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
Thanks Cahal Moran and Philip, seems the discovery process has just started. Now its just a matter of how much path dependency and leftover momentum from the past attempts to inhibit said discovery.
disheveled…. will enjoy reading your book over the holidays Philip, kudos and look forward for more of the same, myself welcomes the expectation.
How on earth did this happen?? Was the teaching of economics always this way? Or did something happen at some point along the way (say, the influence of a particular school of thought, etc.) to create a static curriculum where critical thinking is so undervalued?
Doesn’t this sound exactly like the Clinton campaign? Technocrats all, who say to people like me, “Trust us. We’re the EXPERTS. Don’t even try to stretch your silly little brains. We know what’s best.”
If economics is to function as the medium of power than its students must be made to follow blindly. Critical thinking would allow them to undermine it or manipulate it to their own ends.
The students must be made into strict adherents before being granted access to the highest levels of information. By erecting barriers at each level (be it specialized language that must be mastered or learning contigent on prior learning) we can separate the weak from the true adherents.
Following Adler, economics is not a science, it’s a philosophy.
At least economics doesn’t burn its heretics, it just ignores them. Science is neither immune. Gerald Pollack has written that he was advised to avoid water as a subject of inquiry, or it could kill his career.
“At least economics doesn’t burn its heretics, it just ignores them.” And then “because the market”, they die.
This article highlights why I take what positions Naked Capitalism assert seriously. For instance getting input from Clive about the difficulty of the mechanics of Greece leaving the Euro. Or Yves, having knowledge from her father’s work about solving problems in the real world. This problem is not just limited to economics. To get a Phd one must basically agree to what you have been taught. To get published one must undergo peer review by people who almost always believe the current mainstream ideas in that field. Remember how the nutrition experts told you margarine was good for you – butter and eggs were bad. Climate science is a good example. Reliance on models that can never be complete. In almost every conversation I have had as a climate skeptic, the strongest believers in the alarmist position rely not on their own understanding but that of experts. And those experts who are alarmist rely almost entirely on computer modeling results to buttress their position. In fact, as a skeptic I could almost rewrite the above article using climate science. In your own mind, try that. As a generalist (non climate scientist) I can read and understand most climate papers if I take the time to learn and understand the jargon as every subfield has its own. it does take a good while with considerable effort. Climate science proclaims to know with certainty what the climate future holds so they should be the experts on public policy that will affect the lives of everyone in the world. “The totally convinced and the totally stupid have too much in common for the resemblance to be accidental.” Robert Anton Wilson
Economists writing about climate change purport to define the optimal reduction in greenhouse gases by tallying up the avoided damage, or the benefit in the cost-benefit analysis, then saying that costs of emission reduction should go no higher than this benefit. Not sure if they are still doing this, but in the past they used the ethically questionable and benefit-lessening assumption that lives in poor countries, where most people would die, should be valued much less than lives in rich countries. Worse, the entire exercise is absurd because the result of the calculation is an emissions reduction that could have no effect on the climate, because emissions don’t have a simple effect as with traditional air pollutants for which the analysis was initially developed.
As a generalist who works for and with a climate scientist who is at the forefront of his field I am not able to understand essential details of most of his papers because he and his co-authors are in fact physicists and their analyses involve substantially more than modest calculus. Furthermore neither he nor any other of his colleagues whose work I am exposed to have proclaimed that they “know” what the future holds.
In 1788, Captain Cook sailed the Northern seas and could not go through because of a
wall of winter ice. In only two hundred years, the Northwest passage has opened, oil companies want to drill the arctic sea bottom for oil, and nations are fighting over ‘ownership’ of the seabed. The opening of the arctic occurred in a geologic eye blink.
The complexity of climate models is used to support doubt about climate change. But, a lot of what is known is from measurements and observations. The Keeling Curve measures carbon. The ice and sediment cores measure carbon. Unfortunately, nature is taking over the debate. In four more years the denial industry and deniers of all sorts will
know that climate is changing, because the climate change will have advanced to the point where it will be manifest to the most skeptical of us and to the most duped.
Well then, what is causing the measured increase in the Earth’s surface temperature? Why are the glaciers melting so rapidly? If the cause isn’t anthropogenic greenhouse gases, what is it?
But the temperature increase is being measured in locations that are not deserts, such as oceans. See:
File under “the creative class” writers à la Toynbee…
The way I learnt it was that the complete take over of Business and Economic departments was driven largely by the Powell memo. The 0.1% in the 1970s were very disciplined and took the Powell memo very seriously because they had seen the results of Keynes and Labor unions from the 1950s – 70s. Inequality during these years declined and the power of middle management and upper management dwindled enormously. So they did not need much convincing to get organized and start an assault on the sources of Keynesian economics and a simultaneous bolstering of business departments by throwing out Peter Drucker and Fred Luthans and bringing in Grade-A apple sauce from Austria. Defenestration of the Professors was like taking a cookie from a 2 year old. University departments are such hot beds of jealously and rivalry that it was easy to subvert them by choosing a few bourgeois minded water carriers in each department, elevate them to Chair positions and get around to booting the rest of the bunch into retirement. In one of the earlier NC pieces which was very fascinating there was a link to how this was done in the University of Illinois, Urbana Champaign: https://www.aaup.org/report/UIUC
It was a fascinating read. I am sure this sort of thing must have happened in most other schools.
I have recently been devouring the Sociology Department lectures online at Yale and you will be surprised at how softly they tread anytime they deal with Marx – hell they lower their voices even when they talk of Rousseau. There was this one fellow who openly pledges allegiance to Locke even though most of his passion seems to be reserved for Rousseau and Rawls. It is very clear that these people are careful not to upset the 0.1% in any way with careless talk about income inequality etc.
So, that is my understanding of how it happened. Today I don’t think we have much critical mass here in the USA for a return to Keynes or any sort of a real scientific approach. That train left long ago. We are probably about a 50-60 years from a complete collapse of Capitalism which hopefully will clean the Augean Stables and usher in an academic revolution that takes us back to sanity.
Does anyone have any idea how many economics departments nowadays offer courses in economic history?
At the UI and when I was at Michigan, they simply don’t. Anything remotely like that would be taught in the History department, and then mostly for History grad students.
At Cambridge University it was a compulsory course representing 25% of the first year curriculum (this was 1991-92). No idea if it has been downsized since then but given the “new blood” I remember entering the faculty I am pessimistic.
I have to agree that when I studied economics, it was theory and barely any partical exercises. Lots of maximization and other…
But I never took this as gospel. I understood that all these economic models were a product of their time. A framework that would be adapted by those in power to fit their needs.
When my son was born with a disability, I had to turn many 15 minute errands into 2 hour adventures. It became even more evident that efficiency is relative… What are we really maximizing anyway? THAT is the key question.
I guess many graduate without any critical thinking. But I tend to think that many graduates of economics like the way the world is set and feel no compulsion to change it.
What are we really maximizing anyway? killer question Moneta.
This is where I have to pick a nit in what is otherwise a very good interview.
This is one area where economists or economics students, if we must, could learn a thing or two from the gay rights movement. Simply “being right” or “being on the right side of history” is never enough. It took decades of queer folk coming out of the closet, sharing their experiences, and showing how anti-gay oppression impacted their lives as well as those of their friends and family before the tide turned in their favor. It took years of getting gay characters on TV, prominent figures coming out, and generally putting the life experiences of LGBT persons back into the Zeitgeist, before something like marriage equality could even be imagined as a possibility.
If you want to tear down neoclassical economic theory and boil the octopus that spreads its tentacles into all arenas of public life, then you need to empower ordinary people to understand and resist the allure of befuddling jargon. Help them understand that when an economist uses a term like “externality,” what they really mean is “how the costs get transferred onto you.” It’s about getting the critique out there in the broader public discourse, and I’m not sure building a better econ department would ever achieve that.
Uahsenaa: A good point, although the irony is that for many upper-middle-class white gay men, the argument became that legal and economic (yes, economic) privileges of marriage were being denied. Fortunately, many people were able to keep the focus on equality and equal protection of the law, which is political argument. Because equal marriage was tied up with gaining economic privileges, though, it was all the easier for the Democrats to coopt. By making demands perceived to be economic and being satisfied with such demands, gayfolk lost the ability to make other demands.
My sense of the article above is that economics should not be used to define political arguments. If the populace wants single-payer health insurance, we should not have the populace subjected to all of this crapola about free markets, economic impact of innovation, cost-benefit analysis, and blah blah. Is it good public policy or bad public policy? We’ll find a way to pay for it: That is how the public school system from K though university was brought about.
Also, I find the reference in the article to Bayesian statistics startling. I have seen some references here and there to Bayesian techniques, which are having a slight vogue these days, but having worked with real statisticians, I know that they find Bayesian ideas to be flimsy. It is interesting to note that economists want to drag in a weak branch of statistics.
yes, absolutely. If it is good public policy do it. When you think about it economics doesn’t really exist. Society does. And when economics is talked about like society doesn’t exist it gets pointless. Just like some stupid software language that does basically nothing. What we need is the courage of our human convictions. I think it was Blyth in an early clip who said more or less, “Just do it.” Deficit spend as necessary and the solutions will appear. That’s very Zen and I love it. I mean, here’s the question, What is the worst that can happen? If there is sufficient money. Great interviewer and interviewee. Thanks NC for this post.
Economics doesn’t really exist, society does: a super obvious statement that stands in starkest distinction to NeoLib ideology that insists we are all atomistic,isolated individuals. Math and language are epiphenomena to human being that have perverted our self perception nearly to oblivion.
Bayes allows an entry to qualifying bias and uncertainty in conditional probabilities (tree diagrams). It allows an indication that the source is b.s., which is currently relevant.
It’s unnecessary in terms of fudging models, we’ve been quite capable of that without Bayesian modifiers.
The most important bias his theorem clarifies concerns false positives, for example if a drug test is 95% accurate it can still be wrong more than half the time on a positive response.
As always, GIGO.
Economics wil never progress until it has a clearer grasp on the phenomenon of money. Until they do it’s the same old GIGO using Newtonian metaphors prettied up with math (or let us say “arithmetic”, since it’s just basic calculus, linear algebra or probability/statistics).
Not to be demeaning toward Eigenvectors and matrix theory. It’s amazing how recent that was in the history of math — I mean all the way back to the Greeks, Pythagoras, Archimedes, etc. It’s like it’s still brand new!
However, you could say a drawing by Rembrandt is just “basic pen and ink”. Indeed on one level it is. On another level it’s an entire self-consistent and revelatory conceptualization of infinite physical reality. That’s the kind of holistic and syntheticistic ideation that economics sorely lacks.
Not only does it lack this, but the economists don’t even know it’s there!
whoa you guys rock! that was faster than a New Yoarke minite. Whoa Yves would be proud. I hope you get a bonus! maybe a few million dollars.
They’re not this fast in Denver. That’s for sure. All those TV people and all that money they have and they fkk something up so bad they have to apologize. Wow. that really is screwing up. Not only that, They’re stilll pointing a camera straight at a scene and failing to use cinematic story telling techniques invented , oh, 80 or 90 years ago!
There should be awards for excellence in fake news. The best fake news is news that’s true in the most profound and highest sense of reality. it’s news that captures a truth reality only approximates. It’s hard to avoid Plato even when you try. I didn’t mention him, OK? he’s just there. He’s usually there, but if you mention him every time it gets boring.
The WaPo is an example of largely fake news written and published by individuals who don’t realize what’s true and what’s fake. You’d like to think they qualify for a fake news award, given the fakeiness of what they write (except Redskins coverage which is very good, they have some good spowtswriters for sure), but they don’t because they think they’re writing real news. That should be embarrasing.
Well then, how would somebody advise them to better distinguish fake news from real news? Well, how does a hawk know what to do to hunt rodents? There’s no hawk scientist or hawk school or hawk instruction manual. they can’t even read! But they know exactly what to do. It’s like that. Everybody knows but they pretend to themselves they don’t know. That’s when the faking starts,
: Everybody knows but they pretend to themselves they don’t know.
Teddy: So you lie to yourself to be happy. There’s nothing wrong with that. We all do it. [Memento, 2000]
Nice to see u back, craazyman, you were a kinda Terran it up for a bit there.
On the one hand, yes, absolutely, and it remains a point of contention to this day in the gay community that the one major victory in recent memory was perfectly amenable to a patriarchal, capitalist order. People like David Brock and what have you, who saw gay liberation not as a means to transform society, which is the purpose for which the GLF was created, but rather as a means to help people like themselves become elites like anyone else.
On the other hand, and perhaps it’s just the vulgar Marxist in me, but I recoil at the notion of separating economics from politics. This is why the phrase political economy even exists, to represent the notion that all decisions regarding distribution of resources are inherently political. I find it symptomatic of how entirely defanged class rhetoric is in the US (though the interviewee is British, I presume) that even the well meaning and critical thinking among us can get away with pretending that “economics” can somehow be sequestered from political decisions.
I realize that’s not the point you’re making, but there are moments in the interview when the subject moves in that direction. As for statistics, Mark Twain reminds us there are three kinds of lies: lies, damned lies, and statistics–or, as my spouse is fond of saying, “70% of all statistics are made up.”
One place where social needs interfere with monetary policy, aka economics, is deficit spending wherein the underlying economy is not keeping up (because of economic malpractice usually). So that’s a conflict against the oligarchy because they prevented the necessary jobs and so makes their money worth less. So, depending which side you are on, politics should have a say (force the government not to devalue the currency by inflation/deficit spending without a proper economy) or politics should serve the chronically neglected needs of the general public regardless of preliminary “inflation” – the inflation here is the most dreaded form of inflation for the rich, of course, wage inflation. I think the term ‘wage inflation’ qualifies as an oxymoron, but that’s just me.
Sigh. It’s worse than you think. The gay marriage debate started out on the economic grounds but it didn’t get anywhere. It wasn’t until they decided to switch to a ‘love is love’ message that they made real gains.
now one just has to puzzle out what on earth love has to do with marriage …
> “externality,” what they really mean is “how the costs get transferred onto you.”
Reminds me of the saying that if you’re at a poker table and you don’t know who the sucker is, it’s you (if I have that right; I don’t play poker).
probably an apocryphal story;
so a guy is playing regularly in a rigged poker game. a friend asked him, “why do you play, you know they’re cheating you”? the guy shrugs, and replies “i don’t have a choice, it’s the only game in town”.
Interesting thing I heard the other day, Professor Richard Wolff says he studied economics at three elite universities (Yale, Harvard, and another notable I cannot remember) and never had a course in Karl Marx. Tunnel vision for sure in the field.
Yikes. I remember being taught Marx in the early 90s…. But that was Cambridge ;-) and it was clearly a dying course as they were struggling to find faculty members.
i took a course in marxism, iirc it was in the philosophy department. maybe economics in general belongs there, too.
As one who is well past university age, I am excited to hear that those in the Millenial generation are organizing this movement. The (intentional?) failure of K-12 education to develop critical thinking skills and focus solely on standardized testing of fact knowledge has been deeply upsetting to me as a parent. To see that others have made it through our education system with a well developed BS detector and are not afraid to use it is welcome news.
I look forward to reading your books!
Answer to question no 2: The jargon that is being used these days by presidents, economists, talk show hosts is beyond my understanding. I have a masters degree. I believe Trump gained some supporters who were angry about the disconnect with the way they talk and the way they needed to be talked to. Simple language has its own good. That is what Trump did. Trump is just not a person. There is more to Trump that what it is. He proved so many of these experts wrong and bought back the simple language and easy straight talk to the forefront. Saying wrong things is attractive to me. More people relate to Trump in ways that he can say bad things. I relate to him because we say bad things in our every day life. We go about having a conversation after to correct them. Its that simple.
After all we are all human beings with little better instincts and rational than animals. Just because few people can speak politically correct, few can dress like they are supposed to doesn’t mean that every one has to conform. I am excited to read this book.
(English pronunciation: /ˈɑːrɡoʊ/; from French argot [aʁˈɡo] ‘slang’) is a secret language used by various groups—e.g., schoolmates, outlaws, colleagues, among many others—to prevent outsiders from understanding their conversations. The term argot is also used to refer to the informal specialized vocabulary from a particular field of study, occupation, or hobby, in which sense it overlaps with jargon.
A good investment
Is the economics profession simply following the “He who has the gold, makes the rules”?
Many other professions service retail customers, such as attorneys and doctors,
But how many ordinary citizens ever deal with an economist on any level?
While there may be some economists attached to labor unions, for the most part economists are employed by government, the financial industry, academia or the media.
If paycheck dependent economists know that powerful politicians, wealthy corporate leaders and wealthy donors in academia are looking over their shoulders, one could expect economists’ message to be justify what their “employers” want to do.
The case of skeptical economist Steve Keen may indicate the requirement to stay on message to stay employed
“Keen was formerly an associate professor of economics at University of Western Sydney, until he applied for voluntary redundancy in 2013, due to the closure of the economics program at the university.
But he did find another job.
“In autumn 2014 he became a professor and Head of the School of Economics, History and Politics at Kingston University in London.”
Is there a large job market for skeptical economists?
Nothing’s changed in 100 + years. American Yale Professor Irving Fisher “financial transactions aren’t random”:
Yale Professor Irving Fisher – 1920 2nd edition: “The Purchasing Power of Money”
“If the principles here advocated are correct, the purchasing power of money — or its reciprocal, the level of prices — depends exclusively on five definite factors:
(1)the volume of money in circulation;
(2) its velocity of circulation;
(3) the volume of bank deposits subject to check;
(4) its velocity; and
(5) the volume of trade.
“Each of these five magnitudes is extremely definite, and their relation to the purchasing power of money is definitely expressed by an “equation of exchange.”
“In my opinion, the branch of economics which treats of these five regulators of purchasing power ought to be recognized and ultimately will be recognized as an EXACT SCIENCE, capable of precise formulation, demonstration, and statistical verification.”
And the Fed already validated the Fisherian theory: In 1931 a commission was established on member bank reserve requirements. The commission completed their recommendations after a 7 year inquiry on Feb. 5, 1938. The study was entitled “Member Bank Reserve Requirements — Analysis of Committee Proposal”
It’s 2nd proposal: “Requirements against debits to deposits”
After a 45 year hiatus, this research paper was “declassified” on March 23, 1983. By the time this paper was “declassified”, required reserves had become a “tax” [sic].
Monetary flows, our means-of-payment money times its transactions velocity of circulation:
The surrogate statistic for money flows after the G.6 debit and demand deposit turnover release was discontinued in 1996 (it under weights velocity)
1/1/2016 ,,,,, 0.068
2/1/2016 ,,,,, 0.020 stocks bottom
3/1/2016 ,,,,, 0.043
4/1/2016 ,,,,, 0.041
5/1/2016 ,,,,, 0.045
6/1/2016 ,,,,, 0.073
7/1/2016 ,,,,, 0.109
8/1/2016 ,,,,, 0.111
9/1/2016 ,,,,, 0.112
11/1/2016 ,,,,, 0.105
12/1/2016,,,,, 0.124 stocks peak
1/1/2017 ,,,,, 0.093
2/1/2016 ,,,,, 0.063
3/1/2016 ,,,,, 0.068
4/1/2016 ,,,,, 0.046
Here’s my suggestion for educating economists about the fallacy of their assumption that it is in any way acceptable or even meaningful to put a monetary price on a human life.
Step 1: we ask the economist to place a monetary value on his or her own life in the same way that they feel so comfortable doing for people who are not them.
Step 2: crowdfund that amount of money.
Step 3: give said money to their next of kin and ask them to kindly follow us out to the woodshed…
Ok, so let’s call it a thought experiment….but I think that should make clear one of the many, many things wrong with monetizing the value of everything in existence, as is the common practice.
Step 1: we ask the economist to place a monetary value on his or her own life . . .
Priceless, or in economist’s terms, infinity.
Step 2: crowdfund that amount of money.
Borrow from the Fed. It’s fantasy money.
Step 3: give said money to their next of kin and ask them to kindly follow us out to the woodshed…
That would be cruel. They always claim they are the smartest guys in the room, while also claiming men in manufacturing are low skill or put bluntly, stupid. Can we put them all on an uninhabited island with a few shovels so they can live the civilized life and dig their own latrine, after which they can bootstrap themselves to imagined wealth by inventing their own can opener? They can get there by recycling the shovels, but they would need fire for that.
As the old Joe Hill song goes:
You will eat, by and by,
when you learn how to bake and how to fry.
Chop some wood,
It’ll do ya good.
And you’ll eat in that sweet by and by.
This interview articulates an extremely important insight when it states that the economy “…is believed to be a distinct system with its own logic that requires experts to manage it.”
This seeming independence of the economic and political systems has largely deceived most of modern social science. This seeming independence is not real, and in fact these spheres are deeply intertwined.
As people llike Karl Polyani and Philip Mirowski have maintained, markets are always organized through politics and institutions and one key to understanding this reality is to keep a focus on the promulgation of the rules and regulations of a powerful state that helps to create movements for both regulation and deregulation.
It is now imperative that an alternative political movement finally take the time to carefully examine the nature and role of the State in political and economic life.
As a pre-med student of the mid 1970s, I never took an economics course. Professionally, I tried to fight the same kind of jargon that baffles the lay public in medicine. And I watched in horror how my profession became captured.
I struggle to read NC when reading jargon-filled posts. For example, I read about economic cycles and wonder why that is an acceptable concept.
But I do so because I know that ignorance is not bliss. I know the economy is rigged. Orwellian economics-speak allows the elite to configure human and social capital in their favor.
Is it time to throw this baby out with the bath water? If so, how do we conceive a baby that doesn’t eventually suckle at the wrong teat?
It was notable that Cathal failed to mention Marx.
I don’t think he realizes yet quite how fully indoctrinated he’s been – as that humdinger of an analogy (gay marriage – actually a redefinition to normalize surrogacy, a eugenics-by-stealth agenda, hence it’s enormous funding by the plutocracy) indicates.
The economic can never be separated from the socio-political.
I think its more general than that. Those that have been airbrushed out of the history of economic thought are those who never thought of economics as a separate, largely technocratic, discipline but always as political economy. Marx was just one of these following the tradition of Smith, Ricardo, Mill etc. Veblen and, to a large extent, Keynes were also following this tradition.
So sad that they lost and Walrasian physics envy ended up splitting economics from its political context.
You can add Sisimondi to that.
It’s exactly this separation from the political ( who has power and why) that has effectively enthroned the neoliberal dogma Cathal and others like him operate through the ‘econocracy’.
He reminds me of a lab rat exploring the confines of its cage without a) understanding it is a cage and b) asking why he’s in it in the first place….
…….“how do you try to increase the accessibility of economics without watering it down so much that it becomes analytically dysfunctional?”
This question makes no sense in the context of this discussion around the fact that modern “economics” (theory, courses and practice) is an ideological construct. The suggestion being the discipline as currently manifested would only become “analytically dysfunctional” if it were “watered down” ??????
This simplistic, patently failed dogma has become an almost totalitarian “pensee unique” simply because in coincided perfectly with the interests of the rich and powerful (and therefore those of their lackeys)
It`s politics stupid!!!!!
Sorry, I realise the (exceptional!) core NC community knows all this as well as anyone…
Another quibble. ?technocrats? At the height of the crisis, Italy, for example, had a govt of “technocrats” foisted on the it. Monti, connections with Goldman?. Technocratic indeed!!!
The last couple of days I’ve been listening to a series of lectures by Philip Mirowski available on youtube. When I place Mirowski’s ideas in opposition to the ideas expressed in this interview — the result is very different from the trend I see in the other comments here.
Mirowski describes how the “Neoliberal Economic thought collective” captured and now dominates economic doctrine by controlling what and who can publish in the major economic journals. As a result those aspects of Neoclassical Economics remaining are being re-shaped into a Neoliberal mold. I noticed the word “neoliberal” doesn’t show up anywhere in this post yet Neoliberal economic policies and rationales dominate policy in the real world.
The discussion in the post makes several statements about how economics fails to make predictions about the real world and fails in designing economic policies to help the common man. Mirowski points out that Neoliberal economics designs policy to apply market models to every problem based on the doctrine that markets are the most powerful information processing system available to man — a strong form of the Efficient Markets Hypothesis. The Market is the ultimate epistemological device. If the market solution doesn’t satisfy the needs of the common man then satisfying those needs is simply contrary to the wisdom of the market. For other problems like externalities they just need to be properly incorporated into the market model to obtain an optimal solution to whatever problem they present.
I don’t see how “democratization” of economics teaching or eliminating jargon or deprecating experts or more emphasis on critical thinking or pointing out the abject failure of economics in solving economic problems will do much to counter the Neoliberal attack on the economics discipline. Putting fins and flashy hubcaps on Neoclassical economics as it morphs into Neoliberal economics is not the answer.
Its a hair ball that needs untangling and not a blowtorch thingy….
If you are familiar with Philips past contributions to NC, his blog, social democracy blog and other media portals you would have a better understanding of the perspective forwarded.
I would sort two birds with one link – http://socialdemocracy21stcentury.blogspot.com.au/2013/07/philip-pilkington-blog-fixing-economists.html
Disheveled…. Mirowski does do service here wrt the fundamental methodology and how that frames the topic, wrt base assumptions [human descriptors] and the extension of them.
I checked the two links you gave me. Thanks! I will check them from time to time.
I’m not sure how to understand your suggestion that economics needs some untangling rather than incineration. Economists and economic theory very successfully blew up the economy recently and the powers that be seem intent on repeating that success along with the attendant growth in income for those who least need it. I also perceive the same Neoliberal monolith Mirowski sees — the numerous Neoliberal think tanks, the way Neoliberal concepts and terminology have embedded themselves into our thinking and discussions. We are all becoming or have become fully fungible. We have become customers for all services — not students, nor patients, nor voters. Money is speech, money is value and Corporations are persons while economic theory and economists seem all right with these notions even promoting them.
To me — Neoclassical economics is fighting a rear-guard action against Neoliberal economics and losing. Both Neoclassical and Neoliberal economics have verged so far from representing reality their predictions and prescriptions bear no relation to the very real problems we face in the all too near future. I don’t see how untangling things will solve either problem. On the other hand rather than apply a blow torch I think I’d rather just get some boxes and pack it all away in the basement — just in case there’s some little jewels hidden somewhere. For example — I think Leontief input/output models might have utility. I’ll pack the ideology and concepts like the “Market” into boxes which I’ll store way way in the back.
Pilkington’s new book is titled: “The Reformation in Economics: A Deconstruction and Reconstruction of Economic Theory”. If we deconstruct economics should we reuse the rotten brick to build on the same bad soil for our reconstruction process — which is what I believe Pilkington is attempting but I will try to keep an open mind.
I believe economics should be a tool helpful for achieving specific goals in the political economy. It moved past that and I cannot abide economists telling us what our goals should be nor their insistence on how we should place value to those goals. And I fail to see how applying a new coat of paint to Neoclassical economics accomplishes anything. Neoclassical economics has proven weak and ineffectual at fighting off Neoliberal incursions and worse it seems to be slowly merging into the Neoliberal thought collective.
The key to understanding neoliberalism as articulated by Mirowski is the somewhat hidden role of the state. Mirowski understands that neoliberal flimflam masks the crucial role of power through the confusion(of most observors) of seeing the marketization of government functions as resulting in an inevitable shrinking of the role of the State.
In fact, the exact opposite is the case. Neoliberal doctrine simply retasks the strong state to impose a vision of society open to the dominance of the market as they concerive it.
I am confused. Doesn’t Mirowski describe the importance of the State to enabling Neoliberal policy? The Libertarians want to shrink the State but don’t Neoliberals want the State to assure execution of their policies — not exactly shrinking the State.
The Neoliberal State doesn’t shrink — it just shrinks away when private interests can extract profits. [Yes that is a bit of hyperbole and unfair argument — I don’t want to understand Neoliberalism. I would prefer driving a stake in its heart followed by killing it with fire.]
i think you misread what I wrote. i stated that “Neoliberal doctrine simply retasks the strong state to impose a vision of society open to the dominance of the market as they conceive it.”
In my opinion, “driving a stake in its heart…” will require once again a radical retasking of the state. But this time we will need to rethink its organizational structure more carefully–perhaps starting from the premise that such tremendous power should never be indivisible and must always be institutionally shared.
The Thirteen Commandments of Neoliberalism
The role of Economics is simple: it should inform people of the consequences of certain decisions we make about who gets what. So if you have a problem with classical economics, you really have a more fundamental problem. Economics provides many good answers; but don’t expect it to also provide the right questions. A comment above asked ‘maximising what?’. Good question, but not an economics question.
You are right, that is what it should be, unfortunately neoclassical has failed horribly in that regard. It is based on assumptions that are demonstrably false and they are never revisited to see the effect of relaxing them. You might as well be counting angels on a pin. See Roamer’s take down of it for starters.
I think your assertion “role of Economics is to inform people of the consequences of certain decisions” is correct. I believe your statement is another way of saying Economics is a policy tool — NOT a tool for generating policy. Societal values are human measures ill reduced to monetary measures. Economics most especially Neoliberal economics has stepped well beyond serving as a policy tool.