This is the first post of our new ‘PCES Myth Busting’ series, which will tackle some popular misconceptions we have encountered about our camapign. This post will discuss our view of neoliberalism or ‘free market’ economics – broadly defined as the ideology in place in Anglo-American economies since the time of Thatcher and Reagan.
While PCES has received some support from ‘right wing’ places such as the Institute for Economic Affairs, and former Tory chancellor George Osborne even expressed similar concerns to ours about economics education, we have found it difficult to shed the idea that we are part of a campaign against neoliberalism. Numerous sympathetic articles about PCES have positioned us as anti-free market; we are sometimes thought of as synonymous with the recent surge for Jeremy Corbyn; and people have even criticised us as contradicting our message when we host speakers perceived as too ‘right wing’ or establishment*.
To put it plainly, PCES is not inherently for or against ‘neoliberalism’, however defined, and ultimately we find this an unhelpful dichotomy to be placed into. Our project concerns the narrow and abstract nature of economics education, an issue everybody should be concerned about no matter their political affiliation. We advocate pluralism, which would include everything ranging from Austrian economics – commonly considered right wing – to Marxism, which is of course left wing. In between we have a range of approaches, from politically ambiguous ones such as mainstream economics, evolutionary economics and econophysics; to various strands of Keynesianism which are (loosely) social democratic; and also schools such as ecological and feminist economics which have an obvious focal point.
Neither does the other pillar of our campaign, democratising economics, fit neatly into existing political dichotomies. As we have discussed in our book The Econocracy, the dominance of economics in politics and society is in large part dependent on state institutions such as the Bank of England, Government Economic Service and numerous statistical agencies, hardly hotbeds of free market ideas given that their purpose is to measure and manage the economy! That these public institutions should be more accountable to the citizens they serve (and maybe some people, especially Austrians, think they should be abolished altogether) does not immediately imply they should be more left or right wing. Further educating and engaging the public in economics is another key aim we have that people from across the political spectrum have no reason to disfavour.
We find that exchanges with people across political and economic divides are almost always fruitful, both in terms of exposing you to new ideas and because they reveal unexpected common ground. For instance, last year economist Matthew McCaffrey showed us an excellent quote on democratising economics from Ludwig von Mises, a founding father of Austrian economics:
Economics must not be relegated to classrooms and statistical offices and must not be left to esoteric circles. It is the philosophy of human life and action and concerns everybody and everything…In such vital matters blind reliance upon “experts” and uncritical acceptance of popular catchwords and prejudices is tantamount to the abandonment of self-determination and to yielding to other people’s domination. Whether we like it or not, it is a fact that economics cannot remain an esoteric branch of knowledge accessible only to small groups of scholars and specialists. Economics deals with society’s fundamental problems; it concerns everyone and belongs to all. It is the main and proper study of every citizen.
This kind of discovery only bolsters our case for pluralism and being open to ideas you disagree with. We would love for PCES’ supporters on the left and right to get on board with this message.
One question remains: is there any link between mainstream economics and neoliberalism? Dani Rodrik recently wrote a good essay on this topic, where he argued that while a bare-bones version of mainstream economic ideas can seem to imply free market policies, a broader and more nuanced understanding of economic models can imply a range of policies which may be interventionist or may be free market. The law professor James Kwak has also documented evidence suggesting economists with an undergraduate degree are more in favour of the free market than postgraduates, supporting the view that basic economics has different implications to advanced economics. On the other hand, there are some free market policies, such as abolishing central banks, which are unthinkable to mainstream economists; and some interventionist policies, such as fiscal stimulus during recessions, which are a core part of mainstream macroeconomics but are not free market policies.
Perhaps a more fruitful approach is to question the question. Is it always sensible to put a clear dividing line between the ‘free market’ and ‘state intervention’? Economists such as Ha-Joon Chang and also Rodrik himself have long disputed this view. The state enforces property rights, contract law and corporate law, all of which are filled with nuances which will vary depending on technology, culture and politics. Intellectual property is one example of a type of property right that has increased in importance in the digital age and which there are no ‘natural’ guidelines for: How long should intellectual property rights last, and how widely should they apply? When Apple sued Samsung over the design of smartphones and tablets, it was not obvious which patents had been violated and it took a long court case to come to a (mixed) conclusion.
Thus, to steal a phrase from Rodrik, economists should always say ‘it depends’ and take each issue on a case-by-case basis. However, they should also go one step further and consider a broader range of theories when answering these questions, else they risk fitting too neatly into these dichotomies, which are too often accepted in mainstream economics.
*It is not our desire to ‘name names’, so we have not included references, but they should’nt be difficult to find if you are interested.