‘We need more economists.’
How often have I heard that statement in various JiE discussions, at our College workshops and elsewhere? Sir Ghillian Prance and Tim Cooper have said it, so has our chair, Paul Bodenham, and I’m sure many others. (We have also said that we need more theologians, but I leave that to another conversation.)
But do we need more economists? Or rather do we need to ensure that we all have at least a good appreciation-level knowledge of economics, and of the different schools within economics? This latter is what I argue in this paper. And that we also need, between us, a good appreciation-level of psychology, sociology, politics and other social sciences, of the different schools within those disciplines, and of their applications in various applied fields, including business, public health and environmental studies.
While a good working knowledge of theology, philosophy and some other disciplines may not hurt either. Additionally, we now recognise the importance of the story in winning hearts and minds, so some skill in creative writing would also help.
In an article in the magazine Prospect a group of economists defend their discipline from the challenge to their discipline from Larry Elliot of the Guardian. Elliot argues:
“Neoclassical economics has become an unquestioned belief system and treats anybody who challenges the creed of self-righting markets and rational consumers as dangerous heretics … Complex mathematics is used to mystify economics, just as congregations in Luther’s time were deliberately left in the dark by services conducted in Latin.”
The economists say that they just analyse data ‘to understand how people make choices, because that determines how they respond to policies and how they interact.’ And that this data analysis help them advise governments ‘on issues as diverse as which poverty alleviation policies actually work, how best to recruit and retain community health nurses in rural areas, and how poor households can be supported in their parenting practices to foster the development of their children early in life.’
They say they don’t really hold with the ‘infamous “homo economicus” theory, which says that humans are both selfish and rational.’ That this theory does explain the behavior of many corporations, but:
‘it does poorly at explaining how we treat our children—but ‘it is useful precisely because it serves as a benchmark. Economists spend most of their time studying departures from this benchmark—altruism towards our children, irrational behaviour when drinking. And not just at the fringes.’
I italicized the latter quote because that is precisely why I believe we need to be wary of economists. No matter how broad-minded and liberal some economists may be, their training leads them to see anything but rational, self-interest-maximising behaviour as departure from the benchmark.
What about self-image, peer-pressure, a sense of belonging and our other socio-emotional needs? What about conscience, a sense of obligation, our profound duty to love our neighbours, or the sense of valuing something for its God-given beauty? All these motivations that religious belief should enhance but are by no means confined to people of faith – are these all to be regarded as deviations from the norm of optimizing individual marginal utilities (or whatever the jargon is!)?
Robert and Edward Skidelsky, economist father and philosopher son, wittily argue (in How Much is Enough) that only the very young can be effectively instructed in the dominant economic dogma. More mature minds would ask too many question.
So what areas of expertise do we need in Joy in Enough? Given that we recognize the need to go to authoritative sources with research-expertise for guidance on the specifics of policy – such as CUSP (Centre for the Understanding of Sustainable Prosperity), NEF (New Economics Foundation) and some issue-specific organisations.
We just need that appreciation-level knowledge to be able to understand what these bodies are saying, the context in which they arrive at their conclusions and recommendations, the alternative policies they may be arguing against. Let’s see how this would work out in a number of specific areas:
Resource and emission caps, so that we transition to an economy that operates within the planetary boundaries identified by the Stockholm Resilience Centre. Here we just need appreciation-level understanding of climate, biodiversity and other key scientific fields, and of the political context in which these measures are being fought for. But we leave the actual campaigning to Operation Noah and the big Christian and other NGOs.
Reducing inequality in income and wealth to acceptable levels: economists can tell us the tools we can use (e.g. different forms of taxation of income and of wealth, higher minimum wage, reducing top-bottom ratios within companies. They can predict the ‘disincentive’ effects of higher taxes or the effect of higher minimum wages on certain sectors – based on their assumptions of rationality and financial motivation.
But other disciplines or professions can also help us. HR (human resources or personnel) managers or professionals can predict within company and labour market effects of many of these measures. HR research casts doubt on the existence of a fully competitive market for CEOs and top executives. ‘Top brass’ are not necessarily tempted to other companies, particularly to companies abroad, by bigger remuneration packages, in the way that top footballers, say, are. (Think about it – CEOs tend to be 50 not 25 and with families settled in communities.) Social scientists and theologians may be able to tell us how rewards might be framed differently by the top performers. Remember the chief constable of Cornwall who refused to take a performance pay bonus, and said that it was insulting to offer one to someone at his level?
At the other end of the pay scale small business experts need to be consulted about how socially valuable small businesses might survive minimum pay increases – for example by some form of local social contribution subsidy?
A more equal distribution of employment hours and opportunities is an important component of inequality and unemployment reduction, as well as being a component of work-life balance and thereby a means towards greater well-being. This is a particular area in which economic expertise is particularly questionable. Conventional economists tell us that the proposition that a more distribution of employment hours reduces unemployment is the ‘lump of labour fallacy’; that the way to reduce unemployment is to expand the economy, thereby creating more jobs; that even if some jobs are lost in the ‘creative destruction’ involved in the economic expansion, the new jobs will more than compensate for those lost. Maybe economic growth will lead to more jobs. But most economic growth has dangerous environmental consequences. Whereas redistributing 40 well paid jobs at £50k a year and 50 hours per week among 50 people at £40k per year and 40 hours a week mathematically leads to a gain of 10 jobs without extra cost to the firm’s wage bill. Mathematics is much more solidly based than economics!
HR management expertise is of particular relevance here. How can working hours be best shared out in different types of firms, in different sectors? What are the implications for recruitment, training, pensions, etc?
Again a range of social scientists, such as those involved in health promotion, have expertise relevant to winning hearts and minds for such policies. The over-worked and very highly-paid middle classes, especially, need to be won over to such policies.
Other important policy areas for us include:
- ‘De-marketing’ – restricting and regulated advertising and the other process used in the excesses of consumer product marketing
- Promotion of social capital, getting people more involved in their neighbourhoods and in local community organisations
- Promoting local, and what Molly Scott Cato describes as bio-regional, economies – regions just big enough to be fairly self-sufficient in terms of food and other goods and services.
While economists may have some contribution to make in areas such as these, expertise in areas such as psychology, sociology and social policy, business and management, and agriculture are probably of greater importance.
So what expertise do we need in Joy in Enough? On economics I recommend two fairly short books written for the layperson by Cambridge economist Ha-Joon Chang. 23 Things They Don’t Tell You About Capitalism is a bit orthodox ‘leftie’, but is written in a very clear and punchy style, very short paragraphs. Economics: The User’s Guide is a bit harder going, but working through its 460 pages gives you a good understanding of the main concepts and arguments, and the differences between the nine main schools of economic thinking.
Reading these two books help you understand some of the main texts on which our thinking on the political economy is based – Jackson’s Prosperity Without Growth, Dietz & O’Neill’s Enough is Enough, Raworth’s Doughnut Economics and the above-mentioned Skidelskys’ How Much is Enough?
We need one or two professional economists to keep us in touch with ‘mainstream’ developments, and to ensure that the policies we are lending our weight to have been fully thought through. Which of course do we have already in the JiE College.
What about the other social sciences – psychology, sociology, business and marketing, etc? I think a similar reasoning applies. We should all try to have some basic appreciation-level understanding of these areas, with a few specialists amongst. Perhaps it would be too much of an ask for us all to have as much knowledge of all these areas as we need to have of economics.
I was very impressed by the inter-disciplinary approach used by Jillian Anable and two colleagues in An evidence-based review of public attitudes to climate change and transport behaviour for the Department for Transport in 2006. They reviewed the literature on a wide range of theories that are being used or might be used to explain this attitude-behaviour link. These included a number of economics-based, psychology-based and sociology-based approaches, community theories of behaviour, and stages of change models. Not surprisingly their conclusion was that a combination of all may be required, but more weight given to the latter-mentioned. ‘Whilst economic measures are important, attempting to predict people’s behaviour on purely economic grounds (rational choice theory) is rarely adequate’.
We need to find more studies like that on inequality reduction, social capital promotion and all the areas of interest to us.
I remember the definition of an economist that Michael Jacobs, Gordon Brown’s advisor on green economics, gave us at a SERA conference: an economist is someone who is good at figures but does not have the charisma to become an accountant…
How much more of a sense of the ‘charismatic’ is needed for advising on the complex societal questions that interest us in Joy in Enough? ‘Charismatic’ in the sense of an appreciation of the rich pageantry of our collective life, and an active interest in all the disciplines and studies that can throw light our world.
As theology can. But again, do we need more academic theologians or do we need to be all theologically-literate?