[Marxism] Why Are Economists So Small-Minded?
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Wed Feb 10 06:34:57 MST 2016
THE CHRONICLE REVIEW, Feb. 10 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
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
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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