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The Tyranny of the Econocracy

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The Econocracy: The Perils of Leaving Economics to the Experts. By Joe Earle, Cahal Moran, and Zach Ward-Perkins. Manchester University Press, 2017. Xix + 212 pages.

The global financial crisis of ten years ago had a profound effect on the general public’s perception of the economics profession. Prior to the crisis, most people seemed only dimly aware that the profession existed at all, much less that it had any influence over their lives. Yet ever since, the ideas and institutions surrounding mainstream economics have been vilified, while economists themselves have been blamed for failing to predict disaster, or even helping to encourage it.

But perhaps most important, the crisis revealed a deep and growing rift between the economics profession and the general public. The old image of economists as a sort of slightly-more-interesting version of accountants has given way to a view of them as a priestly class helping governments to divine policy, but whose obscure wisdom and arcane rituals are closed to the general public.

The Econocracy is a study of the economics profession and how it came to monopolize the sphere of expert opinion in politics. There is much that could be said about this book, so here I’ll limit myself to a few general points (you can see a fuller review here). Its main thesis is that economics is no longer a diverse community of inquiry, but a detached profession that sees the world only in light of its own tools and goals. In fact, according to the authors, the world is fast heading toward “econocracy,” defined as, “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 idea is that economists have made themselves an indispensable part of the political process, which they manage by defining its political and social goals (which are usually economic goals, such as increased growth), crafting the policies to attain them, and shutting out competing views.

In this setting, economics is for most people a foreign language in which the important business of society and politics is conducted. This barrier to understanding increases economists’ influence in the political process, and works like most other barriers to entry. For example, 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. Without ‘translators,’ ordinary people are thus frozen out of the political process and deprived of their decision-making power as citizens. This rift between economics and the public is further widened by university-level teaching, which provides a standardized curriculum to support the monoculture of the profession. 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 main goal of this book is to open academic economics to public scrutiny, and to “democratize” it in the sense of encouraging public discussion about its ideas and its (sometimes hidden) goals. To that end, the authors endorse a spirit of pluralism and open inquiry rather than the ideas a specific school of thought; Austrians will be happy to note, however, that the ideas of the tradition are included among those that the authors would like to see explored further (pp. 62-63).

There are many arguments in The Econocracy that are likely to interest readers. For instance, the authors perceptively note that economists like Keynes played a key role in fostering the idea of the economy as an aggregate entity to be managed by experts (p. 15). Likewise, they observe the importance of the growth of government in creating the modern economics profession, which arose in large part from the need for economic planning during the Second World War (pp. 14-17).

Econocracy also depends greatly on institutions like central banks to give shape to its policies. Central bank independence is a particular problem: monetary authorities exercise extraordinary power over the economy while enjoying an almost complete lack of accountability (pp. 12-13, 22-24). (Although this is certainly true, I would add that the real problem is that such institutions are not accountable to the democracy of the marketplace, and do not pass any test of their social worth.)

Some of the authors’ reform proposals are likewise insightful. Of course, part of the “struggle for the soul of economics” (as they put it) involves challenging the prevailing orthodoxy, but it’s also important for economists of all sorts to step outside the narrow boundaries of the discipline and look to other social sciences and to the humanities for inspiration and motivation. This proposal fits well with Austrian research, which has always stressed the importance of multidisciplinary efforts. As Hayek put it, “the economist who is only an economist is likely to become a nuisance if not a positive danger.” There are also some important parallels on this topic between the authors’ approach and Joseph Salerno’s outstanding essay, “Economics: Vocation or Profession?

A large part of the book is devoted to a study of the current state of university economics teaching. These chapters focus on the UK, but many of the arguments are relevant for other countries as well. There is also an element of the authors’ personal history in the book. As undergraduate students at the University of Manchester several years after the crisis, they noticed to their frustration that the curriculum had little to say about economic history, financial crises, practical policy, or almost any topic outside mainstream economic interests. Instead, they found themselves immersed in abstract and unrealistic exercises that seemed to have little to do with the social and economic problems unfolding around them (and ahead of them). In response, in 2013 they founded the Post-Crash Economics Society, a group dedicated to reforming economics curricula and promoting pluralism in economics teaching. It has since received international attention, and several chapters chronicle the story of the organization as well as study some current trends in UK economics teaching. One of the key themes in these sections is the idea that administrators and teachers alike have little incentive to care about high-quality teaching or research that goes against the grain.

According to the authors, only when teaching is reformed and citizens understand and engage with economists will they be able to hold them and other public authorities to account. Mises would agree. In fact, the spirit of this book is captured well in some of his final remarks in Human Action:

Economics must not be relegated to classrooms and statistical offices and must not be left to esoteric circles. It is the philosophy of human life and action and concerns everybody and everything. It is the pith of civilization and of man’s human existence… In such vital matters blind reliance upon “experts” and uncritical acceptance of popular catchwords and prejudices is tantamount to the abandonment of self-determination and to yielding to other people’s domination. As conditions are today, nothing can be more important to every intelligent man than economics… Whether we like it or not, it is a fact that economics cannot remain an esoteric branch of knowledge accessible only to small groups of scholars and specialists. Economics deals with society’s fundamental problems; it concerns everyone and belongs to all. It is the main and proper study of every citizen. (pp. 874-875)

The Econocracy is ultimately more of a manifesto than a research tome. I especially recommend it to students, who can learn a good deal from it about the contemporary economics profession, and will enjoy the exercise of sorting through the book’s arguments, some of which are more controversial than the ones I’ve outlined above.

Matt McCaffrey, former Mises Research Fellow, is assistant professor of enterprise at the University of Manchester.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
Image source: Manchester University Press
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