Economists and the Powerful: Convenient Theories, Distorted Facts, Ample Rewards

Abstract

Haring, Norbert, and Niall Douglas, Economists and the Powerful: Convenient Theories, Distorted Facts, Ample Rewards (London: Anthem Press, 2012).The ongoing global economic crisis kick-started by Lehman Brothers' collapse in 2008 has led to a modicum of soul-searching amongst a few economists- e.g. Ha-Joon Chang's 23 Things Economists Don't Tell You about Capitalism (London: Bloomsbury Press, 2012)-and of increased visibility for prescient non-economists-e.g. the second edition of John McMurtry's 1999 Cancer Stage of Capitalism (London: Pluto, 2013). Still, much of it would not be necessary, had most economists' purview, as well as and business degree lines at large, included de rigueur a conspicuous amount of economic history and the works of non-orthodox masters such as Thorstein Veblen, Joan Robinson, Cornelius Castoriadis and John Kenneth Galbraith (I do not use 'unorthodox' or 'heterodox' for both sound somewhat belittling). Yet, that has not been the case. Economic history has been left primarily to historians or reduced to theory-driven cliometrics (cf. Francesco Boldizzoni, Poverty of Clio. Resurrecting Economic History, Princeton: Princeton University Press, 2011), whilst not even the well-tested wisdom of John Maynard Keynes is being restored to its primacy in a time of crisis that is strikingly akin to the 1930s (cf. Paul Krugman, Still Say's Law After All These Years, Conscience of a blog entry on February 10, 2013,2.50pm).Haring's and Douglas' book is therefore yet another attempt to breach through the wall of economic orthodoxy, the resilience of which before repeated large-scale meltdowns is either the result of the unfalsifiable assumption of the unfettered markets' inherent ability to bring about prosperity (cf. Giorgio Baruchello, The Hopeful Liberal, Nordicum-Mediterraneum 8:2, 2013) or, as Haring and Douglas less kindly suggest, of the self-serving character of much qua rent-seeking profession. Given the prolonged ridiculing and sidelining of alternative views since Veblen's days, I suspect that their clear and well-argued book is going to remain as marginal as, say, Galbraith's pre-crisis Economics of Innocent Fraud: Truth for Our Time (Boston, MA: Houghton Mifflin, 2004) or Jonathan Schiefer's post-crisis Assumptions Economists Make (Oxford: Belknap Press, 2012). After all, albeit unintentionally, their volume is in essence a much-needed contemporary token of economic institutionalism a la Veblen, whom mainstream economists have long condemned to the status of embalmed lone wolf', since they have been trained to keep reality at a safe distance (David Reisman, Social Economics of Thorstein Veblen, Cheltenham: Elgar, 2012, p. 311).The first chapter of the book explains how this peculiar disciplinary feature has arisen, given that it traces the history of modern mainstream economics (1) as a doctrine that, since embracing free-trade advocacy in the 18th century, has been gradually either abstracting or assuming itself away from socio-political reality and empirical data that might contradict the most cherished beliefs of the dominant business elites, not to mention challenge their interests. To begin with, free-trade champions Davis Hume and Adam Smith conveniently ignored how mercantilism had contributed decisively to making Britain the industrial world leader (3). Their point is reminiscent of Veblen's claim that 18th-century liberals were the legitimising mouthpiece of a newly established dominant economic force, not visionaries who bravely challenged the enduring feudal powers of the age (cf. Instinct of Workmanship and the State of the Industrial Arts, New Brunswick: Transaction, 1990[1914], p. 292). Then, in the late 19lh-century, Jevons, Marshall, Menger, Clark and Walras spearheaded marginalism against Marxist assaults and socialist tendencies and proclaimed an allegedly 'scientific' and valuefree understanding of economic life that de-emphasized the production side and eliminated the element of social interaction within fictional models of equilibrium that were worthy of Robinson Crusoe (5). …