Cahal Moran is a member of Rethinking Economics, the worldwide student movement to reform the teaching of economics. He is the co-author, with Joe Earle and Zach Ward-Perkins of the book The Econocracy: The Perils of Leaving Economics to the Experts the authors can be followed on their Twitter account @TheEconocracy. Interview conducted by Philip Pilkington, a macroeconomist working in asset management and author of the new book The Reformation in Economics: A Deconstruction and Reconstruction of Economic Theory. The views expressed in this interview are not those of his employer.
PP: Your book starts with a quote from Albert Camus that is, in some ways, rather pessimistic. In it he says that most generations seek to reform the world but that his generation only sought to ensure that the world does not destroy itself. You and I are both of the same generation broadly speaking and I do not think it unfair that our generation is subject to some abuse and often portrayed as narcissistic, video-game obsessed, layabouts. I have always felt that the ‘problem generation’ are, in fact, the Baby Boomers who tag us with these clichés. It is this generation that rules the world today and this generation that gave birth to The Econocracy. Before we get too much into what The Econocracy is and how it operates, maybe you could briefly talk about this generational issue. Is it something that you have given much thought to and do you identify more so with Camus’ generation?
CM: We do not focus on the generational issue too much, but it is really at the heart of the book and of the student movement more generally. Unlike the boomers, we have grown up in a world of economic and political uncertainty, with the financial crisis being the most extreme example of this (yet). The disconnect between this uncertainty and at times chaos and what we saw in the classroom really sowed the seeds for societies like Post-Crash Economics. If the boom had simply continued, perhaps we would have just shrugged our shoulders and got on with it. But we could not ignore what was going on outside the lecture theatre. In this sense, Camus’ feeling of a call of duty resonated with us and that’s why we chose that quote. However, we try to use this initial pessimism to build a positive vision later on.
PP: Yeah, I know the feeling. It was very hard for me to not think that something was really, really wrong with economics as I took undergraduate classes against the backdrop of the 2007-08 crisis. For me there was a lot of cognitive dissonance. I found it really weird because it seemed to me pretty obvious that economics was the language of power – the language through which our leaders communicated their plans and goals to the rest of us. But what I was learning in class did not seem up to this in any way, shape or form. I think that this is a theme in your book too. Could you explain what you mean by ‘The Econocracy’ and how it functions?
CM: In the book we give a formal definition of econocracy as “a society in which political goals are defined in terms of their effect on the economy, which is believed to be a distinct system with its own logic that requires experts to manage it.“ In other words, the idea of ‘the economy’ as a separate sphere of life is dominant in politics, and this separate sphere has technical properties which can only be understood through economic expertise. The results are twofold. First, public debates about the economy are conducted in a language that most people simply do not speak – we’ve tried to look at this this through undertaking polling with Yougov and one of the things we found is that only 12% of respondents said they thought politicians and the media talk about economics in an accessible language.
Second, many key areas of decision making – central banks, international institutions like the IMF & World Bank, competition authorities – are delegated to people with economic expertise on the grounds that they can find what is in some sense a technically ‘right’ answer to economic problems in their respective domains. The rise of this idea of the economy is reflected in the increase in mentions of ‘the economy’ in the winning UK political party’s manifestos: it was only mentioned once, for the first time, by the Conservatives in 1950, but 5 years later this rose to 10 and in the most recent Conservative party manifesto ‘the economy’ was mentioned 59 times.
PP: I’m getting the sense that this goes beyond a simple criticism of technocracy and bureaucracy, right? I mean a lot of aspects of society are run based on expertise of some sort or another. But you seem to be getting at something else. Is this related to the fact that, like the Scholastics of the Middle Ages, they have concocted an elite language?
CM: That’s absolutely right. One could probably write a book critiquing the technocratic and bureaucratic tendencies of say, lawyers or accountants, but where economics goes one step further is the place it has in public debate. Economists are wheeled out to comment on all sorts of public policy issues: in the news, on the TV, online and so forth. The deference to economic expertise is something that permeates our politics and, through the use of jargon, maths and statistics, serves to exclude non-expert citizens from conversations about issues that often have a direct impact on their lives. As you imply, it is something like an ancient priesthood. In fact, in an earlier draft of the book we made a comparison to ancient medical texts, which were only written in Latin and so created a huge asymmetry between experts and non-experts, which could have awful consequences for the latter. In some senses economics in modern times goes even further than this, because it affects policy on everything from incomes and jobs to healthcare and the environment.
PP: Yes. I’ve also long thought this. My book is actually about trying to figure out what is pure ideology and mysticism and what is not within the jargon. I suppose that leads us pretty tidily to the title of the second chapter of your book: ‘Economics as Indoctrination’. Given that you have this view of economic language – one which I concur with in that I have concluded that maybe 60-80% of formal economic language is ideology – it pretty naturally follows that there will be some attempt to indoctrinate those who wish to speak the language. I guess the natural place to start is to ask you for a flavour of what this indoctrination looks like and then maybe we will move on to what its purposes are and what ends it serves.
CM: It sounds like there’s some crossover between our books, and this is something I’ve noticed with people across the movement. It’s great that so many people are independently coming to similar ideas and, I think, a sign that we may just have a point.
We call economics education indoctrination in the book not just because students are presented with only one set of ideas – neoclassical economics – but because they are taught to accept it in an uncritical manner, as if it is all there is to economics. The idea that there might be criticisms of neoclassical economics, other schools of thought, and even the real world are evicted to such an extent that after a while students may find it difficult to think any other way. Keynes said that the real challenge lies in escaping old ways of thinking, and this is something we’ve all noticed in ourselves after studying economics.
PP: I’d tend to agree. But what I found very interesting about the book was that you looked at how economics education is structured. You paint the picture of a very odd discipline that does not appear to be taught like other disciplines, whether natural or social science. Do you think that there is something distinctly different in this regard and could you describe it briefly?
CM: Economics is definitely a law unto itself. In natural sciences, the culture is very much focused on the empirics: theory has empirical motivations, and you always come back to falsifiable predictions before too long. In other social sciences, the culture is instead focused on debate and the contested nature of knowledge. You learn not to take any of your beliefs for granted. But entering an economics degree feels a bit like being transported to another universe. Students are introduced to a fixed body of knowledge that is presented as if – in the words of one student – it “fell from heaven in an ever-true form”. The focus is very much on learning this body of knowledge by rote, building up the neoclassical world from abstract axioms and solving mathematical problems with at best vague and stylised references to the real world they are supposed to represent. The commonly used phrase ‘thinking like an economist’ really captures the effort to indoctrinate students into this framework.
We did a curriculum review of the final exams and course outlines of 174 modules at 7 Russell Group universities (considered the ‘elite’ of the UK) to look systematically into how economics students are educated. Our main aim was to look for evidence of critical thinking, pluralism and real world application, all of which we would consider vital to educating the experts of the future. The results were deeply worrying: 76% of final exam questions showed no evidence of critical thinking – that is, formulating an independent, reasoned argument. When only compulsory modules (namely micro and macroeconomics) were included, this figure increased to a staggering 92%. Instead, the majority of marks are given for what we call ‘operate a model’ questions: working through a model mathematically without asking questions about its applicability. Of those questions which ask students to operate a model, only 3% even attempted a link to the real world. The remainder of the marks were given for simple description questions (‘what is the Friedman k% rule?’) or multiple choice questions, again neither of which require any critical thinking. All of this is very worrying when you consider the place economic expertise has in society.
PP: It is really very concerning. Although I would imagine that anyone who has actually taken an economics class – as many of the educated public have at some time or other – will not be surprised at what you have found. If you are correct then it seems to logically follow that the experts of the future are being trained to think in a highly abstract manner but that these abstractions need no link to the real world as it exists. What is more, if they are only being given one perspective and are told that this perspective is as true and infallible as the most rigorous of the sciences you are going to get a very high level of confidence in these abstractions by these experts. Have you thought about what this means when these people flow into the elite institutions that control important aspects of our societies? How do you think that it informs and shapes their judgements and what implications do you think this has for the rest of us?
CM: This process is indeed the main way that the econocracy reproduces itself: as the economic experts of the present train the economic experts of the future, this shapes the way the latter approach economic problems when they go on to work at powerful institutions. Broadly speaking, this education shapes the perception of economic experts in two ways. Firstly, they tend to have mechanical view of the world, thinking of economic and social problems as clearly defined technical questions. This allows them to produce clear predictions when addressing even complex political issues. Secondly, they see economics as a separate, value-free sphere which does not require ethical and political debate. Their answers to policy questions have the air of objectivity about them.
To make things more concrete consider cost-benefit analysis, an idea with its roots in economics that’s used extensively by major institutions like the Government Economic Service in the UK. This calculates the ‘costs’ and ‘benefits’ of different policies by assigning a monetary value to each of them, then provides a clear decision rule: if the benefits outweigh the costs, the policy is a good one. Cost-benefit analysis is used even when the effects of a policy are not obviously monetary, such as the number of trees in an area, or mortality rates, transforming what was a multifaceted problem into a simple, seemingly objective mathematical problem. The result of this is that decisions which could concern a large range of stakeholders are made in a centralised manner behind closed doors, often without the consultation of these stakeholders (except in order to retrieve money values from them, which raises problems in itself).
PP: Right. I see what you mean. So this goes far beyond, say, the blindnesses in the theories that led to, say, economists largely missing the crisis and thinking, to quote Blanchard, that the “state of macro was good” even in the face of such problems. Have you given any consideration to these facts in the book? James Galbraith has a great quote where he says that:
Economists predict disaster where none occurs. They deny the possibility of events that then happen. They oppose the most basic, decent, and sensible reforms, while offering placebos instead. They are always surprised when something untoward (like a recession) actually occurs. And when finally they sense that some position cannot be sustained, they do not re-examine their ideas. Instead, they simply change the subject.
That seems to be another angle by which you might criticise the profession: namely, that they’re not actually very good at what they claim to be specialists in. Do you and your co-authors have anything to say about that?
CM: Exactly – economics permeates our political process, from seemingly small examples like cost-benefit analysis to catastrophic events such as the financial crisis. We open the book with the former but later on we move on to several case studies of the latter, including the financial crisis but also broadening our argument to other areas where we think neoclassical economics falls short, like the environment and inequality. The kind of hubris illustrated by economists like Blanchard – as well as Robert Lucas when he claimed “the central problem of depression prevention had been solved” in 2003 – seems quite remarkable to us now, but economists really had convinced themselves that they’d found a simple, technical solution to the business cycle. Making central banks independent from the political process, staffing them with economists and tasking them with using interest rates to manage inflation and growth, along with a fairly hands-off approach to the financial sector (which itself used economic models such as Black-Scholes) seemed to be working. That was, until the theoretical blind spots economists had in the housing market and financial sector was revealed by the near-collapse of both of them.
Quite clearly, the profession has yet to find definitive answers to major economic questions like ‘what causes financial crises?’ This is completely understandable in itself, as these are difficult questions. But the fact that the profession also has the capacity to convince not only itself but policymakers and politicians that it has solved these problems, and therefore that its ideas should guide public policy, is extremely worrying when it can have such terrible consequences for so many people. And it is worth mentioning those non-neoclassical economists – like Hyman Minsky, Wynne Godley, and Steve Keen – who put the financial sector front and centre of their analysis and made sometimes prescient warnings about crises like the one we’ve just experienced. Given these examples, it actually puzzles and saddens me that the profession is not willing to accept more intellectual diversity. Galbraith’s quote touches on this intellectual inertia, and one of the things we discuss in the book is macroeconomists’ attempts to reassert themselves since the financial crisis, some of which have involved some impressive mental gymnastics. One example is Tom Sargent denying altogether that macroeconomists failed to foresee the crisis, which is ironic because he wrote a paper just before the crisis arguing that investors weren’t taking enough risk due to their memories of the Great Depression. This kind of retrospective rewriting of history has to be fought if economics is not to slip back into old habits.
PP: The mental contortions are absolutely fascinating. I’ve noticed three key trends in the profession since the crisis. The first is to talk more about a phenomenon that mainstream economists call ‘rational bubbles’. I mean… RATIONAL bubbles. That is manifestly a doublethink word, not unlike Orwell’s blackwhite. The second is to add Bayesian agents into economics models and saying that this will ensure that these models are robust in future (an absurd claim given the backward-looking nature of Bayesian agents). Bayesian agents, of course, update their beliefs in line with past events — not a bad allegory for the how the modellers see themselves! The final, and most pronounced, is to try to sweep under the carpet the fact that the Efficient Markets Hypothesis makes falsifiable (and falsified!) claims that markets integrate all relevant information and instead try to draw attention to the fact that it also states that no one can beat the markets. The idea seems to be to maintain the theory by saying that it doesn’t say what it in fact says and drawing attention to a secondary prediction that it makes. What do you make of this… sorry, but I have to say it… dishonesty? And do you think that the next generation are by and large swallowing it?
CM: I think the issue is that many economists are stuck in their ways. It’s clear these economists have been doing economics a certain way, using a certain framework, for their entire lives, so it’s perhaps unsurprising that they can’t think any other way. Max Planck said that science advances one funeral at a time, but the especially worrying thing given the research we’ve done for the book is that the next generation of economic experts are being trained to think in the exact same way. In fact, evidence we present suggests that economics education has actually become more, not less narrow over the past few decades, so if things don’t change the situation could get even worse in the future. And as I mentioned earlier, that’s nothing against economics students themselves – they have exams to pass, and aren’t really given much opportunity to read around and question what they’re taught.
The positive thing is that we are seeing these student groups spring up across the world who are all recognising the limitations of their education: the lack of pluralism, critical thinking and empiricism come up again and again in students’ complaints. What’s more is that we have support from big institutions like the Bank of England, Trade Union Congress and Government Economic Service, who have voiced similar concerns. If you look at things like the movement for gay marriage in the United States, it’s clear the politicians were the last to change – when every other sector of civil society had been convinced and they had no choice. Perhaps if change comes to economics, academia will be the last to change – when everyone else demands it.
PP: But surely this is somewhat different from a political issue like gay marriage. Political issues have to do with changing peoples’ opinions on some matter or other. That just means putting forward a persuasive argument and then waiting for it to get accepted. What we are dealing with seems like something rather different. Sure, you could convince many that some change needs to come about in the way economics is taught. But that does not produce the means by which to teach it. I think that we saw what happens there with Wendy Carlin’s CORE program (an INET-funded attempt at curriculum reform). This was the economists’ response to demands for a more integrated and pluralistic course but I saw it — and I think the student movement saw it — as more of the same. Yet I have no doubt that Carlin really did her best to put together something that she thought would address the concerns being raised. The problem is that Carlin et al cannot actually put together something that meets the concerns. I suppose this is a variant on the classic ‘who governs the governors’: who teaches the teachers.
CM: You are absolutely right about that and the example of CORE is a good one, as it demonstrates perfectly the type of limited reform which can serve as a safety valve against more radical opposition. Carlin and CORE’s other proponents view the problem as one with economics education, but not economics itself – she has previously stated that “economics explains our world, economics degrees don’t”. Interestingly, this rhetoric is similar to the response to calls for reform in economics graduate programs in the US in the 1980s, where the need for more real world application was accepted but it was argued that programs should retain the “core [which] should be regarded as the basic unit in which those things common to all economists should be taught”. We repeatedly see this disconnect between the critic’s idea of reform and the mainstream’s, cemented by the fact that many neoclassical economists simply do not know enough about non-neoclassical ideas to teach them. It is a vicious circle which is inevitably going to reproduce a fundamentally similar education, even if some internal attempts at reform are made along the way.
Thus in CORE the calls for history, real world applications and interdisciplinarity are all, to some degree accepted (even if they are not pursued adequately), while the calls for pluralism and critical thinking are not. The resulting education is perhaps an improvement, but the outcome is similar: instead of saying ‘here is neoclassical economics, learn and then (maybe) apply it’, the message of CORE is ‘here is the real world, here is how neoclassical economics applies to it’. Once more, the idea that the theory and even the history itself might be contested is thrown out of the window and the result is still a narrow education. In fact, we reviewed the University College London exams for the CORE course and found that they showed a slight increase in critical thinking, but were still primarily about regurgitating models and theories. The need for pluralism is made especially apparent here, as learning about alternative ideas immediately makes students re-evaluate what they have already been taught. Students need to know more than one set of ideas if they are to judge which ideas are best suited to explaining a particular situation.
PP: My impression from the book – and please, correct me if I’m wrong – is that you want to bypass this structural constraint by making economics more democratically accessible. Personally, I think that there is a lot of merit to this idea. In my book, as I said, I try to present an ideology-neutral economics – which I think can be done to some limited extent – and what you find with such an economics is that many different worlds are possible. Economics in this regard can be a helpful guide but it cannot tell you much about where you want to go. For this reason I would much prefer to see more democratic input on economic decision-making and much less pontifications from an over-heavy technocracy. That said, however, economics is still a relatively difficult subject. It cannot be picked up without some commitment to study it. How do you square this circle – by which I mean, how do you try to increase the accessibility of economics without watering it down so much that it becomes analytically dysfunctional? And a cheeky, but related question: in the book you rightly draw attention to the fact that economics jargon is over represented in political discourse – how do you ensure that you are not increasing the volume and weight of this jargon through attempts at popularisation?
CM: We definitely view the democratisation of economics as a necessary part of the renewal of the discipline and indeed of politics, but your conception of it as a strategic way to bypass the inertia of the discipline is an interesting idea and something I hadn’t thought of explicitly. I suppose this goes back to what I was saying about bottom-up approaches to reform and the value of demanding change from different angles. Unfortunately and as we’ve seen, one of the main response to Brexit and Trump by elites has simply been to view those who vote for it as ignorant or bigoted. The simple fact is that many peoples’ lived experience of ‘the economy’ is completely different to the top-down, statistical and theoretical views of economists and pundits. Many have experienced huge shifts and declines in their circumstances for decades, neither of which are obvious if you only look at GDP and inflation statistics, or (worse) if you are completely lost in theory.
In the book we introduce the idea of the public interest economist, who has socially aware research topics, a commitment to public engagement and education, and who looks to hold powerful public and private institutions to account. Reconnecting economic experts with the public in this way would be a great way to temper the former’s technocratic, top-down tendencies and encourage the experts to understand that people may have different, valid views to them – and this is a gateway to appreciating other approaches more generally. Of course, this doesn’t eliminate the need for expertise altogether: our intuition can only go so far, and some things can only be revealed by systematic and empirical study. Economics is difficult, as you point out. But a world in which economic experts are in touch with and can be questioned by the public is one where economic expertise will naturally be more responsive to the needs of said public. We sum it up by saying that we want experts to inform our decisions, but not necessarily to make them for us.
Illustrating the magnitude of the challenge you raise about teaching economics without jargon, I’m going to have to introduce some jargon. In the book we distinguish between formal literacy, where people are taught a fixed body of knowledge; and substantive literacy, where people are encouraged to question the subject matter and form their own independent views. This is the basis for the other pillar of our proposals: citizen economists, non-experts who nevertheless have some baseline level of substantive literacy and are able to engage in economic debates. The starting point for citizen economics is to make connections between peoples’ own lives and broader economic problems, encouraging their own input from the start. And an important part of being a citizen economist is not to accept the seeming authority bestowed by the use of jargon and to ask experts to say what they mean in plain language. As a student movement we have already started to put this into practice with citizens’ crash courses (evening classes for adults), schools workshops, the public education website ecnmy.org and by supporting the RSA’s Citizens’ Economic Council, which is seeking to establish more democratic input into economic policy.
PP: Yeah, I think I see what you’re saying. Anyway, I suppose we should wrap this up as it’s pretty long already. Where do you see this whole thing going from here? Are you optimistic about the future, both in terms of opening up the discipline and in terms of fixing the incredibly serious economic problems that have emerged in the past 30 years?
CM: I am cautiously optimistic about the future, as I think in many ways the debate has been won over whether economics should change – the question is now what form this change should take. On top of changes we have already discussed such as CORE and the position of the Bank of England, we have seen the ESRC put aside a large pot of money for research in new ideas in macroeconomics (the question is whether this money will be used to support CORE type research or more diverse and radical ideas); Manchester council involving citizens more in the decision-making process; the director of the IFS, Paul Johnson, admitting economists’ failure to communicate during Brexit; and many more emerging examples that the message is getting across to various sections of civil society. More must certainly be done and it is up to everyone to make sure that the changes are fundamental rather than incremental, but in my eyes it is starting to look possible that economics will evolve from an insular and esoteric discipline into a vibrant, pluralistic public dialogue – and we think that can only be a good thing