Economists: Pussycats with Claws?

An interesting debate has been taking place in the pages of the FT about the status and role of economists. I have a sense of divided loyalties, since I sweated blood acquiring the econometric expertise that enabled me to become a PhD in economics, while at the same time being quite convinced that the discipline itself is a political fig-leaf and its methods almost entirely unhelpful.

According to columnist Gideon Rachman:

'When things were going well for the global economy, the prestige of economists rose steadily. They were the gurus of the age of globalisation. Governments, consultancies and investment banks rushed to hire economists, who were thought to possess vital skills and information. Historians, by contrast, were treated as mere entertainers and storytellers. They were archive-grubbers, lacking in scientific method – good on television, but useless with a PowerPoint and no help in government or the boardroom.'

This is a rather naive interpretation. The same day this was written I met with a colleague who is a heterodox economist and was surprised to find himself invited to join a government advisory panel shortly before the election. This experience, and his conversations with other policy-makers, convinced him that the political class has never valued the opinions of the number-crunchers. Professional economists are used to provide evidence for the decisions they have already taken, and to provide ideological defence for the destructive economic system they promote. Examples abound, but those economists who defended the absurd financial shennigans in Iceland are an object lesson.

Rachman argues that economists might learn from historians in their approach to evidence rather than 'aping the physical sciences', a deplorable habit that Hazel Henderson aptly referred to as 'physics envy'. But surely Sheila Dow, a leading pluralist economist, is closer to the mark in suggesting that economics needs to sort itself out, define its territory, accept a plurality of approaches and analytical techniques and - most important of all - re-establish a connection with the real world.