By David Bollier, Director of the Reinventing the Commons Program at the Schumacher Center for a New Economics, and author of Think Like a Commoner and co-editor of Patterns of Commoning. He blogs at Bollier.org. Republished from Evonomics.
As a non-economist, I have little useful advice to young economists seeking to build a successful career. The typical path forward is to absorb the received wisdom of one’s elders and develop new insights within their frameworks of thought. But what I’d like to suggest is that the upcoming generation of economists needs to help their discipline come to terms with some epochal realities of our times. A number of forces — climate change, collapsing ecosystems (fisheries, coral reefs, soil desertification, loss of water, biodiversity loss), savage wealth inequality, tech monopolies, and their data-surveillance, the growing precarity of livelihoods – are challenging some foundational assumptions of standard economics.
My advice to an aspiring economist, therefore, is to immerse yourself in disciplines and ways of life that lie outside of the prevailing economic paradigm and typical career paths. The future will require economics to rethink itself in light of what’s happening outside of its aging, self-referential modes of thought. It needs to seriously reexamine its ontological and epistemological premises to take account of the different ways of knowing and being beyond those of the modern, industrialized West. In short, the discipline, as currently taught, desperately needs to get beyond its “One-World World” perspective, as anthropologist Arturo Escobar puts it. Outside of its narrow, asocial, and transaction-focused way of seeing the world, there is actually a pluriverse of life that intimately conjoins the human with the more-than-human and the individual with social collectives.
It would help, therefore, for economists to open up deeper conversations with the social sciences, especially anthropology and sociology, and with political economy, complexity sciences, and evolutionary sciences. Economists may also want to acknowledge the limits of intellectual inquiry itself. A significant amount of what we know is embodied in our bones, viscera, and flesh, and not necessarily part of anyone’s canon. It is tacit, situated, local, and embodied knowledge.
Thankfully, the emotional and sociological dimensions of life – including in economic contexts – are beginning to get more serious attention. But generally, these phenomena are regarded as aberrations from the default “rational actor” model – or used as heterodox tools to advance familiar corporate and capitalist goals. Meanwhile, a backlash is brewing against the standard “free-market” narratives because of its limitations. Many critics are seeking a deeper, more structural paradigm shift in mindset that would make economics the servant of larger ethical, social, and ecological goals, and not an end in itself.
I bring some different perspectives about economics because I’ve been an activist/scholar involved with various citizen movements for more than forty years. I learned a great deal from my time with Ralph Nader and the consumer movement and as a (non-academic) scholar of the commons, which is emerging as a new/old paradigm of economics, politics, and culture. I have learned about economics from the outside in, so to speak. I’ve found that many of its core premises – about the separation of humans from “nature”; about the purported sovereignty of humans as individual rational agents; about the glib conflation of price with value – to be untenable.
Working with Nader and the consumer movement in the late 1970s and 1980s, I learned through countless policy battles (safety design of cars, pesticides in food, workplace toxins, drug safety, etc.) that the narratives of free-market economics work much better as abstract theories and political cover-stories than as realistic accounts of everyday market life. Put more bluntly, by focusing so obsessively on market transactions, economic analysis tends to ignore social, ecological, and intergenerational realities. It tends to marginalize and dismiss them as “externalities.” The misguided presumption is that free markets are self-regulating and don’t really need governance (“market interventions”) – until, of course, the next oil spill, deadly drug, or speculative financial bubble intrudes to show otherwise.
As various “externalities” from climate change to market abuses disrupt social stability and indeed, confidence in markets themselves, future economists will need to address a gaping hole in standard economic theory: How shall the anti-social, ecologically destructive tendencies of ‘free markets’ be reliably constrained or prevented in the first place? Given the political sabotage and systemic failures of government regulation over the past fifty years, this is a profound question. It’s entirely possible that waning social trust and legitimacy in the market/state system will intensify strongman, authoritarian responses, hastening the corporate neofeudalism underway.
Are economists prepared to deal with such impending traumas? It’s clear to me that political economy – and the underlying cultural life that informs it – must increasingly be part of an economics education.
Revisiting the work of economic anthropologist Karl Polanyi, especially his seminal book The Great Transformation, offers a good way to see capitalism in its larger historical dimensions. From there, move on to some contemporary, venturesome schools of economic thought that study complexity, social behavior, social networks, and evolution. Each is opening up fresh, more humanistic ways to understand the deeper logic of economic activity, and in some cases to offer illuminating new frameworks of understanding.
Future economists should also reflect deeply on their field. If human societies are not simply aggregations of isolated individuals who come together to truck and barter, how then shall we conceptualize society? It’s also worth questioning the very idea of the self-sovereign individual. We are not born as sovereign individual agents even though of course we have certain capacities and scope for self-determination. We are, rather, creatures whose personal development and flourishing requires that we be nested within social and intergenerational collectives. We are actually “Nested-I’s.”
As evolutionary scientists like E.O. Wilson, David Sloan Wilson, and Martin Nowak have argued, group selection is a more influential force than individual selection in evolution. Collective social structures profoundly influence and constrain our individuality. Biologically speaking, it is even a bit difficult to talk about “individuals” as if they were separate from “nature.” Human beings could not function without millions of bacteria living in their guts, or without being immersed within a biodiverse ecosystem of living organisms. Yet much of economics remains locked into the mindset of atomistic, acquisitiveness individuals engaged in mechanical, cause-and-effect transactions in the service of capital accumulation. There is relatively little attention to the holistic, dynamic, non-linear dimensions of living systems. The notions of human aliveness and nonmarket values are scanted.
The idea of “rational self-interest” is now so thoroughly embedded in modern life that the ontological frame is considered self-evident. However, as economists Samuel Bowles and Herbert Gintis show in their book A Cooperative Species: Human Reciprocity and Its Evolution, human beings have a rich evolutionary history of developing social systems and institutions to support “strong reciprocity” and collective interests. The significant work of the late Elinor Ostrom, too, helped demonstrate the profound importance of social collaboration as a powerful economic force. Alas, despite her receiving the Nobel Prize in Economic Sciences in 2009 for her pioneering work, the discipline has not really embraced her perspectives more fully.
This is a shame. Ostrom’s work has been a bellwether for many social movements that reject the stunted social vision and imagination of standard economics. In my own work as a commons scholar, I have seen scores of self-organized commons function extremely well. They use peer-governance and -provisioning to give people greater control over their lives, and in more satisfying, humane ways than labor markets. One need only look to such phenomena as open-source software, cosmo-local production (globally shared design knowledge + local physical production), open-access scientific publishing, data commons, WiFi and civic infrastructures managed as commons, cooperatives, community land trusts, community-supported agriculture, agroecology, indigenous land stewardship, cohousing, participatory budgeting in government, and much else.
In our recent book, Free, Fair and Alive: The Insurgent Power of the Commons, Silke Helfrich and I identify the success of these various commons models. They propose a very different ideation of what a human being is and does. If we are to understand the cooperation that has animated human affairs for millennia, we must see people’s lives as relational, and not merely transactional. We must start to interrogate the inner lives of participants and not rely on catchall tautologies that people rationally “maximize their utility.” Helfrich and I, therefore, propose a framework of “patterns of commoning” to explicate the salient ethical and social relationships that help produce stable, effective commons: commons as social systems, and not commons as merely unowned resources.
These sorts of extra-economic departures are going to be vital in the future. Aspiring economists would do well to march boldly into these less familiar intellectual terrains and develop them. Otherwise, some archaic, parochial ideas will exceed their shelf-life, such as the idea that private property, market exchange, and contracts are the only serious regimes for meeting needs. Whether forced by pandemics or the collapsing infrastructures of capitalism, future economists will need to know that cooperation and commoning are pervasive and efficacious, even in “advanced” industrial civilizations. It’s just that they aren’t culturally legible or adequately studied by economics. On the map of economic inquiry, the human activities of commoning, mutual aid, peer provisioning, and care work might as well be labeled, “Dragons lie here!”
Fortunately, evolutionary sciences are addressing some of these problems by exploring non-market behaviors and values that have marked the human species for eons. The dynamics of cooperation, relational commitments, and nonmaterialistic cosmovisions are getting new attention. Evolutionary sciences are also helping us realize that the premises of libertarian individualism that has long defined market economics, is in fact something of a utopian projection.
And still, amidst all this tumult, many economists are disinclined to rethink the foundations of their field. It reminds me of the closing joke in Woody Allen’s film Annie Hall. A guy has a crazy brother who thinks he is a chicken. The doctor asks, ‘Why don’t you turn him in?’ The guy replies, ‘I would, but I need the eggs.’ ”
Why is the free-market discourse so perdurable despite so many social, ecological, and political realities that call its logic and categories of thought into question? Because the whole field, despite its flaws, is functional enough and entrenched. It needs the eggs — the certitude of quantitative analysis aping the hard sciences, the credentialed expertise always in demand by powerful institutions, the prestige that comes with proximity to power.
But behind these factors, there is a new world a-bornin’ that economics needs to engage with and understand. There are brilliant economic thinkers like Kate Raworth, inventor of “doughnut economics” framework; the writings of degrowth economist Jason Hickel and the late anthropologist David Graeber; the thinkers associated with the web journal Real World Economics; and a number of student associations clamoring for new economic paradigms and pedagogy. Beyond reading the right things, I find that it helps a lot to hang out with the right crowd, listen to serious new voices, and bring one’s full humanity to the questions of the moment.
Economists of all ages – but especially younger ones who have the suppleness and imagination to grow – need to pay attention to these outsider voices. There is a new world that is fast-overtaking us, and it needs to be seen and explained on its own terms.
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I recall the story of one of the few Irish economists to have successfully predicted the 2007 crash – he was an academic who worked mostly on historical urban economics – said that he knew the crash was about to happen when he heard many of his ex students, now working for banks, on radio news shows assuring everything that there was no problem and the banks were on firm foundations. He said that this was the only time in their careers that they were likely to perform a valuable function for society.
A key problem with economists working with other fields is that they can literally make things worse. An example would be the application of cost benefit analyses to environmental issues, something I spent a chunk of my post grad years researching. A lot of ecologists, engineers, and decision makers bought into it, and still do. The problem isn’t that it doesn’t work, the problem is that as an approach it is fundamentally flawed, or put another way, it is epistemologically faulty. At its core, it assumes the commensurability of intangible values, which can easily be demonstrated as a false hypothesis. But if you accept that these values are weakly commensurate, then most cost benefit analyses which try to incorporate intangibles can be seen as having the worth of astrology predictions. Or worse still, they can be easily twisted to get any answer you want to any particular problem.
When you look at economists who have provided genuine insights, they have usually come to economics from another field, whether it is maths (like Keynes), or geography (Myrdal), history or sociology. For me this is a key indicator that economics is a genuinely rotten field – it takes a genuine intellectual effort for someone with that education to rid themselves of the ideology and bad thinking, in order to actually advance human knowledge.
Re: your last paragraph
The problem is that the system as currently set up rewards intransigence rather than honest intellectual introspection and the subsequent dropping of bad thinking borne of such introspection. Dissent is punished with marginalization and being banished to the fringes of the profession, while the highest pulpits and the loudest megaphones belong to those who espouse the rotten intellectual underpinnings of orthodox economics. Milton Friedman and James Buchanan are just some of the ascended masters who continue to be fervently channelled by a devout army of latter day believers, some holding the most prestigious positions in contemporary academia and having unfettered access to the young minds of the next generation of economists. Chipping away at the foundations of the field when the gatekeepers to its intellectual core are so intransigent and rewarded so handsomely for it is going to be a monumental task.
Yes, exactly so. I’ve noticed that lots of economics departments keep a ‘pet’ heterodox just to demonstrate that they are open minded. But in the meanwhile they keep a firm grip on what matters – the basic undergraduate texts being central to the problem. They are still full of ‘facts’ which have been falsified many years ago, and assumptions about history and human behavior which are considered laughable by anthropologists and psychologists.
To really understand key issues, economists literally have to unlearn things they’ve spent years learning. I know I did.
Is there no way that the heterodox economists can join forces and establish an alternative channel for educating or conveying their understanding to others in a visible way?
Just curious but what is your opinion of Bjørn Lomborg, author of the Skeptical Environmentalist? I haven’t read the book but remember that he was making the cost benefits argument.
Bjorn Lomborg is not taken seriously by anyone except for think thanks funding anti-environmentalist propaganda. He is one of a number of economists who made a career for themselves by talking the language of environmentalism, while selling the most extreme form of neoliberalism. I made the mistake of reading one of his books, it is one of the most thoroughly dishonest pieces of work I’ve ever had the misfortune to read. His career is entirely based on being a respectable face for some very unpleasant politics.
Has anyone suggested the word ‘spin mills’ or ‘spinmills’ for think tanks?
Is there anyone who has done good work on the intersection of environment and economics you’d recommend picking up? Or is it all a neoliberal hellscape?
I’m asking as a student from a combined biology/social science background. I’ve only scratched the surface of what you described as the establishment model: cost-benefit analysis of intangible values, and found it very dissatisfying.
In all honestly, I can’t think of any off the top of my head (but it is many years since I spent any time on this subject), although some good things have come from the relatively mainstream economists on the IPCC. Most of the best modern ideas come from MMT, although strangely, Green Parties in general have been very slow to adopt their ideas. Its a little odd that sometimes various Central Banks can be floating ideas that are more radical than official Green Party proposals. I think this all comes down to the abandonment by the left and greens for too long of serious economic and financial thought. Matt Taibbi blames the hippies, and I think he has a point.
Closest I ever came to reading such a book was back in the day when I read E.F. Schumacher’s book, Small Is Beautiful: Economics as if People Mattered.
Yes indeed, its a long time since I read Schumacher, but its a powerful book. The shame is that works like that consistently get marginalized in economics courses.
I think there is a whole generation of people on the Left who have been indoctrinated with the notion that one has to present all of their advocacy in terms that are supposed to appeal to economists and the business community in general: bottom line, ROI, cost-benefit analysis, appeals to individualistic self-interest.
It may be hard to shrug that off.
I don’t think it’s a left/right thing — the ROI issue is too pervasive. I think it’s pretty well known that things that are difficult to measure will be measured by price or some other derived number. The most accessible (and fun?) example of this is Martha Stewart trying to sell pies and pricing them cheaply just to try to get some traffic. They didn’t sell. She jacked the price to something she though was ridiculous and couldn’t keep them in stock.
We have used price to represent value for a long time. Perhaps that has increased now with even more information overload and limited attention spans; there is a lot of pressure to put a $ figure on non-financial items to compete for mind share and investments. That some of those items are the arts, the environment, public health, and other “left” causes doesn’t really make it a “leftist” issue.
Sorry, just to add to this, there are some very good suggestions from some people below about economists who have done good work. I haven’t read much Steve Keen, but from what I understand he is one of the few economists who take resource and energy inputs seriously, which I think is fundamental to a real environmental economics.
Project Drawdown also impressed me. Its a multidisciplinary study aimed at identifying priorities for addressing climate change. It comes to some genuinely surprising conclusions.
Yes I’ve read Drawdown, it provides a very accessible way to better understand what kinds of approaches we need to emphasize, particularly its focus on land conservation. I have a few small criticisms but they’re minor relative to the generally terrible mainstream discussion of how to address climate change (‘clean coal’ and carbon capture boondoggles).
Thank you for the answers as well.
Kozo Mayumi & John Gowdy wrote a book called “Bioeconomics and Sustainability” about the work of Nicholas Georgescu-Roegen that I though was pretty good.
Steve Keen has been particularly effective in taking on the critique of “cost benefit analysis”, and the logical fallacies PK mentions above.
Steve Keen is also very good on the physiocratic side of economics
Herman Daly.
For the Common Good: Redirecting the Economy Toward Community, the Environment, and a Sustainable Future. With John B. Cobb, Jr.
Beyond Growth: The Economics of Sustainable Development
Ecological Economics. With Joshua Farley.
For a deeper dive, from Daly’s doctoral advisor IIRC:
The Entropy Law and the Economic Process by Nicolas Georgescu-Roegen.
You will get enough heterodox to last for the next 20 years. 95% of it essential.
In the interests of avoiding spamming “thank you”‘s to every reply I’m just going to do this top-comment reply.
Thanks everyone for the recommendations, I’m always incredibly impressed by the quality of the responses from the commentariat.
It looks like I have some excellent reading ahead of me.
Mason Gaffney has written numerous articles within these areas: Forest Economics, Extractive Resources and Leasing Policy, Land Economics (General & Urban), Land Economics (Agricultural), Environmental Economics, Water Economics and Law.
https://www.masongaffney.org/publications.html
Economists may also want to acknowledge the limits of intellectual inquiry itself. A significant amount of what we know is embodied in our bones, viscera, and flesh, and not necessarily part of anyone’s canon. It is tacit, situated, local, and embodied knowledge.
This speaks volumes. We’ve reached a point where there is now an inverse relationship between the “knowledge” we attain versus the simple wisdom we need to live contentedly.
I was thinking about the characteristics of an economic actor in the usual equilibrium theories, and I was struck by how they are the same as the characteristics of the Godhead:
In the theology I was brought up on, there is one God who operates outside time, is omniscient and omnipotent.
The conditions for a stable equilibrium posit a single actor who makes present and future spending decisions all together at once, has full knowledge of the consequences of the decisions, and has unlimited access to funds at the risk-free rate.
Maybe we haven’t discovered anything about God, or the economy; maybe we’ve discovered the rules for making rational models.
These would be the things that make for stable abstract models that we can project onto real-world situations as plans or as explanations.
These would be the things that we abstract away to make two or more real-world situations commensurate.
My dad got his degree in economics from the University of Lausanne about the average lifespan of a human being ago, and he passed away 20 years ago, and sometimes I wonder what he’d make of things now?
When all the usual economists said nothing about us bailing out Wall*Street a decade ago, it set an unfortunate pattern that is now playing out. A pox on every last one of them.
One prominent economist did say something and was ignored. The “fix” was in, imo.
https://www.theatlantic.com/magazine/archive/2009/05/the-quiet-coup/307364/
Thank you! What a great read. Dated but still relevant as Lambert might say. I was a faithful follower of Simon Johnson at Baseline Scenario, the now defunct blog he co-authored with James Kwak.
Since economics is also a social ‘science’, how about taking a cue from physics and the whole notion of empiricism, where if the facts don’t fit the theory, you ditch the theory.
There’s a reason we don’t believe the earth is the center of the universe anymore, but somehow economists are still clinging to their rational actor and trickle down ideas despite decades of evidence to the contrary.
Anyhow, great article, despite my semantic pettifoggery.
economics is not a normal social science. lots of a priori reasoning and conceptual work to justify what should-be rather than studying what is actually there. the studying-what-is is kind of only codged in to justify the pre-existing notions of what-should-be.
which is why i didn’t take it seriously at all except as a dangerous weapon in the hands of the powerful “expert”.
Take any economics textbook. In my days, the Samuelson was the standard, nowadays it seems to be the Mankiw — but any such opus by other less well-known authors, or from other countries (France, Germany, etc) will do.
Open the book at the chapter on the law of supply and demand. Try to find a graph of empirically observed curves of supply and demand illustrating the explanations. There are none. Just abstract charts, devoid of scales, showing perfectly smooth curves.
Open at the chapter on the firm’s supply curve, with all the explanations about optimization wrt marginal cost, average price, etc. Not a single piece of empirical data. Same thing: only “theoretical” curves.
Open at the chapter on IS-LM. Not a single actual IS-LM plot for any country. Again, only abstract sketches.
And so on, and so forth.
Elaborating such empirical graphs might be tedious — gathering and sifting through data generally is — but it is a trivial endeavor. After all, all the data are there. They need not even be recent. Just ask some exchange (copper, cotton, corn, whatever) for anonymized data from a day of their choice. Or look at the historical data series for the tulip market in Holland. Look into the archives of a, possibly defunct, corporation. Look into the decades-long-running series about GDP, interest rates and unemployment compiled by the statistical office of a country of interest.
And then compute the damn curves and depict them.
But no. Never will mainstream economists do that. Ever.
Whatever they peddle is akin to 15th century disquisitions about concepts like aether and humors. If economists cannot confirm empirically their hypotheses with observable, measurable data, then they are stuck in a pre-scientific stage.
Or perhaps they do not want to show the empirical curves because the reality does not match their theoretical speculations?
I wrote a pair of introductory econ textbooks (micro and macro), and they don’t have the features you’re criticizing. When logical relationships are portrayed in diagrams they are described as exactly that, along with a discussion of the assumptions that underlie them. And there is a lot of inductive theory, empirical patterns and historical experiences mined for what they imply about how the economy functions.
There is one important thing I missed, however, which I had to add into my teaching later on. There is virtually no empirical basis for estimating real world demand curves without a priori assumptions about their form. Specifically, we have data on elasticities within the realm of actual experience (even that is approximate, since elasticities are context-dependent). Supply and demand curves in applied work always require the assumption of constant elasticity of substitution (CES) production and “utility” functions, which extrapolate the narrow range of recent experience to all potential situations. When I was last teaching micro I spent much more time with elasticities — what influences them, how to estimate them. I downplayed and disparaged the use of D & S curves.
Of course, all of this serves to implement a framework in which economic choices are made separately from one another except for market feedbacks. The theory of interdependent decision-making is too complex for the intro level, but I always gave familiar examples to show how it works and why it matters. My intro micro text has a long, painfully worked out numerical example of interdependent decision-making in an environmental context. It’s terrible for teaching, and I’ve always regretted it. Handwaving would have been the better option.
As a card-carrying historian I’ll have to put in a good word for economic history in addition to the disciplines mentioned above. It’s largely his historical approach which makes Polyani’s work worth reading.
As a non-card carrying historian – I am just a hobbyist – no degrees in the field (yet) but as an avid reader of serious historians – I completely agree. Michael Hudson’s work is also worth reading wrt historical economics.
I might add that Pierre Dardot and Christian Laval are worth reading if you want to know how classic liberalism morphed to the neoliberalism that we have now.
Indeed, one definitely learns with the works of people like Kenneth Pomeranz and Paul Bairoch that whatever mainstream economists postulate about development are just fairy tales, and the so-called “economic laws” anything but laws.
Maybe just go to seminary school instead.
If you are going to dedicate your life to a priesthood then pick a theology that is less harmful than economics.
“God wills it” is just as easy to say as “The market decides”.
I’m not sure why this article sent up so many red flags for me. Maybe it’s the similarity of its language and ‘grand scope’ narrative with Yuval Harari’s ideas, imo.
It would help, therefore, for economists to open up deeper conversations with the social sciences, especially anthropology and sociology, and with political economy, complexity sciences, and evolutionary sciences. Economists may also want to acknowledge the limits of intellectual inquiry itself. [There’s an AI for that, or soon will be. /heh] A significant amount of what we know is embodied in our bones, viscera, and flesh, and not necessarily part of anyone’s canon. It is tacit, situated, local, and embodied knowledge. [It will be hacked and modified to suit. Just ask the Davos crowd.]
This seems roughly the same premise as Harari, but directed toward a different end, hopefully.
I agree with the author that economics as currently practiced isn’t good for most people. It seems to me Keynes and others are a good place to start to turn this around.
Thanks for the link.
Much shorter: I agree with writer’s point. I wish he wouldn’t use Davos/WEF framing to make the point. A new economics might do well to use its own new language. (It’s easy for the language used to itself come an internally accepted premise, maybe a premise one doesn’t agree with, such as the “inevitability”of 4IR or the “inevitability” of the Great Reset for example.) My 2 cents.
adding: Harari’s 2020 Davos/WEF speech is on Youtube. (My take, his dreams of computer AI global dominance will require so much more electricity generation that it will increase climate destruction by several orders. imo. And that’s even before getting to his “useless” people idea, or hacking brains with nano AI responders so we’ll all be “socially connected” but powerless. /heh)
I read Harari’s book Sapiens. On the areas I have more knowledge than the layman (Chemistry) his “knowledge” was pitiful. And his final conclusion about the ‘singularity’ was horseshit imo.
Agreed. I think people do this in the hope of convincing other academics (because it’s the required writing style to be taken seriously in that context) or just as habit. But I doubt that aspiring economists have absorbed so much of the culture yet that they dismiss arguments in more colloquial framing.
Perhaps, but remember “It’s a job.” My nephew just got his doctorate in economics and started working for a university at $170K plus benefits. This is working for the university administratively not teaching. A friend in college majoring in economics went to work for a cable company and also did well. So there is lucrative work in the field. Many misconceptions here about what economists do.
My twin brother and I both grew up first paying attention to the news at around the same time. I was taken with climate change and the issues surrounding that; he saw the global financial crisis but the main takeaway was that bankers are capable of earning themselves vast bonuses. I studied physics in the hope it might help solve some of the societal problems which seemed scientific in nature; he studied economics because it concerned money. These days, he earns a salary five times greater than the meagre academic gruel I’m living off, and seems to enjoy his life vastly more than I do. So it’s certainly a productive choice for some young people.
Perhaps that’s because the most visible actions of economists are harmful to most people’s well being.
“Free Trade! Everybody benefits”
“Minimum wage increases hurt workers”
“Banking regulation is unnecessary and harmful to credit creation”
Or what about the widely trumpeted paper of some economist who calculated that even at a 1% discount rate, there was no value in not destroying the entire planet in a hundred years. I loved that one.
Etc.
Of course there is plenty of useful work done (silently) in micro. Macro, these days, is pretty much all about justifying absurd inequalities of wealth and power.
As a recently retired academic economist, sure, economists aren’t very introspective, but that’s partly because few people are introspective. Perhaps there are exceptions, but courses on the philosophy of science/social science/methodology are taught in philosophy departments, not in disciplinary programs, be they computer science or medicine or economics. Problems in the field? of course, what profession doesn’t have problems? Didn’t predict the future? – really, do you think economists get handed crystal balls when their dissertation is approved? Are there cliques and fads? – surely the same is true of law, medicine, finance, popular investing. That’s intrinsic to human activity. Why should economics be immune from that? Publish or perish driving research? – well, that’s true of every academic discipline, and has pushed formal statistical analysis into many fields, it’s new (well, was new) in political science and some other fields, now we have the digital humanities, but it’s also easy (sort of) to generate multiple papers. Narrow approaches? – well, Thomas Kuhn noted long ago that intellectual disciplines tend to devolve into sub-specialties, partly because of the explosion of knowledge, partly because it’s hard to interact professionally with more than 300 or so individuals. Sure, there’s the multi-thousand person gathering at the annual ASSA / American Economic Association meetings. But most of an economist’s research time is spent in smaller, more focused conferences and grad school seminars. Ditto other professions.
I appreciate the project of redirecting aspiring economists, but it is remarkable that someone can write an entire essay on this subject and not mention once the concept of energy, and in particular, surplus energy. The source of our current and recent prosperity is the vast quantity of surplus energy made available with fossil fuels. Without such surplus energy, your prosperity just disappears, *poof*, it’s gone. New sources of energy have much diminished surpluses, and therefore indicate a looming decline in prosperity. Economists are fond of discounting a shortage of one commodity, by substitution of another comparable commodity. But without surplus energy, all of your commodities are just piles of dirt with no useful function. Many seeming sources of surplus energy disappear when you consider all of the externalities. I would have thought that these ideas would be relevant to an evolving economist, but apparently not.
Professor Steve Keen is very keen on integrating energy into economic models, if you haven’t come across his work before. Alongside levelling a strong critique at neoclassical economics over many years.
I can recommend a few economists whose writings you might want to follow. Robert Kuttner, Stephanie Kelton, Nicholas Taleb, John Weeks, Piketty, and the other economic historians who have written about the lack of significance of the Swedish Bank Prize (aka the misnamed “Nobel Prize in econ”) Piketty never mentions the prize or labels the prize winners in any of his books. There are a good number of othrers who simply understand the problem of economic modeling, the proper use of statistics, etc. And there are some who understand that economic prediction involves a lot of poitical philosophy.
All of the above are economists who understand the nature of what they do for a living.
There is a very good book, The Nobel Factor by Avner Offer (U of Oxford) and Gabriel Söderberg (Uppsala) U) discussing the political background of the prize. Sadly, it seems clear that almost all academic economists are taintd by political ideologies acquired from their teachers. Time will gradually reduce this but until then economics is about as scientific and capable of predicion as weather forecasting.
For looking into this topic, I can recommend as a starting place a book (and author) that was one of my first and best teachers: E. F. Schumacher’s “Small is Beautiful, Economics as if People Mattered” (link is to Powell’s, not Amazon). It is a great starting place and reference point. Other books that shaped my understanding of the world were Rachel Carson’s Silent Spring and Meadow’s et al Limits to Growth. They may be somewhat dated, but, as Lambert says, still relevant.
This interview just came out today re Ralph Nader. Some might find it of interest:
https://www.youtube.com/watch?v=C91dwmgZXsw
I went to school for PPE and did a masters in Public Policy and I seriously had a huge problem with the dominant economic viewpoint. I don’t know about other schools but at KCL – there was this covert insistence on covering other view points – for example we had a visiting professor from George Mason come teach us complexity science and this really changed how I saw things, KCL had a whole African leadership center that employs professors that grew up, studied and taught in Africa before coming to the UK , there was just such a strong focus on looking at the world from a non western perspective. Another thing that was seriously encouraged was dissecting political theories and ideas we were really encouraged to really figure them out – you had to study them for 2 years; I remember seeing the value in taking a social constructivist view point of the world than merely just sticking to the prevailing neoliberal ideals. This is a big contrast to some of my friends at other schools – even LSE across the street from us wasn’t very big on promoting radical thought or other view points. You only got to read Sen if you did development and I’m still the only one I know who learnt about complexity science.
I say all this to say I really think it is the fault of who is doing the teaching. I think people like Hayek and Friedman were probably obsessed with turning economics into something that resembled biology. I genuinely find some of the ideas a bit absurd and I’m not sure how they propagated so much. I mean essentially they promoted a world view that basically said humans are selfish and greedy so let’s order the world that rewards those instincts and they hid this behind the idea that it’s human nature.
There’s so much to say an unpack on this topic. Soooo much of the world will be better understood if people actually cared about the people or economies they are attempting to study. I feel that will give people an incentive to develop ideas that seek the wellbeing of all people, not elaborate abstract theories that are impractical in real life. The disservice is astounding. I think economics shouldn’t be studied as a stand alone – you have to factor in all the other factors that create the economy in the first place and sustain it. I have hope though, a lot of researchers are starting to take these issues seriously and have written some very well thought out papers.
Perhaps economics should be forbidden at colleges as an undergraduate major and undergraduate courses in economics should themselves be forbidden. Schools of economics should only be permitted to grant Masters or PhD degrees in economics and they should be forbidden from admitting grad students from any discipline outside of a narrow range of biophysical reality-based disciplines such as geography or ecology or chemistry or the natural sciences/ ecology/ forestry/ agriculture/etc.
Any college or university which fails to follow the above strictures in even the slightest detail should be dis-accredited.
The reformers of economics have their own blind spots, one of which is a naive notion of the prevalence of altruistic beings that are the opposite of the greedy rational individuals beloved of standard economics. The vexing reality is that there is a broad distribution of human traits, and this greatly complicates theories aimed at maximizing the “common good.”
According to historian Bernard Bailyn, the large number of towns in Massachusetts is the consequence of repeated relocations of settlers seeking more liberal property rules than existed in their prior settlements. Greed spawned a series of new towns peopled by the more self-interested inhabitants, whose idea of the common good differed significantly from that of their former neighbors.
Interesting. In west africa that’s how a lot of towns/tribes developed as well. Ppl will just get tired of living in one place and they’ll move and set up a new village or culture
One might want to counter the shiboleth that “there is no free lunch” by noting that all life on earth itself begins with a steady free lunch . . . . the free unpaid-for energy coming in from the sun, the moon, the earth-core itself, and cosmic energy and particles from Deep Space.
There used to be a free lunch in American bars back in the day. And in some regions of Spain tapas makes up a free lunch.
I think that the “no free lunch” concept in this case means ” no lunch that has not been paid for by somebody”. And so an economist would point out that those lunches and tapas were/are not ” really” free, in that the bars and tapa places themselves had to pay for the lunches/ tapas which were/are given free-of-charge to the customers. And perhaps the bars/ tapa places used the drinks-money of the aggregate customer-base itself out of which to pay for the lunch and tapas. And so the economist would say: ” There! You see?”
So I noted the truly free-lunch nature of solar/lunar/earth-core/deep space energy driving everything here . . . truly free-lunch in that noooo – body pays for it to arrive here in the first instance.
Economics is a thankless profession. But it’s better that way. If economists took more credit for anything, they would take the blame for everything.
It’s a conservative profession with fewer liberals compared to the other sciences. You would expect a profession based on rational self interest to be masters at keeping to centers of power. Priests preached God, but elevated kings. Economists preach prosperity, but only find the millionaires. They also get cut out of the future by science fiction writers. The message being: economics doesn’t evolve, it perishes.
Economists kiss butt more than other professions and live in think tanks separated from the world as intellectual mercenaries. Yes, every professional is a hired gun, but how do you pull the trigger with an economist? You hire a lawyer to get at your ex or rival. You hire an engineer to conquer some force of nature. You hire a doctor to cut at flesh, a therapist to blow away invisible burdens. But with an economist, you can take aim against a whole swath of society and cut at their very redundant existence.
Yeah, so what are economists other than mass murdering psychopaths. After the GFC, they took a Hippocratic oath (at some prestigious university) to do no harm. Much useful advice came from other professionals, but economists are back at their usual mischief. Even Musk thinks economists are a waste of genius. So listen to Musk or you will never ride in his spaceships.
Already an economist? Don’t worry about your prestigious institutions and history of scholarship. That’s all sunk cost, as you would say.
(I kid. Some of my favorite people and topics relate to economics. That’s why I hang around here.)
Morbid but true. I left a research job to start a food business, I think I’m more useful that way. That said I don’t see my education as a sunk cost – I value the friendships I made and how those experiences shaped my world view.
Economists are the theologians of Mammon. Both they and their religious counterparts require operating on trust.
“At its core, [traditional economics] assumes the commensurability of intangible values, which can easily be demonstrated as a false hypothesis.”
This explains why a glib, super-salesman like POTUS Ronald Reagan was able to close the sale of the Nine-Most-Frightening-Words-In-The-English-Language for 40 years.
The Gipper was a great communicator because he could simplify core values into digestible, bite-sized pieces for a national audience. Words mattering becomes secondary to closing the sale of a false hypothesis. Bill Clinton, bright as any POTUS, moved the DNC permanently rightward in order not to lose to the GOP and then Barack Obama “closed that sale” in 2009 by bailing out TFTF Finance Capitalism.
Apparently Biden’s inadequate COVID relief package is meeting with the GOP’s even more inadequate package and soon we’ll get some finally Greatest Grand Bargain, This will permit Victory Laps to be taken by all until 2022 when whatever the results of that mid-term election is, Big Media’s chosen voices will harmonize on: “Well, we never saw that coming!!!” :?)
Terrific piece. Thanks so much
This is the opportunity of a lifetime for aspiring economists.
What everyone needs is some decent economics.
What is the big problem neoclassical economics?
Policymakers have no idea what they are doing.
They all adopt the economic growth model of the US in the 1920s.
The money creation of bank credit drives the economy as you head toward a financial crisis.
At 25.30 mins you can see the super imposed private debt-to-GDP ratios.
https://www.youtube.com/watch?v=vAStZJCKmbU&list=PLmtuEaMvhDZZQLxg24CAiFgZYldtoCR-R&index=6
No one realises the problems that are building up in the economy as they use an economics that doesn’t look at debt, neoclassical economics.
1929 – US
1991 – Japan
2008 – US, UK and Euro-zone
The PBoC saw the Chinese Minsky Moment coming and you can too by looking at the chart above.
The Chinese were lucky; it was very late in the day.
They all adopt the economic growth model of the US in the 1920s.
The Americans wouldn’t make the same mistake twice, would they?
Yes, they would.
Bankers make the most money when they are driving your economy into a financial crisis.
They will load your economy up with their debt products until you get a financial crisis.
On a BBC documentary, comparing 1929 to 2008, it said the last time US bankers made as much money as they did before 2008 was in the 1920s.
https://www.youtube.com/watch?v=vAStZJCKmbU&list=PLmtuEaMvhDZZQLxg24CAiFgZYldtoCR-R&index=6
At 18 mins.
The bankers loaded the US economy up with their debt products until they got financial crises in 1929 and 2008.
As you head towards the financial crisis, the economy booms due to the money creation of bank loans.
https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf
The financial crisis appears to come out of a clear blue sky when you use an economics that doesn’t consider debt, like neoclassical economics.
I have been following INET closely and they have done some very good work.
I have realised why they haven’t got as far as they could have.
They use people trained in neoclassical economics to work out what is going wrong.
I have a huge advantage as I haven’t been through the economic disorientation program known as neoclassical economics.
Conventional economic wisdom is not ingrained and I can think outside the box easily.
I started in 2008 and have built on the work of heterodox economists who got started way before me.
The ground work had already been done.
They have studied one particular area in detail, I went across and picked up lots of their ideas and put them together, e.g. MMT, Michael Hudson, Steve Keen, Richard Werner and Richard Koo.
A few observations. Something I read recently (alas, I did not not note the author …. must have been late at night) that resonates: “The point of economics as a discipline is to create a language and methodology for governing that hides political assumptions from the public” .
In the mid-1970’s, two weeks into an MBA program that really wanted to be the University of Chicago, I began to see similarities to my rigorous training in Catholic theology. There were heresies, apostates, witch-burnings, and incomprehensible doctrines that one had to …. just take on faith. Although counting the number of angels that could fit on the head of a pin had been updated to require calculus. Fortunately, my years of sitting through Catholic Doctrine classes had trained me in listening with a straight face and spewing back approved party lines.
Any system that views a mountain side of old-growth redwoods as of no value until they are cut down and sliced into board lengths, with the dollars generated by this activity being hailed as increase to GDP – the ultimate measure of our happiness – is warped and obscene. And, unsustainable.
Reading Lambert’s post yesterday on the evidence that trees communicate, certainly with each other, I remembered the first trip I made through the Pacific Northwest, seeing a recently clear-cut mountain side, the stumps of giant trees still wound-raw. I burst into tears. Were the chemicals they released in their final agony still suspended in the air? Did I breathe them in and react? Who knows. I may simply have had a tough day driving.