Home > Uncategorized > We rely on economics too much

We rely on economics too much

from Peter Radford

I think I am with Tony Judt on this one. I am reading the new collection of his essays written between 1995 and his death in 2010, and have had my memory jolted: he gave us many very considered critiques of modern economics, although they were usually dressed within the context of a book review. The point I am agreeing with is this statement he gives us in his 2009 speech called “What Is Living and What Is Dead in Social Democracy?”:

“But how did we, in our own time, come to think in exclusively economic terms? The fascination with an etiolated economic vocabulary did not come out of nowhere.”

Etiolated? Lovely, but I disagree. Our economic vocabulary is both robust and way too vigorous to be etiolated. On the contrary, economics has become a weed infesting society in every corner, and our use of it is far too frequent to consider it etiolated at all. Indeed our reliance on economic vocabulary belies the gaping holes in the theories that those words depend upon for their relevance.

But the larger point: that we overuse economics, that we see our world in economic terms rather than in other, perhaps more relevant, terms, and that we have come to depend too much on economic analysis to justify our actions is one I wholeheartedly endorse. 

How on earth did we get this way? After all economics is a deeply divided and fractious discipline. It offers as many opinions as it has disciples. It sits upon a highly contextual and ideologically dependent base. Its pseudo science is exactly that: pseudo. It is a science only in the sense that it has a veneer of formality to paper over its ideological intent and content.

Don’t get me wrong: the logical structure that sits atop its axiomatic base is a wonderful intellectual achievement. But that axiomatic base looks mighty selective. Indeed it looks so selective that we could be forgiven for mistaking it for a political agenda. It fairly screams at you: “governments are bad things”, after which the logical structure which yields that exact comes as absolutely no surprise.

So I repeat: how on earth did this agenda insinuate itself so successfully into our everyday lives? How on earth did it become that we scarcely act without asking what our actions will contribute to growth, productivity, employment, profit, or trade?

Whatever happened to plain old right and wrong?

I am not consciously paraphrasing Judt when I think like this. These are questions we need to ask. His eloquence in asking them is sorely missed as we watch the breathless way in which the media evaluates our elections, not on their potential social outcomes, not on whether we will all lead better lives, but on what the market will think.

To which we all know the answer: the market will go up. Or it will go down, probably both within a short time. So what? That’s what markets do. One day they tell us housing is worth millions. The next day they tell us it is a worthless pile of junk. Apparently economics has no way of distinguishing value other than to say: “it is what it is”. This is hardly a premiss for bold action. It is more a truism to be ignored. It has no content.

That’s the problem hidden behind all that fancy language and math: the more you poke into economic thought the more likely it is to evaporate or to reveal itself as superbly dressed up but intuitively self-evident truths. Ask an economist what a market actually is. Ask for a description. What are the artifacts that denote we are looking at a market? People? Buildings? Structures? No. We are looking at prices.

But aren’t prices an outcome of market activity? Then the outcome defines its own generator? Isn’t this circular?

Then again: it is what it is.

If you keep pushing and prodding long enough what you end up with is the general observation that humans tend to want less of things when the cost rises, and more of those things when the cost falls. Beyond that lies a whole lot of clever window dressing and conjecture.

Yet here we are paying homage to the economic analytical process as if it was a great truth and a solid foundation for a harmonious society.

It isn’t. Indeed it doesn’t even try to be. It seeks to be amoral. It prides itself on its “positivity”. Economists are prone to shrug when they condemn workers to penury: hey its just where the analysis took me! It’s what the market wants! Tough! Get a job no matter what the pay. The key is to get any old job. So stop whining. It’s what the market wants!

And we all know you can’t defy the market.

The problem, I think, is that economics gives us that veneer. It provides us with an easy escape from having to weigh and opine in moral or ethical terms. It appears clinical. It is what it is. We can’t fight the great hidden hand. We cannot avoid the opinion of the market. We therefore must calculate. We must come up with numbers. And we must obey the direction in which those numbers suggest we chart our course. Right and wrong are too difficult to conjure up. After all they involve subjective opinion. Obeying the market avoids the argument that comes along with trying to resolve subjective points of view. So listen, one and all, hear the voice of the market. It is the simple truth we have all been waiting for.

So, I ask again: what, or whom, is this market?

Judt reminds us that Keynes once said:

“ A study of the history of opinion is a necessary preliminary to the emancipation of the mind”

Perhaps we all need to review a history of economics. After that escaping its grip ought to be easy: it doesn’t have much to say about the real world, whereas we do. We live there.

  1. Franklin Chiemeka Agukwe
    May 14, 2015 at 3:25 pm

    I’ve always emphasized that ideology not methodology is what economics needs. Ideology or idea is not necessarily expressed in mathematical terms while methods are mostly expressed in mathematical terms which increases confusion and boredom.the business community does not apply methods to make profit. They only apply idea and there you go they achieve all what economics intends to achieve. the sooner economics comes to this realization the earlier its false theories and models will be corrected

  2. May 14, 2015 at 4:22 pm

    Reblogged this on iGlinavos and commented:
    I have struggled as well with the contradictions and circular logic of economic discourses. It gets worse when economic objectives define legal reforms.

  3. May 14, 2015 at 4:58 pm

    “Our economic vocabulary is both robust and way too vigorous to be etiolated”?

    Tony Judt seems to bewailing the vigour of economic language because its MEANING has been “etiolated”: reduced to a pale shadow of its former self by being whitewashed with irrelevant associations until it becomes to all men all things they happen to be aware of. Peter’s “weed in every garden”, exactly.

    I’ve been particularly aware of the British government watering down the meaning of the word “marriage”, but think of the word “bank”. We still think of putting our valuables and savings in it, but here (cit. http://www.moneyreformparty.org.uk/money/about_money/quotes.php) is William Paterson, founder of the Bank of England, 1694:

    “The bank hath benefit of interest on all moneys which it creates out of nothing.”

    and the Rothschild brothers of London writing to associates in New York, 1863:

    “The few who understand the system will either be so interested in its profits or be so dependent upon its favours that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests.”

  4. May 14, 2015 at 5:15 pm

    The roots of what I term ” economism” are deep. From the Hijacking of Charles Darwin and Adam Smith by Victorian elites ( watch our TV show “How Charles Darwin and Adam Smith Were hijacked “) , to the poisonous philosophy that emerged :Social Darwinism , to the US focus on individualism and competition , about which I have written extensively , we are still suffering from ideology and theory-induced blindness , even to the reality that the ” nobel” in economics is not a real Nobel, but set up by the Central Bank of Sweden !.

  5. May 14, 2015 at 5:43 pm

    Dr. Ursula Franklin answered your question about how we got economics insinuated into every aspect of your lives with a clever article called Building a People First Economy: Canada Under the Occupation of an army of marketeers. http://www.povnet.org/node/649.
    Related to that is the article by Lester about Why Bad Beliefs Don’t Die. http://www.csicop.org/si/show/why_bad_beliefs_dont_die/

  6. blocke
    May 14, 2015 at 6:23 pm

    I don’t know what tree you have been living in but it certainly isn’t the one I’ve inhabited. I was born in 1932; When I studied for a PhD in history at UCLA in the late 1950s, with an emphasis in 19th century German history, we discussed economists a lot in our seminars. But we studied Schmoller, Sombart, Veblen, and others because from them we learned a lot about German history. I quickly learned, from the historian’s perspective, that the neoclassical economics at the time it was taking over economics departments right after WWII, did not, as a discipline, provide much insight into historical studies.

    So Peter, I never went through any of the agonies you talk about in your comment. I have spent the last 40 years arguing that neoclassical economics for those of us who want to understand the real world, was of very little scholarly use. I, in fact, developed a great distaste for so-called orthodox economics because of the pretense, which is echoed in your comment, that the group of scholars who developed the economics you call economics should be the sole fount of knowledge on the subject. Only in 2009 did I start reading this blog, on the grounds that perhaps some economists were finally ready to open their minds to founts of knowledge about economics other than the neoclassical school. Seeing you struggle so hard to free yourself from this neoclassical school, and reading this blog for the past 6 years, has convinced me that real-world economist who want to free themselves have remained captive minds of neoclassical economics, whose takeover of their subject can best be explained by historians not economists.

  7. Ack Nice
    May 14, 2015 at 9:12 pm

    “A study of the history of opinion is a necessary preliminary to the emancipation of the mind”

    You rang?

    I’ve done precisely this study necessary to emancipate minds. Years ago. Using quotations most people have never heard and by showing the truth versus untruth in them. My as yet unpublished chapter 8 is titled The Unanimous Opinion of Wisdom Through the Ages. I deserve an economics PHD for it. But nevermind that – it’s 46 thrilling, delicious pages long. Where do you want it? Will this place accept a guest post from a non-economist who got paid nothing including recognition for the very writing the world most needs to hear?

    How serious are you about getting real?

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