Abstract
Since the global financial crisis, the economics profession has been more publicly visible—and more criticized—than at any other time in its history. Commentaries on the failure of mainstream economics to predict the crisis are ubiquitous, and some critics even place blame for the disaster on the application of misguided economic theories. These reactions have helped turn a spotlight on the role economists play in guiding public policy, and have revealed the underlying power of economic experts over the social and political life of nations. The subject of The Econocracy is the growing tension between economists and society at large that is caused by this power.
The three authors are founding members of the Post-Crash Economics Society (PCES) at the University of Manchester. The goal of the organization is to provide a pluralistic forum for discussing ideas outside the economic mainstream. It was formed in 2013 after the founders were unable to find answers to pressing economic questions within their undergraduate curriculum. Similar student groups have appeared at other universities in the United Kingdom and in other countries. And in the years since its founding, the efforts of PCES have helped to transform a handful of scattered organizations into Rethinking Economics, an international movement for reform in economics education (pp. 1–5). The present book recounts some of this history, but it is mainly a manifesto of sorts describing the authors’ views of the ongoing crisis in economics (education) and outlining their proposals for change. By making the book short and accessible rather than dense and impenetrable, they have already violated a fundamental rule of economic research.
The theses of the book are bold, but simple enough: economics is no longer a diverse community of inquiry interested in understanding the many grave problems facing modern societies. Instead, it is an increasingly abstract and unrealistic profession focused on interpreting all social problems through its own concepts and goals. To non-specialists, economics is essentially a foreign language in which all the important business of society and politics is conducted. This barrier to entry has increased economists’ influence on the political process, just as entry barriers do for any monopolist. In particular, without economic training, most people are unable to engage critically with contemporary debates about trade, growth, inequality, financial crises, and the environment, to name only a few relevant topics. Economists define and interpret these problems for the rest of society, thus taking on the role of technocratic experts whose mission is to guide policymakers. Yet without “translators,” ordinary people are frozen out of the political process and deprived of their decision-making power as citizens. This rift between the economics profession and the public is further widened by university-level teaching, which provides a standardized curriculum to support the monoculture of economics. It also eliminates any serious discussion of alternative schools of thought, and even of other useful disciplines such as history or philosophy. The result is the dominance of mainstream economic thinking and the decline of democratic institutions.
The book calls this state of affairs econocracy, or, “A society in which political goals are defined in terms of their effect on the economy, which is believed to be a distinct system with its own logic that requires experts to manage it” (p. 7). The book particularly emphasizes the role of the expert class under econocracy (p. 9). Experts insist on their own necessity, which in this case, intentionally or not, results in undermining important social institutions. As the authors explain, “An econocracy has all the formal institutions of a representative democracy—like political parties and regular elections—but the goals politics seeks to achieve are defined in narrow economic terms and decisions are made without significant public oversight” (pp. 2–3). Within this system, the economics profession is a kind of priestly class with unique access to policymakers and political leaders.
At this point, we can pose an obvious question: Is the contemporary economics profession really all that important? The authors believe it is. The reason is that economics holds a unique significance for society: unlike some other disciplines, economic arguments profoundly shape vital social institutions, the environment, and even our individual actions. The effects of economic ideas are thus inescapable, and this in turn hints at the importance of the people who teach them. Whether we realize it or not, economic thinking deeply affects our lives, and moreover, “If there is a crisis in economics [and economics teaching], it means that there is also a crisis in society” (p. 27). As the authors observe, “The barrier that prevents us understanding the economy and participating in economic debate doesn’t shield us from its consequences” (p. 24). For an example, we need look no further than the financial crisis. Reactions to it, including repeated rounds of quantitative easing, were shaped mostly by the opinions and recommendations of economists, and not at all by the views of the general public (pp. 22–23).
According to the authors, one of the main intellectual pillars of econocracy is the idea of the economy as a distinct entity separate from the rest of society, one that can only be understood and managed by experts (p. 14). For these experts—and by extension, for politics and society generally—improving the economy is an end in itself. This “philosophy” of econocracy has three sources: “the history of economics as a discipline, the political events of the twentieth century and reforms to higher education” (p. 4).
The idea of the independent economy is especially connected with the rise of the economics profession in the 20th century, mostly during and after the Great Depression and World War II (pp. 14–17). At that time, economists were eager to imitate the successful natural sciences, and therefore turned to new methods of data gathering and analysis that enabled them to model economic relationships with a previously unknown level of mathematical and empirical detail. Keynes in particular began to write of the economy in an abstract and aggregate sense (p. 15). Yet, these developments would not have been possible without the aid of powerful states capable of gathering vast amounts of information in order to transform society through policy interventions (pp. 14–15, 17–18). Most importantly, the war efforts of the United States and other countries required an economics profession to collect data on the economy and establish a basis for wartime planning. The resulting explosion of economic research deeply affected economics as a discipline, expanding its policy influence and creating a technocratic mindset among many of its members. It also encouraged an increase in formal modeling, which both created an entry barrier and necessitated a new institutional system through which economists could be trained in the use of the latest methods.
This system was provided through the institutions of higher education, which developed new economics curricula to suit the needs of the growing profession. The authors argue that university-level economics education in the United Kingdom provides a vital support network for the econocracy. Several chapters and two appendices are devoted to the history and current state of education, especially in leading UK universities. These sections are supported by the authors’ original research on various economics curricula, in particular course offerings and assessment methods. They also rely on a variety of other sources, including informal surveys of students and economists. Much of the evidence is anecdotal, but the results will be familiar to many academics. The authors’ main conclusion is that there is a severe lack of diversity in economics teaching in the United Kingdom, with most courses focusing on conventional mathematical models and empirical techniques, and lacking realistic, applied teaching, especially with regard to non-mainstream schools of thought.
These problems are reinforced by various institutional pressures that universities face. In particular, political reforms to UK higher education have created a series of troubling incentives for administrators and academics. For example, universities now have strong incentives to frame education in terms of economic objectives like increasing students’ human capital, employability, and contributions to economic growth as measured by gross domestic product (GDP) (p. 132), as opposed to promoting the more traditional goals of liberal education. Furthermore, universities are interested in increasing their own funding, which often means increasing student numbers. Yet doing so draws further on academics’ already-scarce resources, especially their time. Specifically, student demands fit poorly with those of the Research Excellence Framework (REF) and other performance measures that prod academics to maximize research time, especially on projects relevant to mainstream economics (pp. 100–103, 127–128). This implies devoting less energy to teaching-related activities like grading exams and papers, and discourages the comparison and discussion of competing views in the classroom. It also results in the continued use of formal methods in economics, which generate objective problems that are easy to grade, especially when presented in the form of multiple-choice questions (p. 137).
The authors thus paint a somewhat grim portrait of modern economics education. But, as their involvement with the student reform movement shows, they do have recommendations for improvement. If key metrics such as staff–student ratios cannot be improved, then at least classroom practices can be. As the authors explain, “we need bold, imaginative experiments to address the shortcomings of the lecture/tutorial format” (p. 142). Many teachers would wholeheartedly agree, but the question of how to truly improve teaching does not have an easy answer. For example, Chapter 5 outlines a number of pedagogical innovations that would contribute to making economics education more accessible and relevant, especially the extensive use of problem-based learning (pp. 140–144). Yet while such approaches may well benefit students, they are hard to square with academics’ current research and other obligations: the authors note this problem, but do not resolve it.
Similar institutional constraints would likely impede other reform efforts. For instance, the authors suggest the creation of a new discipline, Economics Communication, which would focus on the public teaching of economics and thus strive to better equip citizens to take part in debate over controversial issues (pp. 163–164). Although this goal is admirable, it seems likely to produce some of those unintended consequences that economists so enjoy talking about. For example, a separate degree might increase the isolation of traditional research economists by relieving them of their remaining obligations as teachers, thus incentivizing them to become even more detached from the public. At the same time, economics communication degrees would likely be dismissed by the econocracy as “not real economics.”
As another example, the authors suggest establishing a new Public Interest Economics, through which public intellectuals would provide checks and balances for the econocracy, especially by insisting on accountability and transparency among economists and political institutions (pp. 161–163). Again, such changes would be welcome. Yet given the critiques of the economics profession advanced in this book, this project is open to criticism. For example, is it not likely that Public Interest Economists would fall victim to professionalization or institutional capture? This type of criticism does not imply that we should take a defeatist attitude toward reform, only that key educational and political institutions must be altered before we can expect a transition to the kind of “public culture of economics” this book recommends (p. 152).
Can I then recommend the book? Yes: Economists and social scientists of all sorts will find in it something to interest them. Whether readers will agree with every argument is another matter. In fact, I suspect most economists’ opinions about the state of their profession are already formed, such that no matter what they are, this book is unlikely to reverse them. But, if true, that is not an argument for avoiding it: On the contrary, even critics will benefit from the chance to consider seriously the authors’ plea for a more open-minded economics profession.