Heterodox Political Economy Specialization and Interconnection - Concepts of Contradiction, Heterogeneous Agents, Uneven Development

O'Hara, Phillip Anthony Article Heterodox Political Economy Specialization and Interconnection - Concepts of Contradiction, Heterogeneous Agents, Uneven Development Intervention. Zeitschrift fuer Ökonomie / Journal of Economics Provided in Cooperation with: Edward Elgar Publishing Suggested Citation: O'Hara, Phillip Anthony (2007) : Heterodox Political Economy Specialization and Interconnection - Concepts of Contradiction, Heterogeneous Agents, Uneven Development, Intervention. Zeitschrift fuer Ökonomie / Journal of Economics, ISSN 2195-3376, Metropolis-Verlag, Marburg, Vol. 04, Iss. 1, pp. 99-120, https://doi.org/10.4337/ejeep.2007.01.09 This Version is available at: https://hdl.handle.net/10419/277096 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ Heterodox Political Economy Specialization and Interconnection – Concepts of Contradiction, Heterogeneous Agents, Uneven Development Phillip Anthony O’Hara* Th is paper extends the analysis presented by Marc Lavoie in this journal about the relationship between the major schools of heterodox political economy. We argue that the evolution of heterodoxy over the past four decades has seen both specialization and interconnection. Th e specialization has enabled a degree of detailed analysis of concepts, such as class, demand, institution, innovation, gender, ecology and development. Interconnections between the schools also developed from an early stage. With both forces operating, the specialization promotes clarity of perception and depth of analysis, while the association enables this perception and depth to be linked between the schools. Th is has led to a degree of cross-fertilisation of themes to form broad concepts. Th ree such broad concepts are examined that are emerging and link aspects of diff erent schools: contradiction, heterogeneous agents, and uneven development. Th ese broad concepts are important for comprehending the social, institutional and historical forces of political economy, and for linking themes from the various schools of heterodoxy. JEL classifi cations: B5, J1, O1, P16, Z13 Keywords: schools of heterodox political economy, specialization, association, con cepts, contradiction, heterogeneous agents, uneven development * Global Political Economy Research Unit (GPERU), Curtin University, Perth. I wish to thank the anonymous referees, editors, Ron Stanfi eld, and Matthew Wilson for comments and help with an earlier version of this article. Correspondence Address: Prof. Phillip Anthony O’Hara, Global Political Economy Research Unit (GPERU), Department of Economics, Curtin University, GPO Box U1987, Perth, WA. 6845, Australia, e-mail: philohara@ yahoo.com Received 14 Aug 2006, accepted 22 Feb 2007 © Intervention 4 (1), 2007, 99 – 120 100 Intervention. Journal of Economics 1. Introduction Since the 1960s, especially, heterodox schools of political economy have experienced a con siderable resurgence. Much of this was part of the radicalism of the 1960s and 1970s, and much was a reaction to the narrow formalism of orthodoxy. Whatever the causes, this resurgence has continued to this day. There are many who consider themselves to belong to a specifi c school or trend, such as institutional, Marxist, feminist, post-Keynesian, Schumpeterian, social, ecological or international political economy. But there are an increasing number who consider themselves simply a heterodox political economist. The latter generally have an eclectic view of the world under the influence of what they consider to be a fairly uniform trend of convergence towards a common science of political economy. In a recent issue of this journal, Marc Lavoie (2006) has rightly picked up on this theme, providing a post-Keynesian point of view on the question: »Do heterodox theories have anything in common?« He generally answers in the affi rmative, paying particular attention to various themes linking some writers of a post-Keynesian, Sraffi an and neo-Marxist persuasion. He believes that heterodoxy has many things in common, including shared concepts, but that like all human beings they are likely to disagree on certain things, and that this critique is healthy and wise. However, he denigrates sectarianism, or attempts of some heterodox scholars to shield themselves from other perspectives, engaging in caustic criticism and exclusivity. There is said to be strength in numbers and making positive contributions to heterodox thought. In exploring this theme, Lavoie delimits the scope of his analysis to four themes: the concept of rationality, price theory, growth theory and links between money and production. First, much emphasis was given to the heterodox tendency to utilise bounded (or substantive) rationality, since asymmetric information, uncertainty, interdependent choices and adjustments are critical to the human predicament. Second, he examines pricing theories in the short and long run, and argues that in the short-run cost-plus pricing procedures are acceptable to all, adjustments are made through quantities, and are sticky; while in the long-run we can concentrate on the gravitation problem, or the convergence towards prices of production. Third, he discusses the relevance of the Kaleckian model of growth, which is driven by eff ective demand. Here demand creates its own productive capacity, and one can diff erentiate between the current period and long-run utilisation rate. Lavoie emphasises relationships between Sraffi ans, Kaleckians, and certain neo-Marxist scholars and links class conflict with economic activity. Lastly, he discusses the considerable similarities among heterodox scholars in understanding growth and (un)employment within the context of a monetary theory of production. Extensions have been included for open-economy considerations. Lavoie discusses these four themes within the context of recent trends and relationships between heterodox scholars, which he believes are consistent with a more eclectic and open-minded spirit. Such a spirit is certainty at play. Consider, for instance, the fact that recently, two Marxist-institutionalists (Paul M. Sweezy and Howard Sherman) and O’Hara: Heterodox Political Economy Specialization and Interconnection 101 three radical-institutionalists (Bill Dugger, Dan Fusfeld and Ron Stanfi eld) have been awarded the Veblen-Commons Award from the Association for Evolutionary Economics (AFEE). Also, the formerly more Marxist Review of Radical Political Economics editorial policy now »publishes innovative research in political economy broadly defi ned as including, but not confi ned to, Marxian economics, post-Keynesian economics, Sraffi an economics, feminist economics, and radical institutional economics« (RRPE 2006). Also, several broad-church political economy journals now exist, including the Review of Political Economy which »welcomes constructive and critical contributions in all areas of political economy, including the Post-Keynesian, Sraffi an, Marxian, Austrian and Institutionalist traditions« (RoPE 2006).1 Similar sorts of linkages and associations are also typical of other journals, such as New Political Economy, the Cambridge Journal of Economics, as well as at conferences of heterodox scholars in many parts of the world. The purpose of this paper is to continue the debate concerning the theoretical linkages between the various traditions of heterodoxy. Lavoie emphasised that his paper was only partial and selected only a few areas of analysis. Indeed, it was one post-Keynesian view on these matters. This current paper starts off by looking at the main diff erences and specializations associated with the schools of heterodoxy. It is argued that these diff er ences have been critical to the theoretical corpus of political economy. Specifi city of focus is necessary before and during the process of interconnection and association. The very diff erences between the schools have become a source of multiple innovations as cross-fertilization generates richer research programs and broader concepts. With such a multitude of theories and perspectives, due to both specialization and interconnection, it is now possible to develop broader foundations for the science of political economy. After the main diff erences and specializations are examined, the paper examines three »broad« concepts of emerging signifi cance »that include refl ections on the historical and social factors that shape economic processes, and that explicitly explore opportunities for human action to actively intervene and shape economic policies« (IJE 2006). Broad concepts have been emerging from specialization and interconnection between the various schools which enhances heterodoxy. Three such concepts, which have been in 1 Th e various elements of the Austrian School represent an especially diffi cult question for heterodox political economy, since on the one hand they are heterodox vis-à-vis their emphasis on uncertainty, institutions, and evolution, on the other hand they are more orthodox in relation to spontaneous market processes, liberty and the role of the individual. To include them in this paper would have unduly complicated the process and reduced the degree of continuity of the schools. 102 Intervention. Journal of Economics the process of enrichment to varying degrees, include (a) contradiction, (b) heterogeneous agents, and (c) uneven development. These concepts are much broader in scope than those analysed by Lavoie and place more emphasis on the institutional and historical underpinnings of socioeconomies. 2. Diff erences and Linkages between the Schools of Heterodoxy Heterodox scholars have tended to assume that diff erences among and between the schools of thought are inconsistent with the process of convergence, linkage and commonality. I argue the opposite, namely, that diff erences are essential to a vibrant and forwardlooking science and enable innovations and new research programs to be made through linkage and communication. There are often time lags between greater specialization or technical development and the development of large concepts that link various schools of heterodoxy. But over time major advances are possible through cross-fertilization and assimilation. Some large measure of specialization has been happening in political economy over the past forty years (at least). Each of the major schools of thought has concentrated on the core theories of their analysis, and has gained a conspicuous place in the theoretical edifi ce of academia. Without this degree of specialization little progress would have been made in political economy. This section outlines the broad nature of the specializations, and then shows how advances have been made by linking advances of the various schools. Further sections detail three of the broad conceptual developments that are emerging in an evolutionary fashion. Marxists have specialised in class analysis and the production of an economic surplus through the circuit of social capital. Various forms of Marxism have generated quite diff erent analyses of these matters: rational choice Marxists, Rethinking Marxists, and so on. But this has typically been their main substantive research program for comprehending the dynamics of capitalism. Stephen Resnick and Richard Wolff (2005) have, for instance, directed their attention in this respect to the diff erences between fundamental class processes, associated with productive workers and industrial capitalists producing the surplus; and subsumed class processes, linked to the distribution of the fruits of surplus labor; as well as the institutional conditions of existence of non-class processes. Much Marxian economics, including criticism and reconstruction, has been published in journals such as the Review of Radical Political Economics, Capital and Class, and Rethinking Marxism. Some of the key books include Resnick and Wolff (1987) Knowledge and Class, Howard Sherman (1995) Reinventing Marxism, and John Milios et al. (2002) Karl Marx and the Classics. Post-Keynesians have similarly specialised in economic discourse with the aim of developing an original and compelling conceptual framework of the workings of capitalism. The main corpus of this framework has been the principles of eff ective demand and uncertainty. Generally, eff ective demand is seen as part of a circular and cumulative process, O’Hara: Heterodox Political Economy Specialization and Interconnection 103 wherein demand itself is able to generate expansions of supply through learning by doing, economies of scale /scope and innovation. The dynamics of capitalism tend to be unstable through business cycle type fluctuations. A critical source of this instability lies in the process of uncertainty. Because investment is generally undertaken with a view to the future, when economic conditions are unknown, uncertainty is the critical foundation of capitalism. Conventions are used to reduce uncertainty, including accounting techniques, corporate planning, and trying to follow the market. The prevailing business climate becomes the main determinant of investment. Post-Keynesians have developed numerous theories and approaches to this subject, including substantial internal criticism, especially in the Journal of Post Keynesian Economics and the Cambridge Journal of Economics. Some key books include Marc Lavoie (1992) Foundations of Post-Keynesian Economic Analysis, Douglas Vickers (1995) The Tyranny of the Market, and John King (2002) A History of Post Keynesian Economics Since 1936. Institutionalists, meanwhile, have been busy over the past four decades developing their own theories and approaches. Like the other schools an array of diff erent and often competing approaches were experimented with. Looking at the fi eld from afar, after forty years, we can now see that the essence of the program concerns the relationship between institutions, habits and instincts. Institutions are those durable relationships that condition social behaviour, including structural institutions such as the state, corporation and family, as well as the ideological and normative ones of thought and behaviour. Habits are individual modes of behaviour that stimulate regularity and patterned behaviour. Instincts are the broad, biologically driven, propensities which are capable of varying patterns of manifestation; such as the parental, workmanship, and idle curiosity instincts. The relationship between institutions, habits and instincts is critical as it shows how the biological, individual and social realms link to the creation of human social economy. The work of institutionalists has surfaced especially in the Journal of Economic Issues since 1967, and much more recently in the Journal of Institutional Economics. Core books are Ron Stanfi eld (1995) Economics, Power and Culture, Marc Tool (2001) The Discretionary Economy, and Geoff rey Hodgson (2004) The Evolution of Institutional Economics. Since the late 1960s, neo-Schumpeterian themes have re-emerged, with an emphasis on innovation, creative destruction and diff usion of the technological advances of capitalism. Major advances have been made concerning new products, processes, sources of raw material, new markets and changes in industrial organisation. The Schumpeterianevolutionary trend centres on the direct source of profi t and the ongoing dialectic of innovation → profi t → competition necessary for continual advancement. They also recognised the unstable motion of capitalism through long waves and cycles, and the role of credit in the process of development and instability. Contributions were also made concerning the non-class role of entrepreneurs as radical individuals upsetting established institutions of business, and also corporations establishing research and development activities along institutional lines. Much of their work has been published since the late 1980s and early 1990s in the Journal of Evolutionary Economics and Structural Change and Economic Dynamics. Key monographs are Clark and Juma (1987) Long-Run Economics, Brian 104 Intervention. Journal of Economics Arthur (1994) Increasing Returns and Path Dependency in the Economy, plus Freeman and Louca (2002) As Time Goes By. Development and international political economy has perhaps been the most successful area of heterodoxy. Here the »traditional« heterodox concerns of history, institutions, and long-term change could be linked to factors contributing and hindering progress, along with the forces propelling the uneven and unstable performance of neoliberal capitalism. This diverse fi eld emerged in the 1950s, became radicalised in the 1960s, declined somewhat in the 1970s, took a conservative turn in the 1980s, and since then has blossomed in the 1990s and 2000s along numerous lines. Development political economy has advanced along with the work of Amartya Sen and Paul Streeton while international political economy has come to the fore in recognising the multifarious forms of organisation and dynamics of global capitalism. Both have been taking an interdisciplinary approach and expanding while comprehending the social, political and institutional forces operating on the global economy. Major innovations have been published, for instance, in World Development, the Review of International Political Economy, and more latterly the Journal of Human Development. Influential books in the fi eld include Robert Keohane (1984) After Hegemony, Amartya Sen (1999) Development as Freedom, and Peter Dicken (2003) Global Shift. The past forty years has also seen the evolution and development of feminist political economy. The re-emergence of feminism in the 1960s set in motion a whole array of academic works in all major fi elds of the social sciences concerning gender. In political economy, close links were established between feminists, Marxists and institutionalists. In recent years, feminists have formalised the establishment of the International Association for Feminist Economics (IAFFE) and also Feminist Economics. Major developments have occurred in three major fi elds: gender relations have been incorporated into economic analysis; linkages between gender, class and ethnicity have been forged in theory and practice; and, more generally, a holistic and processual perspective has been developed on the social economy. Major developments have occurred, and debates on these themes have evolved in all areas of economics. Heterodox perspectives are arguably the dominant discourse in the fi eld as the notions of gender, class and ethnicity challenge more orthodox perspectives of the economy. Core books include Joyce Jacobsen (1994) The Economics of Gender, Gillian Hewitson (1999) Feminist Economics, and Jaquette and Summerfi eld (2006) Women and Gender Equity. With the deteriorating global environment, ecological political economy has expanded over the past few decades as a transdisciplinary analysis of ecological capital, strong sustainability and the precautionary principal. This has led to the emergence of many new journals and associations, including the International Association for Ecological Economics (and its regional affi liations), their journal Ecological Economics, and a whole host of others such as Capitalism, Nature and Socialism, the International Journal for Environmental and Sustainable Development, and Environment, Development and Sustainability. In the light of the growth of durable fi xed capital, automobile use and extensive logging of old growth forests, the quality of the environment has declined, leading to global warming O’Hara: Heterodox Political Economy Specialization and Interconnection 105 and climate change. In this context, a host of socioeconomic indicators have been emerging, such as the Index of Sustainable Economic Welfare (ISEW), the Genuine Progress Index (GPI) and the Index of Community, Warranted Knowledge and Participation (ICWP). Important books in the fi eld are Nicholas Georgescu-Roegen (1971) The Entropy Law and the Economic Process, Daly and Cobb (1989) For the Common Good, and Robert Costanza (ed.) (1991) Ecological Economics. In the light of this activity of the schools over the past forty years, a multitude of evolutionary forces have been operating. These evolutionary forces have variously been promoting diff erences between schools, similarities between some schools, and a whole host of other changes, including an impact on orthodoxy. Concerning diff erences between the schools, the primary impact is that some degree of specialization has become possible, building on earlier work, and progressing further. This specialization has enabled conceptual development which otherwise likely would not have occurred. Some scholars have been eschewing linkages, often fi ghting for a special place for their school, so that conceptual development can occur. Such developments have been considerable in class analysis and the economic surplus; eff ective demand and uncertainty; institutions-habits-instincts; innovation-profi t-competition; uneven development, capabilities and social capital; gender, class and ethnicity; uneven development, hegemonic dominance and production networks; and strong sustainability, precautionary principal and ecological capital. Major debates, alternative views, and many criticisms have blossomed in the various fi elds. The schools of thought have established themselves on fi rm ground. Even while the schools have been developing /enhancing their own perspectives and concepts, many scholars started using concepts linked with other schools to promote their own explanations for the socioeconomic problems of capitalism, and in order to comprehend institutional changes that have occurred. Neo-Marxists in the 1970s and 1980s started to incorporate institutional theories of change and crisis that drew heavily if unwittingly on the academic turf of institutionalists. These include regulationists and social structure of accumulation scholars. Marxists and feminists worked together (often critically) to develop an understanding of household labor, segmented labor markets and the nexus between class, gender and ethnicity. Post-Keynesians and Sraffi ans recognised the potential continuity between short and long run processes. Schumpeterians and postKeynesians began to see how innovation and eff ective demand are related in a circular and cumulative framework. Marxists and feminists began to appreciate the signifi cance of ecology and the environment for their own view of the limits of capitalism. Development and international political economists drew widely from apparently disparate sources to promote their holistic view of uneven development. Feminists and institutionalists worked together to develop a Veblenian analysis of gender, conspicuous consumption and ceremonial encapsulation. Specialization has enabled the promotion and development of concepts, which led to the possibility of linkages between traditions, and thereby to the enrichment of theory and practice. As knowledge grows, and problems emerge in the economy, scholars are able to develop a more holistic vision, and thereby recognise how apparently diff erent 106 Intervention. Journal of Economics aspects are related. Thus, while we still have diff erent schools, and further specialization, there is now such a tremendous degree of interconnection, communication and correspondence between previously diff erent traditions that a whole range of research programs are emerging from heterodoxy. Indeed, much of this has impacted on orthodoxy, and some Nobel Prizes have been awarded where heterodox ideas have been linked to established ways of looking at the world.2 Hence, diff erences have become a source of communication, innovation and convergence. Diff erences remain, necessarily since they are critical to further development as well as enrichment. But as heterodox scholars gain a wider view of how capitalism changes and evolves, they often utilise concepts and tools of other scholars to enhance their own perspectives. This is a reason why political economists of originally diff ering perceptions have been engaging in cross-fertilisation of ideas at conferences, in journals and in academic departments. This has especially been the case through the various international associations of heterodox economics, including the meetings of the various groups at the Allied Social Sciences Association meetings in January of each year in the US; the meetings of the International Confederation of Associations for Pluralism in Economics (ICAPE); the European Association for Evolutionary Political Economy conference in November of each year; and of course in the broad-church journals such as the Journal of Economic Issues, Cambridge Journal of Economics, Review of Political Economy, New Political Economy, Journal of Human Development, and the Intervention. Journal of Economics. Some of the core books illustrating this linkage between schools include Howard Sherman (1987) Foundations of Radical Political Economy, Charles Whalen (1996) Political Econ - omy for the 21st Century, and Phillip O’Hara (2000) Marx, Veblen and Contemporary Institutional Political Economy. It is thus necessary for heterodox scholars to engage in a multitude of research programs, some of which are specialist areas and some of which cross-fertilise with other traditions. It is imperative to have diff erences between the schools, as often this represents more specialist knowledge that can later be used in a wider context. If only convergence (without specialization) occurred this would inhibit the further development of heterodoxy into the future. A multitude of patterns and processes, incorporating innovations, experiments and cross-fertilizations are required after a degree of specialization has occurred. Now that some necessarily somewhat narrow level of expertise has ensured, the coevolution of further specialization and cross-linkage can advance political economy further. In the sections that follow, I provide examples of conceptual developments in heterodoxy that emerged out of the diff erent works of the various schools. These examples are broad ranging, and enable greater holistic vision for political economy as a whole. Had the diff erent schools not specialised then the broader innovations discussed likely would not have been possible. On the other hand, eventually linkages and communications are 2 Here, of course, we are alluding to the awarding of the Nobel Prize to Douglas North, for his contributions to institutions and economic history; and Amartya Sen for his analysis of capabilities in development. O’Hara: Heterodox Political Economy Specialization and Interconnection 113 Dictionary of Dissenting Economists (Arestis / Sawyer [eds.] 2000). This is true not only in relation to persons involved directly in ›development issues‹, but also when one recog nises that most of the great political economists placed a great deal of emphasis on ›development‹ and long-term change (O’Hara 2003: 141 – 142). Out of all this activity emerges a challenge to orthodox concepts such as global convergence. The alternative concept of uneven development, which has a long history in political economy, is linked to a number of factors, which recognise that there are limits to the extent that nations, regions and localities are able to advance to higher levels of existence, with a sharp limit on the catching-up process. Two sub-concepts will be emphasised here: the terms of trade and social capital. A critical factor is the global division of labor and the trade system. Unequal power relations are influenced in part by the terms of trade, a theme developed especially by post-Keynesian and structuralist political economists. A critical problem has been the tendency for the terms of trade to decline for primary products such as agricultural goods, metals, mining and even low-value added manufactures. This problem, called the Prebisch-Singer hypothesis, has been found to be inhibiting the growth and development of especially sub-Saharan Africa, Latin America and parts of South Asia. David Sapsford and V. N. Balasubramanayam (2003), for instance, argue that both trend and volatility are signifi cant in the terms of trade. Over the twentieth century, relative primary product prices (compared to manufactured goods) have declined by about forty percent, while the cyclical instability problem has become very signifi cant. Some authors concentrate on trend while others emphasise structural breaks. Either way, the periods of major decline and instability have been during long wave downswings – the 1920s – 30s and 1970s – 1980s (see Cuddington et al. 2002). Over the 100 years from the early 1900s to the early 2000s, price instabilities have beset most commodity prices, with declines being especially marked for copper, jute, maize, aluminium, cocoa, cotton, tea, silver, wool, hides, lead, rice, sugar, and wheat. Substantial price increases were characteristic of lamb, timber, tobacco, beef, coff ee and petroleum. Typically, »tropical« agricultural products declined considerably while »non-tropical« did not (Ocampo / Parra 2004). Overall, the commodity terms of trade – Pp / Mp, the index of primary product prices divided by manufactured goods prices – has declined signifi cantly over the period. As a result, the net barter terms of trade – Xp / Mp, the index of export prices divided by import prices – declined in average annual growth terms by 0.50 percent for the poorest nations of the world; there was zero growth for medium income nations; and annual average growth for high income nations was 0.23 percent (Lutz 1999: 862). Critical problems are the relatively low world income elasticity of demand for primary products, the introduction of alternative synthetic fi bres in the North, and the static view of comparative advantage that reinforces the reproduction of relatively unproductive sectors and activities.9 9 In terms of policy, Sapsford and Balasubramanyam (2003) critique the IMF and World Bank structural reform agenda which advised African nations to increase their exports of (non-processed) primary products. Th ey argue that this advice is subject to the fallacy of composition that a partial 114 Intervention. Journal of Economics Another factor exacerbating the forces of uneven development at the global, regional and local levels is diff erential levels of social capital. Development scholars and sociologists have been concerned with social capital as a specifi c concept since the late 1970s and 1980s. Right up until the 1990s, however, most political economists tended to evade the concept, because it was variously thought to be an incorrect view of ›capital‹; or because it was a term better linked to notions of trust, sociality, networks, culture, reciprocity (and hence was thought to be superfi cially conceptualised); or because it meant diff erent things to diff erent people (Fine 2001). While many political economists ignored the term and /or the processes associated with it, the concept grew in importance, even aff ecting the more pluralistic elements of orthodoxy, and into the 2000s most heterodox journals treat it with respect and concern.10 It can also be used in a multitude of political and ideological ways, and has been propagated by the World Bank as well as the main development journals such as World Development and Journal of Human Development, not to mentioned hundreds of other media and interests. Social capital typically includes those durable structures of trust and sociality helping to establish networks of relationships and associations within the community and which provide considerable public good functions of communication, information, and coordination. The socially broader the scope and spread of trust and sociality the greater the externalities and public goods associated with them, while the narrower the spread the more intense the vested interests are that appropriate benefi ts for themselves. For instance, the creation of truly social trust at the system level enhances virtually everyone’s social objectives, including income, well-being and quality of life. The spread of trust within particular corporations, government departments or families will enhance the organisation of these specifi c sites of micro-practices. Promoting trust within groups of classes of people, such as among the upper classes, or within the middle class, with spread benefi ts within these particular groups, leads Pierre Bourdieu (1997) to argue that the asymmetrical distribution of social capital is the main factor propelling class distinctions. This leads Paul Streeton (2002) to argue that social capital can simultaneously be both a stock and a flow in the sense that using it can reproduce it, in a circular and cumulative process. In like measure, the very process of people not trusting each other has the same circular and cumulative impact, but in a downward direction. But, says Streeton, there is also »asocial capital«, in the sense that organised groups can use their own very specifi c internal social capital to destroy more general linkages of trust and sociality in the community. These special interest groups can take the form of terrorist cells (including government militia) that want to promote social fear and intimidation; an ensemble of equilibrium solution for some nations is consistent with a general equilibrium solution for all such nations. Clearly, if all African nations export more primary goods, their terms of trade are likely to get worse. 10 For instance, a number of heterodox political economy journals have started publishing important articles on social capital, including, for instance, the Review of Radical Political Economics, the Review of Social Economy and the Journal of Economic Issues. O’Hara: Heterodox Political Economy Specialization and Interconnection 115 corporations that want consumers to buy their products rather than enjoy free social (or public) goods; organisations such as the Ku Klux Klan that want to destroy trust within the black community and between blacks and whites; close-knit families that prevent their members from developing outside networks and associations; and growing markets that promote anonymous linkages between people and gradually reduce non-market networks and organisations. In the current environment, for instance, globalisation has stimulated mainly corporate and market linkages, while the free movement of people for social ends has been limited. Consequently, »the growth of institutions to protect the poor and the weak, to promote civil and human rights, to provide educational and health facilities and social safety nets, has lagged behind the drive to market forces. Th e result has been growing international inequality« (Streeton 2002: 18). Hence the need to promote global relations of reciprocity, redistribution and embedded human markets rather than purely corporate and traditional market forms. There has been a major global decline in the percent of people who say that others are trustworthy over the past twenty years (O’Hara 2006b: ch. 3). This is likely the result of a shift from community and familial to market and corporate practices, as neoliberal economies (especially) have experienced a marked deterioration in trust over recent decades. Declining trust increases the costs of legality, courts, jails and insurance; lowers the quality and level of information as well as public goods while it enhances individualism; and expands the asymmetry of information between groups. Most of these factors increase uncertainty, since there is less useful information to draw on about likely future tendencies and processes. Instability and insecurity increases, people feel more isolated, and are less willing to invest in the future. Being less willing to engage with people limits business expansion and networks of friends. For instance, a critical problem in many nations of Africa, Latin America and Asia is corruption, which represents a lack of truly social capital, since corruptors often look after family and friends at the expanse of strangers. The development of what Francis Fukuyama (2002) calls a »two-tiered moral structure« between insiders and strangers – or the problem of familism – is a normal response to a society where »people« are not trusting or are untrustworthy. Heterodox economists have always recognised the importance of trust and sociality. Veblen was the fi rst major economist to include it in his analysis through his concept of collective social wealth. Marx recognised the centrality of coordination and interaction through the circuit of social capital (for propelling surplus value) and wanted to promote trust within corporations and other institutions through major adjustments to social relations (his »association of direct producers«; see Prychitko 1991). Social economists have centred precisely on the role of trust, ethics and dignity in business and society. Feminists have long argued for an extension of caring practices that enhance trust, emotional bonding and love beyond the family. Post-Keynesians have for ages emphasised the need for incomes policies to improve trust between social classes, moderate distributional con- 116 Intervention. Journal of Economics flict and improve performance. Radical political economists have recognised the need for numerous accords (and participatory democracy) between classes and groups to promote stability and conflict resolution. Rather than eschewing social capital because it is not a proper notion of capital as linked to business, heterodoxy needs to embrace it as a critical process of the political economy. Gradually it is becoming part of the heterodox mainstream. It provides an opportunity for diff erent schools of heterodoxy to communicate with each other (promoting their social capital). Along with other processes, such as those linked to the Prebisch-Singer hypothesis, it enables us to gain an understanding of the forces of uneven development at the global, regional and local levels. 6. Conclusion This paper commenced with the recognition of the need for both diff erences /specialization and interconnection /cross-fertilization within and between the schools of heterodoxy. Diff erences can stimulate conceptualization through specialization. Since the 1960s, especially, this process of theoretical development has been stimulated by the focus on separate schools of political economy. Major improvements have been made concerning class and the economic surplus; eff ective demand and uncertainty; institutions, habits and instincts; innovations and technological change; the uneven forces of global capitalism; gender, class and ethnicity; plus strong sustainability and the precautionary principle. Without diff erences these developments would have been unlikely. Even while the separate schools were active enhancing their concepts and perspectives, linkages started to emerge between them, and these linkages became greater as the degree of sophistication of the separate schools increased. An array of scholars have crossed school boundaries and started fusing concepts of other schools with their own (both wittingly and unwittingly). This led to a whole series of new research programs and conceptual innovations. Insights from many multiple schools were found to be complementary and enabled general concepts to be formed and enhanced. From this emerged, for instance, the notions of contradiction, heterogeneous agents and uneven development. At conferences, in journals and in departments the degree of cross-fertilisation between schools accelerates. Ever while these cross-school communications continue the separate schools forge ahead with further technical and general advances. Some input into the schools is coming from the convergence process, while some of the further advances in the schools are aff ecting convergence trends. Both diff erences and linkages are needed for the further pro gress of heterodox political economy. May a hundred flowers bloom in both directions, greater depth and further widening of perspectives and concepts. We need both for healthy theory and policy, so that we are able to more fully understand the complexities of modern capitalism and the potential for social and political change into the future. 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