May 15, 2004

Who's Afraid of Economics?

Lisa wonders why it is that so many people are hostile to economics, and postulates that one reason might be that, "in part, left-leaning people fear that learning economics (or indeed, lending it any credence) turns people into conservatives!"

I can't speak for all left-leaning people, but I can flatly assert that this is not my concern regarding economics. My own distrust of the subject hinges on four things, as follows: A tendency for practicing economists or their acolytes to 1) acquire a 'price of everything, value of nothing' mindset, 2) to treat economics as though it were a discipline on the order of mechanical engineering, 3) to develop a near religious faith in the virtue of the free market, or, 4) to remove the human factor from consideration.

Anyone who goes down one of those dark paths is headed for lunacy, no matter which political persuasion they favor.

Knowing the monetary value of a good or service doesn't always tell you much about it's value as a participant in people's lives. This can underplay the off-book costs of activities that cause damages that don't show up on a bottom line, or undervalue goods and activities that contribute to social welfare beyond their list price. The concept of a public good seems to be utterly missing from the ranks of those enamored with privatizing every damn thing. Yes, they do bring this up in beginning econ. Somehow, I rarely see evidence that it sinks in.

Economics, as the joke goes, has successfully predicted 10 of the last two recessions. But unproven economic theories are nonetheless inflicted on large populations around the world as though they were guaranteed to produce prosperity like clockwork. The case has been made by cleverer people than I that developing nations have generally survived economic downturns to the extent that they ignored western economic orthodoxy.

And in spite of that last, the economic establishment, from the IMF to the manically deregulating privatizers, continues pushing the same policies. Always suggesting that they may have different results this time. Libertarian minded folk and religious capitalists talk about the Free Market as though it's an external and independent force unsullied by the whims of petty humanity, and deserving of absolute faith. Please. Economic prosperity, like justice, doesn't produce itself.

Which brings me to the last point, which is that the way economics is used in the public sphere dehumanizes the discussion of such issues as jobs, social services, and civic responsibility. It's used to devalue relationships between people and their communities, often ignoring the contribution of social infrastructure to the success of an individual. Further, the concept of the individual as presented by popular economics, a rational actor with absolute choice, is about as laughably unrealistic as possible. I don't have a mathematical proof for that, but I dare anyone to produce a living example.

People need rules, checks on power, punishment for cheaters, and institutional accountability. Where those things are lacking, no good follows. But yet, all manner of would-be neoliberal economists try to ignore the painfully obvious lessons of every power relationship anywhere, and try to dismantle necessary brakes on the nastier parts of human nature.

The extreme likelihood that these are examples of misuse of the discipline doesn't excuse the problem. Probably Adam Smith, who strenuously disapproved of monopolies, is spinning in his grave. In that respect, it could be said that I have serious issues with the rampant misuse of economics. But there will always be more zealots than serious economists, and I admit to regarding the topic at some level as a menace for that reason. It can be a useful tool for examining various aspects of society, but the rest of us have to deal with the fact that it's very easily applied as a bludgeon.

I've heard too many people use an 'economics' defense as a way to give the rest of the planet the finger without having to sound like some punk anarchist. It's like disestablishmentarianism for grownups with white collar jobs. Considering the results, the distinction between the two is simply too fine for me to care about.

Finally, this could all change. The public economic discourse of today may be reproducing the failed policies of empire and the Gilded Age, but one of these days, something more humane could come into fashion in economics. We will all breathe easier.

Posted by natasha at May 15, 2004 09:42 AM | Economy | Technorati links |

Really nice discussion about this topic, natasha. I also wonder how people can so gullible as to think that if only we let the free market rule, everything will turn out great. The market is a human construct, not a mathematical certainty. And if we don't figure out how to put our values in our discussions of how economies should work, (clean air over corporate profits) then we will certainly be doomed to live in a world created by a mindless adherence to the free market religion.

BTW: I really recommend Thomas Franks' One Market Under God for a really insightful look at this topic.

Posted by: Mary at May 15, 2004 06:23 PM