7 March 2011

Dissident Economists on the Warpath

As an academic economist I find I am living in interesting times. Yes, really. The profession is in crisis, and much blame is being laid at the door of those who teach politicians how the economy works, and who engage in research to support this teaching. The fact that the financial crisis was predicted only by dissident economists, and the lamentable failure of mainstream economists to explain what has happened, much less provide solutions, has led to severe criticism.

Now we have a box-office documentary, Inside Job, which provides a comprehensible analysis of how the financial crisis happened, and fully implicates the academic economists who were complicit in the bankster capitalism that lay at its heart. Apparently they were asked for interviews to consult their expertise, and then ambushed. According to a review of the film by the Guardian:

'When Glenn Hubbard, George Bush's chief economic adviser and dean of Columbia Business School, is shown as a partisan advocate of deregulation, we have one of the movie's punch-the-air moments. During the interview, Hubbard, who denies he was corrupted by his paid-for relationships with government, angrily barks: "You've got five minutes, mister. Give it your best shot."'

A letter in response also implicates the 'self-referential circulation of authority' found in the peer-review publication system. This gives access to promotion, fame and respect within the academic establishment and is a key part of the Research Excellence Framework, here retitled the 'Research Exalting Finance'. Those wishing to find other ways of measuring the contribution of economic research might consider submitting a proposal to a special issue on 'dissident scholarship' in the American Journal of Economics and Sociology. The dissidents, it would appear, are getting themselves organised.

Another practical step towards the radical restructuring of economics would be to support a new generation of heterodox economists. It is therefore very cheering to see a post advertised that specifically excludes neoclassical economists. The Joan Robinson Research Fellowship in Heterodox Economics is named in honour of our own Sister Joan, disciple of Keynes, and a scholar cheated of her Nobel Prize merely for having the wrong genital design. Girton College Cambridge should be congratulated for funding the post, and for paying tribute to their illustrious alumna.

The existence of the concept of heterodox economics implies that the nature of economics as studied and taught is more religion than science. Perhaps we should rather be arguing for pluralism: for economics to accept the sort of lively debate that is common in all other disciplines. Let us hope that the researcher at Girton will be a key player in these debates, and will be followed by many more.


  1. Economics as religion is true. See

    Jay Hanson

  2. The situation in economics is even worse than Ms Cato says. In my judgment the primary purpose of mainstream, neo-classical, economics has been to provide an ideological cover for class warfare by wealthy individuals and corporations (think Koch brothers) against working people.

    This economics is not even remotely scientific. That is, its fundamental assumptions are grossly false, so it's a case of "garbage-in, garbage-out". And it regards as "externalities" the very things that should be a the basis of economics: the environment and natural resources, not to mention effects on culture and society, especially social and economic justice.

    As a Ph.D. mathematician I look at it this way: Real-world economics is a chaotic system, characterized by highly non-linear dynamics, with booms, crashes, cycles, and other strange behavior being normal unless the system is very strongly regulated. But economists don't know this kind of math, even the most heterodox economists (www.paecon.net). This despite the fact the best mathematical economics ever done (in my judgement) was the Limits-to-Growth study from around 1970 (read their 30-year update from 2004).

    This study used coupled non-linear differential equations to model the global economy through the 21st century using only 5 variables (Food, Pollution, Population, Resources, Industrial Output). Notice that resources and environment and society are not externalities here, but foundational, as they should be.

    Rather than quantitative predictions, the results are a series of scenarios which describe qualitative behavior and which depend on different values of parameters that are only partially known. Some of the mathematical models studied by mainstream economists could be applied as approximations of very limited scope in space and times at various space-time points of the non-linear manifolds to fill out the details of various scenarios, more akin to global climate modeling than anything done by economists today.

    The really scary thing is that the Limits-to-Growth "business as usual" scenario suggests a major global crash of some sort in the 2020 to 2030 time frame. And current events, from the financial crash of 2008 to youth revolts in the Arab world to the worker revolt in Wisconsin, could well mean that we are now witnessing the first ripples of a tidal wave bearing down on us.

    And the vast majority of economists don't have a clue about this, even though they should be the experts, preferring to believe in technological and market miracles. Instead we have geologists, ecologists, and historians instructing us on resource depletion, environmental degradation, and ecological overshoot and collapse.

  3. Before we get too self righteous in our dichotomous analysis of economics as either a religion or a science, let's not ignore the question, "What is the value of scientific evidence to a 1350-gram blob of protoplasm?".

    Let us not pretend truth.

    Let us acknowledge that religion is founded in belief without evidence [faith] and science is founded in belief based on evidence.

    There simply is not a shred of "truth" to be had from either.

    There is only the personal pursuit of logic, that is, the individual pursuit of a complete mental model of the world [personal belief system] free of contradictions - something that religion and zealous science fail at miserably or so I believe.