Who are our allies?
By Peter Swann
The large membership of the WEA shows that a lot of heterodox economists want to see substantial change in academic economics. However, I believe this goal will not be achieved by heterodox economists acting on their own. We need more allies outside the heterodox economics community, and the purpose of this article is to start a discussion about where such allies can be found.
Some of our best allies have been students of economics. Their best-known contribution has been to demand that they are taught theories relevant to the financial crash. In the UK, many people in government and business describe students as ‘customers’, and are very critical if a university fails to cater for the wishes of its customers. This is quite a powerful force for change. And it is good to hear about the efforts of the Reteaching Economics group to reciprocate by showing what early career academics can do for these students.
As I see it, many religious leaders share our concern about the state of economics. Pope Francis has been quite outspoken about this, and so also have the present and previous Archbishops of Canterbury. I am less well acquainted with the views of religious leaders from other religions.
And, surprising as it may seem, I think we can also find some allies in mainstream economics. In my experience, some friends from the mainstream have been willing to discuss concerns privately, and have even conceded that heterodox criticism is justified. However, they are usually unwilling to say so in public, and the official mainstream response is either to ignore our criticism, or to give it a hostile reception.
In the past, I thought government economists could be powerful allies, and found many of them were very open to heterodox perspectives, and understood our concerns. But today, it seems that most government economists, in the UK at least, want mainstream thinking, and are wary of the unorthodox. Why the change? It is partly because the new generation reflect their graduate school training, and partly that they see mainstream economics as a palatable and plausible fiction, while heterodox economics is liable to reveal unpalatable and unwelcome truths.
I also believed scientists might help to see sense prevail in mainstream economics. There was some sign of this in the early history of the Santa Fe Institute. The famous dialogue between physicists and economists showed that the physicists were informal with their maths and based everything on evidence, while the economists were formal with maths and based everything on ‘standard’ assumptions (Waldrop, 1994, Chapter 4). To date, however, I have not seen a lot of help coming from that quarter. Even those scientists who are sceptical about mainstream economics do not necessarily want to be seen taking sides with heterodox economists.
What of other social sciences? Certainly, many sociologists and political scientists are uncomfortable with mainstream economics. This does not necessarily translate into support for heterodox economics, because some sociologists can benefit from having a stand-off with economics, and it is useful for them to have ‘straw man’ adversaries with a ‘perverse’ approach to their science. Nevertheless, there are important potential allies here.
It is perhaps less likely that that big business will be an ally. After all, most businesses do not employ economists, and the economists they meet tend to work for regulators or anti-trust authorities. In short, the economist is often seen as a nuisance who gets in the way of business, and from that point of view, indeed, it may be best for business if the economist lives in a fantasy world. Greedy oligopolists need not fear anti-trust economists who believe in Bertrand equilibrium, and insider-traders need not fear economists who believe in efficient markets. But there are important potential allies in small businesses.
Some employers would prefer to see a change in the curriculum – towards ‘real life’ economics and away from an emphasis on economic theory and econometric theory. But while this is true for some, it is not true for all. In the City of London, for example, there is a very strong demand for mathematically competent recruits, while the last thing bankers want is a heterodox economist who knows how much damage a voracious financial services sector can do to the rest of the economy!
And there will be many others that care, as we do, about what is wrong with mainstream economics. The route to finding these people is to ask ourselves this question. Who is being cheated by mainstream economics?
The precise answer to this depends on our particular concerns about mainstream economics. When I ask myself this question, thinking of the errors in mainstream applied economics that concern me most, the answer is simple: ordinary people. By shutting their ears and eyes to heterodox criticism, mainstream economists continue to disseminate a flawed model of economics. While this may serve the needs of government and big business, it can lead to serious errors, and when that happens, it is ordinary people who suffer. To reach the ears of ordinary people we need to work with the media, and that needs careful planning, but in my experience, a really good communications professional can almost always generate a good press story from a powerful academic argument.
These observations are made in the hope of starting a discussion about our potential allies. I would be very interested to hear the views of other WEA members.
Waldrop, M.M. (1994) Complexity, Penguin Books (1994, Chapter 4)
From: p.2 of World Economics Association Newsletter 5(2), April 2015