Category: Critique of Mainstream Economics

The limits of 鈥渄esign ethics鈥� under capitalism

victoriasgarroLeave a comment

Working as a product designer in media for the past five years, I鈥檝e witnessed the topic of 鈥溾�� raised at industry conferences, presentations, and meetups. Yet I鈥檝e noticed that in our discussions, designers rarely mention the economic context within which we design. We hold up examples like and 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鈥檚 鈥淭he Social Dilemma,鈥� which confuses correlation with causation by attributing negative mental health and political trends to technology, with no mention of technology鈥檚 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鈥撯�揳nd 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 鈥渆conomic actors within a capitalist mode of production…compelled to seek out profits in order to fend off competition鈥� (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.

Read More »

We Need to Talk about Economics

plbds2 Comments

By Paulo L. dos Santos and No茅 Wiener

What鈥檚 Wrong with Economics? The title of economic historian Robert Skidelsky鈥檚 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鈥攊ncluding forms of and the . 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 of the contributions other fields of social and historical inquiry make to the study of economic life. Among the public at large, the has faced considerable scrutiny, even while individual by dissenting economists are and generally .

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鈥檚 deeply problematic relationship with realties of race, gender, and other elements of people鈥檚 social identity. As a number of critics have noted, the problems are reflected most obviously in the profession鈥檚 basic institutional composition, which is grossly unrepresentative. In the United States women account for in PhD-granting departments. Of all doctorates conferred in the academic year 2015鈥�2016, . 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 and among leading economists appears to have few or no repercussions. A 2019 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 鈥渙nly 45 percent of all . . . respondents (regardless of race) believed economists who are not White are respected in the field.鈥� When the work on the economics of racial stratification by scholars like and was finally included in the alphanumeric classification system for research topics in economics, it was placed in the last, residual category, 鈥淶 – Other Special Topics.鈥� Recent work by Alice Wu uncovered evidence that these attitudes are , while work by Valentina Paredes, Daniele Paserman, and Francisco Pino found evidence suggesting that economics programs both 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鈥檚 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鈥檚 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.

Read More »

Understanding development in a Global Value Chain World: Comparative Advantage or Monopoly Capital Theory?

benjaminselwynLeave a comment

By Benjamin Selwyn and

The recent period of globalisation 鈥� following the collapse of the Eastern bloc and the integration of China into the world economy 鈥� 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 (WDR2020, or 鈥榯he Report鈥�) to address these questions. It confidently proclaimed that 鈥楪VCs boost incomes, create better jobs and reduce poverty鈥� (: 3). Given the World Bank鈥檚 promotion of neoliberal globalisation, this conclusion is unsurprising.

However, before accepting the Report鈥檚 claims at face value, we should reflect on the findings of Robert Wade (: 220). These annual World Bank reports serve as “both a research-based document and a political document鈥�. the Bank鈥檚 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鈥檚 liberal bias to appear to complement its data. However, the GVC world has generated such inequalities that the dissonance between the report鈥檚 liberal bias and its own data is stretched to breaking point.

Drawing on our , this blog post uses the Report鈥檚 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 鈥� with deleterious outcomes for workers.

Read More »

Pluralism in economics 鈥� its critiques and their lessons

Claudius GraebnerLeave a comment

By Claudius Gr盲bner and Birte Strunk

In we engaged with common critiques of the concept and the movement for more pluralism in economics. We found that while the majority of the critiques are either unfounded, easy to dismiss or address strawmen, others do highlight challenges the pluralist movement should address.

In 2017, we were spending a week at the , when the German economist Johannes Becker published a blog article on Makronom entitled 鈥溾�� (translated from German). He argues that the movement for pluralist economics faces a decision: it could continue to be a movement of fundamental opposition against the 鈥榚conomic mainstream鈥�, or it could start striving for 鈥榬eal change鈥�. Economics professors, at least in Germany, Becker argued, were highly perceptive and open-minded towards alternative perspectives in economics. If the movement would focus more on constructive engagement with economics faculties rather than on fundamental critique, then there would be a greater amount of pluralist seminars and lectures.

Being surrounded by around 100 fellow pluralists who dedicated a week of their summer to study different approaches to economics, the accusation of simply being a movement of unconstructive opposition seemed alienating to us. So we drafted a , arguing that pluralist economics is about both critique and the construction of alternative practices. Based on this response, we wrote an article evaluating the critiques posed toward pluralist economics, drawing from philosophy of science, philosophy of economics, and philosophy of interdisciplinarity. When writing the paper, which has recently been published in the , we indeed found many critiques of pluralism to be unconvincing, yet we also discovered that some critiques of pluralism are not easily dismissed. They should be taken seriously by pluralists because an honest engagement with these critiques rather than the neglect of their relevance could, we believe, make the movement for pluralism in economics more convincing and successful.

Read More »

Ecological breakdown: What are externalities external to?

G眉ney I艧谋kara1 Comment

The 2018 Bank of Sweden Prize (falsely known as the Economics Nobel Prize) winner William Nordhaus opens the revised version of as follows: 鈥淚 begin with the fundamental problem posed by climate change 鈥� that is a public good or externality. Such activities are ones whose costs or benefits will spill outside the market and are not captured in market prices.鈥�

The concept of externalities is a catch-all term, or, an empty box to capture the so-called spillover effects. Under the presumption that the market mechanism brings about the efficient allocation of resources, mainstream economic theory as well as many of its heterodox critiques argue for internalizing these spillovers by determining their costs (or benefits) and including it in the price of the commodity. In other words, the spillover effect itself must be turned into a commodity so that the market can efficiently handle it through the price mechanism.

Insofar as human-induced global warming has not been priced, so the story goes, it is an externality. In fact, it is today 鈥渢he most significant of all environmental externalities鈥� even in Nordhaus鈥� wisdom. Make no mistake 鈥� Nordhaus fiercely advocated inaction for over three decades, and portrayed projected levels of global warming, which are defined as devastating, or even catastrophic by scientists, as optimal.

Read More »

COVID-19: how to transform the industrial policy toolkit in developing nations

kestonperryLeave a comment

industry-construction-industrial-civil-works

COVID-19 presents some leeway for countries to pursue industrial policy on their own terms. However, as crisis conditions dissipate, current economic theory is of little help. Current perspectives range from the almost theological to the overly positivistic. Mainstream economists who have tried to 鈥榤ainstream鈥� industrial policy in recent times offer simple econometric-centred reasoning that seeks to find cross-country regularities instead of nuanced and real-world application based on a country鈥檚 economic history. They apply highly positivistic and proscriptive worldviews claiming industrial policy should reveal latent 鈥榗omparative advantage鈥�. On the other hand, and perhaps equally misguided, heterodox scholars who reclaim the structural roots of industrial policy have anchored it in increasingly irrelevant empirical foundations that would only be useful for countries with already existing manufacturing bases. The latter have opted for the more theological approach that presupposes classical growth as an end of any industrial policy as a positive development. I hope that we seize the chance to encourage a new paradigm for industrial policy beyond narrow prescriptions and dominant worldviews.Read More »

Corporate Planning in the Coronavirus Economy

Terry Hathaway3 Comments

woman-wearing-mask-in-supermarket-3962289The global pandemic and associated developing global recession are calling into question a whole range of economic truths and demanding novel solutions to various interlinked societal problems. In this blog post, I want to connect what we鈥檙e currently seeing in the retail sector during this pandemic to deep-seated narratives about the nature of economic exchange, in particular to the notion of 鈥渢he market鈥�.聽

The market is one of the most dominant concepts for making sense of the social world, primarily because of the prestige of the economics discipline and the elevation of the market concept by the discipline (albeit in a highly abstract manner). At its most basic, it paints the economic sphere as akin to a marketplace, where there is a level playing field and rivals compete for custom primarily through having the keenest of prices. Other, more complex, ideas often get laid over this concept, such as the market pricing mechanism allowing supply and demand to equilibrate, price signals communicating complex information to market participants, and, as such, the market allowing for decentralised decision making led by consumer demands. (For a much (much) fuller account of the market concept, see .)

However, as a result of the coronavirus pandemic increased demand for basic goods 鈥� such as toilet roll, hand sanitiser and flour 鈥� has put a strain on the distribution of these goods and has engendered a response quite dissimilar to the narrative of the economic system as a competitive, decentralised, profit-maximising market. What we have seen, instead, is retailers working as sites of governance in order to ensure a degree of equity in the distribution of resources.聽Read More »

Time for a Rethink on the Worth of Work

plbds5 Comments

piqsels.com-id-otrsa

Most economists are greatly underestimating the economic challenges posed by the Covid19 pandemic. Without a correct understanding of those challenges, the aggressive monetary and fiscal measures many government are now pursuing will fall well short of their goals. They will go down in history as economic Marginot Lines鈥�scaled up versions of tools designed to fight past crises.

The pandemic poses new and unique economic challenges. It compromises our ability to engage in productive and commercial activities requiring close contact between groups of people鈥�that includes most of the things sustaining a modern economy. Epidemiologists tell us this is needed for several months. Responding in a way that minimises the loss of life and safeguards our long-term productive capacities requires two things: Temporarily shutting down large swaths of the economy, and focusing society鈥�s productive resources on the kinds of work needed to fight the pandemic.

Most economists have not yet understood this partly because the scale and scope of what is needed pushes beyond the boundaries conventional economic thinking, and beyond what they generally consider to be legitimate 鈥�economic questions鈥�.

The pandemic requires an unprecedented mobilisation of what feminist economists call care labour: work to care for ourselves, our families, and our communities. Over the next few weeks or months most people need to be focused on a vital job: caring for our collective health and helping save thousands or even millions of lives by staying at home. Many families will have to do this while simultaneously caring for millions of children now out of school, for other loved ones who cannot fully care for themselves, and for those who fall ill but do not require hospitalisation.

We need to allocate resources to enable people to perform this work.Read More »