Wednesday, 23 April 2014

Motivations for Pluralism: Politics and Values in Economics

Friday, 4 April 2014

 Bog Ref Link

We're rethinking economics because... 

This document openly and explicitly states the motivations that bring together the RE organisers and RE groups, and address the underlying question of why we chose the aims that we have, and the direction for economic curriculum reform we have. We address the pertinent question: how political is our organising?

  1. We are not a politically aligned network, but we hold political, philosophical and ethical values at the core of our organising. By this, we mean that we share a broad vision of what is good for academia and society. Namely:
  2. We believe that the ability to effectively participate in democratic processes is vital for all citizens.
  3. Because of this, we want to demystify economics in the public eye and bring it closer to mass critique.  We believe that the current state of economic policy debate, in which citizens are liable to over-deference to experts and reliant on often badly argued “expert” opinion, is a bad one.
  4. We believe that a fully functioning democracy requires rich and imaginative debate at the level of economic concepts.
  5. Because of this, we want to enrich both public debate around economics, and the academic economics that feeds it. Right now both policy and academic debates have become mono-cultural and stale.
  6. We believe that the current neoclassical economics taught in most departments is not politically neutral, and thus it is important to introduce pluralism in economics. Nor did the classical economists see themselves as practising a politically neutral discipline.
  1. We believe that pluralism and open-mindedness to other disciplines is a value that would improve the culture, methodology, and practice of economic research and teaching. We do not collectively advocate for any single economic theory or policy to dominate others; we want to introduce substantial debate back into economics.


I: What we mean by “value-neutrality” in the social sciences
By “value-neutrality”, we mean neutral or silent on issues of: what kinds of changes are good for society; what one ought to value (ethical, normative or positive values); what kind of society is a good one; what is the good life; what is the essential nature of being human, that reaches beyond particular configurations of society.

Although every model is, by necessity, an abstraction from the full complexity of society, the abstractions that are made in neoclassical economics impose particular emphases that have values explicitly or implicitly embedded in them. The questions that any school of social science chooses to pose as its most fundamental questions reveal 1) what is considered as “important” or “relevant” for the discipline, and 2) a pre-made conception of what society is and how one ought to study it, prior to actual research. Therefore we cannot pretend that neoclassical economics is simply a value-neutral science, and instead we ought to discuss and debate what kinds of values it embeds, in contrast to other ways of studying society, and in contrast to other schools of economics.

II: Examples of posits of neoclassical economics that are not value-neutral
In the below section, we give examples of concepts, theories and assumptions that are predominant in neoclassical economics. Not all of them are included in every model, but we seek to give a wide range of examples. This does not mean we support the teaching of the opposites of these examples, but that we believe it is problematic to teach one side in isolation.

a) Normative concepts (concepts that explicitly suggest what is better or worse for people or for society)

  1. Pareto optimality: the major criterion of what it means for a situation to be good, or in economic terms, “efficient”; status-quo biased, blind to distributional issues such as inequality
  2. Kaldor-Hicks efficiency: possibly the second most popular criterion of efficiency after Pareto optimality; assumes that everyone has the same marginal utility of money
  3. Utility and welfare: both these terms are heavily structured economic concepts, with heavily ethical connotations in both their naming and their use
  4. Utility is derived from personal preference-satisfaction: this is implicitly politically libertarian, as it assumes individuals always know what is best to maximise their own utility, or equivalently, that a person’s preferences are the most important to satisfy
  5. Consumers’ and producers’ surplus: used in microeconomic analysis of gains from trade, prone to same problems as Kaldor-Hicks efficiency
  6. Discount rates: the use of exponential discounting under-estimates long-term costs such as environmental risks  

b) “Thick” descriptive concepts (concepts that are descriptions of human nature, but which imply ethical attitudes as to what is important or what is good)

  1. Agents arrive at the market with preferences ready-formed: this assumption means that economists have not ventured into the questions of where preferences arise and how preferences themselves might be shaped by the structure of the economy or society
  2. Utility in macroeconomic models is determined solely by consumption: implies consumerism and materialism: people have no preferences over relational aspects of production, or even over whether they are employed or not (other than through its effects on their being able to afford more stuff)
  3. Representative agent modelling is utilitarian: the “social planner” in DSGE models aggregates individual utilities and maximises this aggregate utility
  4. Representative agent modelling is atomistic: this commits macroeconomics to an individualistic rather than holistic understanding of society

III: References to more material on value-neutrality and economics
Ingrid Robeyns, Economics as a Moral Science,

Robert Shiller, Economists as Worldly Philosophers,

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