Pieria: How Conservative is Mainstream Economics?

I have a new article in Pieria, arguing that the image of mainstream economists as rabid free-marketeers is not entirely without foundation:

There is quite a disconnect between mainstream economics as seen in the public eye and as seen by economists themselves. A lot of media criticism of economics – and the Guardianseems to be going mad on this recently  - paints mainstream economic theory as supporting a ‘free market’ or ‘neoliberal’ worldview, possibly in cahoots with the elites, and largely unconcerned with human welfare. Economists tend to switch off in the face of such criticisms, arguing that the majority of them, along with their theories, do not support such policies…

…Yet I think there is a good  argument to be made, not that mainstream economics necessarily implies particular policies, but that it is easily utilised to push a certain worldview, based on which questions it asks and how the answers are modeled and presented. This worldview is what the public and journalists all too frequently encounter as ‘economics’, which is why they often conflate neoclassical with neoliberal ideas.

An interesting question – which I do not explore in the article, but have written about before, as has Peter Dorman – is the disparity between ‘econ101′ rhetoric and what economics actually implies. ‘Economics’ in the public image is generally used to justify counterintuitive or unpalatable ideas like the minimum wage and austerity, even though arguing unambiguously for them – particularly the latter – is a position that is actually quite ignorant of ‘economics’ as a field.

Do I blame economists for this? Partly: I think economists should be more worried about their public image, whereas you often get the impression they are more concerned with being enlightened technocrats than anything else. However, politicisation isn’t unique to economics (consider climate change denial or evolution/religion), so it’s a bit unfair to single out economists in that sense. Having said that, 99% of scientists in the former fields are united against the pseudo-scientific caricatures of them in the media, whereas economists are far less able to convey a clear message to the public. In short, perhaps economists should figure things out amongst themselves before they rattle off lists of policy proposals based on their models.

Anyway, enjoy the piece!

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  1. #1 by Boatwright on December 2, 2013 - 5:00 pm

    It seems that most economists who represent the profession in the public forum START with a political/philosophical bias and then dishonestly use economic “theory” as if it were settled science to argue for this or that policy. Please understand that my criticism is focused on mainstream macro-economics as it taught and publicly practiced, not on those who are working hard to find a new pathways to real knowledge.

    The general problem for economics as a profession is, as science, that it rests on very shaky epistemological ground. In order for economics to be science it must start from and be consistent with foundations in other more fundamental disciplines, such as biology, ecology, and anthropology. Economic statements are too often made a-priori, assuming this or that as a starting point and then building castles of logic while remaining fraudulently blind to real economic behavior and data.

    • #2 by Unlearningecon on December 5, 2013 - 2:10 pm

      I agree, although I would argue that many economists are actually unaware of this themselves.

  2. #3 by Magpie on December 2, 2013 - 7:22 pm

    Hi Unlearning

    This subject reminds me of a post by Greg Mankiw:

    “Tuesday, December 19, 2006
    “Does econ make people conservative?
    (…)
    “I believe the answer is, to some degree, yes. My experience is that many students find that their views become somewhat more conservative after studying economics. There are at least three, related reasons.” (…)

    (BTW, there is research on the relationship between studying economics and selfishness, dishonesty, cooperation and such.)

    But I think the cartoon at the end of the link explains one of the main roles economists play in contemporary society:
    http://leftycartoons.com/the-minimum-wage-versus-the-earned-income-tax-credit/

    • #4 by Unlearningecon on December 5, 2013 - 2:04 pm

      Yep, that cartoon is spot on. Each economists favours ‘the market system’ overall, but advocates this or that tweak to fix it, depending on their own methods and political views. Then economists disagree over the tweaks and so little is actually done.

      Also, Mankiw’s “appreciation of the market system” is hilarious. It’s indoctrination he’s talking about, pure and simple. Very sad.

  3. #5 by Tokyo Torquemada on December 4, 2013 - 8:59 am

    I think it extremely unwise to assume that because one knows someone’s economics (more precisely how far and towards which school they are biased) one necessarily knows their politics. “Post Keynesian” perspectives (for instance) do not entail left-leaning views in the conventional sense of the word. There is a conservative tradition (perhaps, more properly, a Tory tradition) in which scepticism towards “the market” and an acknowledgement of the existence of classes is dominant. This tradition was neatly encapsulated in the statement that it is mainly “opposed to a narrowly commercial conception of life and associated with a romantic sensibility to the ideas of continuity and tradition …”. Modern political developments have obscured this sensibility and, to be sure, it is not heard from very often anymore. But it does exist. To put it a different way, a person with such views does not feel, when reading Joan Robinson, that he is wandering in a foreign country; while when confronted by “mainstream economics” the dominant sensation is revulsion at the grotesque complacency that it almost invariably represents.

    • #6 by Magpie on December 5, 2013 - 6:48 am

      ” ‘Post Keynesian’ perspectives (for instance) do not entail left-leaning views in the conventional sense of the word. There is a conservative tradition (perhaps, more properly, a Tory tradition) in which scepticism towards ‘the market’ and an acknowledgement of the existence of classes is dominant. ”

      That’s a good point.

    • #7 by Unlearningecon on December 5, 2013 - 2:09 pm

      I agree with this (although I do think that you can make a broad guess that eg a post-Keynesian will, on average, be at least left-of-centre).

      Here are some other ways economics may cross ideological lines:

      - Public choice theory, and from a certain perspective Austrian Business Cycle Theory, can be seen as a critique of capitalism. Just look how corrupt and unstable the system is!

      - ‘Managerial’ institutionalists like Lazonick, Chandler or even to an extent Galbraith could be seen as quite pro-capitalist and in many ways more pro-business than ‘free marketeers’, as they repeatedly praise the benefits of managerialism.

      - As Joan Robinson pointed out, Schumpeter can be thought of as Marx with different adjectives. Marxism has a lot to say about the benefits of capitalism and technological progress.

      Somebody also once told me that agent-based models seem to come up with quite conservative conclusions, although I don’t know if this is accurate.

      • #8 by Min on December 23, 2013 - 8:31 pm

        “Somebody also once told me that agent-based models seem to come up with quite conservative conclusions, although I don’t know if this is accurate.”

        What comes out of the model depends upon what you put in. If starvation is not part of the model, then it is unlikely to address concerns about starvation.

      • #9 by Unlearningecon on December 27, 2013 - 12:57 pm

        Do ABMs typically not have starvation?

  4. #10 by Tokyo Torquemada on December 6, 2013 - 3:29 am

    The area in which economics is clearly at its most “political” is value theory. The marginalist cannot be reconciled to certain political perspectives without giving up his economics. The degree to which similar things can be said about different traditions in economic theory is more debatable (as you suggest).

    Unrelated to this question of theory are two further “problems” – first, that many “economists” speaking about policy assume that their persona qua economist gives them a special status upon which to base their comments. If it does, it only gives them a status akin to that of a popstar commenting on politics. Second, quite a few people don’t actually know what theoretical position their economics implies in terms of value. This is because value questions are explicitly discouraged
    as they might involve classes: eg Krugman “1. Economics is about what individuals do: not classes, not “correlations of forces”, but individual actors. This is not to deny the relevance of higher levels of analysis, but they must be grounded in individual behavior. Methodological individualism is of the essence. ” http://web.mit.edu/krugman/www/evolute.html

    Although one might represent such an occlusion as a political strategy, overall one should consciously seek to avoid “conspiratorial” interpretations of the politicisation of economics. The real “crime” of mainstream views is that they are monotonous and superficial, not that they have been consciously designed (at least, have not since the 1940s-1950s when the Cold War required more control over the agenda, and with the exception of the Mont Pelerin mob) with a political objective in mind.

    • #11 by Magpie on December 6, 2013 - 9:07 pm

      “Although one might represent such an occlusion as a political strategy, overall one should consciously seek to avoid ‘conspiratorial’ interpretations of the politicisation of economics.”

      In my opinion, “conspiratorial interpretations” (alternatively, moralistic interpretations) are more in the eye of the beholder and are inevitable if one holds to methodologically individualist views. This applies to the “politicisation of economics” or to anything else.

      Example: Consider the years 2008-09 and the credit crunch. If banks were acting unethically/criminally, what to do? Who is/are at fault? (Note well: “fault” – morality -, “who are” – conspiracy -)

      If one thinks only bankers (i.e. individuals) have agency then the answer is clear: those individuals who broke the law (and only them) are at fault. Punish them; fix the law, create new and tougher regulation, better “models”, put Prof. E. Warren in charge and presto, no more problem.

      This view assumes that there are no structures pushing individual bankers into becoming banksters (for instance, bankers’ contractual and even legal duty to take advantage of anything in order to maximize shareholder value).

      Therefore, punish anyone you want and do all those good things; but if the same “incentive structure” remains in place, the new bankers replacing the current banksters will eventually find new ways to brake the new laws.

      (Obviously, I am not saying the banksters should go scot free).

    • #12 by Unlearningecon on December 7, 2013 - 12:26 pm

      The area in which economics is clearly at its most “political” is value theory. The marginalist cannot be reconciled to certain political perspectives without giving up his economics.

      Completely agree. I try to point out to marginalists that their idea of an individual being able to express “their own” preferences through the market is not a value free position but a value judgment itself. As is the idea that workers should be paid their ‘marginal productivity’.

      Unrelated to this question of theory are two further “problems” – first, that many “economists” speaking about policy assume that their persona qua economist gives them a special status upon which to base their comments. If it does, it only gives them a status akin to that of a popstar commenting on politics.

      Hilarious comparison and again agree. I have previously discussed economists’ record with policy, and it is simply not great. 1990s Krugman is also unbearable, although he is a great source of evidence when you want to discuss the stupid opinions many mainstream economists hold.

      (at least, have not since the 1940s-1950s when the Cold War required more control over the agenda, and with the exception of the Mont Pelerin mob) with a political objective in mind.

      Obviously there’s no secret room full of lizard overlords. However the book ‘Economists and the Powerful’ points out that as early as the late 19th century theoretical papers were rejected if they had seemingly socialist implications.

  5. #13 by Jan C on December 6, 2013 - 10:36 am

    I have a general question. I am sorry that it is not on topic.
    I want to buy a good book about heterodox/post-Keynesian economics as a Christmas present for a friend of mine.
    He followed some introductory courses in economics at the university, so the book could be a bit challenging. Of course I was thinking about Debunking Economics. But are there other books that you (or the other readers of this blog) would advice?

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