Time for a Precarity-Centered Economics

Written by Charles J. Whalen, Research Fellow, The Baldy Center for Law and Social Policy, University at Buffalo, USA

Economics is a backward science. Conventional economics has long focused on markets that produce or even perpetually exist in a state of equilibrium, where perfect competition and price adjustments yield “economic efficiency,” the best of all possible worlds. From that starting point, any real-world problem is inevitably seen as a product of “market failure,” and the solution is preordained from the start: free the market of all impediments to “get the prices right.” By starting with an ideal state—one no more real than a unicorn—economics has things entirely backwards.

Economics needs to start with problems, exactly as humans experience them, and then work from there. The consequences of not doing so are all around: pervasive economic insecurity for workers and households, global warming that threatens life on Earth, and social polarization (which undermines democracy) and erosion of a sense of community within and among nations. Even worse: mainstream economics doubles down on its myopic obsession and calls for market-based solutions to problems that unrestrained market activity created in the first place. For example, we now have new financial markets for trading derivatives based on carbon dioxide emission permits, which not only distract from emissions reduction but also add to economy-wide financial instability.

We live in precarious times. But that fact also orients us in the direction of a problem-based economics. Exploring the dimensions of contemporary precarity—and their interrelations—serves as a promising way to craft a new political economy capable of not only producing insightful analyses of our current problems but also identifying the social conditions that promote human flourishing and how they can be attained.

A new book by Edward Elgar Publishing demonstrates the power of placing precarity at the center of economic research. Written by a distinguished international team of political economists, Fashioning Prosperous, Sustainable and Humane Societies: Beyond Precarity examines key challenges confronting humanity in the age of financialization and global warming. As a result of the contributors’ focus on precarity—in its economic, ecological, and societal manifestations—human values and concerns are preeminent, not market values.

Incorporating investigations from Asia, Europe, and North and South America, the book shows that although public action has often made matters worse, government policies are essential to constructively moving beyond precarity. The path to success involves getting the institutions right, and that requires civic engagement and deliberative democracy to shape strategic social action and coordination through public policy. How public and private institutions are shaped and coordinated can mean the difference between a vicious cycle of risk-shifting by the powerful and insecurity for the rest of us and a virtuous cycle of steady social improvement for all.

Fashioning Prosperous, Sustainable and Humane Societies: Beyond Precarity is the product of research in the fields of post-Keynesian institutional economics, feminist political economy, and critical business history. But its focus on precarity also provides an opportunity to engage and collaborate with researchers in other social science realms, including sociology, political science, history, and legal scholarship. That’s as it should be: once we start with attention to real-world problems, disciplinary boundaries fade away and we recognize that Gunnar Myrdal was correct when he stressed that all social problems are interdisciplinary.

It’s time for a precarity-centered economics—a new political economy that starts with problems, especially the challenges that threaten us all and the difficulties faced by those for whom this is “the worst of times.”[1] In fact, such an economics is long overdue.

[1] The importance of focusing on the problems of those facing “the worst of times” comes from Marc R. Tool, “Economic Policy for the 1980s and Beyond: An Institutionalist Agenda,” Journal of Economic Issues 18:1 (March 1984): v. The author thanks Janice Peterson for reminding him of this in her Veblen-Commons Award remarks, which will be published in the Journal of Economic Issues in June 2025.