BBC – Clare's research blog

How abstract ideas are “embedded” into everyday interactions…

There seems to be a general consensus at the moment that our ways of doing, talking and thinking are the constructs of “good ideas” in the social sciences over the past few centuries. We are living “the dreams of dead people”, to quote Yuval Noah Hariri. Once these are taken up on a broader level by society, these “good ideas” become taken for granted. We don’t spend our days pondering the rule of law, separation of powers, agency, productivity, and so on. We know these are important and work, as concepts, because… well, they just do. Look around you.

But the seeming invisibility of these “ideas” is a problem. Ignoring the fact that we prioritise concepts agency hides their historical and cultural contingency, and then leaves these unavailable to analysis. How can we challenge neoclassical economic theory that has become “common knowledge” or “just the way things are” when we no longer even notice it?

There have been a few books, blog posts and tweets recently that have spoken to this which are worth mentioning here.

Firstly, James Suzman’s new book. He’s just done an interview about this with GQ magazine, and it’s well worth a read. To oversimplify his argument hugely, he challenges our current notions of productivity in western liberal culture, and specifically puts this in the context of property ownership, heritage, lineage, time and space. In other words, our focus on productvity – often at the expense of other factors in life – is a cultural, social, legal and economic construct. Why do we internalise norms of productivity? Because a few economists 100 years ago thought that the abstract notion might be a good thing for growing the economy (and profits). However, in the process of moving from neoclassical economic theory to mainstream cultural doctrine, it has changed the way we see ourselves as citizens and as consumers.

There’s also a biography of Torsten Veblen by Charles Camic out at the moment, which is a really interesting take on the “outsider” economist. Geoffrey Mead has written a review on the LSE Review of Books Blog here, which offers “an excellent account of how Veblen arrived at his influential contributions to economic theory and paying close attention to how abstract ideas get embedded in institutions and practices”.

Well, yes. They do. And my book (out later this year) is a deep dive into the impact the way we talk about law and economy on how we do and think. Specifically, I look at embeddedness. In the drive to “Build Back Better”, there’s been a lot of talk of “re-embedding” the economy in society. Since responses to the 2008 financial crash started to appear, there have been a lot of statements either that “the economy is embedded in society” or that “society is embedded in the economy”. Start looking out for them – they’ll crop up more than you’d expect. And yet nowhere is there an explanation of what we’re talking about (what is embedded in what) and what we really mean by this.

“Nowhere is there a definition: what is embedded in what”. What are we actually talking about? My work shows that talking about law and economy as “embedded in” society is superficially helpful, but actually restricts innovative responses. We are just repeating the mainstream vocabularies and grammars that got us in to this mess in the first place.

But it really is important. My work is about just one example. But if we do want to Build Back Better, we need ways of talking about law, economy and society that recognise, acknowledge and then challenge “common sense” or accepted ways of doing and thinking about the economy. And this starts with those “good ideas” or abstract notions that eventually work their way into the mainstream and become “received wisdom”, invisible, or “just the way things are”.

Matthew Syed wrote a comments piece in the Sunday Times this week about a new drug for obesity, but placing it firmly in the wider context of personal responsibility, agency (as a Weberian ideal), and the atrophying of this that happens when the state gets too involved in individuals’ lives. I think he misses a trick by not recognising that while the agency-structure duality is open for debate, the “structural elements” (the food industry, the farming industry, and the advertising industry) have evolved under the guise of free marketeering far faster than our capabilities as agents to confront these, both on a social level and a biochemical level. Nevertheless, this is a prime example of one of those “common sense”, “received wisdom” ideas (personal responsibility) that is derived from “good ideas” of theorists (agency and the notions of the individual agent of neoclassical economics) that is held up (usually by free market advocates) that we tend to ignore. Yet we ignore it at our peril. The agency-structure debate is as relevant as it ever was, however our grammars and vocabularies to respond to current crises, crashes and catastrophes are those of the mainstream… in other words, the mainstream mental models that got us into this mess in the first place.

So, we need new ways of doing, talking and thinking about the legal and the economic. We need new grammars and vocabularies that challenge these accepted notions. The fact that we are turning more to the social sciences, to our social and institutional heritage to seek answers for how we can respond to the current crashes, crises and catastrophes is something to be celebrated. The social sciences have a huge role to play in our response. We cannot Build Back Better without them, and the founding fathers of sociology still have a lot to teach us, if we’re willing to listen.

Complexity and Community are crucial for rethinking economics

What could society look like if we do economics better?

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.