The trajectory of mainstream economics can be understood in terms of how the discipline historically responded to moments of crises by attempting to “theoretically fix” the understandings related to five core “questions” of capitalist political economy – namely land, trade, labour, state, and legal-institutional framework. This involved legitimising improvements in land that led to the dispossession and the destruction of the commons, justifying free trade based on comparative advantage as opposed to mercantilist state intervention, reducing labour to a factor of production that was supposedly rewarded based on its marginal productivity and hence not being exploited, legitimising state intervention to stabilise capitalism and developing a legal-institutional framework to protect markets from popular democratic pressures. These “theoretical fixes” served to ideologically legitimise, preserve, and perpetuate the core content of capitalist social relations even as it corresponded with the modification of the surface-level appearances of capitalism.
Korean economist Ha-Joon Chang is a brilliant, best-selling critic of neoliberal orthodoxy. But Chang stops far short of taking the necessary next step: questioning the capitalist system itself.
Ha-Joon Chang is a rarity in the contemporary world: an economics professor who is highly critical of the neoliberal free-market orthodoxy, advocates progressive social change, writes and speaks accessibly, and is very, very popular.
Chang’s books have sold millions of copies, and he is a regular contributor to mainstream media outlets. According to Chang himself, his aim is not simply to challenge free-market orthodoxy, but also to support, through his work, the kind of “active economic citizenship” that will demand “the right courses of action from those in decision-making positions.”
While socialists can learn a lot from Ha-Joon Chang’s work, we also need to read it critically and identify some of the gaps in his thinking. Chang’s self-professed aspiration is to promote an alternative form of capitalism, but our goal should be to develop an alternative to capitalism.
There is growing interest in ‘embedded experiments’, conducted by researchers and policymakers as a team. Aside from their potential scale, the main attraction of these experiments is that they seem to facilitate speedy translation of research into policy. Discussing a case study from Bihar, Jean Drèze argues that this approach carries a danger of distorting both policy and research.
Evidence-based policy is the rage, to the extent that even village folk in Jharkhand (where I live) sometimes hold forth about the importance of ‘ebhidens’, as they call it. No one, of course, would deny the value of bringing evidence to bear on public policy, as long as evidence is understood in a broad sense and does not become the sole arbiter of decision-making. However, sometimes evidence-based policy gets reduced to an odd method that consists of using randomised controlled trials (RCTs) to find out ‘what works’, and then ‘scale up’ whatever works. That makes short shrift of the long bridge that separates evidence from policy. Sound policy requires not only evidence – broadly understood – but also a good understanding of the issues, considered value judgements, and inclusive deliberation (Drèze 2018a, 2020a).
Enormous energy has been spent on the quest for rigorous evidence, much less on the integrity of the process that leads from evidence to policy. As illustrated in an earlier contribution to Ideas for India (Drèze et al. 2020), it is not uncommon for the scientific findings of an RCT to be embellished in the process. This follow-up post presents another case study that may help to convey the problem. It also illustrates a related danger – casual jumps from evidence to policy advice. The risk of a short-circuit is particularly serious in ‘embedded experiments’, where the research team works ‘from within’ a partner government in direct collaboration with policymakers.
The case study pertains to an experiment conducted in Bihar in 2012-2013 and reported in Banerjee, Duflo, Imbert, Mathew and Pande (2020)1. This is a large-scale, influential experiment by some of the leading lights of the RCT movement – indeed, a formidable quartet of first-rate economists reinforced by one of India’s brightest civil servants, Santhosh Mathew. The high technical standards of the study are not in doubt, and nor is the integrity of the authors. And yet, I would argue that something is amiss in their accounts of the findings and policy implications of this study.
Cambridge Journal of Economics Special Issue / Deadline for submitting papers via CJE refereeing process: 30th April 2022.
2023 marks the fortieth year since the passing of Joan Robinson and her one-hundred-and-twentieth anniversary. This special issue of the Cambridge Journal of Economics aims at presenting a collection of papers that reflect the extraordinary breadth of Robinson’s career and examine what insights these might offer the economics profession and policy makers to address our seemingly most intractable problems of inadequate demand, rising margins with falling competition, and widespread and seemingly intransigent inequality and its consequences. For Robinson the purpose of our discipline is in understanding the real world to enable all global citizens to enjoy life to the full. It is therefore fitting that we follow her lead and demand that we ask of ourselves whether we have done enough to address her challenges to economic theory.
Despite making her international reputation in the Marshallian tradition of economics, she came to regard her generalisation of John Maynard Keynes’s theories and their integration with Kaleckian and Marxian insights as her more substantial contribution, along with a vigorous defence of rigorous evidence-based thought over inductive mathematical modelling. Among an impressive body of work, three books by Robinson mark key moments in the evolution of her ideas: The Economics of Imperfect Competition (1933), An Essay on Marxian Economics (1942), and The Accumulation of Capital (1956) (Marcuzzo, 2003).
In 1933, she made her international reputation with brilliant work within the orthodoxy on imperfect competition, offering an internal critique of the marginalist theory of distribution. Only a decade later, her reflections on reading Karl Marx persuaded Robinson to question the Marshallian methodology, in particular its polite theory of income distribution which became so incongruous during and after the depression (Marcuzzo, 2003).1 Finally, in 1956, she had the courage to follow the logic of her argument to examine the whole neoclassical theory of income distribution and its predominant method, facing the might of the now dominant American economics profession in the [in]famous capital controversy. She had to accept the pyrrhic victory of her interlocutors accepting she was right, yet the profession moving on regardless.
Books abound on what is wrong with economics (Chang 2014; Keen 2011; Nelson 2018, Mazzucato 2018, Raworth 2018, Stanford 2015), and what we would have to do to change it. Given the little change we have seen in economics training and policy-effective economic thinking since the global finance crisis of 2007/08, and in light of the global environmental, inequality and health crises, it is to be seen whether these interventions can make any meaningful impact. What is good though: Half of these impactful books were written by female economists. Despite this ‘wind of change’ in an overtly male discipline, it is striking that these books still offer a glaring lacuna: the issues of race and racism (except for brief mentions in Nelson 2018 and Stanford 2015). For many people around the world, these are no mere ‘issues’, but integral to their daily struggles and experiences in White majority countries. These are part of a differentiated life– a life differentiated so much that it can be full of unrealized potentials, suffering and trauma, physical harm and violence, and premature death in the worst of cases. Therefore, while we could move on, building on these interventions and many others (e.g., Obeng-Odoom 2020; Sarr 2019 or here), to discuss what would have to change in economic thinking (which includes economics training), policy and praxis to help achieve a “safe and just operating space for humanity” (Raworth 2018), the goal of this blog entry is more firmly tied to the question of how economic thinking would change if race and racism were taken seriously as structural-relational problems?
Much of economic thinking happens via economics. Therefore, my entry will often refer to economics as an institutionalized field. That said, expertise about the economy is not just rooted in economics. In fact, economists should not hold an intellectual monopoly over explaining how the economy works and should work (even though many of them, ironically, seem to appreciate that monopoly). That is why I as an economic geographer dare write this post. Pluralizing the economy, economics and economic thinking are separate but still interconnected projects. Some of the arguments that follow apply to other disciplines, too. Nevertheless, economics is singular among the social sciences in terms of its socio-demographic homogeneity (at least in countries of the Global North), prestige, student intake volumes, policy influence and partial self-isolation from other disciplines. It thus deserves particular scrutiny.
So what would an economics that takes race and racism seriously as structural-relational problems have to look like? To what kind of epistemic and institutional practices would it have to commit itself in an effort to effectively engage with these lived realities? A partial answer is already provided by economists who do study race and racism in a field called stratification economics, not to be mixed up with the so-called economics of discrimination that is largely rooted in a neoclassical economics framework. Building on some the insights of the former, and adding a few more perspectives, we can call for at least 10 ways of how to challenge the broader field of economics (i.e. variants of neoclassical and behavioural economics, but much more than that, as we saw above!) via race and racism.
Working as a product designer in media for the past five years, I’ve witnessed the topic of “design ethics” raised at industry conferences, presentations, and meetups. Yet I’ve noticed that in our discussions, designers rarely mention the economic context within which we design. We hold up examples like news feeds promoting fake news and financial apps encouraging users to trade the riskiest stocks and we ask: how might we design better? Conventional discourse presents these unintended consequences of our work as technical problems: how might we design and code ethically, while maintaining profitability and growth? (Perhaps the most well-known example of this framing is The Center for Humane Technology’s “The Social Dilemma,” which confuses correlation with causation by attributing negative mental health and political trends to technology, with no mention of technology’s place in capitalism.)
We will not solve problems of authoritarianism, racism and xenophobia, misinformation and addictive technology, mental health and public health, or climate change with design ethics. While designers should thoroughly consider the consequences of our work, the problems facing the design and technology industry are not ones of individual bad actors (though some exist). Rather, we must acknowledge that design decisions are economic decisions––and in our current economic system, the economic interests of individuals often conflict with their social consequences. Technology firms are not cultural or ideological actors, but “economic actors within a capitalist mode of production…compelled to seek out profits in order to fend off competition” (Srnicek 2017, 3). If we truly want to design ethically, we must first consider how technology is embedded in capitalism. Our ability to make technology work better for society as a whole depends upon our willingness to reorder our priorities and redefine value as more than profit maximization.
What’s Wrong with Economics? The title of economic historian Robert Skidelsky’s latest book captures well a prevailing mood of popular disaffection with the dismal science. Many have come to associate the discipline with specific lines of political partisanship—including forms of market fundamentalism and the politics of austerity. Economics has also been widely criticised for its failure to grapple with actual, urgent economic problems. Within academic circles, the discipline has become widely regarded as insular and dismissive of the contributions other fields of social and historical inquiry make to the study of economic life. Among the public at large, the credibility of the discipline as a whole has faced considerable scrutiny, even while individual contributions by dissenting economists are widely debated and generally well received.
Recent political developments like the rise of the Movement for Black Lives and the #MeToo movement have helped broaden the sense of crisis in economics; encouraging examination of the discipline’s deeply problematic relationship with realties of race, gender, and other elements of people’s social identity. As a number of critics have noted, the problems are reflected most obviously in the profession’s basic institutional composition, which is grossly unrepresentative. In the United States women account for only 14 percent of full professors in PhD-granting departments. Of all doctorates conferred in the academic year 2015–2016, only 1.29 percent were conferred to Black or Latina women. This dismal performance was significantly worse than the 3 percent average across all STEM disciplines. That same year, only 3.6 percent of all full economics professors at PhD-granting institutions were Latino; a meagre 1.6 percent were Black.
The problem is also evident in prevalent attitudes and values among economists. Casual racism and misogyny among leading economists appears to have few or no repercussions. A 2019 survey of academic economists by the American Economic Association found that nearly half of Black economists reported being targets of discrimination in the profession. It also found that “only 45 percent of all . . . respondents (regardless of race) believed economists who are not White are respected in the field.” When the work on the economics of racial stratification by scholars like William Darity and Darrick Hamilton was finally included in the alphanumeric classification system for research topics in economics, it was placed in the last, residual category, “Z – Other Special Topics.” Recent work by Alice Wu uncovered evidence that these attitudes are prevalent among economics students, while work by Valentina Paredes, Daniele Paserman, and Francisco Pino found evidence suggesting that economics programs both attract and cultivate bigotry.
What has so far received comparatively less attention are the ways these attitudes are embodied in the basic concepts and analytical tools that most contemporary economists use to understand the world. Yet it is over this terrain that the discipline’s problems with issues of social identity prove most harmful to society at large.
The frameworks at the heart of contemporary economic thinking reflect analytical choices that ultimately betray the social position and outlook of those developing economic theory. In all of these choices, contemporary economic thinking has created a stilted conceptual terrain where it is easy to ignore or downplay the economic expressions of systemic inequities by social identity and class. This is evident in some of the discipline’s core analytical stances, like what is and what is not considered as economic activity, and in its rejection of social categories like gender, race, and class as useful in the analysis of markets and economies. It is also evident in the ways most economists think about the nature of discrimination, its relationship to market competition, and the statistical measurements of its effects on economic outcomes.
Given the outsized influence economics exerts across all fields of social inquiry and policy, these biases exert an insidious, conservative influence over public thinking and over the very framing of debates about those iniquities. Countering this influence requires understanding these biases, which in turn requires engagement with a few foundational methodological and technical issues in economic analysis. In what follows we draw on contributions by many critically minded economists and political economists, and on some of our own recent work, to contribute to a conversation among social scientists and political actors about these biases and about how they may be overcome.
The recent period of globalisation – following the collapse of the Eastern bloc and the integration of China into the world economy – is in essence the period of global value chains (GVCs). From low to high-tech, basic consumer goods to heavy capital equipment, food to services, goods are now produced across many countries, integrated through GVCs.
The big question in development studies is whether this globalised reconfiguration of production is contributing to, or detracting from, real human development? Is it establishing a more equal, less exploitative, less poverty-ridden world? To understand these complex dynamics, scholars rely on economic theories. These theories must be relevant to the GVC-world and equipped to tackle these pertinent questions.
In 2020 the World Bank published its World Development Report Trading for Development in the Age of Global Value Chains(WDR2020, or ‘the Report’) to address these questions. It confidently proclaimed that ‘GVCs boost incomes, create better jobs and reduce poverty’ (WDR2020: 3). Given the World Bank’s promotion of neoliberal globalisation, this conclusion is unsurprising.
However, before accepting the Report’s claims at face value, we should reflect on the findings of Robert Wade (2002: 220). These annual World Bank reports serve as “both a research-based document and a political document…. the Bank’s flagship message must reflect back the ideological preference of key constituencies and not offend them too much, but the message must also be backed by empirical evidence and made to look technical”.
When globalisation is booming it may be possible for the report’s liberal bias to appear to complement its data. However, the GVC world has generated such inequalities that the dissonance between the report’s liberal bias and its own data is stretched to breaking point.
Drawing on our recently published article, this blog post uses the Report’s own data to undermine its core claims. It shows that the GVC world enhances the dominance of transnational corporations (TNCs), concentrates wealth, represses the incomes of supplier firms in developing countries, and creates many bad jobs – with deleterious outcomes for workers.
Developing Economics 