Saturday, 24 November 2012

Economics and Vagina Dentata

Discussing the "crisis" of soul-searching in the economics profession following the 2008 financial crash, Chris Dillow asks why economists lost sight of Keynes's advice to aspire to be as humble and as competent as dentists. Chris attributes the failure to the delusion of professional significance - the belief that economists could and should drive policy, rather than just deal with practicalities, which inevitably led to hubris: "What sort of reputation would dentists have if they stopped dealing with people's teeth and preferred to give the government advice on dental policy, tried to forecast the prevalence of tooth decay or called for new ways of conceptualizing mouths?"

All professions are vulnerable to the same delusion, privileging theory over practice and seeking to bask in the reflected glory of public policy, but I think economists were encouraged in the cultivation of their pretensions and we should be cautious about beating them up. Not only did some correctly predict the coming crash (though normal distribution means that a number were always going to be either spot-on or forgotten), but even cheer-leaders of the neoliberal economic order sounded a note of caution on occasions, notably Alan Greenspan's comment on "irrational exuberance".

The social and political standing of economists has little to do with their functional usefulness and everything to do with their ideological value. If the latter was close to nil, they'd have much the same standing as dentists. Talk about a "crisis in the profession" currently serves to deflect criticism of the financial order, just as the current "bishops with vaginas" kerfuffle distracts from the real crisis of the Church of England (an absurd anachronism in practice and based on a theory in inexorable decline). With little widespread support for an alternative to neoliberalism, economists must take on the role of scapegoat, despite the fact that many correctly identified the growing (and continuing) problems. The regular appearance of the Governor of the Bank of England and other economist worthies before the Treasury Select Committee thus oscillates between Moses delivering the tablets and a penitential auto da fe.

In 2008, the Queen famously asked "Why did you [economists] fail to predict this?" Many took this as an example of her sage wisdom, the equivalent of the small boy pointing out the emperor's butt-nakedness, but she was actually asking completely the wrong question. A profession so dependent on theory would always be disputatious, if only to satisfy personal ambition, so the idea that economists as a collective entity had a settled view was both naive and typical of the belief that there must be a "right" answer. A better question (and one that a small boy might well ask) would be "Why does a house in London cost a million quid?", though there are obvious reasons why such a thought would never have occurred to her, any more than she is probably troubled by being the head of a church that denies the authority of women.

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