[Marxism] Why Are Economists So Small-Minded?

Louis Proyect lnp3 at panix.com
Wed Feb 10 06:34:57 MST 2016

Why Are Economists So Small-Minded?
By Jefferson Cowie

After reading through a policy speech prepared by John Kenneth 
Galbraith, President Lyndon Johnson addressed the economist. "You know, 
Ken," he said, "the trouble with economics is it’s like peeing in your 
pants. It feels hot to you but leaves everyone else cold." One only has 
to go to an economics seminar to know that Johnson was right.

Yet in an era in which markets have become the method of justifying and 
adjudicating all things, we cannot afford to have economics leaving us 
feeling cold and wet. Economics has become the benchmark for other 
intellectual endeavors; its practitioners rule policy debates; and, 
sadly, its mathematical modeling has become a closet form of 
anti-intellectualism — mathematically abstracted, as it tends to be, 
from real-world problems — that is creeping into other disciplines. 
While fewer people care that much of the lit-crit crowd stopped talking 
humanities to humans, economics is too central to political life for 
such shenanigans. It is time for the "queen of the social sciences" to 
get off her throne and start speaking to some of the lesser subjects in 
the kingdom of academe.

My "J’accuse" is this: The field of economics practices the very sin it 
preaches against ­— protectionism. That is to say, economists are 
protectionists of the intellectual sort at a time when the need for 
trade in the market of ideas has never been more pressing.

In a recent article, "The Superiority of Economists," in the Journal of 
Economic Perspectives, we learn a number of things that are truly 
impressive about the field: Its graduates have higher standardized-test 
scores than political scientists and sociologists; they tend to find 
places higher up in policy and advisory circles; they are the best at 
math; and they earn more money and tend to have better career prospects 
than other graduates do. It’s no surprise that economists also seem to 
have more intellectual self-confidence than those in other fields. 
Economics, after all, is the only social science to have its own Nobel 
prize. Grounded in the present, they look toward the future and only 
rarely to the past.

The more economists agree among themselves, the further they drift from 
everyone else. On the other hand, smug in their security, economists are 
the least likely to cite other disciplines. Perhaps the most disturbing 
thing is the remarkable extent to which graduate training in the field 
is similar across institutions and departments — a stark contrast to 
other disciplines. And most of that graduate education is driven by 
textbooks and textbooks alone. To other social scientists and humanists, 
that is an astonishing proposition, and evidence of the field’s range of 

As that survey of economic training shows, economics demonstrates more 
internal control over its own labor market, hiring only those who follow 
the prescribed formulas. The study of economics appears to be an 
exercise in the affirmation of orthodoxy.

Economists also have less regard — or perhaps greater disdain? — for 
other disciplines, as well as much more tightly wound methods, unified 
frameworks, and core principles that appear unchallengeable from within 
or outside the field. All of this condemns economists to a distinct 
epistemological insularity, a unified worldview that demarcates them 
from the rest of the academy. The more economists agree among 
themselves, the further they drift from everyone else.

As for that Nobel prize? Perhaps it is an example of the problem. It was 
created not by Alfred Nobel himself, as part of his proj­ect to 
recognize those who have created "the greatest benefit to mankind," but 
was endowed some 70 years later by the Swedish national bank in an act 
of propaganda ­— what one wag called "a marketing ploy to celebrate the 
Bank of Sweden’s 300th anniversary."

The insularity of economics prompts an enormous irony: Rather than a 
market, economics borders on a command economy. From inside its 
fenced-in monocultural landscape, students are taught that they have 
arrived at the land of objectivity, that they have passed beyond the 
ideological and into the scientific. Not only is this protectionism, but 
it creates a rub with democratic theory and practice. It is, 
essentially, an invitation to opt out of the greater intellectual 
struggles in which the rest of us are engaged. By protecting itself from 
the contagion of outside ideas, economics offers up a more extreme 
version of the Balkanization and creeping anti-­intellectualism that are 
apparent elsewhere in the academy. Its hegemonic role, however, makes 
all the more important the need for the field to open up and transcend 
its preoccupation with the blackboard fictions of economic modeling.

As the Keynes scholar Robert Skidelsky has put it, the methodological 
presumption of economics is that "a good car [called economic modeling] 
has been built: Students must learn how to drive it." But economics 
should not be a course in driver’s ed; it should empower students to 
think critically and creatively about the whole system of 
transportation. We should be inculcating curiosity, a sense of 
adventure, a greater range of ideas, not shutting them down. After all, 
it’s not as if economists are simply correct. When the queen asked the 
faculty members of the London School of Economics and Political Science 
why they did not foresee the 2008 financial crisis, they said they would 
get back to her. They later admitted in a letter that they had no answer 
and that their promise to provide one was an example of "wishful 
thinking combined with hubris."

The training of an economist encourages a sense of difference from 
others. The economist Robert Frank joined in performing a telling 
experiment involving the prisoner’s-dilemma game with undergraduates at 
Cornell University, in which two players had to decide whether to work 
together or advance their own interest at the expense of their 
partner’s. Economics students, the study found, behave less 
cooperatively than others do. Economics students were 42 percent more 
likely to predict that their partners would defect rather than cooperate 
in the game.

As students in general wind their way through four years of college, 
they tend to become more cooperative. But as economics students move 
toward graduation, Frank and his colleagues found the trend toward 
cooperation to be "conspicuously absent." In short, undergraduates who 
went through economics training became less cooperative and more 
suspicious of the cooperative impulses of others. Perhaps the principle 
of self-interest is taught as much as it is intrinsic to human nature. 
The final irony is that such behavior prepares aspiring economists for 
the very world they are seeking to create.

People are shaped by history and social experience. And the market 
changes people. To quote Alan Greenspan on recent social changes: The 
problem is "not that humans have become any more greedy than in 
generations past," but rather that "the avenues to express greed had 
grown so enormously." Even Greenspan thinks that context matters, that 
change over time matters, and that political culture shapes economic 

His remark leads us to the vast and varied terrain of economic history. 
History is valuable, and, if the education of economists were more of an 
intellectual endeavor than a pipeline to careers in finance, it could be 
one intellectual component in a basket of approaches to get students to 
think more widely. Unfortunately, economic historians tend to be busy 
reducing history to the application of contemporary models to old data 
sets. And they don’t like to talk with people in the history department 
very much.

Perhaps Thomas Piketty’s immodestly thick compendium of theory, data, 
and narrative, Capital in the Twenty-First Century, promises a comeback 
for a broader range of ideas. Piketty is a rare voice willing to call 
out economists for their protectionist methods. As he boldly states in 
one of the most intellectually liberating passages in the book:

The fetishization of mathematical modeling is little more than a barrier 
to keep out the competition. To put it bluntly, the discipline of 
economics has yet to get over its childish passion for mathematics and 
for purely theoretical and often highly ideological speculation, at the 
expense of historical research and collaboration with the other social 
sciences. Economists are all too often preoccupied with petty 
mathematical problems of interest only to themselves. This obsession 
with mathematics is an easy way of acquiring the appearance of 
scientificity without having to answer the far more complex questions 
posed by the world we live in.

The book is more important, of course, for its argument about how the 
economy works. Piketty’s basic premise is as heroic as it is succinct: 
The rate of return on capital outstrips economic growth, making 
capitalism an engine for inequality unless there are countervailing forces.

As powerful and persuasive as Piketty’s work is, truth be told, he is 
not much of a historian. As much as I admire his data — and use it 
myself — the American history in his book, where it exists, is often 
just wrong in both fact and interpretation. He wields history like a 
chef with a heavy hand on the salt — it’s there every time you taste the 
dish but it doesn’t really help things. Balzac keeps popping up in 
Piketty’s book, but there are no unions, the New Deal is not especially 
significant, and there is not much labor-market policy at all. Taxation 
and war seem to be the only levers of change and, by association, the 
only solution to problems. Social history — the history from below — 
seems like an unknown land.

In the past several years, there has been a resurgence of interest in 
the history of capitalism. What once might have been called the study of 
"political economy" is an emerging intellectual framework combining an 
array of methods and questions with a return to putting capital at the 
center of the historical narrative. The hope of those engaged in the 
history of capitalism is to challenge the clinical modeling of social 
life. There is not one thing we can call "capitalism," after all, but a 
contingent historical assemblage of work, investment, production, 
politics, and trade from the 15th-century spice trade through slave 
cotton to today’s digital labor.

The new historians of capitalism tend to be more consciously ecumenical 
in their research and interpretive methods. Their strength is the 
opposite of mainstream economics. As the historian Louis Hyman has put it:

"When the story calls for linear regression, they use linear regression. 
When the story calls for the backstory of the commodity, they 
de-fetishize and figure out the story. When gender is the dominant force 
in the archive, they use feminist theory. Leveraging the ease of data 
analysis, the historians of capitalism display a return to numbers that 
has been lacking in historical scholarship of late. While math is widely 
used, its models are not lionized. Data does not displace the human 
element in history, but complements it. It is used to clarify and 
explain, but not be so complex that it can’t be conveyed to normal humans."

For the most part, the historians of capitalism are engaged in the 
subjectivity of the matter rather than the objectivity of the model. 
They privilege facts over theory, the personal over the impersonal 
forces, the specific over the universalist claim, the implicative rather 
than the explicative, the narrative over the analytical, and the thick 
description over the compression, precision, and mathematical parsimony 
of the economist. What could be a better complement (I’m not looking to 
overthrow the discipline) to the insularity of economics than the 
subjectivity of real people?

To historians, it is clear that markets are less natural or specific 
than temporally, spatially, and culturally specific. They operate in a 
given moment created by social actors. It is difficult to look at the 
historical record and see the past as shaped by perfect competition, 
perfect information, and minimal interference by the government, let 
alone to see that markets always provide "fair" outcomes. Moreover, 
people trained in history, sociology, or anthropology would never 
believe that you could remove "market distortions" like unions or 
regulations without both affecting the course of democracy and 
strengthening the power of already dominant groups.

A 2014 study by Martin Gilens and Benjamin Page shows that regulatory 
capture has actually become regime capture, the power of wealth enjoying 
its near-complete conquest of the political process. The researchers 
conclude that the rich and powerful control the country, not the 
majority of its voters. In contrast, "mass-based interest groups and 
average citizens have little or no independent influence." How then can 
the study of economics become divorced from the study of politics?

In chiseling their intellectual enterprise down to its narrowest 
terrain, economists ironically reflect the fate of the hapless workers 
in Adam Smith’s Lectures on Justice, Police, Revenue and Arms. He argued 
that the "commercial spirit" "confines the views of men." "Where the 
division of labour is brought to perfection," Smith argued, "every man 
has only a simple operation to perform. To this his whole attention is 
confined, and few ideas pass in his mind but what have an immediate 
connection with it." By separating economics from the rest of the 
intellectual world, by posing models that few understand or accept, 
economists’ part in the intellectual division of labor has become more 
refined and less useful as a way to understand the world. Confined, indeed.

The textbook fundamentals of economics are important to us all — and 
important for people in all disciplines to be familiar with. Many 
economists are among the smartest people on campus, and I enjoy 
listening to them reason. But the fetishization of mathematical 
modeling, wrapped around the assumption of perfect markets and rational 
behavior, ends up being little more than a barrier to keep out the 
competition rather than an opening to the intellectual cooperation and 
collaboration that are sorely needed.

Here we must hail the rise of behavioral economics, with its creative 
experimentation, connection to sociology and psychology, and, to 
paraphrase Dan Ariely, its investigations into the predictability of the 
irrational. What economists can learn from other corners of the campus 
is that people live subjective, historically contingent lives, and that 
many of their core values and pursuits lie outside the tyranny of the 
cash nexus.

If we break down protectionist barriers, perhaps we can replace the 
study of Homo economicus with that of Homo sapiens. Let’s not forget 
that paradigmatic breakthroughs don’t come from supersmart parrots with 
the best math skills. Education is not technical training. New ideas 
come from energetic, youthful, rebellious intellectuals like John 
Maynard Keynes, who, with his protégé Hubert Henderson, wrote that we 
should feel "free to be bold, to be open, to experiment, to take action, 
to try the possibility of things. And over against us, standing in the 
path, there is nothing but a few old gentlemen tightly buttoned up in 
their frock coats, who only need to be treated with a little friendly 
disrespect and bowled over like ninepins." While the target of their 
impatience was politicians, perhaps the same might be said of what needs 
to happen in his profession today.

Come on, economists, the rest of us really need you.

Jefferson Cowie is a professor of history at Vanderbilt University. His 
latest book, The Great Exception: The New Deal and the Limits of 
American Politics (Princeton University Press), was released in January.

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