show [again without the LTV] how wages are related to profit.

However, Lee’s own stance was that there is no inherent relationship between wages and profit because profits can increase while maintaining or even increasing wage rates. His argument, not being based on the labor theory of value, should not lead us to dismiss his theories and their significance. I believe his work has important implications not only for radicals but also for heterodox economists in general.

INTERVIEWER

I want to return to the book and your contribution to it.

We gathered from your essay that you consider heterodox economics to be strong when it focuses on policy that can influence policymakers. However, we’re unclear about who exactly one might mean by “policymakers.” Typically, this term relates to those involved in macroeconomic policies, such as state actors managing central banks, exchange rates, and legal regulations. But if the state is not interested in pursuing the specific policy goals suggested by heterodox economics, such as building social democracy, assembling welfare states, or initiating a green transition, then by definition, the state will never find heterodox macroeconomics useful and promote it within its institutions. How is heterodox economics supposed to influence policy when the very policies it advocates are unappealing to the state?

Conversely, we’ve noticed that your work, and Lee’s as well, often relates to heterodox microeconomics, particularly the planning and administration of businesses and the industrial policy enacted by coordinating enterprises. If heterodox economics isn’t influencing macro-level state policy, is it possible that it might have a better chance of influencing policy at the micro-level? Could this Lee-inspired microeconomics help build social movements, unions, and cooperatives, thereby circumventing the need for government intervention? If so, how could it help us achieve this?

JO

You’ve raised some fundamental questions about heterodox economics and economics in general. First, I think it’s incorrect to assume that there is a clear distinction between macro policy and micro policy. When a new policy is adopted and implemented, it affects both the entire economy and the individuals within it. Policies like those for unemployment, job guarantees, or basic income will significantly impact the welfare of people within the economy.

INTERVIEWER

Right. There’s nothing more micro than people in a room making a decision, even if that room is in a central bank. The micro element boils down to who controls which levers and what they do with them.

JO

Exactly. Heterodox economics has traditionally been dominated by its macroeconomic approach. Classical political economy, including the works of Adam Smith, Ricardo, Marx, Keynes, and even the Post-Keynesians, focused on the fundamental and enduring structures of the economy. It’s crucial to identify problems at the structural level and understand how the economy operates within this structure. This focus on the structural level of the capitalist economic system is an essential part of heterodox economics.

However, if we only pay attention to these structures, we might overlook the importance of decision-making processes at the business enterprise level. It’s important to discuss how managers or big businesses make investment and pricing decisions, and how entities like the Federal Reserve Bank decide on interest rates. These decisions are based on self-interest, which is shaped by the surrounding social arrangements. If the interests of the state or the Federal Reserve align with those of private businesses, then it is likely that policies will favor the private business sector.

For example, let’s say Post-Keynesian macroeconomics proposes an economic policy that could solve the inflation problem and is in the interest of the majority of working-class households. This does not guarantee, however, that the state will adopt such a policy. Another example is the Green New Deal, proposed by progressive politicians like Alexandria Ocasio-Cortez. This policy, which aligns with Post-Keynesian ideas, aims to address global warming and create public sector jobs to increase income for working-class and poor households. Despite its merits, the likelihood of such a policy being adopted by either Republican or Democratic administrations is slim, as evidenced by the Biden administration’s Inflation Reduction Act, which falls far short of the Green New Deal’s objectives.

The reality is that, as Marx, Thorstein Veblen, and other heterodox economists have pointed out, policymakers often serve the interests of the capitalist class and political elite. Having the best idea to solve an economic problem doesn’t necessarily mean it will be adopted or embraced by policymakers. This presents a significant challenge in how we can improve conditions for the majority of the population.

Recently, a couple of young scholars from Austria sent me a paper discussing grassroots initiatives in Germany using Fred Lee’s social provisioning process, a framework adopted by American Institutionalists.⁸ Their argument, centered on this framework, highlights that it’s not just a theory but a perspective on the economic system that emphasizes the need for both material and cultural bases. This approach clarifies the importance of understanding the underlying conditions that support economic systems and policies.

Many local communities are organized differently, attempting to operate independently of capitalist constraints. There are numerous such communities across Europe, America, and Asia. However, the most challenging and crucial aspect of building a new community that serves its members is creating institutions that facilitate the provisioning of material goods and services. These institutions are often geared toward preservation.

On a local, small scale, it may be possible to build such communities even within the capitalist economic system. The key is to develop institutions that not only avoid harming nature but also support community development and enhance people’s lives in a more humane manner. Institutions can have varying impacts; they can either support or destroy the community and environment.

INTERVIEWER

Is “the social provisioning theoretical framework” a better way to put it? Can it help us create unions, cooperatives, communes, or other alternative institutions? If so, how specifically does it assist us?

JO

Fred Lee didn’t delve deeply into specifics on this point, but he aimed to build a framework. It is then up to us – your work, my work, and the work of others – to create institutions based on those principles.

I mentioned the study by two or three economists because they identified three bases essential for creating a viable community or society. You can’t simply ask people to behave differently; you need to establish institutions. For example, business enterprises can raise their prices freely because our institutions allow them to. What if we introduced a new law controlling how business enterprises set their prices? Could we control inflation? I would say yes. We’ve been facing this inflation problem for several years now. Is it possible for the US government to immediately control inflation? Yes, but it has chosen not to. Instead, they adopted an interest rate policy, which has proven ineffective. Just a week ago, a New York Times article confirmed that even neoclassical economists now admit the interest rate policy has not been effective in reducing inflation.⁹

INTERVIEWER

[grinning triumphantly] I just want to say that Strange Matters was early to that beat.

Last year, we published Tim Di Muzio, who was inspired by Steve Mann’s inflation article, itself inspired by Fred Lee’s input-output model. We published an article on how there’s no good reason to believe that interest rates will have any effect on inflation. If they do have an effect, it might even cause cost-push inflation. Not everyone agrees with that harder stance, but at the very least, there’s no good reason to think that interest rates would lower inflation, except that dogma insists they do.

More and more economists are adopting this view, although they don’t cite our essay about it, which I find very interesting. So, I’m very glad you brought that up. I haven’t seen the article in the Times, but it’s very validating that much of the discussion has taken this direction.

JO

Federal Reserve economists have long discussed the relationship between investment and interest rates. Despite Keynes’s understanding that simply raising interest rates would not reduce investment and vice versa, it indicates that interest rates are not a major factor in making investment decisions.

Business enterprises do not base investment decisions solely on interest rates. Empirical data show that investment, especially fixed investment, largely depends on business cycles rather than interest rates or tax rates. It’s not about the price mechanism. That’s why the Federal Reserve emphasizes the importance of agency, which is the capability to make decisions in an uncertain world—about price, investment, employment—where decisions are made in their own interest, regardless of price or interest rate changes.

INTERVIEWER

It’s really interesting because I think many people would agree with this argument initially. However, the more insightful ones might start to feel unsettled.

If raising interest rates doesn’t affect investment or lower prices, then what is the purpose of a central bank? In all the major OECD countries, central banks use interest rates to control employment and prices. But if this mechanism is ineffective, then what role does the central bank serve?

One might argue that it could be more beneficial not to have a central bank in its current form but rather a development bank that makes direct investments or a planning agency that handles industrial policy.

JO

I think you know the economist Blair Fix. He has done some very important and interesting work on inflation, along with his professors’ advisors, Jonathan Nitzan and Shimshon Bichler.¹⁰ They have argued since the early 1990s that interest rates are distributional variables that distribute wealth between classes. When interest rates rise, wealth holders accumulate more wealth, while the majority of working-class households, who do not own significant property or wealth, lose money.

Similarly, the profit markup set by businesses is a distributional variable; by raising the profit markup, businesses increase their prices, revenue, and profit. Wage rates also function as distributional variables.

These three types of prices—product prices, interest rates as part of product prices, and wage rates—are essentially determined to distribute and redistribute income and wealth. However, mainstream economists argue that these prices are about the allocation of resources, highlighting the significant difference between the heterodox view and the mainstream view regarding prices.

INTERVIEWER

Would it be fair to say that the reason why something like the social provisioning framework or other grounded theories of the economy are important to social movements is that they provide an understanding of how economic mechanisms function? And that this knowledge allows you to build your own institutions, including anti-capitalistic or communal ones, with a sufficient understanding of how it works to actually succeed? Is that roughly your position?

JO

Yes, exactly.

I made a similar argument in a chapter I co-authored with my friend Zdravka Todorova, who was also a student of Fred Lee, included in the Routledge Handbook of Heterodox Economics (2018).

In that chapter, we argue that everyone knows mainstream neoclassical economics focuses on the allocation of resources through the supposed market price mechanism, based on the assumption of resource scarcity. However, this view is particularly narrow and unique to neoclassical economics. If we go back to classical political economy, even before Adam Smith, and consider current and past heterodox economic approaches, none of them have such a limited view of the economy. They encompass how we produce goods and services, how income is generated, how households sustain themselves, and how businesses grow over time. Since the emergence of neoclassical economics, our perception of the economic system has fundamentally changed, which I think is problematic.

Additionally, in East Asian countries like South Korea, China, and Japan, the word for economy – gyeongje in Korean (경제), Jīngjì in Chinese (经济), and keizai in Japanese (経済) – historically and etymologically combines the concepts of managing the economy and helping the people.¹¹ This definition has persisted since the first century, though its interpretation has evolved since the late nineteenth century.

The social provisioning process framework seeks to reclaim this original meaning of the economy and the purpose of our analyses. It emphasizes that the economy involves human beings and organizations, and it suggests that if we adopt a view of the economy that diverges from the capitalist or neoclassical perspective, we can envision an economic system based on different principles.

These principles would focus on the cultural, social, and material foundations, aiming to maintain basic welfare and preserve our natural environment. However, we haven’t achieved this yet because the provisioning process has been dominated by profit-oriented, accumulation-driven private business interests – and the state has played a role in this, focusing not on protecting the livelihood of the majority.

INTERVIEWER

Next I wanted to discuss your collaboration with John F. Henry a few years ago.¹²

From what I understand – and feel free to correct this – it outlines the transition from one form of capitalism to another. We begin in what you refer to as the industrial capitalism of the mid-century. This period was characterized by large, Fordist, vertically integrated firms where there was a clear distinction within the capitalist class between upper management and shareholders. Upper management had its distinct interest in maintaining technical efficiency and productivity, and it was the firms in industry that called the shots, moreso than those in finance.

The article then discusses the transition to money manager capitalism, which occurred after the shareholder revolution and the deregulation of financial markets. It’s now the heads of large financial firms – investment banks, hedge funds, etc., on Wall Street – who, through their roles as creditors and shareholders, exert much more control over industrial firms. This increased control has led to a greater propensity for financial instability and financial crises, as described by Minsky in his famous texts.

This political economy you sketch seems closely related to what is referred to in political discussions as the transition from social-democratic capitalism to neoliberal capitalism, covering much of the same territory.

My first question is: Is that a decent summary of the argument?

Secondly, who was responsible for this transition? Can you give us a sense of who in this ecosystem of concerns, or in this class of absentee owners, was responsible for the deregulations, stock price manipulations, buybacks, the rise of asset management, etc. – all these processes that you identify in the paper, and that we might discuss as financialization or the neoliberal turn? Who brought this about, and by what means did they do so? What kinds of people are responsible for these decisions, and what do they want?

JO

Let’s start with a summary of the article, which begins with a theoretical concern with the general theory of the business enterprise.

The Institutionalist and Post-Keynesian literatures often discuss the business enterprise. From my viewpoint, the most important work in this area is Veblen’s Theory of the Business Enterprise (1904). Veblen conceptualized the business enterprise as a going concern – a concept also recognized by others, including accountants and real-world businesses, who understand that the primary goal of a business enterprise is its continuation and growth. By continuing and growing, a business can accumulate capital and exert greater influence on other economic actors.

The article notes that since the early twentieth century, the lifespan of business enterprises has decreased. It is now rare to find enterprises over 100 years old, with the average lifespan likely less than 50 years. Particularly, tech companies often last only about 10 years before they disappear or are merged. This demonstrates how dynamic and change-driven the capitalist economic system is.

The article suggests that business enterprises have chosen to expand, diversify, and invest their profits in financial assets as an easier way to generate more profit and satisfy their owners. However, this has led to unintended consequences. The entire economic system, including the social provisioning process, has become more unstable. Since the early 1980s, U.S. policies have allowed businesses to purchase their own stocks and engage in unlimited financial transactions, although owning a commercial bank is still not possible. This has ushered in the era of money manager capitalism, marked by the rise of pension funds, mutual funds, investment banks, and the dominance of the financial and real estate sectors since the late 1980s. These sectors have become the primary drivers of profit and wages for working-class households.

As the financial sector has become dominant, permanent employment has declined, given that this sector requires fewer workers. Meanwhile, the manufacturing sector, despite still producing goods and services, is no longer the primary sector of the economy. Furthermore, manufacturing businesses have moved many of their operations overseas to reduce costs. These changes are driven by both manufacturing and financial businesses, with assistance from the state, leading to increased instability in the capitalist economic system due to past decisions.

INTERVIEWER

You’ve discussed large firms, financialization, outsourcing, the rise of pension funds, 401(k)s, their institutional design, and the increased role of shareholders and management among other topics in the essay. You frequently used the phrase “they chose.”

This is intriguing to me because it contrasts with the explanations provided by my Marxist friends. They account for the transition from social democracy or industrial capitalism to neoliberal or money manager capitalism differently. They attribute it to structural factors like the tendency of the rate of profit to decline, profit squeezes, automation, and other structural transformations, suggesting these forced the decision-makers to act as they did. They argue these leaders were constrained, and if they hadn’t adapted, they would have been outcompeted by those who did.

My question to you is, do you believe any of this is true? Or do you think that these people chose to adopt neoliberalism simply because they saw an opportunity and could have chosen differently?

JO

I think there’s a very contrasting point here, as you are correct that I deliberately use the word “chose.” What’s important is the capability of making decisions. Everyone has this capability, but mine is completely different from, let’s say, my boss’s capability. We can interpret this capability as agency.

I mentioned that classical political economists and many heterodox macroeconomists tend to stay focused on the structural aspects of capitalism. Following that kind of reasoning, you might say they have been forced to do something – but I think differently. The business enterprise is not just one of the actors in the capitalist drama. Using Thorstein Veblen’s term, it is the master institution of capitalism.

Especially in the modern, advanced capitalist economic system, the management class – top managers, CEOs, and particularly those dominant shareholders, such as pension funds and mutual funds – are able to make all kinds of decisions. They direct how business enterprises operate. If the business enterprise is the dominant and most influential institution in society, they are able to influence how policies are made within the policy cycle.

Therefore, I think it is the business enterprise, assisted by a business-friendly state, that created all the problems because they chose to generate profit in the short term. This is what the shareholder value theory imposed by the shareholder revolution implies: their ideology is now all about profit in the short run, about trading stocks, trading assets to generate more profit. That’s what they chose, regardless of whether they knew the entire economic system could become unstable, or without caring about the consequences.

INTERVIEWER

They might have known and just not cared.

JO

That’s what John Henry and I were talking about. Sure, this is what you guys created – but if so, then what’s next? If we’re concerned about creating a viable, sustainable economic system and caring for the well-being of the general public, this is not the answer. This is the cause of all the problems we have. That was the kind of argument we made.

Now, there are also small and medium-sized enterprises (SMEs) in the system – there are even some good business people in there, especially among the smaller and most innovative businesses. But sometimes, they have to follow the decisions made by large businesses, because these are the dominant ones in the industry and the market. The SMEs often have no choice but to, for example, take the price set by the leading and dominant firm.

So in a sense, when I said “they chose” to change things, that phrase applies especially to those large business corporations with more agency – not to the small and medium-sized businesses.

INTERVIEWER

So if I’m understanding you correctly, people have agency, but it’s the overall structure of the system that determines who has more agency and who has less.

JO

Yes.

INTERVIEWER

I guess my follow-up question to that is: if it were 1973, and you still had the Office of Price Administration and the federal government able to implement direct price controls; and there were still a significant cadre of industrial policy people who knew how to conduct certain kinds of economic planning;¹³ and people who had real decision-making power were actively playing around with input-output models – do you think it could have gone differently? That instead of the monetarists or the Friedmanites winning out in the policy sphere, and Reagan and Thatcher winning out in the political sphere, resulting in the consolidation of the neoliberal regime – instead of all that, it might have developed in some other direction?

JO

I would say yes.

You mentioned the early 1970s, which is probably before the oil crisis – because the crisis started in 1973, and the subsequent recession changed many things, especially government policies. At that time, monetarists emerged and began to gain prominence in the economics profession over the Keynesians, which then led to changes in government policies. This era ushered in Reagan, Thatcher, and similar neoliberal regimes globally.

Before the oil crisis and the changes I’ve mentioned, the period from the post-World War II era to the late 1960s was quite different. During that time, workers were organized and could protect their interests because they were unionized. Since then, labor unions have declined, and we now have very low unionization, which means the balance of power between the capitalist class and the working class that was present in the 50s and 60s has disappeared since the early 1970s. The neoliberal regime certainly cemented the dominance of the capitalist class, as well as capitalist ideas and principles.

So, returning to your question: things could have been different if the unions had remained strong, or if society had decided to take a different path. But as it stands, society itself does not make a decision, although I say that rhetorically, that we could have chosen differently.

In the end, it’s not possible to plan everything ahead of time. We try this and we try that, but sometimes even our good decisions may end up having bad outcomes. That’s basically the nature of the evolutionary path. We tried to do things – but they’re how we got here. That doesn’t mean we should give up trying something else. We have to keep trying to make things better, right?

INTERVIEWER

What do you think determines the power balance between different classes or the institutions they create?

Do you believe it could be influenced by sudden shocks and events like the oil shock, or is it more about contingent struggles where, perhaps due to dumb coincidences, one particular battle sways the balance one way rather than another and locks you into a path after that? I realize this is a huge question, almost impossible to fully address, but I’m curious about your perspective on this.

JO

Everything has a cause and effect, right? There’s no such thing as a shock in history or society; something always triggers something else. We are interdependent. I don’t believe that change was ever driven solely by shock or coincidence.

You have to look at the longer history of the economic system and capitalism. The fundamental organizing principle of the capitalist economic system is the existence of different classes; meaning, this isn’t an organic whole. We have the capitalist class with its own interests, the working class with its own interests, and political elites with their own interests. There are always multiple conflicts of interest – and sometimes one interest dominates others.

But the bottom line is that capitalism is organized around business or profit-oriented interests. This is what Veblen was trying to argue in his Theory of the Business Enterprise: we have business principles and social principles. If social principles are dominant, society becomes a better place to live because it is organized around the idea of cooperation, mutual interest, and effectiveness. However, if society is organized around business principles, then everything revolves around money-making activities, efficiency, and competition. Unfortunately, most capitalist societies move in a direction that runs counter to the interest of the general public.

INTERVIEWER

I think that makes an interesting transition to your next work that we wanted to discuss, which is your heterodox microfoundations of business cycles.¹⁴ This whole question of how the structure of the class system affects the evolution of the system and its propensity to change and transform is, as I understand it, the central subject of that work. Although it’s titled as being about business cycles, which might give the impression that it’s about economic crises, it seems that for you, the crisis is very closely tied to the class system. So, I was wondering, maybe just to start, if you could describe your theory of business cycles or crises – briefly and in relatively untechnical language – how would you do it?

JO

Ah, I think you’re referring to my book chapter, which was published a decade and a half ago. Let me briefly discuss the meaning of microfoundations.

Fred Lee also uses this term in his work. It’s a somewhat neoclassical term, because neoclassical economics has its own microfoundations, meaning that everything is reduced to the individual’s rational or optimizing behavior. You can in principle analyze anything from that optimizing framework. However, when I use the term microfoundations, it refers to connecting or integrating the micro and macro aspects of the economy.

In essence, I’m very critical of macro-only analysis. Traditionally, theories of business cycles are macro theories. They look at changes in gross domestic product and its components like consumption demand, investment demand, and government spending. In Keynesian theory, it is quite clear that private business firms’ investment demand drives aggregate or effective demand, which leads to business cycles. If you look at empirical data about those components, you’ll find that investment demand is the most volatile and fluctuating, which indicates that investment is largely determined by psychological factors. Keynes discussed this in terms of marginal efficiency of capital and liquidity preference.

I’m not fully satisfied with the macro-only analysis of business cycles. That’s why I wanted to add some of the micro aspects to the story of business cycles. This was actually related to my dissertation project, which focused on the microfoundations of effective demand. I aimed to augment Keynes’ macro theory of effective demand by incorporating the theory of the business enterprise, focusing on how business enterprises make pricing, investment, and finance decisions.

I placed the business cycle in that context. Although the chapter was very short and I couldn’t say everything I wanted, I aimed to make a point that, if you wish to understand how business cycles occur, you must understand how business enterprises, as Keynes argued, make all the investment, employment, and production decisions. That’s the basic idea I wanted to convey in that chapter.

INTERVIEWER

What is the specific relationship between the class system, the way that different agents socially provision themselves and have different degrees of control over the social provisioning process? What is the relationship between the class structure and the business cycle?

JO

I think I mentioned Schumpeter in that book chapter. Schumpeter was very optimistic about the capitalist economic system – as long as entrepreneurs are innovative in developing products and organizing business enterprises. However, one of his articles, which I cited in the chapter, suggested that the capitalist economic system might eventually collapse if society becomes extremely individualistic, a notion similar to what Veblen discussed in his time. I believe the Schumpeter article was from around the 1920s; it connects to what I mentioned earlier about money manager capitalism and the evolution of the capitalist economic system since the 1970s.

The dominant class of society advances its interests over others, continuously accumulating wealth and creating institutions in its favor. As a result, as observed over more than a century, society becomes increasingly fragmented, and the strong social cohesion that once existed is collapsing. Ironically, this outcome is detrimental to the survival and growth of the dominant ruling class, including billionaires and enterprises.

One aspect of the contemporary capitalist economic system, as Minsky argued, is increasing instability, resulting in more frequent large recessions and crises. Addressing your earlier question about responsibility: it is essentially the ruling class’s attempts to advance their interests which leads to a more fragmented society, more concentrated market structures, and therefore systemic instability. These actions eventually go against the interests of not only the ruling class itself, but all of society.

In a sense, this argument is very similar to what Marx argued: the capitalist economic system is doomed and must eventually be replaced by something else – whether better or worse, we don’t know. Thus, the situation we observe today with various economic and social problems has both causes and consequences.

INTERVIEWER

If I’m understanding correctly, you’re suggesting that the ruling class’s control over the social provisioning process means that, all things being equal, they will act in their own interests. However, these actions have knock-on effects that can destabilize the system. At the very least, it results in a distinction between their private interests and the interests of the masses, leading to alienation and a fragmented social fabric. If they act recklessly, they might even create the preconditions for a Minskyan financial crisis, like those in 1929 or 2008. This, in turn, could provoke people to rebel against the system and potentially lead to something new, whether it be an industrial democracy, an industrial dictatorship, or another form. So, in essence, it’s not a stable situation. Is that roughly what you’re saying?

JO

This does not necessarily mean that businesses intentionally try to destabilize everything. They know they need to stabilize themselves and the market, which is why they administer prices, control employment, and exercise power over labor unions and workers. In some sense, they stabilize the system. On the other hand, their actions can also destabilize the entire system.

INTERVIEWER

And that’s arguably why a faction of the business elite sided with Roosevelt during the New Deal and decided to help construct social democracy – because they thought a state-regulated capitalism could better serve their interests. This formed a ruling-class consensus that lasted for at least a generation.

JO

Exactly. Even before that, the United States established the Federal Reserve System in 1913 to stabilize the financial market after the financial panic. That’s another example of stabilization efforts.

However, sometimes greater destabilizing powers and forces emerge, which then create problems.

INTERVIEWER

It’s interesting how you discuss the dynamics between stabilization and destabilization differently from how Marx predominantly approached it.

While Marx, especially in Volume Three of Das Kapital, acknowledges counter-tendencies,¹⁵ he generally sees an overall movement toward greater destabilization leading to an inevitable crisis. However, in your discussion, you talk about an oscillation between tendencies toward stabilization and destabilization, where there’s no predetermined outcome, but movement is certain.

I find it intriguing – and I might be reading between the lines of your piece here, so forgive me if this is incorrect – but it seems like the more critical aspect for you isn’t the crisis itself but the dynamics leading up to it.

The fact that a class system exists at all suggests inherent conflicts of interest between the vast majority and those few who control the social provisioning process. When you describe crises, like a Minsky crisis or a crisis of coordination that leads to the establishment of the Federal Reserve, or even an inflationary crisis with rather different causes, it appears that the actual crisis is less significant than the crisis of legitimation it precipitates. Your theory of business cycles reminds me of what political philosophers might call a crisis of political legitimacy, where people begin to doubt the system, particularly if the ruling class fails to provide a decent standard of living.¹⁶ This doubt is exacerbated by the ruling class’s distinct interests, which are different from those of the working class and from the requirements of social provisioning itself.

My question is, what do you think of this interpretation of your thoughts? Is this reading too much into it, or have your thoughts aligned similarly?

JO

Well, I’m not familiar with that political theory. But it sounds pretty much the same as what I was talking about. Though because I’m not familiar with the theory, I can’t really say.

INTERVIEWER

Totally fair. But in broad terms, do you think that this question of people’s belief in the system is an important fulcrum point for social change?

JO

Of course, yes, I think that is a very important part. These belief systems are largely influenced by others.

For example, why do I see the world from a social provisioning perspective? Because I was educated in a scholarly environment where different perspectives, especially heterodox approaches, are integrated to provide better explanations. I am fine with heterodox and integrative approaches, but not all heterodox economists share this view. Indeed, I have encountered many dogmatic heterodox economists who believe strictly in one approach and dismiss all others.

I recently read a book by a heterodox economist who argued that the only genuine unorthodox approach is Marxist theory. He wrote the entire book to support this argument. I don’t agree with that. Why should we believe there is only one way to explain things? It’s fine if you support the labor theory of value, but I have a different theory of value. Is that wrong? No. We might end up with the same conclusion, but I have different ways to explain things.

Additionally, our belief system is influenced by those who control society. I recommend an article by John Henry published in 2009 titled “The Illusion of the Epoch.”¹⁷ I often assign this article to my students to read and write a review essay. The reason I bring this up is that not only policymakers but also laypeople have a particular way of seeing the economic system: mainly, that of the market price mechanism, which is an illusion. The real-world markets do not follow the law of demand and supply; it is an illusion.

Now, if I tell my neoclassical colleague that neoclassical economics is an illusion, what would they say? They would completely dismiss what I’m saying because they have their own belief system, which could be very different from mine. And I also have my own belief system. But when it comes to economics and economic policymaking, I think that the majority of people, both economists and laypeople, are largely deluded by neoclassical theory.

INTERVIEWER

Hmm. So you think that, in other words, the theoretical debates within economics are not just a result of the political power balance? They can, if I’m understanding you correctly, actually influence the political power balance itself. That’s really cool and interesting.

JO

By the way, John Henry is not well known to people outside heterodox economics. I find that his ideas were very radical, because while he would say that he was Veblenian, or post Keynesian, and Minskyian, and Smithian –

INTERVIEWER

He was also a Leninist, wasn’t he?

JO

This person was very radical. But if you read his writing, you will understand the gist of his argument. It’s radical because he always gets into the foundations of society, exploring aspects beneath what we typically see. That’s why I find his writings quite fascinating. He’s one of my two mentors, which is why I like and admire his work.

INTERVIEWER

I’ve read his book The Making of Neoclassical Economics (1980), as well as the Festschrift in his honor. He’s an interesting character.

Speaking of your mentors, and the pluralistic space that you occupy – you’ve often talked about how the fact that it has been pluralistic is why you have all these tools in your toolkit. I wanted to talk a little more about what that milieu was like.

Since you brought up Henry, maybe we can start with not just Fred Lee, whom we’ve written about, but the whole UMKC milieu. What was that like? It’s known in heterodox circles, though not much among the general public. Strange Matters is trying to make it more well-known that UMKC is, in a way, the Harvard Economics department of the heterodoxy – one of the most prestigious, in other words, for its having produced papers setting into motion the likes of Modern Monetary Theory (MMT). It also served as a hub for Lee’s intellectual programme. It’s like a haven of thinkers from different schools, keeping the Post-Keynesian and Institutionalist legacy going. Minsky wasn’t there directly, but exercised considerable influence through the studies of people at the UMKC Full Employment Institute, as well as partner institutions like the Levy Institute at Bard.

From talking informally to people who have been in and out of UMKC, like grad students or people who just pass through for a conference, my sense is that the UMKC Econ department, because it had people from all these different schools, was almost like, forgive the outlandish metaphor, the Athens of Socrates’ day. The way I heard it, there were stories of students going from one office to ask Henry or Kelton something, and the professor saying, “This is my perspective, but if you want the other perspective, go ask Dr. Lee and see what he’ll say about it.” Then the student goes over, and everybody’s like, “Oh, you must have gotten that from Kelton, didn’t you? But no, it’s really like this.” And then they go back to Kelton or Henry, and it’s like, “Well, Lee thinks this, but really, it’s like this.” There was this vibrant culture of exchange and debate, but it was friendly.

Now, my question to you is, since this is all oral tradition that I’ve heard and not written anywhere, is that description accurate? What were your experiences like at UMKC?

JO

I think that’s pretty accurate. I studied economics at UMKC from 2003 to 2007, for about four years – because I’d spent what I consider two wasted years at Texas A&M before moving to UMKC. I accelerated my studies to graduate in 2007.

Those four years at UMKC were the best time in my academic life. Largely this was because of the diverse group of students from all over the world, including South America, Europe, Asia, and Africa, who came specifically to study heterodox economics. The academic environment was vibrant and supportive, filled with heterodox economists, faculty members, Institutionalists, Post-Keynesians, and Marxists, as well as a few who supported new classical economics [i.e. Sraffians].

We had a seminar every two weeks on Fridays, sometimes led by our faculty or students, where we invited heterodox economists from other institutions. These seminars would start at three and often extend into dinner and a social event. This created a lively atmosphere with constant activities, from individual conversations and debates to international conferences like the Post-Keynesian conference or Fred Lee’s IWW conference.

I learned a lot from my colleagues, fellow students, and professors.

However, UMKC has changed significantly since the death of Fred Lee and since prominent Post-Keynesians left UMKC, such as Wray and Kelton. I’m not very familiar with the current state of the UMKC Economics program. But it seems not to be as robust as before. Though I haven’t been in regular contact with them to know exactly what’s happening now.

INTERVIEWER

What strikes you from a distance as seeming like it’s different?

JO

Well, for example, we had events like a Post-Keynesian Conference every two years at UMKC, which was one of the major events within the heterodox economics community. However, I have not heard of a conference like that happening since the mid-2010s.

Also, it doesn’t seem that UMKC graduates have found decent academic positions recently. This is a significant issue, because for an institution to continue, it must educate students who then find jobs and contribute back to the institution. This reproductive process does not seem to be happening now, which is problematic.

INTERVIEWER

How did you meet Fred Lee? What do you remember about the context in which you met him?

JO

I think it was either May or June 2003.

Now, by then I’d quit Texas A&M and applied for the UMKC doctoral program. I was going to start my new life at UMKC in the following four semesters. Because it is about seven or nine hours from Texas A&M to Kansas City, I just drove up to UMKC to get the score and to meet any people around. I went straight to the Economics department; the only person who was in the office there (it was summertime) happened to be Fred Lee. Upon meeting him I talked to him, and not very long, but he was very friendly – he was a very kind person – so I had a very good impression of him, and about the entire department.

Then of course at the end of fourth semester the class I had to take was Lee’s microeconomics course. Obviously, I had no knowledge of heterodox micro, and I didn’t know anything about Fred Lee’s work. I took the course without expecting much. But it was a kind of shock. I had never thought about microeconomics in terms of dealing with the real business enterprise, real households, and the real economy in a historical context – because every microeconomics course I’d taken up to that point was about finding solutions to equations which basically had no meaning. This was the first microeconomics course that actually made sense to me. I really liked this course. That was my first academic encounter. That was the beginning of the relationship which lasted about 11 years.

INTERVIEWER

What was he like as a professor and also as a colleague?

JO

As a professor, he was truly a scholar who loved economics and discussing economic theorists. In my second year of the PhD program, I moved to a graduate student office close to Fred Lee’s office. I would go to my office almost every day, from 7 AM or so to 7 PM. Fred Lee was one of the few faculty members who regularly came to the office from 8:30 AM to 5 PM. Later, he told me that I was the only person he knew who beat him to the office. As I mentioned earlier, coming from a family of farmers who always wake up very early, I inherited this habit. I still wake up very early, always arriving at the office before he did.

He cared deeply about his graduate students. His birthday is on November 24. On Thanksgiving Day, he’d invite graduate students to his place, which was very close to the school. I was one of them, and that year it happened to also be his birthday. That was my first Thanksgiving dinner, and we had a great time. He organized many social gatherings and events for his students because he was passionate about seeing heterodox economics continue and grow. He believed that to achieve this, educating students was crucial. The first thing he did when he found out about his cancer was to establish a college fund to ensure the continuation of his work.

INTERVIEWER

And the initial endowment came out of Lee’s own funds, if I recall. That’s incredible.

JO

I’m one of the board members of this fund. So we advertise this scholarship around April and October, because deadlines are May and November. And we have funded over 20 students over a nine-year period and over $70,000. That’s what he did when he knew that he was going to die.

INTERVIEWER

That says a lot about him as a person.

It reminds me of something I’ve come across in my research.¹⁸ As you know, Lee is not typically a very emotional writer – he adopted a more workmanlike style, just focusing on particular technical topics – but I find that in his interviews, he reveals a very intense emotional core. Anyway in this quote, I might butcher it, but he says something that really breaks my heart – because having read about his life and work, I know it’s true. He talks about people approaching him and saying that the stuff he wrote in The History of Heterodox Economics, you know, that rating system he created for professors and departments, helped them justify themselves and secure jobs or tenure. He saved their careers! And Lee, he notes in the interview, often snaps at them, losing his patience, saying, “Well, that’s great because that was me working for you. But my question is, are you going to work for me now? What are you doing to contribute to the infrastructure that lets heterodox economists like me do my work?” He expressed frustration about having to divert time from theory to write historical analyses to support others, wondering who would support him.

This was shortly before he died, and he wasn’t even sure if he would finish his textbook on heterodox microeconomics.¹⁹ He wasn’t sure he’d complete it because he was dying. He lamented that he had spent so much time working for others but felt like nobody had really worked for him. That was part of what inspired “Wobbly Economics” in the magazine.

But more relevant for the interview: as a journalist looking from the outside in, it sometimes feels like nobody in academia, nobody in heterodox economics, has taken up Lee’s legacy except for you. I know that’s not literally true; he had many students who went off to various places. But it seems like you’ve played a special role in upholding his legacy. For example, you edited his nearly complete manuscript and filled in missing bits with some of his lectures, as mentioned in the introduction of the book.

Your personal website hosts a ton of key documentary texts that journalists like me can use in writing about Lee, including course materials and biographical items. You organized the Festschrift in his honor, which was a tremendous amount of work that, as far as I can tell, nobody else undertook.

First of all, I want to express my gratitude because I would not have been able to write the essay nor understand Lee as well if it hadn’t been for that sort of apparatus. But I also want to ask, why does it sometimes seem like you and maybe a handful of other students are the only ones actively preserving these ideas? These ideas are revolutionary, yet why haven’t they been more broadly adopted even within heterodox economics? What do you see as the barrier to their wider acceptance?

JO

That’s an important question. Fred Lee supervised only three students during his lifetime; I was the first one. The second was my friend Zdravka Todorova, at Wright State University. She had co-supervisors – Fred Lee and Randy Wray – because she wanted to integrate [Lee’s model of the] monetary production economy with household economics from a feminist perspective. A third student graduated a few years later but has not pursued anything related to heterodox micro. So essentially, I was the one to continue in a direction closely related to Fred Lee’s work.

You raised a crucial question about the barriers and obstacles. Why don’t more economics students find his work appealing, or why don’t they pursue similar paths? I don’t have a definitive answer, but one possibility is that many students, especially doctoral candidates, are drawn to current events like the pandemic, inflation, or financial crises. They tend to focus on what they see as most urgent.

However, in any discipline, including economics, theoretical work is crucial because it is quite time-consuming. For example, it took Fred Lee nearly 30 years to publish his work, which was only published posthumously. You may have heard similar stories about other scholars who spent their entire lives on a single book or theory. Developing a theoretical framework like Lee’s is challenging and can take decades. Many students opt for easier, more immediate paths to publication, focusing on policy or applied issues.

At the time I was studying at UMKC, most students were interested in macroeconomics; only my friend and I were focused on micro and theoretical work. This might explain why not many pursue heterodox micro, despite its significant implications for developing heterodox economics. People often emphasize policy, like inflation or fiscal policies, but it’s essential to recognize that a solid theoretical foundation enables us to address various contemporary issues. A robust theory, whether Marxian, Keynesian, or whatever, provides the tools needed to tackle these problems.

Reflecting on what Fred Lee once told me when I proposed my doctoral dissertation on the microfoundations of effective demand, he asked me directly if I was prepared to dedicate the next three years to this topic. At the time, I didn’t fully grasp his meaning, but I soon realized he was emphasizing that meaningful work takes time and consistency. Earning a PhD is not the end, it’s the beginning of serious scholarly endeavor. That’s what he meant. But I think that should be enough explanation.

INTERVIEWER

And he embodied that belief in what he did; he practiced what he preached because he really did spend decades working on the intellectual history and the heterodox micro theory. This endeavor produced a paradigm that was ultimately just the beginning of the research program he wanted to pursue. I had a discussion with my friends, who are amateur enthusiasts of his work, about why Lee hasn’t been widely adopted. We have a theory that I wanted to share with you to see what you think.

We suspect that part of the reason why Lee hasn’t been widely adopted is that most heterodox theories claim to differ from neoclassical economics, but they typically only attack one subsidiary part of it. For example, behavioral economics criticizes the utility function and theories of consumer preferences. Modern Monetary Theory (MMT) challenges theories of money, such as the loanable funds model. Post-Keynesianism might target this or that specific aspect depending on the variant. And so on.

However, with the exception of Marxism – and even then, only those interpretations that don’t adopt a marginalist framework with a class struggle overlay – most heterodox theories don’t entirely replace neoclassical economics. They leave the beast intact and only nibble at the edges.

What’s particularly provocative about Lee’s work is that he directly challenges the core of neoclassical theory. By dismantling the price mechanism, he argues that there is no demand curve, no equilibrium, not even as a theoretical construct – these are fictions, and neoclassical economics itself becomes akin to pseudoscience.

From a career perspective, Lee’s theory could be seen as self-defeating. What graduate student would enter a field from the standpoint that everything taught in introductory courses is fundamentally flawed? The beginning of wisdom, according to Lee, starts on entirely different foundations. It’s almost as if Lee’s theory is too radical to be embraced by anyone seeking a career within economics, even within the heterodox circles. (Not to mention, in the eyes of the field’s gatekeepers, it could result in career suicide.) This raises a difficult question: how do you propagate such a theory?

That’s our take, anyway. But I’m curious to hear your thoughts on it.

JO

I agree with you because it is clear what he was aiming to achieve. He completely rejected the entire neoclassical paradigm and sought to establish a different framework. He utilized various theories, including the Marxian monetary theory of production, the Keynesian theory of effective demand, and the Sraffian and classical surplus approaches within the input-output framework. He had all the tools and theories he wanted to integrate to build a heterodox framework. Of course, you don’t have to agree with his approach, but he attempted it, and there were some outcomes from his attempts.

He supported the social provisioning process framework, which includes all the price and input-output models of the entire economy. This framework not only shows the structures but also the causal mechanisms and agency, explaining the capitalist economic system. You’re right: if you examine his theory closely, as you said, it is radically theoretical, so it’s challenging to adopt. Some heterodox economists did not appreciate it. Lee, of course, was critical of certain heterodox theories and did not always have good relationships with some heterodox economists. That’s normal; you can’t be friends with everyone—you have allies and adversaries.

What is clear to me is that he particularly disliked those heterodox economists who attempted to blend heterodox economics with neoclassical economics. The entire neoclassical paradigm, as you mentioned, is pseudoscientific, not scientifically consistent, and not supported by empirical data. The problem here is scientific, not political. I agree with your argument that the theory is too radical.

INTERVIEWER

So, if we have these dual problems where: on one hand, students aren’t always ready to commit to a 30-year project to build up a research paradigm, and on the other hand, there are careerist concerns about how to advance in a profession whose fundamental paradigm you are refuting. How do we overcome those hurdles? I understand that the answer might be that we don’t know, and perhaps that’s a reasonable response. However, I am curious about what kinds of actions might help in overcoming these barriers and truly getting the momentum going?

JO

Fred Lee always encouraged other heterodox economists to collaborate because that’s the only way to ensure a future for upcoming generations of heterodox economists. You must run economics programs that teach heterodox economics, and you need to host events like conferences, workshops, and seminars to keep conversations going. Perhaps the most important part is survival. Whether you’re at a research university or a teaching institution like mine, you need to persist with teaching, studying, and researching various heterodox topics. However, the outlook isn’t as optimistic these days with many negative developments. Heterodox associations are aging, with most members in their 50s, 60s, and 70s, posing a significant problem for engaging younger generations. This may become critical within a decade. Many heterodox economists are aware of these issues, as I’ve outlined, but we need to actively engage in both academic and social activities. Continuing to struggle and engage is the only way forward.

INTERVIEWER

One thing I would say, and I think all of us at the magazine agree, is that heterodox economists and other important militant minorities and outsiders in academia, who face similar challenges due to academic cult behavior like that seen in neoclassical disciplines, have not fully utilized the power of the free press outside of academia. One of the things we aim to do with the magazine is to help these individuals reach the public.

For instance, Modern Monetary Theory (MMT), despite its academic roots, gained fame through blogs, which we’ve documented in our history. These blogs built up a whole infrastructure outside of academia that attracted weirdos like our editors, and then got picked up by the business press and activists. This exposure has led people to pursue academic careers in MMT, showing how ideas can move from the public sphere back into academia.

There is significant potential for this approach. We want our magazine to be a home for many sorts of dissenters, particularly on the economics pages, where we encourage heterodox economics schools to engage with each other and the public. Hosting these debates publicly can inspire young individuals, like a 15-year-old who senses something is wrong with society and economics but isn’t sure what, to eventually become the graduate students who push the discipline forward or start new departments. This is a key aspect of our institution-building outside of academia.

JO

I’m very glad to hear that you’re organizing those initiatives through your magazine, and I hope I can contribute to your efforts and to improving economics in general. I’m truly grateful for your work.

But returning to MMT – many proponents of MMT were my professors, whom I greatly respect. In principle, I’m sympathetic to their arguments and goals, such as the Green New Deal, which I support.

However, in the end I’m not a big fan of MMT because even before its inception, I was critical of some Post-Keynesian macroeconomists who focused on controlling wages to combat inflation. I question why we don’t instead target profit markups to control inflation, harking back to the views of Post-Keynesians from the 1960s and 70s, like Sidney Weintraub. I was surprised to see that the Job Guarantee / Employer of Last Resort program includes public-sector jobs with controlled wages as a strategy to fight inflation.

INTERVIEWER

I recall seeing a panel with Randy Wray and Warren Mosler where they were presenting to Republicans, arguing that their approach could prevent wages from rising too high. It’s funny; I might be misremembering it, but it was an interesting moment.²⁰

In fairness to MMT proponents, there are some, like Isabella Weber, who during the recent crisis have argued for targeting profit markups rather than wages. However, this creates a huge tension within their framework. This is not unique to MMTers but extends to Post-Keynesians as well. For example, Joan Robinson accepted that wages drive cost-push inflation, suggesting that the wage rate sets the price level. That’s a rather bleak outlook if it were entirely true. Yet, it’s clearly not the only factor, as demonstrated by the administered price debate involving U.S. Steel in the 1950s, showing that there’s more to the story.

JO

She may have been right about what happened at the time. Recently, the IMF published empirical data on the recent inflation, where about 40% of the inflation, which was close to 9% last year, was explained by profit margins, and another 40% was explained by non-labor costs. Only 20% of the recent inflation is attributed to labor costs and wages.²¹ Yet, people are saying we need to control wages, which is nonsensical. The EPI had their own study, too,²² but I also noticed something similar from the IMF. They published a bar graph showing that wages were a very small contributor to the inflation of the early 2020s. It’s really quite astounding. It’s fortunate that people like Weber are actively challenging this perspective, but it also highlights the ambiguities in the theory and how it sometimes lags behind what we really need.

One reason I was critical of Post-Keynesian macroeconomics is that they consistently focused on full employment and income policies. While I understand the emphasis on employment policies, I felt they did not sufficiently address the welfare system and how to enhance it, so that even those who are not working can survive and have a decent life. Why don’t we discuss universal healthcare or basic income, instead of focusing solely on employment? This could significantly benefit middle- and low-income households.

Moreover, I do not fully agree with their argument about achieving full employment. It is quite obvious that the capitalist economic system inherently includes structural unemployment. This cannot be eliminated unless the system itself is changed, as Kalecki argued in the 1940s.²³ However, there is talk of achieving full employment without altering the underlying structures and institutions. I disagree with this approach. It’s not merely a policy issue; it involves fundamental changes to the structures and how we can make a difference in the provisioning system. They don’t go far enough, which is why I was not convinced by some of their arguments. While I am sympathetic, I do not agree with all their policy suggestions.

INTERVIEWER

Regarding the heterodox micro approach, or the social provisioning approach—whichever term you prefer—the Leesians’ works span micro aspects but ultimately models the entire economy. As we conclude, I’d like to discuss two areas: the open problems that remain unexplored and potential critiques of the framework.

Starting with the open questions, what are the significant areas of inquiry that still need addressing? We have the basic social provisioning framework, including the going concerns and input-output models, which is a solid foundation. However, what are the open questions that remain unanswered? I have a few ideas as well, and perhaps we can address these rapidly.

JO

One of the points you raised in your email to me was about asset prices, such as stock prices. I don’t think heterodox economists have a solid explanation for them. We know how to criticize neoclassical theories, like their pricing models or the efficient market hypothesis, but we lack a robust explanation for how asset prices are determined. The cost-plus pricing principle, for example, does not seem applicable to asset prices. We need to develop our own theory because there is no way to measure the true value of an asset. Neoclassical economics suggests that assets have a true value, but I’m unsure what that means, and we can’t find the unit cost of producing an asset. I view the financial and stock markets essentially as casinos – places of gambling, guesswork, and speculation. Therefore, we need to develop a comprehensive theory about this.

Additionally, when it comes to theories of value, Post-Keynesians like Keynes and Minsky offer a liquidity preference theory of value. Institutionalists have a theory of value too, the instrumental theory, though I don’t fully understand what that entails. Marxists have their theory of value, and Fred Lee had his own perspective on the theory of value.

Regarding Fred Lee’s framework, as you mentioned at the beginning of the interview, it is underdeveloped, to say the least. This is an area that requires further development.

INTERVIEWER

As far as asset pricing goes, I think you’ll really enjoy one of the essays coming up in the next issue by Steve Mann. Keep an eye out for that one.²⁴

Returning to the topic of open questions, we had a few ideas in mind. Without delving too deeply into any single one, I’d like to share a few thoughts and get your impressions, kind of like the ‘shower thoughts’ they mention on Reddit—these aren’t fully formed ideas, just initial impressions.

One topic I’m particularly interested in is the economics of the green transition. Specifically, how do we not only decarbonize in general but also target specific sectors like agriculture, automotive, logistics, and various industries? Additionally, what systems, such as accounting and planning mechanisms, would be necessary to support this transition? I’m curious to hear your thoughts on this.

JO

I want to link this question to another one you asked via email. You were talking about De Gregori’s article concerning the social construction of resources.²⁵ It seemed you were critical of his argument. But resources are not understood in the same way in his theory as in ordinary language.My interpretation of De Gregori’s argument, as well as the Institutionalist argument in general, is that resources are not simply physical or material things. His argument is that resources are ideas – or, to use Veblenian terminology, the “joint stock of community knowledge.” What this means is that we develop technology out of this broader collective stock of knowledge. These technologies can create something beneficial for society, or they can destroy something beneficial. It can go either way.

De Gregori was first trying to criticize the neoclassical notion that resources are scarce. If resources are not scarce, or if resources are understood differently, then the entire neoclassical framework begins to collapse, because rational choice and efficient allocation are based on the assumption of scarcity. That was one purpose of his argument. He also argued that we may be able to develop technologies, knowledge, and institutions to overcome problems such as poverty and food shortages. That was the central issue he was addressing. But now we face new questions: how can we deal with global warming and the climate crisis? I do not think he had a direct answer to that question, but we may still use his argument to suggest that we can develop our knowledge, institutions, and technologies to address these problems.

Technology does not have to exploit nature. It can be developed in ways that are compatible with the preservation of nature. That is how I interpret his argument.

In that regard, regarding the transition and the Green New Deal, I agree with the general idea. However, one major question I had when I first learned about it was: who is actually going to benefit from these policies? If a Green New Deal is implemented by the government alongside large businesses, and large amounts of public resources are injected into the economy, then who ultimately receives the benefits? That was my concern, because it was not entirely clear to me.

Still, we need to do something as early as possible. Otherwise, we will face very serious problems in the near future. So while this issue is not directly related to the social provisioning process framework, it is still an extremely important and urgent issue that we have to address.

I think MMT advocates are engaging with this issue these days, but I still do not think their response is sufficient.

INTERVIEWER

Another open question I’ve been pondering is how to connect heterodox microeconomics to developmental economics. This topic arose during our discussions about Korea, and I found your critique of developmentalism, particularly its frequent reliance on the authoritarian state, very intriguing.

My question is twofold. First, what methods might we provisionally use to link heterodox micro, a la Fred Lee, to questions of development? Second, is development possible without an authoritarian state? Are there other ways we might think about development occurring under a democratic regime or even occurring despite or without a state, perhaps by non-state actors?

JO

First, you need to define what you mean by development and the specific type of development you have in mind. Conventionally, development is understood as economic growth and the material well-being of people. History shows that one effective method is through a strong authoritarian government planning and allocating resources to grow the economy, as seen in South Korea. However, replicating this model in other countries is challenging due to different problems and structural conditions.

As I told you, recently I came across a study by two Austrian scholars on grassroots movements in Germany and small-scale community initiatives, which differ significantly from national strategies. What struck me as insightful in their research was the crucial role of institutional arrangements, which I’ll keep vague here as it can encompass various aspects. These arrangements should favor not only material growth but also the qualitative growth of life processes.

This is arguably the most challenging part, as policymakers often focus only on material growth. Building a framework or system that also considers qualitative improvements might take a century or more. However, it’s essential to start by understanding what development truly means for people and nature. The United Nations has attempted to address this with measures like the Human Development Index and the Gender-Inclusive Development Index, but these still do not address the fundamental issues related to the institutional arrangements that enhance quality of life and preserve nature.

INTERVIEWER

Another open question I find fascinating is applying Leesian microeconomics to history. I’m curious about using the basic social provisioning framework, with necessary modifications, to describe pre-capitalistic or non-capitalistic societies, whether historical or contemporary to capitalism, or sectors within capitalist-dominated systems that were non-capitalistic. This could involve using the general input-output and going concern frameworks to describe such societies.

For example, I wonder what a Leesian view of the ancient Mediterranean would look like, or the Soviet Union. This is a fascinating prospect. I even think that heterodox macroeconomic accounts could describe areas not typically viewed as having an economics, like art, science, or philosophy. This is because people are shaped by the institutions that govern their training and where they work.

How do the institutions through which art is made affect the type of art produced? How do the institutions that govern philosophy or the operation of religions influence them?²⁶ This question is similar to what Marxism explores, but the Leesian approach would focus specifically on the configurations of the institutions and analyze them in an input-output manner to create a detailed map.

I wonder if you have had any similar daydreams about this and what kinds of explorations along these lines you would like to see.

JO

I’m not fully sure about applying these ideas to historical contexts like the Soviet Union or pre-modern, pre-capitalist societies. However, the social provisioning framework, which is consistent with agency, structures, and causal mechanisms, can be applied to analyze various entities, from the economics discipline to local communities or even, I suppose, the entire Soviet Union. This framework doesn’t provide answers directly. Rather, it guides you to examine who is making decisions, the underlying mechanisms of these decisions, and the processes involved.

You can use this approach to understand the evolution of different systems by identifying the agents, structures, and mechanisms at play. For example, you could analyze the history of economics, tracing its development from its inception to the present by focusing on these elements. Although my response might not directly address your question, my main point is that I see the social provisioning process as a tool to examine changes and dynamics in the real world.

INTERVIEWER

Once we have that framework and all those tools in our toolbox, the question becomes: What do we do with it? We have this edifice of work that Fred Lee helped create, synthesizing from various theorists. Now, what do we do with it?

JO

The real world is constantly changing, presenting new questions and issues. We can address these with the tools we’ve already started using. Additionally, if I’m doing research, I would probably apply the social provisioning process framework to analyze how, for example, big tech companies operate and how they differ from traditional business enterprises. Companies like Google, Meta, Apple, and Amazon are controlling a major portion of economic transactions and are key players in the economic system. We need a good understanding of their operations. Perhaps we can find ways to socially influence their behavior, aiming to improve the general well-being of people. However, this idea is still quite vague.

INTERVIEWER

Overall, what does Lee’s framework and its applications empower people to do?

JO

My short answer is that action matters. If you wish to change something, you must act. This is what business enterprises and the ruling class do. They plan and execute those plans to advance their interests. If we want to change that, we must organize and struggle constantly. We don’t own the means of production or possess substantial wealth, so every day is a struggle. This theoretical framework emphasizes the centrality of agency, action, and developing the capability to improve conditions.

INTERVIEWER

I think that there’s not a better note that we could end on.~

Authors

The Editors

The co-editors of Strange Matters have only just recovered from their Babylonian madness. They are based all over the world.

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Tae-Hee Jo

Tae-Hee Jo is a professor at SUNY Buffalo State University. Most recently, he is the editor along with Lynne Chester and Carlo D'Ippoliti of The Routledge Handbook of Heterodox Economics, whose second volume was released in 2025.

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