Some years ago a fellow economist queried why economic inequality is a problem. He suggested that people are born with different endowments of talent and opportunity and a degree of social difference in outcomes is not only natural but good as a spur for economic performance. In any case, he argued, if someone chooses to live a simple life in a remote island at a level of income deemed to be below the poverty level that’s their choice. What right has some analyst or bureaucrat, it is asked, to say that you can’t earn less than €8.65 an hour by law? He went on to emphasise that markets use prices to ration goods among individuals who behave in mostly rational ways to maximise their interests as they buy and sell commodities including their own human capital. Such frank views from an economist reflect an interesting perspective on the world and reflect deeply held assumptions about the human condition. Behind the maze of complex equations and sophisticated logical reasoning many economists are quite simple people. Many claim to be neutral in the battle for ideas or economic interests.
However, a few can’t resist taking sides with the ubiquitous ‘consumer’ who is poorly served by monopolies or special interest groups that rig markets or institutions to their advantage. The villains in the piece are typically colluding bankers, trade unions, politicians, the public sector etc. The use of complex modelling and copious reference to economic statistics and facts is used to reinforce the view that economists, by and large, know what they are talking about and what they offer is values-free, robust analysis which ‘policy makers’ and market actors can use or ignore as they wish (usually the latter).
The past 6 years have been a difficult time for the economics profession. Having transformed itself gradually over a century into a series of self-contained communities – some working for banks, businesses or NGOs as ‘chief economist’ or some such title – others working in academia (the purest type) and busily publishing papers and articles to meet research assessment metrics and promotional requirements the profession has been caught up in a severe storm in the advanced economies where they have not shown great capacity to anticipate the vulnerabilities of the financial and political systems. Even less obviously have many understood the need for new policy approaches and responses to what has been pursued throughout Europe and beyond.
The love of learning does indeed enter into the profession of course. But, the love of learning for the purposes of affecting change and, dare I say, ‘saving the world’ is less obvious. A generation of political economists from Smith to Marx to Marshall and Keynes is studied but not seen as a challenge to what economists do these days. Clearly, generalisation and stereotyping is not helpful and it would be unfair and inaccurate to claim that most or all economists are of one particular persuasion or school of thought. Methodologies, philosophies and inter-disciplinarities collide and contrast as new syntheses arise.
But, ‘Economics’ needs to reinvent itself in a number of ways because:
- The profession like so many others is not sufficiently representative of the population whether by gender, ethnicity or ‘political persuasion’;
- Some members of the profession suffer from an excess confidence in their own capacities to predict and explain as if sheer weight of empirical data coupled with ever more sophisticated modelling could fully uncover the hidden truths of human behaviour;
- A lack of cross-fertilisation of ideas, approaches and methodologies between different ‘disciplines’ – political, social, philosophical and natural sciences (the rise in behavioural economics is a welcome trend) limits the potential capacity of ‘economics’ to enter a debate; and
- Initiatives and currents which challenge existing orthodoxies within and outside Higher Education are welcome.
One thing is certain: whether you travel by car, bus or taxi – you may have noticed that people are fascinated by economic affairs. They want to understand it better. They want to discuss it. They have opinions (sometimes very strong!). In some cases they even want to make a difference to the world on the basis of this knowledge. Perhaps it is time for various non-governmental organisations, including the trade union movement, to consider how best to work with others including teachers and lecturers in secondary, further and higher education to open up the dark mysteries of markets, public finances and behavioural economics ….