Economics — too important to be left to economists

11 Jan, 2020 at 14:25 | Posted in Economics | 2 Comments

aaBad economics underpinned the grand giveaways to the rich and the squeezing of welfare programs, sold the idea that the state is impotent and corrupt and the poor are lazy, and paved the way to the current stalemate of exploding inequality and angry inertia. Blinkered economics told us trade is good for everyone, and faster growth is everywhere. Blind economics missed the explosion in inequality all over the world, the increasing social fragmentation that came with it, and the impending environmental disaster, delaying action, perhaps irrevocably.

Two of last year’s ‘Nobel Prize’ winners in economics, Esther Duflo and Abhijit Banerjee, are back with a follow-up to their 2011 book Poor Economics. In the new book — Good Economics for Hard Times — they set out to show that although few people nowadays trust economists, there is a way to “make economics great again.” What has undermined the general public’s trust in economists is bad economics, and there has been, and still is, plenty of it (the authors take trade liberalisation, growth theory, migration, inequality and climate change as poignant examples.) The alternative, good, economics is — as was argued already in the earlier book — what results when economists work more like plumbers and “solve problems with a combination intuition grounded in science, some guesswork aided by experience, and a bunch of pure trial and error.”

Although yours truly agrees with most of the picture the authors give of present-day bad (mainstream) economics, I’m less convinced of their alternative.

Duflo and Banerjee think that economics should be based on evidence from randomised experiments and field studies. But to give up on ‘big ideas’ like political economy and institutional reform and instead go for solving more manageable problems the way plumbers do, is in my view not sufficient to move economics forward and make it a relevant and realist science. A plumber can fix minor leaks in your system, but if the whole system is rotten, something more than good old fashion plumbing is needed. The big social and economic problems we face today are not going to be solved by plumbers performing RCTs. We need to dig deeper than plumbers and make sure we get at the deep causal mechanisms behind the present stagnation of capitalism and the climate catastrophe it has landed us in.

There is also a rather disturbing kind of scientific naïveté in the Duflo-Banerjee approach to combatting socio-economic and environmental problems. The way they present their whole endeavour smacks of not so little ‘scientism’ where fighting problems becomes a question of applying ‘objective’ quantitative ‘techniques.’ But that can’t be the right way! Fighting problems like poverty and inequality is basically a question of changing the structures and institutions of our economies and societies.

2 Comments »

RSS feed for comments on this post. TrackBack URI

  1. Apart from the fact that the analogies are almost always banal – economists are like like doctors, or like dentists, or like engineers, or like architects, etc. – they are also self-evidently ill-fitted to their professed task. The latest one – (good) economists are like plumbers – is just more of the same, except that its inappropriateness is made more blatant by it being assumed that “evidence based research” is somehow obviously morally good. A plumber can do a perfectly serviceable “evidence based” job fixing the pipes in a concentration camp, but no-one should be under the illusion that this somehow makes his or her work – or the camp – morally desirable. Rather than use these stupid analogies, why not employ the direct terms that used to be used – terms that perfectly fit the moral high-ground claimed by Duflo and Banerjee? I’m thinking of “political economist” or “applied moral philosopher”. I suspect that these terms, alas, are both too obvious and boring to gain any marketing purchase and yet also too extreme. Embracing these terms would entail the deeply unpleasant task of genuine serious engagement with ethical theory and ethical reasoning, rather than regurgitating yet more sophomoric liberal moral paternalism.

    • What exactly does “liberal moral paternalism” refer to? There is nothing moral about mainstream economics it seems.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Blog at WordPress.com.
Entries and comments feeds.