Tag: neoliberalism

Roundtable: Has Economics Failed?

Tom Clark and Chris Giles, writing for the Financial Times, debate the big picture of the economics profession. A few other FT writers respond.

Here is the contribution from Diane Coyle, the Bennett Professor of Public Policy at the University of Cambridge:

The Discipline Suffers from its Lack of Diversity

The debate about the state of economics is a bit surreal, to an economist. Tom Clark says economics is “a profession in a defensive mood”. Only if it is defensive to point out that what some critics are describing bears scant resemblance to economics. I’d go so far as to say there is economics, which is what academics, consultants and many officials do; and something almost entirely different, “economics”, an ideological construct deployed by some politicians and polemicists. The critics are attacking “economics” and calling it economics (when they are not calling it neoliberalism).

This is deeply frustrating. Partly because it would be marvellous if critics could accept that areas of the discipline such as market design, behavioural economics, industrial organisation, auction theory, data and techniques for policy evaluation, institutional economics, construction of major historical data sets et cetera are not just the few useful contributions identifiable in “a far-fetched vision of omnipresent and flawless markets”. On the contrary, areas such as these form the bulk of the work economists do.

But it is frustrating as well because there are certainly valid criticisms of economics. My top concern is its social composition. It is a largely male, white and posh profession — not a foundation for good social science, whose questions, hypotheses and data need to be rooted in society. The male dominance reflects both culture and the unusually narrow criteria for advancement in the academic profession, where only five journals really count. Other people would highlight further weaknesses, but then economics is a living science, looking at a constantly changing society, and there is a lot to learn.

And here is a snippet from the contribution of Mariana Mazzucato, Professor of Innovation and Public Value at UCL:

[…] the assumption that price reflects value means that we end up constantly correcting gross domestic product for the priceless activities it ignores (caring services at home, environmental damage, quality of life). And similarly, those activities which do have a price, but are just moving things around rather than creating value, get included (eg. most of the financial sector).

My suggestion is that before we add happiness indicators, we first take out rents. This would cause the GDP of some countries to drop drastically and for new questions to be asked about the “direction” of growth, not only its rate.

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Excerpt: Joseph Vogl, The Specter of Capital

On the one hand, the rationality of economic transactions is renscribed here in a new code: the exchange “mechanism” becomes the “web” of competition. Competitive societies are understood as being defined less by reciprocal trade relations — as was still the case in the eighteenth century — than by competitive differences or inequalities. And whereas the market once fulfilled the (liberal) natural law of self-interest, it now follows the (neoliberal) idea or form (ēidos) of competition.

Joseph Vogl, The Specter of Capital (Stanford: Stanford University Press, 2015), p.38.