Economics: a crisis of overproduction?
“And then the vulgar economist thinks he has made a great discovery when, as against the revelation of the inner interconnection, he proudly claims that in appearance things look different. In fact, he boasts that he holds fast to appearance, and takes it for the ultimate. Why, then, have any science at all?”
Marx to Kugelmann, 11 July 1868 (Marx, 1977: p525)
“The only function of economic forecasting is to make astrology look respectable.”
Ezra Solomon, quoted by Martin Wolf in Financial Times (January, 2015)
“In this regard, Foucault accepts and operates within this view of the market as the paramount and invisible machine of knowledge production.”
(Tellmann, U. 2009: p24)
It has become a modern commonplace to note that the discipline of economics is in crisis (see Conway, 2009; Pettifor, 2012; Giles, 2017; Taylor, 2015). Even before the international recession of 2008, it is worth noting that a few learned economists were concerned about the unsatisfactory state of their subject (Krugman, 2009; Lawson, 2003). The widespread failure to predict the severity of the crash brought the weaknesses of conventional economic thought to the fore (Krugman, 2009). Large international economic imbalances and a huge credit-fuelled property bubble were not regarded as serious obstacles to progress because of naïve faith in globalisation (Greenspan, 2005). This inaccurate complacency about modern globalisation was not shared by all sociologists, for example (Hirst and Thompson, 1996). The outcome of the eventual disaster was complex and confusing for economists, but not without promise. Firstly, the voices of radical critics of the system rose in volume (Mészáro, 2008; Jefferies, 2012). Secondly, those percipient thinkers who had noted the instability of the long credit fuelled boom had their credibility enhanced (Krugman, 2009). Thirdly, the contribution of new institutional economics then received some welcome recognition (Krugman, 2009b). Fourthly, students of economics demanded a more pluralist curriculum (Inman, 2014). It looked like economics was on the verge of becoming strong enough to mount some kind of sustainable recovery. Supporters of the Democrat candidates for the American Presidency took the opinions of economists seriously in the hotly contested primaries of 2016 (Matthews, 2016).
The academic debate over austerity also lent some support to the idea that economics might change its spots. Not all economists were convinced by the arguments advanced by those in favour of immediately cutting state spending to reduce the size of the deficits produced by fighting the possibility of a depression. Many of the true believers might not have realised what the consequences of austerity would be for the most vulnerable sections of the population of the UK (Caruana-Galizia, 2017). When presented with negative European policy outcomes, even the mighty IMF retreated from the simplistic advocacy of ‘slash and burn’ policies (Pop, 2013). Furthermore, the meticulous activity of a bright student of economics illustrated that the complacency of powerful economists may be shattered (Alexander, 2013). Ambitious policy entrepreneurs should be careful that their empirical evidence is of the quality which means that ‘replication’ is a feasible task.
Since the productive revolt of the students, progress has been neither linear nor swift. Heterodox economists might have demanded a reformation of economic thinking (Macfarlane, 2017), the profile of behavioural economics might have been raised (Partington, 2017) and healthy scepticism towards experts might have mounted (Montaigne, 2017), but the ultimate result of the creative activity on the left is that the wide gap between orthodoxy and heterodoxy remains unbridged (Wren-Lewis, 2017). Ordinary citizens remain confused and some are in thrall to the one-sided texts produced by celebrity economists (Mason, 2015; Varoufakis, 2017). Some working class people have defiantly ignored their own economic interests at the ballot box in the United States and the UK (Packer, 2016; McKenzie, 2017). Attempts to simplify matters for public consumption may have involved the smuggling of populist bias into the explanations (for a semi-nationalist interpretation of the Euro crisis, see Varoufakis, 2015).
While there is some transformative work being done in the sphere of economics (for example, Hickel, 2017; Mazzucato and Semienuik, 2017) there is still far too little stress on the uncertainty and humility which should be attached to an area of thought in which costly errors have been made (Pettifor, 2012). Perhaps economics is simply suffering from a glut. Low interest rates and unorthodox measures in advanced economies have returned the international economy to a strange kind of health, but the unfortunate politics of the day are a morbid reflection of the underlying contradictions. Economic texts may have become a commodity to be marketed like cornflakes or poetry (Marx, 1977: 513).
Clearly, the issue is not that individual economists are performing badly in terms of their output. The reality appears to be that too many economists are being obliged to advance their disparate agendas through hastily written blogs, opinion pieces, journal articles, and books. Power and money can always condemn a profession to push forwards too swiftly (Tellmann, 2009), whilst participation in a “society of the spectacle” may induce ‘creative’ individuals to work far too hard to keep up with the Jones (Debord, 1967; Florida, 2003; Veblen, 1899). One consequence of these overdetermined factors (Althusser, 1962) is that there is seemingly a surplus of choice for the citizen reader. In other words, it may well be that “the epidemic of over-production” (Marx and Engels, 1848: chapter one) has finally arrived.
Major dilemmas flow automatically from the apparent excess of economics. It is as though the profession has been subject to inordinate stimulus from ill-timed tax cuts. Like people treating the stock market as if it were simply a casino (Strange, 1986), individual economists can lose their bearings in the intense atmosphere. The point is that they cannot keep in touch with the work of all their peers because there is far too much activity going on. Furthermore, competition between excellent economists may limit opportunities for sustained collaboration. Finally, the social media may distort “animal spirits” (for importance thereof, see Keynes, 1936) outside the confines of the speculative financial sector.
While the potential for another major real-world crisis builds, the theoretical capacity to see precisely when one coming is not being enhanced. This can lead directly to a failure to foresee specific events. However, in numerous other cases it may lead to economists spotting crises which do not happen in time for the prediction to be valuable (Dorling, 2014: p231). Many of the optimistic predictions being made can even be viewed as promoting outcomes which are desired (Gramsci, 2005 edition). Several governments are not trying hard enough to safeguard their populations against future economic shocks (Dorling, 2014; Stiglitz, 2017). The abject failure of economics to evolve into a predictive science does not imply that it is incapable of generating insights of considerable interest. But it does suggest that when the ship is struck by the inevitable iceberg there will be insufficient lifeboats to go around.
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