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Economics as religion?

from David Ruccio

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Mainstream economists have been taking quite a beating in recent years. They failed, in the first instance, with respect to the spectacular crash of 2007-08. Not only did they not predict the crash, they didn’t even include the possibility of such an event in their models. Nor, of course, did they have much to offer in terms of explanations of why it occurred or appropriate policies once it did happen.

More recently, the advice of mainstream economists has been questioned and subsequently ignored—for example, in the Brexit vote and the support for Donald Trump’s attacks on free trade during the U.S. presidential campaign. And, of course, mainstream economists’ commitment to free markets has been held responsible for delaying effective solutions to a wide variety of other economic and social problems, from climate change and healthcare to minimum wages and inequality.

All of those criticisms—and more—are richly deserved.  

So, I am generally sympathetic to John Rapley’s attack on the “economic priesthood.”

Although Britain has an established church, few of us today pay it much mind. We follow an even more powerful religion, around which we have oriented our lives: economics. Think about it. Economics offers a comprehensive doctrine with a moral code promising adherents salvation in this world; an ideology so compelling that the faithful remake whole societies to conform to its demands. It has its gnostics, mystics and magicians who conjure money out of thin air, using spells such as “derivative” or “structured investment vehicle”. And, like the old religions it has displaced, it has its prophets, reformists, moralists and above all, its high priests who uphold orthodoxy in the face of heresy.

Over time, successive economists slid into the role we had removed from the churchmen: giving us guidance on how to reach a promised land of material abundance and endless contentment.

However, in my view, there are three problems in Rapley’s discussion of contemporary economics.

First, Rapley refers to economics as if there were only one approach. Much of what he writes does in fact pertain to mainstream economics. But there are many other approaches and theories within economics that cannot be accused of the same problems and mistakes.

Rapley’s not alone in this. Many commentators, both inside and outside the discipline of economics, refer to economics in the singular—as if it comprised only one set of approaches and theories. What they overlook or forget it about are all the ways of doing and thinking about economics—Marxian, radical, feminist, post Keynesian, ecological, institutionalist, and so on—that represent significant criticisms of and departures from mainstream economics.

In Rapley’s language, mainstream neoclassical and Keynesian economists have long served as the high priests of economists but there are many others—heretics of one sort or another—who have degrees in economics and work as economists but whose views, methods, and policies diverge substantially from the teachings of mainstream economics.

Second, Rapley counterposes the religion of mainstream economics from what he considers to be “real” science—of the sort practiced in physics, chemistry, biology, and so on. But here we encounter a second problem: a fantasy of how those other sciences work.

The progress of science is generally linear. As new research confirms or replaces existing theories, one generation builds upon the next.

That’s certainly the positivist view of science, perhaps best represented in Paul Samuelson’s declaration that “Funeral by funeral, economics does make progress.” But in recent decades, the history and philosophy of science have moved on—both challenging the linear view of science and providing alternative narratives. I’m thinking, for example, of Thomas Kuhn’s “scientific revolutions,” Paul Feyerabend’s critique of falsificationism, Michel Foucault’s “epistemes,” and Richard Rorty’s antifoundationalism. All of them, in different ways, disrupt the idea that the natural sciences develop in a smooth, linear manner.

So, it’s not that science is science and economics falls short. It’s that science itself does not fit the mold that traditionally had been cast for it.

My third and final point is that Rapley, with a powerful metaphor of a priesthood, doesn’t do enough with it. Yes, he correctly understands that mainstream economists often behave like priests, by “deducing laws from premises deemed eternal and beyond question” and so on. But historically priests served another role—by celebrating and sanctifying the existing social order.

Religious priests occupied exactly that role under feudalism: they developed and disseminated a discourse according to which the natural order consisted of lords at the top and serfs at the bottom, each of whom received their just deserts. Much the same was true under slavery, which was deemed acceptable within church teachings and perhaps even an opportunity to liberate slaves from their savage-like ways. (And, in both cases, if those at the bottom were dissatisfied with their lot in life, they would have to exercise patience and await the afterlife.)

Economic priests operate in which the same way today, celebrating an economic system based on private property and free markets as the natural order, in which everyone benefits when the masses of people are forced to have the freedom to sell their ability to work to a small group of employers at the top. And there simply is no alternative, at least in this world.

So, on that score, contemporary mainstream economists do operate like a priesthood, producing and disseminating a narrative—in the classroom, research journals, and the public sphere—according to which the existing economic system is the only effective way of solving the problem of scarcity. The continued existence of that economic system then serves to justify the priesthood and its teachings.

However, just as with other priesthoods and economic systems, today there are plenty of economic heretics, who hold beliefs that run counter to established dogma. Their goal is not to take over the existing religion, or even set up an alternative religion, but to create the economic and social conditions within which their own preferred theories no longer have any relevance.

Today’s economic heretics are thus the ultimate grave-diggers.

  1. Tom Welsh
    July 21, 2017 at 9:58 am

    Actually, economics fall far short of being a science because it rarely makes falsifiable predictions, and when it does they are usually wrong. It is tempting and delightful to conjure up an abstract world of mathematical relationships and models. But it is not enough that some, or even all, of these abstractions correspond somewhat closely to events in the real world. They must do so in aggregate, or correct predictions cannot be made.

    If it were true that some economists are right, although others are wrong, it would quickly emerge that the ones who are right make correct predictions while the others don’t. That has signally failed to happen.

    • July 21, 2017 at 7:23 pm

      “They must do so in aggregate, or correct predictions cannot be made.”

      Good points – I would add that some of the greatest discoveries in Physics come from outliers. Meanwhile, neoliberal economists think they have nothing to learn from South Korea and Japan because they don’t match their models.

  2. patrick newman
    July 21, 2017 at 10:15 am

    Seeing conventional economics as religion in essence is a very useful way of entering a rigorous critique. As with all religions failure follows an unbias clear thinking analysis of the reality we see and live in. It is very difficult to break through the absolute ‘truth’ we must all accept of laissez faire free enterprise, free markets, balanced government budgets the private sector paying for public services, government spending under perpetual challenge etc. I think it was Marx who said the religion of the Englishman is the laws of supply and demand.

  3. C-R D
    July 21, 2017 at 3:49 pm

    The comparison of neo-classical economics to a religion is aptly justified in my view, and Ruccio is correct to stress that not all economists are neo-classicists. However, I am rather uncomfortable when I hear that:
    Economics uses too much math, and economics is not a science. I do not know any scientific discipline that shuns mathematics, and no one calls attention to the fact that neo-classical economists chose a branch of mathematics that is not suitable to the problem at hand! For example, the classicists, forerunners and marginalists engaged a young discipline on the utility tract, which subsequently led them to a no men-land where they are trapped. Had their modern successors (post 1880s) chosen set theory to find a metric for value rather than Newtonian mechanics, we would not be having this conversation today. I also think that the neo-classical should have tried to learn from process engineers how production is carried out, instead of playing with Cobb-Douglas identities and they should have long ago introduced their students to analyses of complex systems.
    All of this is to state more succinctly that “Preference” is in ordinal space, while physics operates in real “space “. A mapping from from ordinal space to a real isomorphic real space is monotone, and there are no constants in ordinal space. I think that we should be more careful when comparing “social Sciences” to “normal” sciences.

    • July 21, 2017 at 7:28 pm

      Great points. I also think that inorganic chemistry and evolutionary ecology should be required classes for an economics degree because the perspectives in those to areas apply better to economics of the real world than most of the orthodox economics I have seen..

  4. July 21, 2017 at 4:40 pm

    Thank you for this David. Every time the pronouncement is made that the “end of neoliberalism” is at hand the funeral seems to get postponed. I do believe we are getting closer however, in 2017. And one of the main reasons it has hung on so tenaciously, despite all the critiques of increasing coherence, has been its religious like intensity.

    I had my own sense of that, first hand experience by watching the flashes of anger on the Right when economic doctrine was questioned (supply side theories, taxation, role of government…the package) confirmed by Karl Polanyi’s repeated comments on the religious like intensity of the those who helped formulate “classical economics” in the early 19th century, made in several places in “The Great Transformation.”

    And then the very first time I read something by Yanis Varouvakis, at Yves Smith’s Naked Capitalism blog, “Can the Internet Save Democracy?” I noticed that Varouvakis had listed James A. Morone’s “Hellfire Nation: The Politics of Sin in American History,” which is a great introduction on how Protestant fundamentalism is intertwined with capitalist theory and practice: the deeply imbedded sense of “just” economic reward for Christian virtue…which serves as the moral scale for the American right to so fiercely deny a decent material life – health care being a glaring example – to those deemed unworthy. George Lakoff the cognitive linguist also agrees in his “Moral Politics” that this fundamentalist Protestant background to our ideas about economics is deeply woven with Biblical metaphors about work, reward and debt…woven into the language at an unconscious level.

    Of course the old Testament notion of the Jubilee time, of the forgiveness of debts which cannot be repaid, doesn’t get much mention except on the left. My pen name here, “gracchibros,” was inspired by the attempt of the Gracchi to role back the debts which the rural backbone of the early Roman republic had accumulated while they were away on the endless domestic and foreign wars which Rome fought. The patrician Senate (ahem to the contemporary median “net worth” of our Senate) did not take kindly to economic revisions of this kind, and had the impudent brother murdered by a Senate led mob…which I have come to see as the end of the “republic” …long before Caesar was born. Our American founding fathers, so fond of Roman republican “virtue,” didn’t write much about the Gracchi dynamics. Some proof, I think, of Piketty (and Michael Hudson) dynamics operating in pagan life as well as Christian eras.

    Did Varouvakis also know, beforehand, because his essay appeared in 2014, before the amazing experience he had in 2015, that Hellfire Nation would be a very useful guide to the modern German banking mind, and therefore the tight chains placed around reforming debt and fiscal policy, so tight that “social democratic” Germany rejected even the meek new New Deal for the Union and the periphery that Varouvakis and Galbraith had proposed in 2013, in their “Modest Proposal.”

    Religious intensity indeed. Thrifty virtues – hard work, saving, wage restraint – all at stake in “bailing out” those feckless Greeks…the public invective tossed at them by various German editorials might have come from New England Puritan clerics in the 17th and 18th century “jeremiads” against moral decay…the Greeks not having “earned it” – a decent material life.

    Hard for the secular left, here in America and especially in Europe, to understand how Protestantism (shared by the Catholic Right) values still form the moral underpinnings of capitalist theory, the “market” being the great deciding body on who has moral merit for what rewards, and who doesn’t.

    And then there is the American Dream…but I’ll save that for another time.

  5. July 22, 2017 at 12:01 pm

    David Ruccio was “thinking, for example, of Thomas Kuhn’s “scientific revolutions,” Paul Feyerabend’s critique of falsificationism, Michel Foucault’s “epistemes,” and Richard Rorty’s antifoundationalism”.

    ‘Epistemes’ being a new term for me, I looked it up and found Foucault was thinking of Kuhn’s paradigms as practice not in particular fields but at the most fundamental level:

    http://onlyagame.typepad.com/only_a_game/2015/06/foucaults-archaeology-1-paradigm-and-episteme.html

    That amounts to the conditions of the possibility of evolution and of our being able to know about it, which is what I’ve been studying and Yoshinori thought must be very interesting:

    https://rwer.wordpress.com/2017/06/28/economics-10whatever/#comments [July 19, 2017 at 7:33 pm].

    At a minimum one has to assume (against Hume) the existence of energy rather than change, and a form of energy (a Big Bang rather than an already existing cosmos), these being represented by our knowledge of the assumptions; but one also needs Cartesian coordinates or their equivalent to be able to minimally represent other differences by positioning them.

    Anyway, given the model based on waves, turbulence and particles evolving from this beginning, how does it affect the discussion here?

    If David’s “Today’s economic heretics are thus the ultimate grave-diggers”, surely the same is true of Christ, who dug the graves of the priestly caste by abolishing the need for it (God is your Father: he wants your love, not tribute) and showed God’s love by his becoming the priest and making the ultimate sacrifice of himself (the Big Bang?). Why does everyone have to keep abusing the word ‘religion’? One cannot re-tie oneself without first having been freed.

    Tom, what comes out in my model is that you cannot predict the future exactly. What science should be doing is advising you where to look, so you can see problems while they are still manageable (c.f. the lookout on a ship). For, Jeff, one can still predict where to look.

    Patrick, if you want to make comments like this you’d better think in terms of pseudo-religions.

    CR-D, I largely agree with you (and Jeff here). What you might have pointed out is that your real space is mathematically complex as against one-dimensional, and that much of what we now take to be mathematics (like manipulation of arabic number representations) didn’t exist when the Greeks developed geometry with the aid of Pythagoras’s theorem. I agree economists should long ago have introduced their students to analysis of complex systems, but I would argue, at the mathematical level of Foucault’s episteme and the practical level of fundamental electric circuit theory, as an introduction to study of the carrying of information in coded form and the development of complexity in our decoding and communication capabilities as we grow up.

    Graccibros, I am with you in spirit, not least because a while back I took the trouble to google your name. Thank you for daring to mention both mainstream Protestantism and the Catholic Right, but looking at the facts, it was a joker who said “It must be true; I saw it in the paper.”
    Most of us believe what we are taught, and if that is wrong, so are we. The problem of Right and Left in political Economics as well as religion isn’t so much in what we believe as it is in our having to grow up, and the left (code-word) side of our brain tending to dominate the right (sensory image) side of our brain in the 70/30 proportions of right and left handedness. It follows that there are conservative socialists and radically self-centred conservatives, but the proportions of these are not such that, in democracy as we know it, either gets a fair hearing without hijacking the media (c.f. Pravda and The Times). Still, the hope is that truth will out by standing back from what we are seeing to enable us to view its landscape. Sufficient may learn to see life in context for this to become sufficiently mainstream, facilitating the doing of what so badly needs doing so us old heretics can continue to argue among ourselves.

  6. July 23, 2017 at 12:32 pm

    I get the impression, as a non economist that classical economics of the academic sort is not much interested in the real world so much as the elaborate models constructed to explain this or that feature. To get a handle on it they make assumptions such as that humans behave rationally, which is just not true.
    Why not go back to first principles? The currency exists because it was created by the Constitution. There was no dollar before 1776. First point. Then note the federal government has sole power over the currency. It can create it by buying debt. No debt, no money. Also there is no money in the economy until created by government spending, which strips away the pretence that the government taxes to be able to spend. In fact the government spends to allow us to earn the money we need to pay taxes. It continuously has to spend because continuously taxes over time use up every dollar spent. And so on.

    That’s what the economic debate has to recognise before getting bogged down with false models etc. No algebra is required. Start with the laws.

  7. July 23, 2017 at 1:05 pm

    My concerns about economics are practical. Rapley points out,

    “Hubris, never a particularly good thing, can be especially dangerous in economics, because its scholars don’t just observe the laws of nature; they help make them. If the government, guided by its priesthood, changes the incentive-structure of society to align with the assumption that people behave selfishly, for instance, then lo and behold, people will start to do just that. They are rewarded for doing so and penalised for doing otherwise. If you are educated to believe greed is good, then you will be more likely to live accordingly.

    The hubris in economics came not from a moral failing among economists, but from a false conviction: the belief that theirs was a science. It neither is nor can be one, and has always operated more like a church. You just have to look at its history to realise that.”

    Economics and economists do things that science and scientists do not. They actively invent the worlds (reality) they study. (1) Then they pretend they have not invented anything. Next, they set themselves as the only and final judge in deciding both what science is and how it must be carried out. In short, economists, even many so-called “alternative” economists are authoritarian dictators who accept no interference in their realm and strongly punish any who violate their rules. This may not be religious, but it is clearly not scientific, not democratic, and is a-historical. It’s damned dangerous for all of humanity, even if the rules don’t kill us right away.

    (1) All scientists invent what they find and describe. They arrange hundreds, perhaps thousands of observations over many years, many locations, and many perspectives into a description of some part of the world. Then they link these descriptions into a “theoretical construct” that’s supposed to bring the observations together. Wonderful invention. But they try to base the end – theoretical construct – on the beginning – observations. Something most economists do not attempt.

  8. cparesb
    July 24, 2017 at 12:50 am

    I don’t agree with the first point: in almost every religion there are, actually, different approaches. Evangelicals and Catholics are both Christians. Sunni Islam and Shia Islam are not the same, either… etc.

    Moreover, we should be careful because a big amount of our scholars is based on faith. Basically the whole Classic Model, perfect markets and rational expectations and the results based on them, are just acts of faith. And we continue to teach them in our catechism, and repeat it prayers in TV, radio and newspapers…

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