“…[I]t is tempting to leave economics to the experts, particularly as this is part of the dominant political culture of the twentieth century, but in this case we cannot afford to. We are being sold short because the very knowledge and skills we need to address the great challenges humanity faces in the twenty-first century have been systematically left out of the education of those who go on to run our economy…as a society this binds us in a mental straightjacket that prevents us imagining the economy in any other way. This is turn precludes any real discussions about what our collective values are, how we wish to organise the economy and how we should address the challenges we face. We must reform economics so that the next generation of economic experts have the skills needed to reinvigorate economics and to build a society in which economics is a dialogue people actively take part in.
The aim…is to create spaces in which we can individually and collectively begin to rethink economics. In time we hope these spaces will become concrete institutions which enable mass participation in economic decision making. Ultimately we believe that economics must become a public dialogue and never again be left only to the experts.”
Joe Earle, Cahal Moran and Zach Ward-Perkins (2017), The Econocracy: The perils of leaving economics to the experts, p.169-170
Following videos on Marx, Keynes, Adam Smith and Capitalism, and in the interests of some kind of balance, here is a brief video introduction from The School of Life on Austrian School economist Friedrich Hayek. His thinking influenced the political programmes of Reagan and Thatcher in the 1980s and, many years before, he was involved in some great intellectual debates with Keynes.
I found the video useful, as I have not read any of Hayek’s work, though I have read other writer’s critiques of him. One of the points in the video that stood out for me was Keynes’ questioning of Hayek as to where the line should be drawn between government intervention and the private sector, given the inevitability of some state planning. Of course, private firms make plans as much as governments, but the balance between the public and private will surely vary over time in any country depending on a range of factors.
I would also make the point that Thatcherism has been described by one academic as ‘the free economy and the strong state’. If this is an accurate characterisation, it illustrates the inevitable and shifting relationship between the market and the state, and a range of other institutions. Like it or not, modern capitalist economies are all mixed economies with interventionist states. There will always be room for debate over the balance between the various and evolving institutions that comprise such a system.
With Donald Trump’s apparently escalating trade war very much in the news, here are some wise words from Peking University’s Michael Pettis, taken from the final pages of his 2013 book The Great Rebalancing – Trade, Conflict, and the Perilous Road Ahead for the World Economy (p.192-194). They seem particularly relevant right now.
Democracy, accountable and transparent government, low levels of corruption, the rule of law, stable property rights, pluralism: we tend to think that these are all highly desirable in any society.
In poor countries, they are often absent, but at least some of them are present in many rich ones. It seems to follow that they should be encouraged in the former as a way to encourage development. After all, if richer countries have these characteristics, they may be part of the development process.
This wishful thinking provides a foundation for the ‘good governance’ agenda propagated by the World Bank and other international institutions during the 1990s and into the 2000s. It was argued that domestic political reforms in the direction of good governance in poor countries would provide the institutional environment conducive to the efficient working of markets and thereby promote development. Continue reading
Another short video from The School of Life, this time on capitalism. I like this series, partly because their main focus is not so much on the pure economics of each subject, but instead covers some of the historical, political, social and philosophical aspects.
The video concludes by describing the mixed blessings of capitalism: its extraordinary productive capabilities on the one hand, and its frequent neglect of workers and provision of goods based on what is profitable rather on human need. But it ignores any kind of discussion on the solution to these dilemmas: should we reform the system, or encourage its replacement?
2018 marks 24 years since I first took an interest in what is sometimes referred to as the ‘dismal science’. Not a particularly notable landmark, though it is more than half my life. And I certainly have not spent all that time with my nose in books about economics, although I have spent quite a bit of it like that, maybe more than is good for me.
Apparently it was the Victorian historian Thomas Carlyle who coined the phrase dismal science in the 19th century. I am sometimes inclined to agree, when observing a malfunctioning economy and its malfunctioning stewards in government and business. But more often I am prepared to be optimistic that we can find solutions to the problems of humanity. Some of them might even come from studying economics!
Keynes looked forward to a time when the economist’s role in society would be akin to that of dentists, as humble, competent fixers of minor problems. Notwithstanding a call from the UK’s current environment secretary during the campaign for Brexit to pay less attention to experts, economists and their ideological categories of supply, demand and growth have become extremely powerful and accepted, even if with passivity, resignation or incomprehension. Continue reading