I stumbled across this bizarre object in Ikea. It’s a loom – about A3 in size. Apparently, it’s for weaving bags, or rugs, or toys. Or I’m not sure what. Suffice to say though, this is not why it caught my eye.
This little loom is a reminder of a piece I displayed at the 2017 SLSA conference, which used a frame and different coloured threads stretched across it to represent the different aspects of interactions. It is pictured below. I chose red for legal, yellow for economic, and green for social. The threads overlapped and crossed each other, representing the complexity of social interactions with all their various elements in a 3-dimensional model.
So while I may not take up weaving, this did get me thinking about ways of representing and visualising the econo-socio-legal using random and wonderful pieces that you stumble across unexpectedly.
There was an interesting post this morning in Foreign Policy, and widely followed up on social media sites, claiming that economists are “on the run”. Paul Krugman in particular has come in for criticism, and no small dose of schadenfreude given his recent admission that he got it wrong. There seems to be a dawning recognition, at least in the United States, that free market policies, neoliberal ideals and globalising aspirations have left the “have nots” much worse off than the models predicted. Of course, this becomes a much sharper problem when the prospect of a US election looms large on the horizon.
What does this mean? An end to neoclassical mainstream economics translated into pure policy? Blanchard has been cited as saying that as a self-confessed left wing economist, he now finds himself at the centre of broader debates. Will this mean a re-examination economics from soci
The problem? That free market economics, which told blue collar workers in the US that free trade and neoliberalism would not hurt their prospects, has been shown to be false. Krugman himself, one of the messiahs of free marketeering, has admitted as much in a recent article entitled “What Economists (Including Me) Got Wrong About Globalization”. He acknowledges the huge economic and social upheaval that followed as a result of policies based on his analysis.
This has been called “quite the ‘Whoops’ moment”. But this downplays the devastation wreaked on the lives of millions in the name of ideology. For anyone familiar with economic sociology, this conclusion has been long overdue. Writing in 1944, Karl Polanyi warned of the consequences of unchecked free marketism, insisting that the state was ideally placed to countermove and intervene to protect against the worst excesses of the free market. He paints a duality and constant battle between business, with their drive to lower costs regardless of the impact on workers and society, and the state, drawn in to protect the basic interests of its communities. This echoes the free market-protectionism debates playing out today. The difference now is that those advocating flavours of protectionism, who have been shut out of policy arenas over the past 20-30 years, have gradually been proven right.
This also reflects the economic monoculture described so succinctly by Earle et al in The Econocracy and “something of a guild orthodoxy” in the profession that advises policy makers of the benefits of free markets, free trade and globalisation. If this hint at regret or dawning realisation indicates an expansion of views or a heterodox approach going forwards, this can only be a good thing. We can only hope that the changes brought about do not fade with the cycles of the US electoral system.
Do mine eyes deceive me? I came across this post by Evan Davies on the BBC website, where he blogs about the changes taking place in economics. For those fond of the TL;DR, he says that economics has been, and still is, in need of a radical overhaul, given that most economists did not foresee the 2008 financial crisis, and that economics has not addressed its flaws in the decade since. Davies sets out the “two Cs” that make “neoliberal” or orthodox economics models risky (to put it mildly), and these are Complexity and Community. The short version is that people are Complex souls who live in Communities. Well, duh! Some of us have a been banging on about this for a while now.
Davies is clear not to make a straw man of mainstream economics though. And this is an important point. Microeconomics – the small-scale interactions between actors – has been remarkably successful in boiling down our collective lives into theories, formulae, and models that guide economists towards understanding how we act (and then nudging us in the right direction to make better decisions). But macroeconomics – the larger scale stuff that includes GDP, interest rates, international trade and investment and so on – tends to draw on the microeconomic theories and scale them up. But as we all know from experience, the more people you include, the more complicated it becomes to plan anything. And that’s before you start on complex interaction patterns across communities and societies.
Why have things started to change now? As I wrote in a previous post, change occurs gradually. Many successful careers have been built on the status quo of neoliberal or neoclassical, orthodox economics. The core of the academic economics community has developed, advocates, practices and teaches this approach. So revolutions, as in most areas of life, tend to be the exception. When we start to question the entire shape and direction of a discipline, there are myriad interests at play that all need to be reoriented. The mainstream journals, senior economists, and general momentum is geared towards neoclassical theory, and its implementation as neoliberal economic policy. In short, we are steering an oil tanker rather than a Mini Cooper.
Secondly, neoliberal economics is plugged into and reflected in the political mores of the day, and neoliberalism in politics remains in the ascendancy. A theory of economics that retreats from and questions this is bound to raise eyebrows. Perhaps then, eleven years might be a relatively short timespan for the reorientation, or evolution, of a discipline.
So what changes are actually happening now? The past decade has seen a wave of literature questioning the type of society we want to live in, both locally and globally, and the type of economics that might realise this.
But there are more recent projects turning explicitly to the way we do economics and its role in society that are much more exciting. The NIESR has a project underway Rethinking Macroeconomics, which is ESRC funded. The IFS is launching a project looking at inequality in the UK and targeting questions like the kind of society we want (a particularly timely question in the light of the most recent UN Report citing poverty as endemic in the UK). And then there are the centres rethinking traits of orthodox economic theory like the Paul Woolley Centre at LSE, the full title of which is “The Paul Woolley Centre for the Study of Capital Market Dysfunctionality”. The Centre essentially asks what happens if the frictionless markets featured in economic models suffer from, well, friction.
But what alternatives are there? If you’re familiar with some of my previous posts, you’ll know I’m a fan of socio-economic and econo-socio-legal approaches that take economics back into the social sciences. There are myriad alternatives though within these disciplines, including relational work, actor-network theory, community lens, network analysis, systems analysis, and many more. Zooming out somewhat, historical, geographical, psychological and anthropological approaches can also contribute to an understanding of economics as it really is performed in the real world.
But, why should we care? To make a bold, and controversial statement, economics is usually one cause of most social issues facing us today. What do I mean? The rise of populist politics caters to the anger and frustration of the “have nots” in society (economics). Austerity as a response to the financial crisis enacts neoliberal economic theories (economics). The lack of living wages and the rise of insecurity, the precariat, and the gig economy has resulted from technology and a reluctance of government to intervene based on neoliberal economic theories about the free market (economics). Climate change and global warming continue unabated because of the economic consequences of actions to tackle environmental issues head on (once again, economics).
In short, if we want to get society right, we need to get economics right. And that means a retreat from the belief that there is one “right” way of “doing economics”. It means recognising (or re-recognising) that economics is about how people act and interact. And that we do not always act rationally, or even in our best interests. Until economics models and formulae reflect this, we are left with a hollowed-out version of economics that cannot reflect the full complexity of real life. And this is something we all pay the price for. A broader, richer understanding might help us spot the next financial crisis looming on the horizon.
In the years following the 1929 crash, economists responded with a flurry of new and innovative ideas to better understand the bigger questions of how the economy works. Keynesianism, over the decades, came to be shaped more by the political mores of the time than any true adherence to what Keynes actually wrote, while Hayek’s free market theories present questions that we are still grappling with.
There have been other flurries of activity calling for “better economics” over the decades, and the 2008 financial crisis sparked another wave of calls for a deeper and more accurate understanding of what is actually going on. Clearly, while microeconomics might have given us the answers to some questions, macroeconomics has a way to go in understanding how the world works. But really, since 2008, what has actually changed?
“Very little” appears to be the general answer to this. There are several reasons here. In academia, the way your research is assessed and the way that promotions are awarded tends to come down to publications that support, rather than challenge, the mainstream (more on this later). In business, monopolies are unlikely to campaign for better antitrust regulation and enforcement. And we have a generation of politicians who have been taught (indoctrinated in) orthodox, mainstream economics and have been told that this is the only way to do economics and that it works. But there are calls for diversity, plurality and different approaches appearing.
I thought it might be helpful to set out some of the institutes and organisations that have appeared since the financial crisis calling for a rethink of economics. In the UK, Promoting Economic Pluralism (PEP) aims to change the way economics is taught in universities, and sets out an ambitious accreditation for pluralist economics teaching that it aims to have up and running by 2020. The blog for the group can be accessed here, and charts some interesting developments, seminars, and movements that have the common purpose of changing the way we do economics.
Other research programmes include “Rethinking Macroeconomics” at the National Institute of Economic and Social Research (NIESR) in London, which has secured ESRC funding for a project looking at how we could do macroeconomics better.
In the US, the Institute for New Economic Thought sets out to challenge the dominance of mainstream economics by funding research, engaging in public dialogue and driving forwards a new way of thinking about economics. Their goals are listed on this page.
Both institutes are engaged in highlighting and tackling the crisis of conformity in economics – in the way it is taught, the way it is practiced, and the way it is thought about in academia. The conformity within academic thought is more of an institutional problem, as this touches on publication, promotion, and professionalism within academia.
The problem here is that to progress as an academic you have to publish, preferably in the “top” or most prestigious journals. Obviously, if you’re trying to do something innovative or outside of the mainstream box, or even worse trying to tear down the existing box and build a new one, it is unlikely the more prestigious mainstream journals will accept your paper for publication. They have strict criteria for what they accept, and usually this means conforming to mainstream standards and not challenging or undermining the entire field. The publication industry actually reinforces the mainstream way of doing things, and in economics, that means reinforcing methodologies and frames that led us to the financial crisis.
As I mentioned in the previous post, there is a lot to be said here for greater education. Not just in universities on macroeconomics 101 courses, but more generally and broadly. We need a much higher level of economic literacy across the board, so that society is able to engage with – and more importantly challenge – economic ideas, plans, models and conclusions. This needs to happen hand in hand with an expansion of economics methodologies and approaches, and an appreciation of economics as a social science that is about perfectly imperfect and irrational people.
We all need to hope that the voices currently calling for diversity and plurality are more successful this time than previous waves of soul searching have been.
Yesterday evening saw the first episode in a new series of Simon Evans Goes to Market on BBC Radio 4. You can listen (again) to it here.
The programme was about the life and work of Adam Smith. Actually, it was more about his life than his work, and the vox pops asking what people actually knew about his work were somewhat disappointing in their lack of awareness (this was a radio 4 audience attending a broadcast on economics, remember). Similarly, the programme itself was light on content about his actual economics, although it was in the 6.30pm comedy slot, so maybe this was understandable.
Regardless though, having a programme about economics in prime time radio is to be applauded, and I can only wish that there were more opportunities like this to engage a wider audience about the huge role that economics theories have in shaping their lives, relationships, aspirations, and achievements. The next programme looks at the life and work of Karl Marx, and the following week is John Maynard Keynes, before a final programme wraps up what we have learned. Disappointingly, although perhaps unsurprisingly, Karl Polanyi doesn’t appear scheduled for discussion, although I suspect there are many listeners whose favourite economists will fail to make an appearance. Obviously, while the series is to be praised for existing at all, its scope and ambition do seem lacking, given the focus on only three economists.
Nevertheless, if the series succeeds in anything, it will be in making people realise that the free market is not inevitable, and that economic arguments are at their heart political. A choice, in other words. There has been a great drive recently to get people learning to code and acquire digital skills to be able to partake in the digital economy. But there remains a staggering level of both illiteracy and disinterest in economics and the economy, and I would suggest that economic illiteracy is perhaps a greater issue. Without some basic knowledge of economics, society is unable to challenge the claims that the free market is inevitable or self-regulating, neither of which are true, but both of which have become “received wisdom”. The result is the widespread belief that privatisation and the creation of markets is the ideal solution for the provision of goods and services, and anything else going.
Economic illiteracy is disastrous for any democratic society, as it places us in a position where we are unable to question the myths being propagated about the market, the economy, employment practices, economic relations, and the very foundations of society itself. Without knowledge of the basic theories (and their flaws), we are unable to see that economic arguments are just that – arguments based on political choice and preferences. In other words, opinions that can, and should be, challenged. So, more programmes like this please!
Is economics now society’s default, or de facto, operating system? And what does this mean? I heard this mentioned in passing on the radio the other day in another context. But it struck me as a really useful and interesting analogy to the role of economics in society, and the values and goals that we subconsciously prioritise.
An operating system is system-wide software that manages computer hardware and software resources, and which provides common services for computer programmes. It operates as a base on which all other functions rely for resources and access – it sets the rules of the game. Similarly, we can see economics, in particular neoclassical economics, as performing a similar function within society, although widely unrecognised and largely subconsciously. It does this, as I suggest below, through setting the rules of the game as well as providing the vocabulary and grammar that we use to talk about the game.
Kathleen Fitzpatrick’s piece in the Times Higher Ed this morning, on the impact of competition and marketization in higher education, perfectly summed up some of the issues of economics-as-operating-system, but in the specific context of higher education.
Fitzpatrick writes that while friendly competition can be helpful, “when the competitiveness that fuels excellence and prestige becomes based in the logic of the market, universities lose sight of their true purpose”. In a detailed and thoughtful piece, she argues that excellence in academia and higher education has embodied the norms of the market, and competition between academics, between faculties, between institutions and between fields of research has become the main means of determining achievement, excellence, and promotion. The metrics that are used to determine success – publication in the right place, impact, and so on – are based on orthodox, or neoclassical economics and the assumptions, biases and norms contained therein.
Fitzpatrick asks what we could achieve instead if we moved from competition to collaboration within faculties and within higher education more generally. What could we achieve by articulating our goals and values and determining excellence in relation to the achievement of those goals and values rather than against one another?
Fitzpatrick’s argument relates to higher education, which is in a state of flux at the moment given the questions surrounding its funding and the role of higher education in society more broadly. The answer is, of course, not quite so simple, as to challenge or step outside of the mainstream competitive framework inherently makes oneself “uncompetitive”. Funding and prestige are therefore potentially sacrificed – a leap into the unknown that so far, only the University of Ghent has been prepared to take.
In other words, the system perpetuates and reproduces itself, while being almost impossible to step outside of. However, within the sphere of higher education, there is some level of awareness of the metrics, competition, and implications of this on career progression, wellbeing and industry more broadly, even if there is no clear or simple solution.
But the article raises broader issues that relate to my research, and the comment about economics – particularly neoclassical economics – functioning as a de facto operating system throughout society. The difference here is the general lack of awareness about the way that neoclassical economics shapes the way that society functions. Even within economics as a field of study and research, there is a generalised monoculture.
We can point to economics notions like competition and a belief in the free market, ways of measuring (GDP, for example), profit maximization, and so on, as having pervaded social consciousness and public discourse to such an extent that they guide and influence policy making even tacitly. By effectively fixing the rules of the game, and even the way we talk about the game before playing it by supplying the vocabulary and grammar, economics functions as a social operating system. And the sooner we are more aware of the impact of this, the sooner we can begin to challenge its effects.
Five eminent sociologists recently reviewed the state of sociology for the Times Higher Ed. You can (and should) read the post here. It makes for interesting, if slightly depressing, reading. For those fond of the tl;dr approach, each of the five sociologists review their experiences of sociology teaching and research today, and recount the somewhat inferior position to which sociology has been resigned within the social sciences. This is for a variety of factors, but I want to dwell on two in this post; the diversity (or fragmentation) of the subject, and the unavoidable political accusations that are inevitably hurled at it (just see the comments on THE).
Much in the same way as the social sciences have fragmented, drifted apart and become silos of endeavour over the past century, sociology has more recently succumbed to a similar fate. We have a sociology of sport, a sociology of arts and music, a sociology of x, y, and z that talk at, rather than to, each other. At the same time, we have economic sociology, legal sociology (or as it tends to be referred to in the UK, sociolegal studies), and then the discipline struggles to distance itself from anthropology and offer something different (apart from research into the present day and the present society).
But what does it really do? Why do we need it? And why is it fair to level the same accusations at sociology as we would at, say, a badly conducted physics experiment?
The political connection
There is always a political connection – politics is about social rules and beliefs, and sociology is about understanding these. They are two sides of the same coin. Look at the impact of Anthony Giddens’ “third way” in forging New Labour’s direction in the years after Blair’s election to power.
And this tends to be one of the main accusations thrown at sociology for why it should not be publicly funded in the same way that STEM subjects are – that we would be funding “socialists”, “Marxists”, and look where that experiment ended… (I paraphrase here). The comments in response to articles banging the drum for public funding of the social sciences generally have at least one reference to socialism.
But wasn’t the notion of the free market also derived from the social sciences (economics)? Hayek and Polanyi published in the same year (1944) but Hayek’s Road to Serfdom received much greater acclaim at the time than Polanyi’s The Great Transformation. Arguably, 99% of us are the poorer for this, and still feeling the impact of this twist of fate. But the politically motivated accusations against public funding of the social sciences recur consistently, and in a way that does not seem to apply to capitalism, neoliberalism or the rise and rise of neoclassical economics. These seem to be treated as the natural order of things these days, backed up by the received wisdom of neoclassical economics and the laws of social interaction it has “discovered”. Any investigation into performativity will tell you differently.
Can we study societies? No? Then why bother?
What is the point then? The point is that we need to shout louder about what sociology – and the social sciences more broadly – can do for society. About what it already has done. And about what we stand to lose without publicly funded research into the social sciences, both to understand society and to shape the type of society that we (collectively) aspire to. Do we value the rule of law? Do we value independence of the judiciary? Parliamentary supremacy? The free market? Labour regulation? Because these all started out as “good ideas” that someone had. You may not agree with all of these, but if we had never had “the social sciences”, chances are we would not even have “the State” now. We would still be living in a Hobbesian state of nature.
The response to this is that we have all these “good ideas” and solid institutions that we value now, so why continue funding investigations into how society works? This is a little like Francis Fukuyama’s end of history argument, that has been roundly debunked, notably by John Gray’s argument that history is cyclical. The things that we value need to be protected, otherwise they begin to disappear. And that means shouting loudly about what they have done for us, especially in the face of nationalistic, populist sentiment. Politics in the United States has shown that, and the neoliberal drive to set markets free and dial back the state in the UK has seen inequality rise and the safety net of the welfare state feel less secure than ever.
Why publicly funded?
Michael Burawoy’s chapter about the future of the university as a centre of knowledge production in an age of marketization and regulation makes some interesting points about the funding of research. Marc Spooner has also written an interesting post on the drive to publish and the perverse incentives now in place in higher education and research. Taken together, these posts provide an overview of the direction the sector is moving in, and the question that we keep coming back to is “for whom”? Who is paying for the research? Who is paying for the publications? And does this matter?
The Coburn Amendment in the US has seen a scaling back of public funding for social research into anything that does not directly apply to the national economy or the national defense. In Australia, the “national interest” test has prompted fears that curiosity-driven research will be pushed out altogether. In both Australia and the UK, there are ever higher demands for researchers to demonstrate the impact of their work and its benefit to society. The (somewhat flawed) riposte that is habitually trotted out here is Newton’s discovery of gravity; what is the impact of this? How does it benefit society? Newton would have failed under the current research excellence framework, and would probably not have convinced a funding body – let alone a Research Council – to pay him to study this.
The marketization and commercialization of the entire HE sector raises a number of questions that should probably be saved for another post. The point is that the application of the free market to the production of knowledge about society and for the good of society will produce skewed results. Yes, industry can and does fund social research – into how to market products and services more effectively, how to sell more, and how to understand consumer behaviour. Industry is unlikely to be interested in funding research into the big issues mentioned above – the big issues central to society. Why would they? These are things that we are mostly unaware of but impacted by every day. These institutions, beliefs and policies shape our interactions, our ambitions, and the options available to us in almost every aspect of our lives. The welfare state actively funds the companies to pay lower wages and remove labour rights through the very provision of the welfare state. The production of social knowledge is therefore, I suggest, a public good that should be publicly funded.