Tag: sociology

Categories
Embeddedness Free market Social Sciences

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.

Image of one large blue sphere with a smaller red sphere attempting to "embed" itself into the blue sphere. This is ultimately impossible because they are separate phenomena
“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.

Categories
Research Social Sciences

What does a Pandemic mean for the social sciences?

A few months ago, I had the privilege of chatting with a student of public policy at one of the leading universities in the UK for science and disease. He was telling me about the postgraduate course he was on, and how public policy is a discipline based purely on science. I thought briefly, and then double checked. You don’t study anything resembling a social science at all then? No ethics, no law, no economics, for example? No no, public policy, he assured me, is based solely on scientific evidence.

I shelved my doubts and put any skepticism down to my natural bias as a social scientist and my tendency to argue for the wider understanding and valuing of the social sciences in any scenario.

And then COVID-19 happened. Of course, this is a scientific conundrum, and scientists, chemists, biologists, immunologists, epidemiologists, mathematicians, and the like are working together globally like never before to test, trial, model, and to keep the rest of us as safe as possible.

But then a strange thing happened. A trend appeared in the Covid19-related deaths, which, frustratingly has been inadequately recorded by the official statistics, but which is pretty plain to see on any photograph wall of “victims”. Deaths of those from a BAME, or those from a black or minority ethic background, exceed the numbers expected if these things were to be in proportion to the population. So what is going on?

A recent paper in The Lancet identified the issues surrounding ethnicity, stating “Ethnicity is a complex entity composed of genetic make-up, social constructs, cultural identity, and behavioural patterns.2 Ethnic classification systems have limitations but have been used to explore genetic and other population differences. Individuals from different ethnic backgrounds vary in behaviours, comorbidities, immune profiles, and risk of infection, as exemplified by the increased morbidity and mortality in black and minority ethnic (BME) communities in previous pandemics.” This can be represented in the following chart:

From Pareek et al, “Ethnicity and COVID-19: an urgent public health research priority”, available at https://www.thelancet.com/journals/lancet/article/PIIS0140-6736(20)30922-3/fulltext

This “complex entity” of “ethnicity” straddles the natural and social sciences as well as the arts and humanities, and there has never before been such a huge need for the disciplines to work together. Could there be any correlation between being a front-line worker and BAME? Is there any truth in the statements that those from a minority ethnic background are more likely to live with extended family in smaller, more cramped housing? Or is the answer down to genetic susceptibility to co-morbidities? The research here is, surprisingly, still in its infancy, although projects like the UNESCO dialogue offer hope that society may be forced to confront the inequalities that COVID-19 has laid bare.

Once again, we are not all in this together. The virus is not a great leveller, and we are not all suffering equally. The statistics bear this out in black and white. But science can only carry us so far down the road investigating this. The rest must be in combination with the insights of lawyers, economics, psychologists, sociologists, anthropologists, and geographers, as well as historians, ethnographers, artists, musicians and – well, as much of society as possible if we really want a representative dialogue. And this means hearing voices that are usually silenced by inequality and minimised by power imbalances.

Interestingly, Germany may be already setting off down this road, enlisting scholars in the Arts and Humanities in that country to help establish a new normal and to ask how society can make sense of the changes. How can we forge meaningful relationships from a “socially-distant” 2 metres? And what might a post-COVID-19 society look like? Sound like? Behave like? Which social values and interests will be prioritised? These are questions that will require the full range of inputs, styles and learning from across the academy.

What is the new normal? And how do we figure out how to get there? This is something that will require the close cooperation of all disciplines.

Despite the fact that we are facing a viral enemy, arguably we have never needed interdisciplinary research more, specifically combining insights from the social sciences, arts and humanities to interpret, process, disseminate and enhance understanding of the work of the natural sciences. COVID-19 has highlighted inequalities that society had previously been able to ignore. The role of the social sciences, arts and humanities in elevating those voices and interests will be critical not only to the successful implementation of vaccines and treatments (community dialogue and involvement is essential for engagement with health services), but for the reconsideration of social priorities and equality more generally.

Categories
acoustic jurisprudence economics Embeddedness methodology methods Research Visualising ESL

Diving in to an ESL frame…

This mini animation, with sound, asks what the reintegration of the economic, legal and social might look like and sound like.

This is relevant for each and every interaction that occurs – there are always legal and economic aspects to every interaction, but we tend to forget that talking about the legal and economic in isolation from the social is a metaphor, or fiction.

How might we think about integrating legal, economic and social phenomena conceptually?

How could frames or lenses like ESL help us to remember the social basis for any legal or economic aspects of interactions?

Categories
economics Embeddedness Free market PhD Research Thesis Uncategorized

“Embeddedness” (and why we need to stop saying it)

Is the economy embedded in society? Is society embedded in the economy? Is the law embedded in society? Or is society embedded in a set of rules and regulations?

Have the law and economy become “disembedded” from society, and is this why the financial crisis in 2008 came as such a surprise? Would it help to “re-embed” the economy?

This post explores the use, misuse and abuse of the concept of embeddedness in the context of econo-socio-legal interactions.

Coinage of the term in the context of economic sociology and ESL is attributed to Karl Polanyi in his 1948 book The Great Transformation. Polanyi had reportedly been reading about the coal mining industry in the UK, and had taken the term “embeddedness” from descriptions of coal embedded in the walls of a mine. Thus, to Polanyi, the term was likely a relational descriptor and metaphor. Interestingly, despite earlier documented usage, Richard Thurnwald’s use of “embeddedness” has gone largely unremarked, enabling him to dodge the bullet of origination foisted on Polanyi. The term only appears twice on page 60 of Great Transformation, and then on pages 68, 73 and 135. There is no great overarching theme of embeddedness. Nor is there a definition offered. It is probably safe to assume that the word was a throw-away term of description that came to hand, and was then never given much more thought.

Little did Polanyi realise that 70+ years later, scholars would be puzzling over his meaning and even writing doctoral theses on the matter! One catalyst for the development of embeddedness into the core concept of sociological lenses was Mark Granovetter’s accidental revival of the term. Granovetter’s theory of networks, published in 1985, described the actor as embedded in networks. He has since admitted that at the time of writing, he had forgotten Polanyi’s usage of the term. Nevertheless, the success of Granovetter’s paper revived the career of embeddedness, but at the same time created confusion. Polanyi had been referring to the macro-level embeddedness of economy in society, although his “always-embedded economy” is more a theoretical proposition than empirically-proven reality. Conversely, Granovetter had used the term at the micro-level to describe the embeddedness of the individual in networks of interaction. Thus, development of the concept of embeddedness already straddled the micro and macro, giving rise of the question; “what are we talking about”?

Here’s the rub. When discussing the extraction of coal from a mine, for want of a better example, “embeddedness” is a perfectly adequate relational descriptor. It implies the co-existence of two conceptually separate phenomena in time and space; the coal, and the rock from which it is hewn. There is no problem with saying that one is embedded in the other.

Where difficulty arises though is where we also want to investigate the possibility that the two phenomena described not only share characteristics but might even be two aspects of the same phenomena. For example, we can say that the economy must be re-embedded in society if we accept that the economy and society are two distinct entities. This is clearly nonsense. An economy cannot exist outside of a society. An economy necessarily implies human interaction of a specific nature (economic). The same is true of law. We cannot imagine a legal system without a society behind, underpinning, and performing it. A legal system implies human interaction of a specific nature (legal). Therefore, stating that one is embedded within the other – whichever way round you phrase it – clearly does not make sense.

My research puts this in the context of ESL, which aim to reintegrate social science dialogue and which ultimately takes a constructivist approach. In other words, economic and legal phenomena (the econolegal) are performed through social interactions. All social interactions have econolegal aspects or flavours. There’s no escaping this, just as there is no way to have an economic exchange without it being between people (I’m excluding high frequency trading between computers here for argument’s sake, but will return to this in a future post).

Why is this important? Well, the response to the 2008 financial crisis is something we, in the UK, are still living with. Austerity, as the main policy response, was based on a particular understanding and framing of the economics that led to the crash. This is an economics that sees the discipline as somewhat ‘apart’ from society. Neoclassical economics sets out a version of ‘economic man’ on which complex economic theories are modelled. There has been recognition of the limitations of this approach. But in turn, those who criticise mainstream neoclassical economics frames tend to (with or without the help of Polanyi) argue that we need to “re-embed” the economy in society.

If we take this approach, we deny the possibility of ever seeing the economy as an aspect of society, the same as the law. We cannot hope to reorient the economy and its regulation (the law) towards real people if we talk about society, economy and law as separate entities. Speaking of one being embedded in the other simply reinforces their difference, their separation, and their disunity. It reinforces existing ways of doing, talking and thinking, which are predominantly shaped by neoclassical economics. It prevents us moving forwards.

So, what to do? We need to move beyond embeddedness, and how to go about that is the subject of a future post.

Copyright note: animation by me using ProCreate 5 on iPad Air 3. Please ask before you take!

Categories
Development economics PhD Procreate Research Uncategorized Vignettes Visualising ESL

Making research relevant: Meet Ann, Pol, and Lil

One of the biggest challenges for anyone working on conceptual issues is making their research relevant to everyone else. After all, the first question any researcher should be asking themselves is “who cares”? This is not the passive-aggressive, somewhat depressing question that it could be, but rather a positive nudge to any researcher to bear in mind why you’re doing the research, and who is going to benefit from it.

My research is primarily conceptual, but has three main audiences: academics engaged in sociolegal research, policy makers working in international development, and a lay audience seeking more innovative responses to the financial crisis. Using designerly approaches to make the research tangible and visible, this post puts a face to each of these groups. Let’s meet each in turn.

Introducing Academic Ann…

Academic Ann

Ann works at a university as a law lecturer. She is researching the importance of the legal system for any country wanting to attract foreign investment. She is planning a trip to Sri Lanka – her target country for research – and is going to talk to government ministers, business people and investors, and local communities around investment zones. But how should she frame her research? How can she hold the interests and views of such a wide range of people in one frame at the same time?

Introducing Policy Polly…

Polly has been working at an international development institution for several years now. Her job requires her to use existing research to make policy recommendations for foreign governments, international agencies and charities. She wanted to work in development to reduce poverty, but has become disappointed by the lack of tangible impact her work has, and has been wondering whether there is an alternative approach to understand the causes and ways of addressing poverty.

Introducing Lay Lillian…

Lay Lillian

Lillian is not an academic. Nor does she work in development or policy. In fact, she is a retired dinner lady and pillar of her local community. She doesn’t know much about “the law” or “the economy”, but she cares about her community, and knows that something isn’t working properly. The economy crashed in 2008, and a decade of austerity was rolled out. She was told that there was “no more money” and that budgets across the country needed to be cut. But while her community saw centres close and support disappear, she noticed that the rich continued to get richer. So, she began reading about the crisis, and noticed that there were a lot of people arguing that we need to “do” economics and law differently. Lillian is an interested bystander, and wants to know more.

Why the characters? Personae can be a useful tool for exploring research concepts. We can see the relevance of concepts and frames for our own lives. They can make the conceptual visible and tangible.

Each of these will be developed in future posts, and will each bump up against the limitations of the ways we currently do, talk, and think about legal and economic phenomena. Each of them will then try an ESL lens using embeddedness and then moving beyond embeddedness. Through their eyes, we can explore the benefits and drawbacks of reframing in different contexts and for different audiences.

In the meantime, these characters are by me, using ProCreate on an iPad. They are rough first drafts, and the characters will be developed along with their stories. Copyright 2020.

Categories
economics Maps Research Visualising ESL

Maps and mapping…

Sean C Jackson is an artist who draws maps and mazes. The Guardian featured his work recently, and you can see it here. His maps are mostly imaginary, but ask the viewer to dive into the world he has created and puzzle through it. Most of the works sit somewhere between 2 and 3 dimensions, which can make for some disorientation at times, and asks you to engage with the work by turning either your head or the page.

Topography and mapping can be useful ways of visualising ESL, interactions, and social phenomena. Like a map, an ESL can highlight the relevant and hide the irrelevant. Like a map-maker, the researcher using an ESL must choose what is relevant and important and why. Like a map, an ESL lens can also zoom in on areas that are more important, while identifying but minimising others. As a result, we can appreciate the whole landscape in all its complexity and understand the context of the research.

If we were to map out current mainstream approaches in law, economics and sociology, how might it look? The picture below is a (stylised) suggestion that the academic silos of law, economics and sociology would look be islands of research endeavour. They are separated by sea, and generally have their own languages, cultures, and traditions. Some brave interdisciplinary scholars traverse the seas and work on two or more islands, but many do not.

Map of current mainstream disciplines
Current mainstream disciplines as islands of endeavour

How might it look if we were to draw an ESL as a response to these islands? Would they converge? Would we need bridges, ships, or loudspeakers? Would this enable inter-island dialogue, or just increase competition? And what could a map of the topography of ESL tell us about the lens?

Categories
Visualising ESL

The Art of Innovation (Part 1)

There’s currently a very interesting exhibition on at the Science Museum in London called “The Art of Innovation”. It’s about the links and dialogue between the (natural) sciences and the arts.

Given my interest in the dialogue between the social sciences and the arts (have a scroll through some of the other posts in this blog if you’re new), the first part of the exhibition was a little wide of the mark. The artistic side of the first few exhibits included architecture, dress-making and textiles.

However the real showstopper for me was a piece designed by Theodore Olivier in 1830 (see below) in the section on “Meaningful Matter”. These were built to convey complex 3-dimensional ideas to a wide audience. The coloured strings could be adjusted using weighted beads in the frame, meaning that different surface shapes could be modelled according to the mathematical equation at question, revealing a number of surfaces and shapes simultaneously. These frames and models were eventually produced in significant numbers and sold across the world. The one in the picture below was made by French company Fabre de Lagrange.

Exploring surfaces and mathematical equations in 3 dimensions

However, as ideas progressed, these models fell out of favour with the mathematical and scientific communities. After the First World War, the models were displayed in museums as curios where they found a new audience; avant grade artists. The string models represented not the abstract thinking of the original mathematical equations, but the ability to explore shape and form in a new way.

Among those who drew inspiration from these models were Barbara Hepworth and Henry Moore. Hepworth modelled her sculpture on the mathematical models that she had seen at Oxford (see below).

Barbara Hepworth Sculpture inspired by mathematical equations
Barbara Hepworth sculpture inspired by mathematical equations

As a member of the St Ives set, it was therefore no surprise to see Hepworth joined on the opposite wall by a set of sketches by Henry Moore.

Sketches by Henry Moore
Henry Moore sketches inspired by equations

Moore’s sketches drew inspiration from the string recreations of maths equations that he encountered on display at the Science Museum when he was a student in the 1920s. Moore immediately recognised the structural and artistic possibilities the models presented, noting that “it wasn’t the scientific study of these models but the ability to look through the strings as with a bird cage and to see one form within another which excited me”. The sketches on display in the exhibition eventually inspired several wooden string figures of his own.

There are similarities with some of the work I’ve been doing with zentangling interaction patterns, as you can see in my previous posts. I’ve also built 3 dimensional string models using the colours of strings to represent economic, legal and “other” aspects of each interaction, overlapping these to build complex patterns. Some of the questions I’ve been pondering are how models like these could help us explore complex patterns of interaction in the context of the social sciences? How could we visualise economic and legal aspects of interactions using colour to build up overarching patterns of interaction?

Stay tuned for more from the exhibition in Part 2….

Categories
economics Procreate Research Visualising ESL

Visualising interactions using Procreate on the iPad: an update

I’ve recently started using ProCreate on the iPad to explore visual representations of econo-socio-legal interactions. My portfolio has always relied on the good, old-fashioned pen and paper approach, so it’s been really exciting trying out different technologies. I’ve been updating my portfolio and recreating the pieces digitally, which I’ll discuss in this post – with pictures!

I’ve found the app to be really responsive and a fun and easy way to get creative. The Apple Pencil can be a bit frustrating to use as it has that “drawing on glass” feel, and runs out of battery at crucial moments. But the feedback and pressure sensitivity works really well and makes drawing on the iPad a really enjoyable experience.

But on to the content! Here is a first attempt using Procreate at recreating the social fabric of interactions, weaving together three layers. Here, they are legal, economic, and “other” aspects of social interactions. This recalls the goals of Economic Sociology of Law-based approaches that want to recombine legal, economic and social phenomena, as well as recognising the importance of others aspects of interactions. In this, we can refer back to Max Weber’s four interaction ideal-types (instrumental, affective, belief-based, and a traditional); all of which fit into the “other” layer here.

In case there’s any doubt about the three layers, we can add some colour. For me, law is best represented in red, economics in yellow, and social otherness in green.

Then, adding in economic aspects of interactions…

And then, the social “other”, completing the woven fabric of interactions as seen through an econo-socio-legal lens…

The really cool thing about Procreate is that is can record everything you do on a particular canvas, and can reply the progress of the piece as a time lapse video. If you want to see the steps involved in creating this piece, it’s on my YouTube channel here.

I’ve also started redrawing representations of orthodox economics, economic sociology, and economic sociology of law. The idea is that the main stream, orthodox economic theory relies on assumptions and models that provide a straight jacket and that sociological and econo-socio-legal framers can moderate this and make the approach more flexible and more reflective of real life.

So, in the first image, neoclassical economics is drawn as straight lines, with little flexibility outside of the predetermined categories built into the models. In this sense, it fails to capture the complexity and unpredictability of real world interactions.

By incorporating more insights from sociology and from focusing on interactions rather than actors, we can capture the full extent of how complex, dynamic, and unpredictable real world interactions can be, and what this might look like…

All that’s needed now is a roadmap from the orthodox to the heterodox… a visualisation of which I’ll post as an update!

Categories
economics Free market Gig economy Infrastructure Research Uncategorized

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.

Categories
economics Research

The Science of Economics? What Works, and How Much…

We do seem to be talking more about economics – what it should do and look like. But there is still a whiff of revolution about calls for the discipline to be more evidence-based and, well, scientific. This article, by Philip Aldrick in the Times yesterday, argues for more careful scientific approaches, and this is worth noting. Of course, in the natural sciences, this would be taken as read. Drugs need to be extensively trialled before they are sold and used to treat disease in humans. But for some reason, in the social sciences, theory and ideology have the ability to shape policy just as much as evidence.

Aldrick’s piece cites two studies launched by Nesta, a UK Innovation think tank, roughly seven years ago. The first was a retrospective review of the effectiveness of business clusters; do small businesses do better when they are closely located and can share location and labour advantages? The second was a randomised controlled trial on whether tax relief for small creative companies worked. The results of the studies were not their most important findings however.

For the sake of finishing a story, the first study proved relatively inconclusive, and could not find any clear correlation between clusters and growth. The second study found that tax and financial incentives were helpful in the short term for small creative businesses, but after 12 months any advantage had faded.

So, what was the main impact? The reason these two studies are remarkable are for their illustration of research methods. While retrospective reviews – generally the majority of most empirical work in the social sciences – can only look for correlation, randomised controlled trials (RCTs) can go deeper, further, and can identify causative factors. In other words, we can target specific factors and identify why things happen. This is important because it means we can be more scientific about what works, how it works, and why. And this means we can begin to base policy on evidence rather than theory. RCTs also offer a way of measuring the extent of policy impacts. By having a test group and a control group, we can gauge the extent to which a policy really makes a difference. And that means we can evaluate whether a policy is financially and economically viable. So, RCTs offer a way of seeing not only what works, but how much.

Why is this news? Similar to other recent posts on here, there is increasing discussion of economics and how the discipline can be improved in the mainstream media. Aldrick’s argument is that economics – both the research and the formulation of policy – can and should be more scientific in its approach. And to this end he calls for more RCTs and longer term studies testing causation before policy is enacted. The government has launched the Business Basics Fund with Nesta to carry out trials investigating, among other things, productivity. UK productivity lags behind that of other countries, attributed generally to poor management practices. But how can management practices be altered to improve productivity?

Questions like this lend themselves readily to RCTs where different techniques can be trialled in comparison with a control group. Nevertheless, there are questions of macroeconomics that are not suitable for trials. We cannot test interest rates or tariffs, for example, against control groups. And this remains a problem for the larger questions tackled in macroeconomics, where theory remains a significant influencer of policy.

Calls for greater use of careful empirical data in shaping economic, legal and social science policy is not new though. Economic sociology, economic sociology of law, and sociolegal approaches have long stressed the need for analysis and understanding to be based firmly in the real world, on real data, and about real people. Increasing access to big data and AI could enhance this. As Aldrick states, “Economics is a social science. Why not make it more scientific?”