Would you agree with the following statement? "[Economists] should take credit for the deteriorating quality of existence. For it is their philistine notions of personal and national welfare that have helped to ruin the natural world; confused technology with culture; reduced art to money, time to interest, sexual relations to pornography, friendship to advantage, and liberty to shopping, and wasted whole generations who, because they have only been taught to think in categories of money, have, in Schopenhauer's phrase, 'missed the purpose of existence'."
If so, you'd have plenty of company. This was the writer James Buchan, ranting in Prospect ("The poverty of economics", December 1995). He represents an extreme, perhaps, but such views about economics are to be found repeatedly expressed in political and literary journals. Even the Financial Times, from time to time, indulges in economist-bashing. A column by Philip Ball on its op-ed pages ("Baroque fantasies of a most peculiar science", 29 October 2006) made the same points: economists have an arid view of human nature, miss all that is rich and complex about life, and reduce everything to the profit motive.
Diane Coyle runs the economic consulting firm Enlightenment Economics. She is a member of the UK Competition Commission and a visiting professor at the University of Manchester. Among her books are Sex, Drugs and Economics: An Unconventional Introduction to Economics (Texere, 2002) and The Weightless World: Strategies for Managing the Digital Economy (MIT Press, 1998). Her most recent book is The Soulful Science: What Economists Really Do and Why It Matters (Princeton University Press, 2007)
Also by Diane Coyle in openDemocracy:
"Business is the victim" (24 February 2003)
Even sophisticated critics of the establishment, like the brilliant economists Deirdre McCloskey and Paul Ormerod make this claim. In his 1998 book, Butterfly Economics, Ormerod said we "remain fixated on the maths of 19th century engineers" and this "machine oriented maths" can't cope with social interactions. Both are amongst the group of "heterodox" economists who feel terribly beleaguered and oppressed by the mainstream.
What is truly bizarre about this persistent and frequent set of claims - economics ignores or over-simplifies reality, is based on a false conception of human nature, is only about money, thinks the world operates like a machine - is how untrue it is. Those who make the claims haven't been reading any of the economics published since about 1980. The caricature never represented reality all that accurately, but a whole generation of research has made it completely unrecognisable.
What's more, there is plenty of coverage in newspapers on journals of the areas of research which make it obvious that economics as it is is nothing like economics as it is perceived to be. To take one example (out of many): the nature of political and social institutions is at the heart of many branches of economics, including the study of economic development, industrial economics and corporate governance, growth theory and political economy. Several Nobel memorial prizes have been awarded to people whose work has emphasised institutional realities, including stars like Joseph Stiglitz (who looked at the role differences in the information people have can shape institutions such as sharecropping).
The test of reality
Two questions arise. Why do non-economists persist in such as dismissive view of the subject, which flies in the face of plentiful evidence? And why should economists like me care?
On the latter question, the answer is that the conventional criticism has set the tone for a popular view that economists are, although wrong, extremely powerful: evil Svengalis of government policy. The risk is that public opinion turns against influence of economics on public policy - at a time when the hidden renaissance in economics during the past twenty years or so has vastly increased its potential contribution to public policy.
In Britain there have been a number of important institutional reforms and innovations which ask people to trust economics - the Bank of England's monetary-policy committee, an independent Competition Commission, evidence-based assessments of public-service reform, auctions, the extension of congestion charging among them. There could be many others with the potential to improve policies based on a growing body of careful evidence, thanks to the impact of computers and new data sets during the past twenty years. The quality of outcomes will be greatly impoverished if voters distrust the technical economic decision-making behind such policies.
What about the first question - why do people hate us, still, after all these years? We certainly haven't done ourselves great favours. Economists are typically very bad at communicating, and lag behind natural scientists in grasping the need to engage with public opinion in a new way. But at the heart of it, I believe, is the reluctance of many people to accept that human behaviour can appropriately be modelled at all - that is, adequately described at a general level in a few relatively simple rules. David Hume, one of the first economists, set out the original agenda in his advocacy of a "science of human nature", and the economics of today has returned to this Enlightenment programme.
I believe (as I argue in my book The Soulful Science) that economics offers a uniquely powerful way of thinking about society, and how individuals make choices in their social context. Other approaches, those of the other social sciences, or history or literature and music, are valid too - I feel no need to dismiss them. But only economics with its choice-based models emphasises the opportunity costs and trade-offs that inevitably arise from the social and physical realities of our existence.
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Comments
My point is that until economists come up with ideas that, once implemented, lead to equitable, sustainable worldwide growth, they will be treated on a par with witch doctors. 'Witch doctors' is an appropriate designation considering the success rate neoclassical economics-inspired policies have had throughout the world, but perhaps 'court jesters' is more to the point, since mainstream economists seem to do nothing more than provide a veneer of justification and popular appeal for policies that will - and demonstrably have - beggared the masses and enriched a few. So long as the few getting wealthy are the same people who pay the court jesters' salaries, I don't think a significant change in mainstream economics very likely.
These and many other examples are developments in microeconomic analysis with significant macro implications. The improvement in explanatory and predictive power is bound to gain wider acceptance of economics. As economics embraces the pluralism, so the public will embrace this 'revolution' in economics.
The dominant form of economics globally is a particualr strand of "laissez faire" neo-liberal economics, overseen by Washington-based international institutions, set up to run the world, and marginalise the UN, during the post-war settlement.
There is a revolving door between US government (particularly the treasury) and staffing in these insitutions. These institutions, which are often seen as extensions of US foreign policy, have done immeasurable damage to developing countries, since their "structural adjustment' policies have failed so spectacularly.
It is clear that this represents the dominant stream in economics, since the post 1980 shift in the profession coincided with these huge financial institutions finally caving in under the overwhelming evidence and criticisms mounting against their policies.
Stiglitz says as much, and his work on information economics is basically an exploration of one very faulty assumption in mainstream (neo-classical) economics, that is of perfect information. It has also become part of a new attempt to establish a hegemony around "accountability" in terms of the transparency of information being paramount in terms of how states run their affairs.
However this is a holding action by the economists: The problem is that they are technicians, and not policy makers, and should not have been left to run so much of the world's affairs.
"Information" cannot really say much about overarching human priorities, and is as such only a necesssary and not sufficient condition for democracy, or however else one finds social and political priorities.
When we have a functioning global democratic body, and an economics that is relegated to implementing policies, and in a way that is sensitive to particular social conditions, and particular sets of ethical and political priorities, then things will improve. Economists will be in their proper place as technicians implementing means to socially and poltically determined ends (rather than being agenda setters) and the cirticism will lessen.
This will not be achieved through theoretical apologies from economists, it will be achieved by reform of the instutions of global governments, to put human and democratic concerns above utilitarian economistic concerns. The profession will then follow suit, since economists seem to almost inavariably follow the money.
Whether or not economists deserve the negative press, the fact is that business and governments invariably dance to the tune of the economists and analysts. We, the public, see this and, as joefranks69 said, we also see the failures of the systems; we see the few get richer and the many get the poorer, we see the rape of the environment and we see the dehumanisation of people into workers. Anyone who tries to add responsibility or humanity to the economic system is described as "anti business" or dismissed with the usual excuses ("it's too expensive", "it would cost jobs/efficiency/prosperity/".
(At this point I would normally cite dozens of examples, but since the article is one giant generalisation I don't currently feel any pressure to go into much detail. I will drop these in, though: the environment, the mental health of the workforce, taxation of the rich, actual sustainability - you get the idea.)
At the core of the hubris surrounding economics we have this simple truth: In an economically-focused world, if something is 'uneconomic' it will invariably not be done unless there is *huge* democratic/public demand.
What we need, absolutely and urgently, is RESPONISBLE economics. The intangibles must be made tangible and costed in, no exceptions. The polluter (of any kind) must pay.
I am currently deeply unconvinced this will happen because, put simply, being completely responsible is uneconomic.
Besides, I think she is a little optimistic about the state of academic economics too. I have been told on several occasions that papers have been rejected out of hand from top journals simply because they used agent-base modelling that does not conform to the neoclassical paradigm and are intrinsically non-equilibrium. These is a lot of exciting innovation out there, but there is also still huge inertia in what Alan Kirman and others have called the Citadel. Economists need to take a hard, long look at what they teach students and at how their ideas get translated into practice in the outside world, not just at what the creative thinkers are publishing in the journals. That's precisely why books like Diane's are needed.
The reason why Economics is down graded among the scientific community is that it is not half as challenging, exciting or fulfilling as regular science. I'm a student of economics and i feel i made a terrible choice. Economics is for wimps who are not good at anything else. Yes, that makes me a wimp.
Economics is an utter waste of time. The "cause and effect" is very vague and there is way too much variables for any usefull scientific exploration. We need centuries of raw economic data to make any headway, which we don't have.
Also i totally agree with joefranks69, economists have
failed in giving any tangible benefit or explanation to anything. They are without doubt the greatest loosers amoung the employed population. I feel a prostitute brings more value into the world than these goddamn economists.
The reason why America(or the west in general) got rich is not because of purposeful economic planning by governments, but it's what american people are-an entrepreneorial class.
The economics of free markets and competition is an effect of the innate "inventive-ness" of the american people, rather than a cause of clever scientific theory.
Same is true for any great civilization ever risen on earth.
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