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Don’t rock the ideological boat (too much)

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Don’t rock the ideological boat (too much)1

By David Wells

In his opening keynote address at the recently-concluded Rethinking Economics conference in London (June 28-29, 2014), Lord Adair Turner dismissed the need for changes to microeconomics by referring to the beneficial use made of micro by two committees he chaired, the Pensions Commission and the Low Pay Commission.

His committees may well have benefited from microeconomic insights but that does not leave micro in the clear. After all, the centrepiece of the micro banquet is the model of perfect competition which is foundational for the theory of General Equilibrium which in turn lies behind those models which assured mainstream economists that the financial crash of 2008 was not merely unlikely but actually logically impossible: so micro has a lot to answer for.

Lord Turner then focused his attention entirely on macroeconomics. The obvious problem with this limitation is that it leaves most of the foundations of mainstream orthodox economics intact and so student rebels against orthodoxy are likely to be disappointed.

Every session I attended at the conference included at least one reference to ideology. In addition, ‘Whig’ as in Whig history was heard at least once, and ‘neoliberal’ several times.

Yet no-one put these themes together to actually come out and say plainly that the ideology of mainstream economics is (extreme) liberal, let alone to argue that this ideology which naturally and inevitably promotes laissez faire and free markets and so on, leads to distorted and inadequate models of experience, as seen in current economic textbooks and in the 2008 crash.

Ha-Joon Chang in his concluding keynote called forcefully and eloquently for pluralism in economics teaching, without considering that some of the schools of thought within economics that he identified preach (the correct word) ideas and claims that are deeply ideological and deeply damaging, the prime culprit being the hegemonic and extreme liberal neoclassical school. Thus, I presume that DSGE models ought not to be included in any pluralist course, except possibly as a terrible example of ivory tower economists running amok.

Finally, just before the final keynote address, a short video was played in which Robert Johnson, the President of INET, sent his best wishes to the conference and congratulated the organisers – but also suggested at one point that the students should be ‘guided’ by INET.

This is strange. Why should the students be ‘guided’ by INET ? Why not the other way around? After all, it is the students who are the instigators of this revolution and who are at the front line, manning the barricades. INET are very active in their own way – the CORE curriculum project is especially interesting – and they supply invaluable funding, including for this conference2, but they are essentially secondary actors on the stage. The protagonists are the students, not just in the UK but all over the world: the ISIPE now has (at least) 65 member associations in 30 countries.

Putting these points together, and writing as one of the older generation who was actually there at the time, I am reminded of the 1965 essay by Herbert Marcuse on ‘Repressive Tolerance’.

Lord Turner is happy to use his vast experience to re-examine macroeconomics, but the foundations are, frankly, OK. Everyone acknowledges that ideology is present, but no-one actually wants to analyse it deeply. Robert Johnson wishes the students well but hopes that they will accept his avuncular guidance, while Ha-Joon Chang favours pluralism but without examining any ideological skeletons that various schools might be hiding in their cupboards.

If I were a student, I think that I would find this extremely disturbing.

1 Reposted from the Rethinking Economics Blog

2 And for researchers. I applied for a grant myself and was rejected, probably quite rationally.

 From: p.5 of World Economics Association Newsletter 4(4), August 2014 http://www.worldeconomicsassociation.org/files/newsletter/Issue4-4.pdf

Download WEA newsletter Volume 4, Issue No. 4, August 2014 ›

3 responses

  • greg gerritt says:

    The entire premise is phony. Economic growth no longer exists in the west and the entire economics discipline is based on faulty assumptions of growth. use less, share more, heal ecosystems if you want prosperous communities

  • Pranjal Rawat says:

    In providing a half answer you are guilty of the same charge.

  • Richard E. Planck says:

    I fully understand about not ‘rocking the boat’. I have been trying for several years to find a journal which will publish my Copernican heresy. The polite reply always has the same general theme: “The proposed paper will not be of sufficient interest to our general readership.” But it’s interesting that the Managing Editor of a very prestigious economics journal, while he had to reject my paper, later sent me a personal 1 ½ page e-mail encouraging me to pursue my efforts and he even suggested several possible journals. [In that same personal e-mail, I learned that he was newly appointed to his position and that even he did not dare ‘rock the boat’ in public.]

    The scary part is that economics – by default – has become the single most important discipline in the history of humanity and I have concluded that we are a ship without a captain. No, strike that. We are a ship with many captains and the crew doesn’t know which one to obey. And I think our ship, the S.S. Earth, is headed for an iceberg. As our world grows smaller and smaller, our gradually escalating world-wide economic tensions could easily erupt into a world-wide military conflict.

    So where do I find an outlet for my Copernican heresy? Who will dare publish my contention that extant economic theory is not unlike alchemy in the history of chemistry? When I try to be polite, I call it ‘alche-nomic wishcraft’.

    Do any readers understand ‘tabula rasa’…? Almost nothing in extant theory can be saved, regardless of ‘school’ and/or political ideology.

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