Rehabilitating the economist

Following up on my post Methodology, Ideology from a few days ago, I’ve started to dig in to Johanna Bockman’s Markets in the Name of Socialism: The Left-Wing Origins of Neoliberalism. It is a fascinating perspective on the history of economic thought and the sociology of economics. Importantly, it is explicitly concerned with separating the standard methodology of neoclassical economics from right-wing, capitalist ideology.

I have suffered from an unshakeable paranoia about being an economist ever since it looked like I was going to become one. To be an economist is, as I have written about a lot before, to be generally understood as someone concerned with finance, business, and money, a soulless being who sees human beings as automatons programmed to maximize their wealth. I began to feel—I still can’t shake the feeling—that we are forever condemned to this tragic, villainous role.

The second part, about the automatons, goes against everything I understand about the foundational principles of economic methodology. But in the mid-2000s it caused a big intellectual crisis for me. It I began to feel that I was living in a Twilight Zone.

The reason was the advent of what is known as behavioral economics. I was so enthusiastic about it. One part of behavioral economics is enriching and empirically locating the motivations of the people in our economic models. I thought, and still think, that this was going to be an exciting, valuable thing for our work. But I also thought it would help us against the charge of soullessness: see? We do not assume that people care only about wealth!

Instead behavioral economics—as it filtered down through its academic work and into popular discourse—reinforced the problem. It cast itself in its popular writings as an outsider methodology, an insurgency fighting the good fight against those alleged Soulless Economists. It co-opted what I thought was the non-economists’ misconception and tarred us with it from within.

Ouch!

Is that who we are? Was I wrong all along?

This is something I struggled to understand. I still struggle with it. I still cling, maybe stubbornly, to what I thought I knew, that behavioral economics is at most a revolution within neoclassical economics and not a revolution from outside.

I suppose, though, this is just a symptom of the larger misconception. A symptom of the of the misconception that neoclassical economics as presupposing a narrow cash-profit-wealth motivation for human behavior is a brick in the larger conception of neoclassical economics as the tool of capitalist ideology.

And so, finally, back to Bockman’s book. It gives me the simple, great gift, of an outsider to economics saying: yes, the perception is wrong. I feel like someone is deconstructing my Twilight Zone.

I have much work to do to properly understand and digest Bockman’s thesis and arguments, precisely because she is writing with a methodology and language that I am not totally familiar with. And I’m cheating because I haven’t even finished reading yet. So I doubt I will be able to do much justice here to the depth of her argument. But I can’t resist sharing a few small excerpts.

On the distinction between economic methodology and neoliberal ideology:

[We] should not conflate neoliberalism and neoclassical economics, we should not assume that neoclassical economics is a capitalist science or ideology, and, most importantly, we should go beyond the state-market axis.

On the neutrality of neoclassical results:

Unexpectedly, by the 1890s, neoclassical economists also discovered that the competitive market economy was mathematically identical to the centrally planning economy… both the pure competitive market and centrally planned socialism sit together at the center of neoclassical economics, no matter the politics of the economist.

Bockman supports this by quoting Paul Samuelson on the equivalence of methodology among ideologically diverse economists, documenting the diverse 20th century “schools” of economics that share the neoclassical methodology, and, crucially, having extensively interviewed dozens of academic economists about their profession.

Scholars have… assumed that economists’ professional work, what they publish in their professional journals, reflected neoliberal capitalist principles…

Some economists might be angry about this misperception, though most economists do not seem aware of the problem. I once asked an economist why he and other economists continued to let the public think that they were conservative right-wingers. He immediately criticized me for thinking that economists were conservative right-wingers. All the economists he knew were left wing. Although I tried to say that I did not actually think this but rather wanted to know why economists had allowed this common misperception, he continued to fume at me about my ridiculous assumptions…

Yes, professional work is always ideological, but not necessarily in the way it first seems. Analysts have not taken the time to study economists’ professional writings and clarify what economists actually do.

On the “social planner” in economics:

A benevolent dictator, more usually called “the social planner”, appears throughout mainstream economic writing… the social planner is an imaginary benevolent representative for all of society…

The economist then evaluates the results of a new policy or institution in comparison with the results obtained by the social planner, which serve as a benchmark. As this book shows, the social planner is the socialist state as imagined in the 1890s.

Already this has me thinking critically about how, starting from a common understanding of the toolbox of “standard” economics, economists and non-economists can read the tools in useful, novel ways. I would not likely have arrived at reading the economists’ concept of a “social planner” as a conception of a “socialist state”. And yet now that I have read it, I see the power and usefulness of the reading.

As Bockman points out, the Walrasian general equilibrium model, a central achievement of the neoclassical methodology, has at its heart an “auctioneer”, whose job it is to call out and adjust prices to balance incentives, wants and needs across the interconnected web of the economy. Whether the auctioneer functions as an analogy for a central planner, a decentralized competitive process, neither, or both, is, to me, one of the deepest questions in economic theory.

Elsewhere she rightfully deescalates the perception of institutional rigidity within economics:

Neoliberalism appears as disembedded liberalism, as a commitment to unfettered markets, when, in fact, institutions are always the object of debate…

Neoclassical economists continually talk about institutions required for the successful functioning of these core elements, the market or the centrally planned socialist state.

I could go on and on, but I’ll let it rest here. As you may already have gathered I would enthusiastically recommend this book on many levels. I think it will be interesting to the student of economics in disambiguating the methodology of the discipline from ideological debates, and interesting to the economist in illuminating an underappreciated relationship between historical and ideological context and that same methodology.

I hope and expect that Bockman’s book will teach me more about historical socialisms and the East-West dialogue in the economics profession as I continue to read and digest it. For now, though, I am grateful to it as water in the desert. Let us all as economists share in this uphill task of rehabilitating our image. I still believe we have the truth on our side.

One thought on “Rehabilitating the economist

  1. Pingback: The second best: achievable policy | Jim Campbell

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