The questionable power of economics

14/02/2012 Comments Off on The questionable power of economics

openDemocracy had an article last week on the o’erweening power of economics:

It is time to acknowledge an uncomfortable truth about the public status of economics as an expert discipline: it has grown to be far more powerful as a tool of political rhetoric, blame avoidance and elite strategy than for the empirical representation of economic life

The article runs through some of the same arguments we’ve heard before: the assumptions are unrealistic, but the models get picked up, used, and promoted by people with power and money. Economics provides a rationale and an academic veneer of honesty for anti-democratic elites to do what they want.

This is not the sort of article I can accept or reject as a whole. There’s some truth in it, as well as some chest-beating (or econ-bashing).  A few quick thoughts on it:

  • Economics gets used for all sorts of nefarious purposes. That’s Eric Crampton’s complaint about consultants and their dodgy reports. I would take it one step further and say that (a) academic and government economists also participate in the market for dodgy, and (b) for markets, as for tangos, it takes two sides.
  • This tension between democracy and economics or capitalism has been highlight by economists. IIRC, that was a major thesis in Schumpeter’s Capitalism, Socialism, and Democracy. Essentially, society vests power in two spheres, economic and political. They end up in conflict, but individuals also try to coalesce power in both (Michael Bloomberg, Mitt Romney).
  • And that really goes to the heart of my problem with this article: most of the criticisms have already been developed at length by economists. For every shonky idea expressed by some person at the US Federal Reserve (pdf), there are economists and more economists willing to take it apart. This has been going on for decades. So, really, a little credit for the profession wouldn’t hurt.

I expect, though, that the openDemocracy article is preaching to the choir. The congregation will feel holy, but the world will continue its wicked ways.

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