I began my Bachelor of Science in Economics and Mathematics 3 years ago with an academic paper by Israeli economist Ariel Rubinstein (Rubinstein, A. (2006). A Sceptic’s Comment on the Study of Economics. The Economic Journal, 116(510), C1-C9). Students from Tel Aviv University and the Hebrew University of Jerusalem were asked how they would respond to a hypothetical scenario in which they, as the vice presidents of a company, must choose how many workers to lay off during a recession.
The students were given either a chart comparing the company’s expected profit for a given number of employees or a profit formula. The responses the students gave, which mirrored those of other respondents to the survey, often depended on the academic discipline they were studying. It was the economics students who most consistently chose to maximize profits at the expense of employee wellbeing.
It is also notable that this trend was particularly pronounced among those who were presented with the profit formula, although many of these respondents acknowledged that their choices might differ from those of an actual vice president. In addition to highlighting economics students’ learned tendency to maximize profits, Rubinstein also points out that “this appears to support the intuition that presenting a problem mathematically, as we often do in economics, conceals the real-life complexity of the situation” (p. C9).
Economics as Objective “Science”
Economics’ reliance on mathematical reasoning does more than simplify the choices of those within the profession, however. It has often allowed economists to mistakenly liken the discipline to those of the natural sciences, conferring upon it a kind of legitimacy that the other behavioral sciences do not typically benefit from.
In my own macroeconomics textbook, for example, Canadian economist Stephen D. Williamson writes the following: “A macroeconomic model, once constructed, can be used to conduct ‘experiments,’ somewhat like the experiments conducted by a chemist or a physicist using a laboratory apparatus” (Williamson, S. D. (2018). Macroeconomics (6th ed.). Pearson, p. 133).
Economists have long relied upon an excessively convoluted language – or economicspeak if you will – designed to insulate their discipline from a wider public.
Unfortunately, the use of mathematical models alone does not grant economics the status of “hard” science. Such models can only represent – not make up for – economic theories, many of which are founded on unrealistic assumptions, such as that of the perfectly informed, utility-maximizing consumer or homo economicus.
For a discipline that takes its source from human behavior – economies, after all, depend on relationships – the failure to adequately integrate psychological findings into economic models is disconcerting. This resort to obscure mathematics, often in lieu of empirically verifiable data, is what economist Paul Romer dubs “mathiness” in the economic literature (Romer, P. M. (2015). Mathiness in the Theory of Economic Growth. The American Economic Review, 105(5), 89-93).
Such mathiness, at least in my own view, is frequently used not only as an attempt to further legitimize economic theory, but also as a means of protecting those within the profession. Economists have long relied upon an excessively convoluted language – or economicspeak if you will – designed to insulate their discipline from a wider public.
By contributing to the perceived difficulty of the discipline, mathiness and economicspeak add to the demand for specialized knowledge in economics.
This mathiness only adds to the “mystification” of economics by erecting barriers to those incapable of comprehending such flawed mathematics, not to mention economicspeak. This also has the added advantage of fending off potential criticism from those outside of the economics profession.
Most importantly, however, by contributing to the perceived difficulty of the discipline, mathiness and economicspeak add to the demand for specialized knowledge in economics, which economists clearly have a stake in maintaining. Indeed, this is all rather unsurprising given that the average salary of an economist in the United States can easily reach upwards of $100,000 per year.
Why Economics Does Not Exist in a Political Vacuum
Beyond the economics profession, however, the perceived legitimacy of economic theory can have drastic implications at the societal level. By comparing their discipline to the natural sciences, economists have been able to present their findings of the market as “iron laws” that, similar to, say, the laws of physics, must hold in all economic systems, even when empirical evidence points to the contrary. Even more worryingly though, this allows many economists to present their “laws of economics” as transcending any political debate due to their supposed fixedness.
However, the self-proclaimed apolitical nature of the “laws of economics”, as well as their policy “prescriptions”, is illusory. To pretend otherwise is to willfully ignore the political essence of almost all economic questions, as capitalism, our current economic system as well as the basis for the study of economics, is fundamentally rooted in disproportionate power relations between those who benefit from this system and those who do not. By designing certain models that treat all consumers as one entity, i.e. as rational individuals with the same preferences, economic theory chooses to disregard the realities of class conflict.
This reasoning reveals an adherence to a right-wing political ideology, which attempts to disguise itself as an objective “science” through the use of mathiness and economicspeak.
In emphasizing the welfare of the individual, as compared to, say, the collective, economic theory has also espoused the idea that government intervention can only be synonymous with inefficiency. By introducing “wedges” into the market by raising taxes or fixing prices or wages, economists argue, government intervention always impedes the productive “invisible hand” of free or private enterprise. This line of thinking justifies economists’ claims that regulations, unionization, and public enterprises can therefore only hurt the individual consumer.
In addition to being grossly erroneous – one only has to evaluate the wastefulness of the privatized American health care system to see this – this reasoning reveals an adherence to a right-wing political ideology, which attempts to disguise itself as an objective “science” through the use of mathiness and economicspeak. It upholds the interests of those who have the most to lose from higher taxes, protective labor rights, and a functioning welfare system – in other words, the wealthy and powerful – which undoubtedly includes most economists themselves.
Towards An Interdisciplinary Economic Theory?
This critique is predominantly aimed toward neoclassical economics. However, at least in the “Anglosphere”, this tends to form the foundation of most economic textbooks and modules, although attempts to make economics more inclusive have increased in recent years. While the development of subdisciplines such as behavioral economics or environmental economics is encouraging, the dominance of neoliberal thinking in most economic theories – again, under the pretext of “science” – is impractical at best, societally detrimental at worst.
Until the foundation of the discipline accounts for these shortcomings, economics is likely to continue to give rise to disillusioned students, which overwhelmingly includes women, like myself, who end up losing interest entirely. Or, worse yet, it will produce students that blindly subscribe to the “Washington Consensus formula” with little concern for the wider philosophical or social implications, as those in Rubinstein’s survey appeared to show signs of.
What is the purpose of an economy if not to serve the collective needs of those who make up that economy?
Indeed, how are future generations of policymakers supposed to direct the economy when we haven’t even considered what values we would like not only our economic system to reflect, but our society? What is the purpose of an economy if not to serve the collective needs of those who make up that economy?
This requires not only seeing economics for what it is – a social science in which economists have their own stakes in the game, so to speak – but making it more interdisciplinary. Integrating key findings from psychology, sociology, philosophy, politics, cultural studies, and ecology could be a start, but this would also involve expanding traditional economic measurements, such as GDP, to include “quality of life” indices. Rather than just writing off climate change as a negative externality in a footnote, for example, economic models need to start accounting for the effects of pollution and greenhouse gas emissions on long-term economic growth.
Without such changes, economic theory is likely to do little but continue to prescribe shortsighted economic policies. So, is economics void of political ideology? Of course not. Economics, at least as it continues to be taught in most universities in the English-speaking world today, does not exist independently of political interests; in this sense, there is no politics or economics, only political economy.