Can Economics really change its spots?

The 6^th December issue of TLS had an important article by Paul Collier under the heading “Greed is Dead” (unfortunately now behind a paywall). It reviews 5 books which, in very different ways, subject the economics discipline to an intellectual battering which has, understandably, been building up a strong head of steam for the past decade. The titles give you a sense of the drift of the arguments–

-       “BLUEPRINT - The evolutionary origins of a good society”; Nicholas A. Christakis

-       “HOW BEHAVIOR SPREADS - The science of complex contagions”; Damon Centola

-       “LICENCE TO BE BAD - How economics corrupted us”; Jonathan Aldred

-       “WINNERS TAKE ALL - The elite charade of changing the world”; Anand Giridharadas

-       “PROSPERITY - Better business makes the greater good”; Colin Mayer

One of my posts at the beginning of the year actually concealed an important comment about economics –

As a social “scientist”, I have long had a healthy skepticism about the overconfident claims of particularly economists. 2008, of course, should have been the death knell for economics since it had succumbed some decades earlier to a highly-simplified and unrealistic model of the econom”y which was then starkly revealed in all its nakedness…..Steve Keen was one of the first economists to break ranks very publicly way back in 2001 and to set out an alternative - Debunking Economics – the naked emperor dethroned.

This coincided with economics students in Paris objecting to the homogeneity of syllabi and reaching out to others – creating in the next 15 years a movement which has become global

This is a good presentation on the issues (from 2012) and a little Penguin book The Econocracy – the perils of leaving economics to the exerts by Joe Earle, Cahal Moran and Zach Ward-Perkins (2017) reflects their experience of stirring things up on the Manchester University economics programme. The book’s sub-title says it all!

Dani Rodrik is one of the few economists with a global reputation to support them (Ha-Yoon Chang is another) and indeed published an important book recently reviewing the state of economics - Economics Rules – the rights and the wrongs of the dismal science; (2016) which was nicely reviewed here

The Financial Times recently reviewed several other such books - so the situation is not beyond repair but we have to be realistic. Academic economists have invested a lifetime’s reputation and energy in offering the courses they do - and neither can nor will easily start offering programmes to satisfy future student demands for relevance and pluralism….. they will calculate that the chances are high that the next cohort will be less critical and more pliable... 

Paul Collier’s review is more optimistic. As you can see from the excerpt, the 5 books he has selected are only a sample of the torrent of critical contemporary analysis of the economic discipline – whose basic assumptions have indeed been compared to a religion. The first 2 books illustrate for Collier the scale of the scientific case against the economists’ worship of greed as the primary human motive. Sociability and cooperation have rather been the prevailing norms. Collier’s opening sentences seems to reflect his reading of the third book since it talks of

“Economic Man being conjured up in the 1950s by the economics profession. Our understanding of human evolution was then more rudimentary than it is now…Economic Man was duly characterised not just as greedy, lazy and selfish – which to some extent we are – but as only greedy, lazy and selfish”

Geoff Hodgson is an important political economist who would certainly not agree with the idea that the economics profession created a Grankenstein only in the 1950s. Indeed he wrote an entire book which traced the origins of this selfish model of man back a couple of hundred years - From pleasure machines to moral communities – an evolutionary economics without homo economicus; Geoff Hodgson (2013)

More perhaps to the point, I was in the early 1960s an Economics student at Glasgow University (where Adam Smith had taught in the 18^th century) and did a bit of a confessional last year about what I absorbed in those years…..

Despite my 4 years of economic studies (and some years actually teaching it to others!), I make no claim to understand the nature of the global plague that has befallen us in the past few decades. I start to read the books which promise to clear my confusion but find that my eyes soon glaze over….

I toiled during my studies in the early 1960s to make sense of its focus on marginal calculations and “indifference curves” but can remember only the following lessons from my four years engrossed in economics books

- the strictness of the various preconditions which governed the idea of (perfect) competition – making it a highly improbable occurrence (and the greater  reality being oligopoly);

- the questionable nature of the of notion of “profit-maximisation”;

- the belief (thanks to the writings of James Burnham and Tony Crosland) that management (not ownership) was the all- important factor

- trust (thanks to Keynes whose work was dinned into me) in the ability of government to deal with such things as “exuberant expectations”  

- the realization (through the report of the 1959 Radcliffe Commission) that cash was but a small part of money supply. Financial economics was in its infancy then.

For someone with my education and political motivation and experience, however, my continued financial illiteracy is almost criminal but not, I feel, in any way unusual. Most of us seem to lack the patience to buckle down and take the time and discipline it needs to understand the operation of the system of financial capitalism which now has us all in its thrall.
We leave it to the "experts" and have thereby surrendered what is left to us of citizenship and political power. Like many people, I’ve clicked, skimmed and saved – but rarely gone back to read thoroughly. The folders in which they have collected have had various names – such as “urgent reading” or “what is to be done” – but rarely accessed. Occasionally I remember one and blog about it.

The economics I was taught was, of course, Keynesian (Paul Samuelson was the bible) – but pluralist Tom Wilson may have been its moderate Professor but the staff included the well-known Marxist Ronald Meek.

If Collier (and Aldred) are correct and the economics virus has been with us for only 60 years, then I can understand their optimism about the possibility of change. But I’m on Hodgson’s side of the argument and think things will be a lot harder to shift.

Update; the Dissent magazine has also found critical books about economics for review - four more!

 

Further Reading; Heterodox Economics Directory (6th edition 2016)