“The American Dream and the Boston Economics Party”

from Edward Fullbrook

An invitation to speak at next year’s ASSA annual conference in Boston has reminded me of attending the same event in Boston twenty years ago and of a short article I wrote about it (“No Reality, Please. We’re Economists”, The Times Higher Education Supplement, March 25, 1994). The observations I made then seem no less pertinent today.  Here is a draft of that article.

The American Dream and the Boston Economics Party

Edward Fullbrook
January 1994

When at this year’s American Economic Association meetings a speaker used the word conscience, embarrassment fluttered through the hall.  “The c-word” is taboo among economists. Its effect on our notion of “rational­ity”, which admits only isolated self-interest, is like a lighted match in a gas tank.

The unfortunate speaker (he was later publicly admonished for his impropri­ety) was one of 7200 economists from over 50 countries gathered in Boston for a three-day bash of reading and listening to learned papers.  Astonishingly, this global event for “the queen of the social sciences”, addressed scarcely a word to the world’s mounting economic ills.

This year’s venue, Boston’s Copley Place, symbolizes economics’ current indifference to the woes and aspirations of the man in the street.  This city-centre complex stands as a postmodernist shrine to the socio-economic after­math of Reaganomics.  A French colleague aptly dubbed it “an American Versailles”.  No expense has been spared or architectural excess foregone in constructing its three thirty-story hotels and their connecting half-mile of arcades.

These warm marbled pleasure walks are home to Neiman-Marcus, Tiffany, Gucci, Louis Vuitton and, for nature-lovers, a sixty-foot waterfall.  With their banks of tropical foliage, the elevated arcades crisscross the icy streets of the other Boston.  When arriving from the airport by subway, that system’s antiqueness and the third-world despondency and shabbiness of its users had shocked me.  But in Copley Place, a city within a city and only a short walk from Boston Common, everyone looks middle class or above.

America’s segregation of old required more than laissez faire.  So too does today’s.  Squads of hard-faced men and women in blazers police Copley Place’s homogeneity, especially at its few ports of entry to the other America.  Even the doe-eyed youths who administer loving care to the delicate plants wear neckties.

Copely Place, like similar developments in other American cities, is a prototype of a new form of civic organization.  It is induced — some say neces­sitated — by the increasing bifurcation of America into haves and have-nots.  That economists should be meeting in such a place, given their lead in creating prosperity for all in the first three post-war decades, seemed poignantly sad.

That proud history desperately needs recalling.  At the end of World War Two western governments feared a return to depression.  So they sub­scribed to the new wonder remedy for economic ills, Keynesian economics.  The cure rate was astonishing.  For three decades the middle class expanded as full employ­ment, low inflation and high growth reigned across America and Western Europe.  It set a record of economic performance completely without historical precedent.  In the wake of its colossal success the economics pro­fession amassed prestige, tenured positions and public funding.

But by the early 1970s, Keynesianism, like an antibiotic that has been over prescribed, began losing its curative powers.  Anxious to preserve its position, the profession scrambled to package and market new remedies.

The earlier success, however, had given rise to the dogma that all of economics’ fundamental problems had been solved.  This doctrine had made primary research a forbidden activity, a career-destroying form of heresy.  For a generation the profession’s patriarchs had permitted only analysis conforming to pre-existing models of how economists of the past believed economies functioned.  So, only old ideas, ones predating Keynes, were available for response to the emerging crisis.

The failure of those reconstituted ideas to stem the decline is now also part of economics’ history.  Today Europe stews in persistent double-digit unemploy­ment as fascism and anti-semitism reappear.  While in the United States, it is public knowledge that for the majority of citizens the American Dream is dead or dying.  Falling expectations of standards of economic man­agement are now an implicit part of the public culture.  The era when a widening middle-class, 3 percent unemployment, 2 percent inflation and 3.8 percent per capita growth was the Western norm now seems like a fairy tale.

Memory of the post-war economic miracle greatly embarrasses today’s economists.  It testifies to our radical inferiority to our predecessors in terms of our capacity to treat economic ills and to be of use to society.  Knowing one belongs to a degenerating science does not make one feel good.  Consequently, the post-war miracle is now, by various means, being “pro­gressively” written out of the collective memory.  Already economics’ radical failure to cope with the millennium realities has become one of “the unmentionables of our time” (J. K. Galbraith).  In lieu of a sense of history and of service to humankind, the economics profession increasingly takes refuge in meaningless mathematical puzzles and in the vainglory of its Nobel Prizes.

As a participant in the Boston conference I received a 382 page program listing the 564 sessions and the over 2000 papers.  In vain I studied it for signs that the profession wished to address itself to the economic crises griping the world outside Copley Place.  And, I should add, the paper I gave was no exception.

In any discipline responsibly intent on rectifying its failure to adequate­ly represent and explain its object of inquiry, one would expect to find two things: an empirical focusing on those areas where the system of representa­tion had proven particularly inadequate, and a serious, no holds-barred, critique of theories and concepts.

But, except for sessions organized by women, who recently have gained a toehold in the profession, there was scant sign of such empirical focusing.  And there were no signs at all of mainline interest in rethink­ing the theoretical structure.  Orthodox economic theory is now more sacrosanct than Christian dogma.

I had registered too late to get a room in one of the Copley Place hotels.  So at the beginning and end of each day I had to leave my hot-house world and step out into the real republic.  Walking from my hotel on the morning of “The Presidential Address”, I came upon a parked ambulance.  In the doorway of a boarded-up shop, one of Boston’s homeless had been sleeping.  At first I thought he was elderly; then I realized that the white in his hair was frost.

A few hours later, the president-elect of the American Economic Associ­ation stood under an elephantine crystal chandelier.  He recalled how 43 years ago he had arrived in America as an immigrant.  Fair enough.  But then he claimed that his standing there as the head of “one of the most powerful clubs in the world” epitomized the realization of the American Dream.

Suddenly it appeared to me that the president had crossed over into the subversion of an ideal.  Surely that dream which has given inspiration to most of the world, was not this picture of a man in the exclusive splendour of Copley Place celebrating his hold on the reins of power of a notoriously undemocratic and illiberal institution.  Surely the American Dream, when it had lived, rather than championing the few over the many, had been some­thing like the opposite.

I remember it as the dream that all people, especially those who did not yet have them, would be well provided with the necessities and comforts of life, endowed with the dignity of good education and productive work, and who, after their labors, would feel free, safe and willing to mingle with all comers in truly public places like Boston Common.  The president’s inversion of the American Dream, uttered without malice and in the vacuum of a forgot­ten history, seemed symbolic of the moral decline.

If economic orthodoxy is correct, this article will succeed in arousing not a single economist from their complacency.  If economists are “rational” men and women, seeking to “maximise their utility” as isolated individuals, then they have nothing to gain from abandoning their pro­fessional disregard for the economic perils of our age.  Neither their livelihoods, nor their junkets, nor their prestige, nor even the aura of their Nobel Prizes are at risk.  Indeed, they will find their self-esteem severely dented if they dare venture beyond their Copley Place worlds.

So, in the end, I have no basis for “rational” appeal.  In the end I can only invoke the c-word with intent.  All I can do, all anyone can do, is appeal to their conscience.