Home > ethics, The Economics Profession > Thoughts on The Ethics Of Economics

Thoughts on The Ethics Of Economics

from Peter Radford

Allow me to offer an ill tempered tirade:

Medicine has its famous injunction: first do no harm. Economics ought to abide by that rule too. It is a massive evasion of responsibility for the profession to continue to plod along as if a few hundred more earnest papers will do the trick. They won’t. The error is profound. It is deep. It is decisive. Economists everywhere: stop what you are doing. Stop researching. Stop teaching. Stop advising. Stop writing. And above all stop pontificating. There are no clothes on this particular emperor, and it is high time we admitted as much. So, instead of all those activities, consider this: what are you doing to rehabilitate economics? Now. Not tomorrow.

I found this comment, by a non-economist, buried deep in a Krugman blog post about the effect of wage cuts: “I wish that you economists had the equivalent of a bar exam so that the incompetent among you could be prevented from practicing. As far as professional credentials are concerned, you seem to be operating like medicine in the eighteenth century, PhD’s notwithstanding.”


I am tired of all this introspection. It is time to do something. Before economists do any more damage.

Let’s attack this by asking: What is the point of producing more economists? And, just what exactly is economics anyway?

First, What is Economics?

Whatever you want it to be. Economics is organic. It responds to contemporary issues. It seeks to resolve problems that crop up in society and then to advocate solutions. But it is more than this: it has also become an academic filed of study. So it tries to theorize and produce more lasting ideas that have relevance through time. It is consequently bifurcated. It is a profession akin to medicine, and it is an academic discipline akin to biology. Both at once. This bifurcation creates great confusion. And creates an ethical dilemma. The endeavor to be a “science” has dominated for years, and, as a result the professional or practical side has lingered with its relationship with society undiscussed.

If you visit the web site of the American Economics Association you will find three well known quotes, each trying to summarize what economics is about. Here they are verbatim:

“Economics is the study of people in the ordinary business of life.”
– Alfred MarshallPrinciples of economics; an introductory volume(London: Macmillan, 1890) “Economics is the science which studies human behavior as a relationship between given ends and scarce means which have alternative uses.”
– Lionel RobbinsAn Essay on the Nature and Significance of Economic Science (London: MacMillan, 1932)

Economics is the “study of how societies use scarce resources to produce valuable commodities and distribute them among different people.”
– Paul A. SamuelsonEconomics (New York: McGraw-Hill, 1948)

The problem with these quotes is that only the middle one truly pertains in most of what passes nowadays for economics.

Marshall cast the net far too widely for his successors. The real study of people in the ordinary business of life would include all sorts of things no longer considered as being economics. Remember he was writing before the great splintering within the social sciences – before, for instance, Talcott Parsons led sociologists off on their own pursuit of part of that wider study.

Samuelson, in contrast, tries to keep faith with the broader notion of economics, but pays due reverence to the notion of scarcity that sits at the heart of the contemporary subject. The problem with his articulation of what economics is that most, if not all, economists pay no attention at all to the actual production of things. Nor to the infrastructure of distribution. Nor to the desirability of the distribution we end up with. The Samuelson project has been gutted. The problem was, his successors decided, that those issues – actual production and distribution – threw too much grit into the wheels of equilibrium. Production is a process through time. It entails all sorts of compromises with uncertainty. It introduces the possibility of error and a reliance on judgements that cannot easily be resolved into, or reflected within, the equations of classical machinery. So study of such stuff was outsourced to the lesser people in the organizational and management studies schools.

That leaves us, by and large, with Robbins. Constrained allocation. As if that was the only goal of economics.

In my mind this definition is so narrow as to be worthless. It asks us to focus on a set of “given ends”. What on earth are they? How could we possibly know? These ends inevitably remain a mystery to be revealed magically as whatever outcome occurs. It is a leap of faith that what happens is concurrent with what is potentially desired. We have no way of knowing the difference so we march on secure in our faith. Having set off down this mechanical path we allow ourselves to offer up a definition of ends that suits our process. We borrow the notion of utility from Bentham and then twist it about to squeeze it into our desired analytical framework. A useful metaphorical or philosophical idea suddenly morphs, in the hands of economists, into a highly precise tool upon which everything depends. It was never designed to be thus. It cannot carry the load. But there it is: up front and center.

And those “scarce means”? This seems to be a binding constraint, of Malthusian proportions. But we need to limit ourselves if we are to stay within our analytical boundaries. No wonder innovation and technology have been sore subjects for economics. If there is one characteristic of the entire capitalist era it is that what was once scarce is now less so because we have invented better ways to produce more from our available resources. Yet a strict Robbinsian approach places the study of innovation outside the boundaries of “true economics”.

This is why the subject can seem so sterile. According to the American Economics Association much of what most of us think of as economics turns out not to be. Business firms, entrepreneurs, institutions, culture, gender and other relations, technology, geography, and a host of other things that an ordinary observer may think of as legitimate subject matter for economics, or at least of great influence on an economy, are excluded from the pure definition. What’s left, of course, is the study of the efficacy of markets, and the supposedly general general mechanisms allegedly within them.

But economists, many of them anyway, are not that stupid. Some of them set off on various heretical journeys to study the impact of these interesting oddities. They were all cast out for their pains, but at least their work is there waiting to be incorporated into a more general notion of economics if we can make our way back out of the desert.

Meanwhile, the profession is teeming with highly educated folks who have no inkling of large parts of economics. They have been taught just one strand of a multi-strand web of ideas. They stand on a small island within an archipelago and imagine they inhabit a vast continent. They believe, profoundly and erroneously, that they know economics. In fact they are functionally ignorant, and deeply immersed in only one thing. Oblivious to all others. They are thus not professionals, they are academics. Their training is a license to train others. It is not a license to give advice. This is where the ethical problem crops up: they have proliferated not just in economics departments of universities, but any other institution in need of the wisdom expected from someone steeped in economics.

Driven on by hubris of economics, the self proclaimed “queen of the social sciences”, with its faux accuracy and its bag of apparently clever analytical tricks, the economics world view has been imported into those outsourced disciplines like management and organizational theory. In other words economics has falsely blended its theoretical and practical aspects. Its academic practitioners pretend to have clean hands with respect to giving advice, but, in fact, they are educating and influencing whole generations of erstwhile practical people. These practical people think they are being taught useful real world and deeply applicable knowledge. Some of them end up running major corporations. Others occupy places of great influence in government. Yet more advise politicians. This is advising through the back door.

This allows many economists to elide the need to discuss and take on board the ethical relationship all advisors have withy their clientele. When pressed to discuss the ethics of such a professional relationship most economists claim academic privilege. They claim they should be allowed to pursue their vocation wherever it leads. Ethics, they tell me, is for doctors, accountants, and attorneys. Economics is different.

But that’s not tenable. Not at all. Especially after the recent crisis and its indictment of much of what was held as established wisdom within the subject.

Economics, no matter how abstract and theoretical it may appear at one end, is perceived by the public as deeply practical and worldly at the other. What economists argue over matters. What they disagree over matters. What economics is and isn’t matters. What economists teach matters even more. It is distressing, to me at least, that economics remains the only social science not to take seriously its relationship, as a center of expertise of interest and value to society, with the society within which it operates, and whose operations and wealth it affects with its opinions.

Yes this needs to be said. Again.

There is, I believe, a general opinion – I stress the word “general” – about what an economist knows. That is to say out that there in the great wide world people have expectations of economists. There is a skill, or set of skills, attaching to the word “economist’. When people seek that skill, as in when they hire an economist, they are justified in imagining they have secured the services of someone who is well briefed in the subject and who is capable of providing a well rounded response to problems based upon that set of skills.

What they get nowadays, too often, is a very narrow mind largely ignorant of economic history, the history of economics, the context of its ideas, society at large, and, crucially, any notion of the limitations of the economic world view. This world view is based upon the absurd assumptions and naive psychology of economic orthodoxy which propagates reductionist methods and methodological individualism even where they are wildly inappropriate.

And then there is the problem of politics.

Economics is inextricably tied up with politics. This is evident every day when we read of phalanxes of well known economists proffering competing opinions that directly contradict each other. The vaunted scientific project of economics is revealed to be nothing but an adjunct of a particular political point of view. There is, apparently, a well crafted economic theory to justify every point on the political spectrum. There is no right and wrong, just a gaggle of opinions.

But at least they are opinions backed up with fancy math. Which is what influences the public most. I would wager that the image the word economist conjures up most is akin to a slightly more sophisticated accountant. Someone versed in more complicated math. Someone who can be trusted with difficult computational problems. Someone steeped in the tradition and values of objective clinical analysis. An applied mathematician in other words. Not an economist.

Yes: our schools are producing, deliberately, ill educated people and presenting them as the complete article. This is an ethical failure on the part of those schools. It fails the community who has every right to expect those places to produce well rounded, fully educated professionals who will, in fact and not just in theory, “do no harm”.

In other words economics is a rotten enterprise when viewed as an activity producing professionals who add value to society at large. Economists are not bad people. They are simply the product of a broken system. Rehabilitation is in order.

One of the more enjoyable moments I had this summer was reading Sylvia Nasar’s excellent history of economics titled “Grand Pursuit”. She brings to life some of the varied personalities who tower over the progress of economic thought, particularly up until the 1930′s. I, like Krugman, had no idea that Irving Fisher invented the Rolodex. Her approach is revealing: she ignores everything after Samuelson – other than a long discussion of Sen. This is highly deserved and telling. There has been remarkably little progress since 1948. In my more draconian moments I would say there’s been none. On the contrary, the subject slid backwards. What was known as efficacious in 1948 has been disregarded and “unlearned” since.

This is an extraordinary disservice to society and is akin to medicine “forgetting” how to cure smallpox simply because that cure no longer conforms to contemporary ideas about what a cure ought to look like. It isn’t that we don’t want to cure. Nor is it that the cure doesn’t work. It is the nature of the cure, which isn’t congruent with individualist thinking and is thus set aside as old fashioned. And since all economics has been reconstructed on the absurd and flimsy base of its micro foundations, most, if not all, macro ideas have been deliberately forgotten. Tried and true cures were cast aside for the sake of ideological purity. Faith triumphed over reason. Which is odd in the extreme given the perverted place rationality plays in the workings of that faith.

This quote from Blaug tells it far more succinctly than I can:

“At this point, it is helpful to note what methodological individualism strictly interpreted…would imply for economics. In effect, it would rule out all macroeconomic propositions that cannot be reduced to microeconomic ones, and since few have yet been so reduced, this amounts to saying goodbye to almost the whole of received macroeconomics. There must be something wrong with a methodological principle that has such devastating implications.”

In my words: economics forgot some of its cures because they were inconsistent with the purity imposed after their discovery. Damn the patient, economics sought its ideal. It had to forget anything not fitting within this ideal. That this forgetting could cause harm, serious long term, and very real, harm, out there in the actual economy was of no consequence. That real human families could be broken up, could lose their homes, and could be ground down by relentless poverty was of no consequence. The pursuit of the ideal, that elegance so marveled at, that wonderful and difficult mathematics, that narrow but beautiful construction of market magic, that consistency so prized within orthodoxy, all trumped, by far, any notion of retaining cures that did not fit. That this ideal was populated by robots bereft of humanity was also not a consideration. Nor was the required impossibility of the calculations presumed performed by those robots. Nothing, absolutely nothing, was allowed to stand in the way of the pursuit of the ideal.

I do not think for a moment that students entering an economics education desire to emerge as narrow minded and potentially dangerous to society. On the contrary, most want to learn something useful and view economics as socially beneficial. They are unaware of the amnesia that bedevils the subject, its intellectual poverty and the naive view of humanity that infests its models despite the glitter of their math.

As for my second question: What is the point of producing more economists?

I don’t know.

It depends on what economics is. And that question is what got me into this trouble to start with.

Whatever the answer, they should do no harm.

Can we say that now?


  1. October 27, 2011 at 1:37 pm

    It would be nice if physicians did no harm but the fact is that they do harm. And sometimes they do harm when they are sincerely trying to be helpful.

    I would start with another proscription: tell no lies. It would help enormously if economists just stopped saying things they have no evidence for. It would be even nicer if they would stop repeating those things when they are shown that they are untrue.

  2. Bruce E. Woych
    October 27, 2011 at 3:54 pm

    Posted on Peter’s George Monbiot seminar, but it seems to equally fit here. With gratitude to Peter Radford for opening up what may be a rough road of questions yet to be answered.

    As an anthropologist outside of the self-interests of economics as a school house or lineage, I have grown impatient with the circular evasions of sectors and factions within economic disciplines that portend a corrective factionalism but literally sustain each other through a process of polemical validation. If we need a special language to discover that we are being manipulated into a self-promoted “dependency” crisis than perhaps we should “exclude” economists out of the process for a period of time and see what we come up with by collecting real evidence.

    The contemporary context of “classical” economic classification is tantamount to virtual fraud.
    The contemporary “design” of computer enhanced transactions presumes a “systems coherent capacity” with a (literal = corporate) cooperative foundation with the entire emergent process (real sustained support growth) in mutual consent towards a common outcome. But the exclusivity of competitive based zero sum profit gains in mathematical formulas that maximize pure monetary gain (fiat over substance) nearly obliterates the imbalance of growth potentials of a cooperative and mutual base, in favor of “winner takes all” and desperate “succession by any means” as the primary hidden agenda for survival. Monetarist priorities make a mockery of the “as if” confabulations of “classical” theory and its taxonomy that blind sides a false reality with “slight of hand” shifts of emphasis and Ponzi scheme economics distribution of assets regally portrayed as privatization.

    The realism of “if so, then so” evidence based foundation demonstrates that “zero sum” financial sector “gaming the system” is not a balance between contractual obligations or an equal exchange of debt and transubstantiation into real infrastructurally secured economy. It is more of a lop sided confidence game based upon loss and scavenger sell outs. You have to deny real history and the destruction of commercial enterprise in America to try to substantiate a balance of assets to debt in the contemporary global sectors. In fact it is more and more true that one sector of debt has become another sectors liability to the tipping point of chaos.

    If one so choose to benchmark analysis towards the perverted incentive potentials and moral hazards (computational speculation in finance makes classical “ratios” totally obsolete and obliterates the moral compass of these terms…); and, one is to truthfully evaluate “rational choice” manipulations of asymmetrical information and the obfuscations and machinations made possible under the margins of corruptability and abuse under the potentials presented by “relational database” exploitation? The “design” of computer enhanced transactions becomes an agent of power dynamics and social domination. A monetary system that does not build civil society but seeks to capture and control it is not economic in nature or culture…it is political economic tyranny and financial collusion.

    In essence, so-called “classical” economics (as much as it is a utilitarian template over the veil of discovery in the contractual market system of society) has become a shroud over a still born science. It has long since become a knowledge based control fraud over domestic economies as industrial systems of wealth, and to hell with the costs…they are gains and assets to the subset of looters that progressively pretend to be “leaders” of the economy and more and more…our very lives and their “interpretive” value.

  3. Bruce E. Woych
    October 27, 2011 at 4:11 pm

    quick correction: the alternate to Peter’s article is George Monbiot Seminar by Steve Keen, and I apologize for the lead in line confusion.

  4. Dave Taylor
    October 27, 2011 at 9:39 pm

    “It is consequently bifurcated. It is a profession akin to medicine, and it is an academic discipline akin to biology. Both at once. This bifurcation creates great confusion. And creates an ethical dilemma”.

    Thank you, Peter, for a very thought-provoking article, particularly this bit. It’s a language problem I’ve struggled with for years; the labels “pure and applied” sound too much like mathematics, while “academic and “practical” leave no room for new science. I’ve ended up distinguishing “basic” from “applied” science, having in mind electric circuit theory providing the basis for everything from power generation and distribution to emergent technologies like telephony, tv, general purpose computers and broadband communication generally.

    These correspond to Kuhn’s “revolutionary” and “normal” science, the basis being his “paradigm” which, though of pedagogical importance is also capable of revolutionary developments, as in Heaviside’s recognition of circuit dymamics and Tesla’s of the possibilities pf alternating currents. The fact is that revolutionary paradigm changes usually result not from normal scientists developing the existing basis, but from newcomers or outsiders already having a different way of seeing its problems, or academics or technicians familiar with evidence inconsistent with it see a new way of .

  5. Dave Taylor
    October 27, 2011 at 10:09 pm

    To continue #4 as intended: “seeing a possible alternative as a result of a gestalt switch”.

    It seems that in modern economics the academics are not familiar with the evidence and such applied economists who are not academics pontificating outside the academy tend to get shunted off into the wilderness of heterodoxy.

    So what’s the point of producing economists? None – until they accept a more up-to-date paradigm like economics being at once a circuit system, a power distribution system, a control system and a general purpose information system. Such systems can be half-baked or otherwise go wrong, giving the academics and technicians of economics something better to think about than their getting paid for “smoke and mirrors”. Confronted with the consequences of their own falsehoods, they may eventually discover the value of truth.

  6. October 29, 2011 at 2:25 am


    “In the beginning of a great change, the Patriot is a scarce man, brave, hated and scorned. When his cause succeeds, however, the timid join him, for then it costs nothing to be a Patriot.” – Mark Twain

    You are clearly true & heroic patriots & scholars in the land of blind cowardice. Yet, the world is a dynamical system, which occasionally evolves (every 500 years or so).

    Here is a link to a rather apt definition of economics for the neoserfs (most of the 99%ers):
    >> http://www.despair.com/economics.html

    I hope the image and caption don’t make y’all think I’m a pessimist or a contrarian demotivator. I aim to support even higher motivation than we find here (always room for improvement, re: TQM applied to economics. Right, Dave?).

    Peter’s scathing yet informative essay and all the above comments provide huge encouragement and hope for an effective cure. Yet, the title implies an ethic where there is no single, generally validated vehicle or discipline that might rightly be judged ethical — unless, of course, we can agree agree that bogus disciplines shot through with corruption and heartless, spineless collusion with monstrous evil and ecocidal destruction are in fact totally bogus. This requires no exotic maths or complicated explanations. On the basis of sheer logic, we can all agree that 99% of the truth is actually equal to 1% in the context of theory and interpretation or application purveyed as valid or relatively perfect. Logically, mathematically and ethically, the whole truth is actual truth, while partial truth is not; and 100% validity is valid, while pseudo- or quasi-validity is invalid.

    Unfortunately, as in the hard sciences and highly complex professional disciplines, such as medicine and architecture, the terrible downside of the negative paradigm of ponzinomics has pervasively incentivized & enculturated structural corruption in over 90% of us no longer see the psychospiritual poison we swim in, any more than a fish sees water. It reminds me of Bob Dylan’s nightmare anthem about the End Game, “A Hard Rain’s Gonna Fall” (from 1965), where he decries the “wholesale” pollution of the socioeconomic paradigm with toxic propaganda for selling paranoiac social policy, perpetual war, planned obsolesence, mass degradation, and normative delusion:

    “…and the pellets of poison were flooding our waters…and it’s a hard rain gonna fall…”

    How prophetic and tragic that most of us have yet to wake up from the nightmare. The field of architecture makes a “good” example: Generally, success and prosperity in architecture depend on the building industry, which depends on the real estate market, which depends on the viability of the financial industry, which depends on a robust economy, which depends on a lively healthy, viable culture, which essentially depends on a valid, sane paradigm. Yet, since the end of the upside boom (bubble) phase of the cycle, the few surviving construction companies are having a relatively hard time even with the vast majority of the market (the fast shrinking sliver left of it) in their hands, have ever less need of their own in-house designers & strategically allied firms. Ever more architects are running out of clients & savings & flipping burgers or whatever. Yet, architecture schools depend on cranking out new architects. Go figure… for a New York second…

    Clearly, the weird theories & neuroses of Voodoo Ponziconomists and the cooked books of Consumer Society as usual are not the only problems causing the normative insanity of academia, in any field of study. Ted Trainer’s insightful, seminal essay on Steady State or No Growth economics, though perhaps less than 99.99% comprehensive, floods the field with very reasonable (if uncomfortably “patriotic”) light — pointing to what should be the obvious answers & options.

    There are so many other good points, issues, and inspirations in the post & comments above, I’m going to integrate my responses into a paper in progress on the fundamentals. But I’d like to add that, as a mathematical holontologist, I am especially aware of the curious dilemma that afflicts academic mathematics in a way not unlike the problem in economics.

    Normative insanity (incentivized with tenure, benefits, perqs, and status) is as blinding as the naive optimism and commercially programmed delusion of ambitious youth.

    And, regardless of our excess tenure, greed, testosterone, delusion, intelligence or patriotism, the message of the image linked below now seems to apply:
    >> http://www.despair.com/consulting.html

    These other amazing visions of clarity seem equally apt:
    >> http://www.despair.com/liberty.html … why?
    >> http://www.despair.com/idiocy.html

    Oh, and I suggest that all heroically patriotic RWE pragmaticists collaborate on the action plan via Google+ using its “Hangouts” feature for live video conferences. It would also be great to see some substantial help with explaining the GCCS and real (positive) credit for the layfolk at the Facebook group: Green Community Credit System.

  7. Dave Taylor
    October 29, 2011 at 10:11 am

    Yes, Michael, science and ethics. Let’s start with that amusing definition of economics as:

    “The science of explaining tomorrow why the predictions you made yesterday didn’t come true today”.

    Lovely. But that of course is not real science, which is more like research showing everyone going the same way, postulating the existence of a path, then going out into the real world to see if one can find one and explain its existence (e.g. a pass between the mountain tops)?

    So lets look at the science of logic. In 1740 it had been realised for 2000 years that certain paths through the maze of language enabled one reasoning enabled one to short-cut physical demonstrations of the paths between cause and effect. It was 1938 before Shannon discovered how logic physically worked, and 1948 before he discoved how morality worked – by putting mistakes right as soon as possible after they occur, so that errors are not broadcast and damage remains tolerable. Seeing how this physically works in computers, and that nervous systems (like computers) operate by means of switching logic, we can postulate that brains also have both deductive and error-correcting logic, and in fact this is perfectly consistent with behaviour consistent with the observed the architecture of the brain and mathematically explicable in terms of group theory. All of which means that Hume was totally wrong in 1740 and subsequent economists and social scientists have been naive to slavishly adopt his misinterpretation of scientific method.

    “Logically, mathematically and ethically, the whole truth is actual truth, while partial truth is not; and 100% validity is valid, while pseudo- or quasi-validity is invalid”?

    Absolutely not. Truth is complex, with its important dimension looking to the future and your dimension, Michael, looking to the past, as in your amusing definition of economics. The whole truth is that what we do will near enough produce what we intend, with negligible side effects, if and only if our understanding of what has happened in the past is near enough consistent with the structure of reality.

    We are discussing absolute fundamentals here. I hope these conclusions will be shared among a much wider audience than the 500 or so followers of this blog.

  8. October 31, 2011 at 8:39 am

    Living in Germany as I do, and having come to the subject of economics and management through he German system before taking on the Anglo-Americans, I am somewhat amazed at the hachet job that the neo-liberal Friedman school of economics has done to the subject. We don’t have to dredge around in the swamps of the distance past for alternatives to the Chigoeans. At the same time they were taking over economics and finance and banishing ethics, the Germans were in theory and practice setting up the social market economy. there are numerous texts to consult about it. See, Standard Texts on the Social Market Economy (1982), Gustav Fischer Verlag, Stuttgart. I know that UK and American economists suffer from the “not invested here syndrome” which prevents them from taking anything seriously from outside their bailiwick. But gosh, gee wilikers — wake up, your country needs you!

    • Dave Taylor
      October 31, 2011 at 10:03 am

      Amen to taht, Robert.

  9. Bruce E. Woych
    October 31, 2011 at 7:39 pm

    “Mischief springs from the power which the monied interest derives from a paper currency which they are able to control, and from the multitude of corporations with exclusive privileges…which are employed for their benefit.”

    –Andrew Jackson

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