Best economics read of 2012
from Edward Fullbrook
I have a policy of not taking economics books on holiday. Philosophy yes, literary fiction always, genre fiction sometimes, occasionally books on physics written by physicists, but economics never. Recently however the rule was broken. Economists and the Powerful by Norbert Häring and Niall Douglas went with me to Majorca and it was a rewarding and enjoyable mistake. Like F. Zaman’s RWER paper which I reviewed yesterday, and for similar reasons, it is an important book for understanding the times in which we live. For both works, the role of power in the economy and the successful efforts of the ultra-powerful and their minions to keep their doings off society’s radar is the central theme.
Häring and Douglas detail how the real-world contexts out of which economic doctrines came to be created, in other words, all that stuff that should be in a History of Economic Thought course, but probably never is. Their concept of power vis-a-vis economics includes the Pentagon. The book abounds with fascinating historical detail. Here is an example.
It is hard to overestimate RAND’s impact on the modern economic mainstream let alone modern society. As a quick indicator, to date, some 32 recipients of the Nobel (Memorial) Prize, primarily in the fields of economics and physics, have been involved or associated with RAND at some point in their career. Among other things, it had a big role in de-emphasizing empirical real-world oriented research in favour of axiomatic, mathematical deduction across the fields it touched. RAND was an important source of funds for the Cowles Commission in the 1950s. The Cowls Commission, funded by the businessman of the same name, would be the most important driver of the advance mathematical formalization of the neoclassical mainstream after the war. In 1951, it received almost a third of its funds from RAND and another quarter from the Office of Naval Research. [p. 23]
Unlike the rest of us, the powerful were and remain fully cognizant of the importance of narrative to the functioning of societies. Häring and Douglas show how, possessed with this knowledge, the powerful set out to change society’s basic storylines in so far as they inhibited their ambitions. Above all else this meant changing the discipline of economics. “Changing the discourse” became for the ultra-powerful a strategic goal, and this book – you really should read it and it is not expensive – documents the processes by which economists and their institutions were and remain corrupted. As products of that discipline, economists — sometimes even non-neoclassical ones – tend to be oblivious of the strategic role that intersubjective forces play in shaping and controlling economies. Häring and Douglas’s book aims to diminish that ignorance.
. . . it was not an improvement of knowledge or tools that led to the shift from classical and institutional economics to today’s “anti-government – neoclassical – rational choice” mainstream. It was the result of a redefinition of what economics should be concerned with – from a fair to an efficient allocation of resources – an effort that was generously funded by businessmen and the military in the name of cementing the power and legitimacy of their selves and their beliefs within society in a post-1929 Depression ideological Cold War world. It has become time, especially in light of the 2008/2009 financial crisis and the fact that the West won the Cold War two decades ago, to reacquire the power to substantially change how we perceive our economic behaviour, and in so doing to reacquire the power to behave better in the future than we have until now. [pp. 25-6]