The Econocracy – The Perils of Leaving Economics to the Experts

Blurb

One hundred years ago the idea of 'the economy' didn't exist. Now, improving the economy has come to be seen as perhaps the most important task facing modern societies. Politics and policymaking are conducted in the language of economics and economic logic shapes how political issues are thought about and addressed. The result is that the majority of citizens, who cannot speak this language, are locked out of politics while political decisions are increasingly devolved to experts. The econocracy explains how economics came to be seen this way - and the damaging consequences. It opens up the discipline and demonstrates its inner workings to the wider public so that the task of reclaiming democracy can begin.

Book summary

The Econocracy by Joe Farle, Cahal Moran and Zach-Ward Perkins is rooted in the aforementioned rationale and attempted a well-researched critique of modern economics. It emphasizes the structure of syllabus and pedagogy in universities across the world as well as of public engagement with the discipline. The authors who are founding members of Post-Crash Economics Society (PCES) at the Manchester University defines the term ‘econocracy’ 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.” It would not be wrong to say that the book is well-timed in the observance of the Brexit referendum and Donald Trump’s massive mandate in the United States cautioning of an absence of a common premise between the economists, policymakers and the public. This is strongly validated by the positive reviews of a range of economics thinkers. How did the thoughts of “The Econocracy” arise? Since the global financial crisis of 2008, the dominant narrative has been that the economists failed to predict the crisis. This book takes on the education of contemporary economists across the globe. The Post-Crash Economics Society (PCES) has its origins in these setbacks and one of the book’s noteworthy efforts is its critique of the highly standardised and homogenised curriculum which is taught worldwide. Most importantly, it shows us with appropriate arguments of the growing exclusion of the public from the discipline of economics. Further, the book acts as a reminder that not everything needs an economic value. This review essay looks at the major themes of the book with one’s own understanding and rationale.Does everything need an economic value? The authors provide a very deep insight into this question with thoughtful examples. For instance, they note that a famous children’s charity justified a campaign to encourage fathers to read to their children on the basis that improving literacy would increase GDP by 1.5 per cent by 2020. Other examples include Organisation for Economic Co-operation and Development (OECD) in 2014, highlighting that mental health issues cost the UK around £70 billion every year, roughly 4.5 per cent of GDP, in lost productivity at work, benefit payments and healthcare expenditure. The most ironic of all, the existence of the monarchy is often justified in terms of its beneficial effect on the economy. These cases make a point that diverse and personal experiences of life are justified by confining them into the walls of the economy and monetary value. Art of any kind, a soul-enriching experience created through an expression of skill or imagination has been turned to be a mere sector of the economy in contemporary times. The authors use a sarcastic tone in this context and provide a subtle comment- “It’s surprising that no one (to our knowledge) has yet worked out the value of Shakespeare to the economy.” What makes economics at the centre of attention? The book features this question and leaves us wondering about politics beyond economics. To understand how contrary sustains, we need to accept how the discipline is portrayed in popular media. Economics is generally perceived as a technical discipline which provides neutral and scientific advice on policy rather than engaging in politics directly. This technical language and tools of economics camouflage political judgements and subtly redefine goals of political problems which leads to exclusion of the public and other important stakeholders from the policy process. The book uses the help of case studies as well as statistical data to conceptualise how political success and social problems have been reduced to figures and graphs. The book explores the historicity of political issues turning into economic issues, a perfect example being the financial sector where economics has played a hand in constructing entirely new markets., for instance, creation of the Chicago Boards Operations Exchange (CBOE) as a financial market in 1973. The authors further take a tour to the roots of the system termed as ‘econocracy’ which lie in the events and ideas of the twentieth century, when innumerable economic institutions devoted to measuring, analysing and managing the economy arose. The investigation and analysis in exploration for the roots of ‘econocracy’ show us that the Second World War gave economists the opportunity to showcase their rapidly developing technical skills. The war necessitated a mobilisation of resources that was unprecedented, and economists were hired for a broad range of tasks, from optimising shipping routes and loads to planning war manufacturing. The war also saw the development of state control and systems of compiling statistical information which would later form the core of econocracy. With the war and National Income Accounting, economics took a central role in governance.Is there an absence of public in the discipline? Does it have a latent effect on democracy? The book is a bold pursuit by the authors to showcase the growing divide between public and economics. The system of econcracy results in an authoritarian position of the economists and elites in decision making and undermines the role of citizens for whom the economics policies are meant. With disengagement and disempowerment of citizens in the economic debate, the ideals of liberal democracy or any democracy are in a compromising position. At the heart any democracy lies the privilege of choice. The authors argue that technocracy is incompatible with liberal democracy in two ways. Firstly, in an econocracy political decisions are redefined as technical questions to be answered by experts and thus removed from the public arena. Secondly, as increasing areas of political and social life are colonised by economic language and logic, the vast majority of citizens face the struggle of making informed democratic choices in a language they have never been taught. The book makes us mindful of the importance of choice in a democracy. It analyzes and conveys the essence of real choices which require an understanding of the options available and it is problematic when they are complicated with the jargon of economics. The author compares the situation with a doctor offering different treatment choices to a patient in a language the patients did not understand. The vision of democratising economics has been presented in the book where authors are of the view that economic issues are subject to democratic public debate. They aspire economists to the informers to the citizens of their choices rather than to take decisions for them. In this manner, citizens would be able to articulate their economic desires and negotiate in the political system. How is the education of economics standardised and reduced to figures? The authors oppose the current structure of economics education and argue that despite attracting capable students who are interested in the world around them, economics, as it is taught at university, has little to do with the real world. It has set out a model based on rational individuals and an economic system that tends towards equilibrium, while also being insufficiently pluralist, downplaying debate between different schools of economics. This argument is supported by a useful analysis of the final exam questions on core and elective economics courses at various universities. These rely heavily on what the authors call ‘operate the model’ problems: asking students to uncritically apply the taught model to a stylised situation, with no thought to whether the model, situation or answers are realistic or useful. Overall this analysis finds that 76 per cent of exam questions required no “critical or independent thinking whatsoever”. Even if exams are not perfectly representative of course content, they will very much influence student efforts, so it is concerning that critical engagement is neither valued nor rewarded. The authors lament: “It is hardly an exaggeration to say that it is now possible to go through an economics degree without once having to venture an opinion”. In this regard, the authors open up the discipline of economics for public scrutiny and express the opinion that if the economics would take thecentre stage in public debate, it is important for the people to understand the current language of economics based in neoclassical school. However, they complain over the fact that a generation of economists think neoclassical economics is one and only way to study the discipline. Is neoclassical economics political? In this view, the authors used a quote of economist Joan Robinson- ‘‘The answers to economic problems are only political questions.” There has been no diplomatic gibberish in the book, the book has directly pointed out how the dominance of neoclassical economics shapes our political mindset. The standardisation of economics, particularly at undergraduate level pointed out above is based in neoclassical economics which contains a lot of models which highlights markets and capitalism as best possible answers to economic problems. For instance, standard demand-supply analysis teaches students that policies in areas such as taxes, rent controls or the minimum wage will only serve to make things worse, so the market should be left to reach a ‘socially optimal’ equilibrium by itself. The authors display a bigger implication of this education. As economists will teach and plead that these are the only basic models which are developed in more advanced study, but many students may not go much further in studying economics, so these are the ideas that will shape how they think about the economy. A comment by economist Adair Turner presented as a warning is noteworthy in this context that policymakers may be ‘‘slaves to a simplified version of the conventional wisdom’’. The strengths of this book are in many terms providing the readers across the globe an entry point to engage in a larger socio-economic-political discourse. What makes it prominent is the fact that the authors present an insider view of the discipline of economics and its central role in democracy. The book acts as a reminder to the very important point that not everything needs an economic or monetary value. Further, it shows how economic judgements need not be the basis for social and political problems. The authors urged in a way for a new kind of ‘citizen economist’ for making the discipline inclusive as the objective of economics is for policies for the public. Economics of the contemporary structure is a new discipline as this book argues, and has mostly been controlled by experts and elites but let us remind ourselves it is for the public. Lest we forget, at the end of the day we are responsible for our own lives.