A personal view.
I’m at the New Economics Foundation Summer School at present. It is providing a useful overview of the dominance of neoliberalism and its ‘colleague discipline’, neoclassical economics, and on some of the alternatives. It has also assembled a large cohort of activists on economic issues with all the benefits of networking and mutual support that brings. I don’t agree with everything I’ve heard, but that’s inevitable – we will have differences of emphasis and analysis. But that’s not so important – this is about building a movement with an alternative, credible story – what neoliberalism itself did.
Meanwhile, the discussion of the challenge to the University economics curriculum continues The impressive report by the University of Manchester Post Crash Economics Society (some of whose members are here), with a foreword by Andrew Haldane, one of the Executive Directors at the Bank of England, no less, has been downloaded 12,000 times in a few weeks. Robert Skidelsky in an article HERE asks why neoclassical economics is so impervious to criticisms. This version of economics, as a technical, scientific, value-free discipline dominates the curriculum, to the extent that even classical economics (Adam Smith, Ricardo) and Austrian economics (where Hayek, father of neoliberalism fits) are not really covered. Skidelsky suggests, that in addition to being embedded institutionally,
“…it has become an article of faith that any move toward a more open or ‘pluralist’
approach to economics portends regression to ‘pre-scientific’ modes of thought”.
As Thomas Kuhn suggested, mature sciences cohere around an agreed paradigm, with agreement on the boundaries of the discipline, the key issues, the principles and concepts to be deployed, and they have their artefacts that go with it (their research technologies). They go on like this until the paradigm comes unstuck – think of Newtonian physics and Einsteinian physics as two successive examples. But that doesn’t mean a discipline can adopt the clothing of a paradigm and thereby become a science (“normal science” in Kuhn’s terms). This is effectively what neoclassical economics has tried to do, as if by freezing out alternative paradigms, such as Marxist economics, Ecological Economics or Post-Keynesian Economics, and pretending that economics has nothing to do with ethics and values, it can truly become a science.
Alternatively, just maybe, an alternative theory of science helps us understand what’s going on. Imre Lakatos, in his theory of Scientific Research Programmes, suggested that such tendencies are organised around a hard core of concepts and principles that stays largely unchanged as new information enters the scene. So Newton’s programme (think of the 3 laws of motion, linking mass, space and time) was ‘progressive’ leading to many more discoveries, novel findings, until it came up against the issues raised by nuclear physics and cosmology. Then it started to degenerate, adjustments being made to protect the theoretical core, but that merely shored up the model, not leading to any novel discoveries. At that point a new research programme emerged, with the theories of relativity at the core, that included but reframed and went beyond Newton’s core. And (if my limited understanding of modern physics is correct) it continues to produce new discoveries; it is a progressive, rather than a degenerating research programme.
So maybe, just maybe, neoclassical economics was a research programme that worked OK within the limited world of neoliberalising economies from around 1979 to 2008. Come the unexpected, unpredicted crash, it was revealed to be a degenerating research programme whose core assumptions were false, and which endlessly produced a protective belt of, frankly, post-hoc excuses. It was relevant only to a weird subset of economic problems.
Whether the Kuhnian or Lakatosian view is adopted, neoclassical economics is dead. It will carry on going through the motions for some time. Its priests will continue to mumble their way through the rituals, convincing fewer and fewer people. New leases of life will be granted, as in the current bubble recovery based on expanding household debt and house price inflation, but these will be temporary. The coming crash will maybe put the final nail in the coffin, but that doesn’t mean that some of the tools of mainstream (neoclassical) economics aren’t useful so long as their assumptions as properly understood and subject to challenge.
Meanwhile, let’s repeat together:
– Economics is everyone’s business.
– Economics is a matter of ethically based policy choices.
– Economics is political: The economy is a terrain for struggles for resources and power.
– The economy is a subset of society and its context is the environment, the very basis for human life.
– The market is a helpful tool but a bad master. Community and government are at least as important as steering mechanisms.