Joan Robinson on economics and the study of society

Joan Robinson (1973)

Apart from her voluminous academic writings, the Cambridge Keynesian economist Joan Robinson wrote several popular books. Freedom and Necessity – An Introduction to the Study of Society was published in 1970. Although some of it dates somewhat, there is plenty of interest and contemporary relevance that remains. Here are a few such extracts:

(From the preface) “It seems to me that an economic interpretation of history is an indispensable element in the study of society, but it is only one element. In layers below it lie geography, biology and psychology, and in layers above it the investigation of social and political relationships and the history of culture, law and religion.”

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Joan Robinson on the nature of economics and the uniqueness of humanity

Joan Robinson (1973)

Joan Robinson was Professor of Economics at Cambridge. She was a leading figure in what became the post-Keynesian school, having been one of the group of academics surrounding Keynes as he developed the ideas which led to his General Theory in the 1930s.

She was highly productive and covered a broad range of subjects during her life, from the economics of imperfect competition to the theory of economic growth, as well as popular books on economic philosophy and the nature of society. She was well-known for being fierce in debate and for her tireless efforts at critiquing neoclassical theory.

The following is a brief extract from an interview with Diego Pizano conducted in 1977 and included in his Conversations with Great Economists (p.90):

“Keynes was certainly aware that an economic approach to history was only one, yet dispensable, element in the study of society. Economics is a discipline constructed on the basis of elements of many sciences – geography, biology and psychology – and it interacts with a whole range of subjects from the history of culture to politics, law and religion. Keynes had a very good background in most of these disciplines but it is probably true that he was not sufficiently aware of the connections that certainly exist between the economic and the biological process.

…I would like to say that it is crucial to understand the biological basis of human behavior to shed light on the problem of the origin of society. Man was once defined as a tool-making animal, but now it has been discovered that chimpanzees construct tools designed for particular uses. Neither tools, nor manners characterize man: language does. The invention of a procedure that enabled man to convey information about things not present and to speculate about things not known was the great step. Language made social life much richer and complex and this obviously implies that the economic life of man is much more complicated than that of any other species.”

The political economy of the future: AI, Big Tech and humanity

Human-Intelligence-Can-Fix-AI-Shortcomings-1Peering into our technological future may seem a little inappropriate amidst the current global pandemic, but before Covid-19 had emerged, one of the major themes tackled by many scientists, economists and social theorists of both left and right had been the advance of technology, Artificial Intelligence (AI) in particular, and its potential impact on the worlds of business, the economy, politics and society.

The prospects of humankind given the inexorable march of technology typically range between a variety of utopias and dystopias. What will AI mean for productivity and living standards? Will it lead to a society of abundance with more leisure time than ever before for the majority? How about the distribution of income and wealth, the implications for democracy, and so on?

Four compelling books from 2019, written by, respectively, a computer scientist, two journalists and a maverick scientist and futurist, address some of these issues, from different perspectives, but with some overlap, particularly in terms of the necessary human response to the advance of AI. Continue reading

The selfish and the social

Brain-598x342Until recently, much of economic theory has neglected the roles that evolution, psychology and biology play in shaping the economy and its human constituents. This has been detrimental to mainstream economics’ narrow vision of economic man, who is supposed to behave in a selfish, rational fashion as he optimises social outcomes, primarily in the realm of markets.

A notable recent contribution which attempts to counter this conception is Rojhat Avsar’s The Evolutionary Origins of Markets. The book argues that the human brain and human behaviour have evolved in ways which make the creating and sustaining of socioeconomic institutions, not least the market and exchange, outcomes of social motives as much as selfish ones.

Avsar’s short book contains a wealth of ideas and applications of studies of human nature to the economy. I will not attempt to cover more than a few of them, or review the book, in this post. Instead I want to discuss one model of the human brain taken from the book and note its implications for our understanding of man in the economy. I will also introduce some ideas from a similar effort by institutional and evolutionary economist Geoffrey Hodgson, which also employs concepts from biology in its attempt to construct an alternative to homo economicus. Continue reading

Can the history of economics inspire a pluralistic approach to economics? — Developing Economics

Pluralistic Economics and Its History, edited by Ajit Sinha of Thapar School of Liberal Arts & Sciences, Patiala (India) and Alex M. Thomas of Azim Premji University, Bengaluru (India), contains seventeen essays. This review seeks to engage with some of the principal themes that animate the essays in this volume.

via Can the history of economics inspire a pluralistic approach to economics? — Developing Economics

How Nations Learn – industrial policy and political economy

HowNationsLearnLast week I finished some lockdown reading, following my perennial interest in industrial policy and how it impacts development. This time it was the edited 2019 volume How Nations Learn, subtitled Technological Learning, Industrial Policy and Catch-Up.

HNL explores industrial policy in the context of ‘learning’ by governments and firms in ways which can accelerate industrial growth and development. That is, learning by governments in the process of policy making for development and learning by firms in the form of using and adapting already existing technologies to drive productivity growth in the catch-up process.

It is fair to say that most of the chapter authors hold to the idea that industrialisation and the growth of the manufacturing sector in late (relative to today’s advanced countries) developers is a primary driver of learning and of development. In this vein development is seen as more than periods of growth, but as an economic transformation. It is this continuous transformation in economic structure which makes long term growth and broad increases in living standards possible. Continue reading

The appeal of individualism in economics

Chang EconomicsUsersGuideHere is another extract from Ha-Joon Chang’s 2014 introduction Economics: The User’s Guide. I have posted a number of quotes from Chang’s popular books over the last few years. For me these works make accessible to a potentially wide audience important points about economics and political economy.

This one outlines what he sees as the “appeal of the individualist vision of the economy and its limits”. In particular, economic freedom may not always be aligned with political freedom, contrary to the claims of many free market economists.

Elsewhere Chang has argued that there is no such thing as a ‘free’ market anyway, as markets under capitalism are institutions structured and sustained by all sorts of rules, both formal and informal, whose emergence and management are frequently subject to political intervention and debate. Although this kind of argument starts becoming one of semantics, I find that it can be helpful to challenge conventional wisdom and elements of discourse and meaning which are widely influential. This reveals them as partially subjective as much as objective, and therefore able to be changed. Continue reading

Is economics — really — a science? — LARS P. SYLL

As yours truly has reported repeatedly during the last couple of years, university students all over Europe are increasingly beginning to question if the kind of economics they are taught — mainstream economics — really is of any value. Some have even started to question if economics is a science. At least two Nobel laureates […]

via Is economics — really — a science? — LARS P. SYLL

Ha-Joon Chang on the different ways to ‘do’ economics

Chang EconomicsUsersGuideIt is important to recognize that there are distinctive ways of conceptualizing and explaining the economy, or ‘doing’ economics, if you like. And none of these schools can claim superiority over others and still less a monopoly over truth.

One reason is the nature of theory itself. All theories, including natural sciences like physics, necessarily involve abstraction and thus cannot capture every aspect of the complexity of the real world. This means that no theory is good at explaining everything. Each theory possesses particular strengths and weaknesses, depending on what it highlights and ignores, how it conceptualizes things and how it analyses relationships between them. There is no such thing as one theory that can explain everything better than others – or ‘the one ring to rule them all’, if you are a fan of The Lord of the Rings.

Added to this is the fact that, unlike things that are studied by natural scientists, human beings have their own free will and imagination. They do not simply respond to external conditions. They try – and often succeed – to change those very conditions by imagining a utopia, persuading others and organizing society differently; as Karl Marx once eloquently put it, ‘[m]en make their own history’. Any subject studying human beings, including economics, has to be humble about its predictive power.

Moreover, unlike the natural sciences, economics involves value judgments, even though many Neoclassical economists would tell you that what they do is value-free science…behind technical concepts and dry numbers lie all sorts of value judgments: what is the good life; how minority views should be treated; how social improvements should be defined; and what are the morally acceptable ways of achieving the ‘greater good’, however it is defined. Even if one theory is more ‘correct’ from some political or ethical points of view, it may not be so from another.

Ha-Joon Chang (2014), Economics: The User’s Guide, Penguin books, p.111-112.

Ha-Joon Chang: why history matters

ha-joon-chang“History affects the present – not simply because it is what came before the present but also because it (or, rather, what people think they know about it) informs people’s decisions. A lot of policy recommendations are backed up by historical examples because nothing is as effective as spectacular real-life cases – successful or otherwise – in persuading people. For example, those who promote free trade always point out that Britain and then the US became the world’s economic superpowers through free trade. If they realized that their version of history is incorrect, they might not have such conviction in their policy recommendations. They would also find it harder to persuade others.

History also forces us to question some assumptions that are taken for granted. Once you know that lots of things that cannot be bought and sold today – human beings (slaves), child labour, government offices – used to be perfectly marketable, you will stop thinking that the boundary of the ‘free market’ is drawn by some timeless law of science and begin to see that it can be redrawn. When you learn that the advanced capitalist economies grew the fastest in history between the 1950s and the 1970s when there were a lot of regulations and high taxes, you will immediately become sceptical of the view that promoting growth requires cuts in taxes and red tape.

History is useful in highlighting the limits of economic theory. Life is often stranger than fiction, and history provides many successful economic experiences (at all levels – nations, companies, individuals) that cannot be tidily explained by any single economic theory. For example, if you only read things like The Economist or the Wall Street Journal, you would only hear about Singapore’s free trade policy and its welcoming attitudes towards foreign investment. This may make you conclude that Singapore’s economic success proves that free trade and the free market are the best for economic development – until you also learn that almost all the land in Singapore is owned by the government, 85 per cent of housing is supplied by the government-owned housing agency (the Housing Development Board) and 22 per cent of national output is produced by state-owned enterprises (the international average is about 10 per cent). There is no single type of economic theory – Neoclassical, Marxist, Keynesian, you name it – that can explain the success of this combination of free market and socialism. Examples like this should make you both more sceptical about the power of economic theory and more cautious in drawing policy conclusions from it.

Last but not least, we need to look at history because we have the moral duty to avoid ‘live experiments’ with people as much as possible. From the central planning in the former socialist bloc (and their ‘Big Bang’ transition back to capitalism), through to the disasters of ‘austerity’ policies in most European countries following the Great Depression, down to the failures of ‘trickle-down economics’ in the US and the UK during the 1980s and 1990s, history is littered with radical policy experiments that have destroyed the lives of millions, or even tens of millions, of people. Studying history won’t allow us to completely avoid mistakes in the present, but we should do our best to extract lessons from history before we formulate a policy that will affect lives.”

Ha-Joon Chang (2014), Economics: The User’s Guide, Penguin books, p.48-50.