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sanity,
humanity and science In this issue:
- Bernard Guerrien
Once Again on Microeconomics
Bernard Guerrien (Université Paris I, Panthéon-Sorbonne,
France)
It is clear that several contributors to this discussion clearly disagree with me: Deirdre McCloskey2, Bruce Caldwell3 and Julie Nelson4, for example. As for Jacques Sapir5, I confess that I did not understand most of what he wrote - perhaps because I never read Spinoza. All of the participants I just mentioned believe that there is something worth keeping in microeconomics, something they more or less identify with “economic reasoning”.
First of all, I am not against “theory“ or “abstraction” as Jacques Sapir suggests (“. . . part of Guerrien’s argument reveals an unhelpful bias against abstraction itself”). On the contrary, I am in favour of teaching a lot more theory. When French students who are revolting against their curriculum say “no more micro 1, micro 2, micro 3 . . . ”, they mean that they want to be taught more theories, in the plural (including neoclassical theory), more history of economic thought, more moral philosophy (even Spinoza ...), more sociology, etc.. You can explain neoclassical “abstract” theory
in a very simple way, because it consists of a set of “stories”
or “parables”, and with a lot of mathematics, but if you think
that these stories are not relevant, then insisting on proofs of existence,
on comparative static results and other refinements, will not make them
relevant; all this has no interest (except, perhaps, for mathematicians). Second remark: I am not against "economic
reasoning". When I say that neoclassical theory is not
"relevant", I am not at all pointing to the obvious fact that
"economic men" do not resemble "actual men" but mainly to
the fact that "the relations" these economic men entertain among
themselves (in neoclassical theory) do not resemble the relations that exist
in any known economy, past or present. I am not against reasoning about abstract men (whose self-interest is grossly exaggerated, becoming almost their only motive) as long as the relations they enter into (firm-wage labourer, landowner-tenant, banker-industrialist-merchant, etc.) resemble relations that exist in the real world. I may not entirely agree with him, but I find John Stuart Mill's economic reasoning "relevant", though, as he says himself, it is based on “an arbitrary definition of man, as a being who invariably does that by which he may obtain the greatest amount of necessaries, conveniences, and luxuries, with the smallest quantity of labour and physical self-denial with which they can be obtained in the existing state of knowledge” (System of Logic, p. 326, his italics). Probably, neoclassical economists agree with this, too. Then, the difference between us is not that I reject "economic reasoning". The logical flaw in micro theoryNow, after these two remarks, I remind you that the
principal bug in microeconomics -
as you find it in all textbooks (including McCloskey’s - see appendix) - is
not in the use of mathematics, or in the “unrealistic” preference
relations, and so on, but in the very simple fact that, if you suppose, as
micro theory does (at least, “at the beginning”), that everyone is a price-taker, then you logically need an auctioneer-type
institution to set prices. Then, and
only then, can you legitimately speak of supply and demand curves (or functions) and so on.
Without an auctioneer, you need at least some price-making agents, and if you introduce such agents you find
yourself in a completely different theory. You can, for instance, imagine
people wandering around, bargaining, etc ..., as David Kreps
suggests in his Microeconomic Theory,
pp. 196-197, saying that these kinds of models are in their “relative
infancy” (how is this so, when there are so many people all around the
world producing all kinds of models?). I think that I don’t need to remind you that the founders of neoclassical theory were perfectly aware of the logical problem concerning the origin of prices in a model in which everyone is supposed to be a price-taker. Jevons tried to avoid it with his “trading bodies” metaphor, Walras by assuming that prices are "barked" or "barked out" (“les prix sont criés ”) and that there are no exchanges (nor production) outside of equilibrium. Edgeworth, perhaps the most clever of them, clearly criticized these illegitimate assumptions and saw the logical flaw or circular reasoning implied in them - a flaw that you find in all microeconomic (or “price theory”, or “economics”) textbooks, Stiglitz included - which consists in deducing supply and demand curves (functions) from the behaviour of price-taking agents and then explaining that the prices they take are determined by these supply and demand curves (see appendix for two examples). So, if you insist on keeping a neoclassical or individual-based theory about the world around us, you should at least be consistent and not skip necessary steps: you have to suppose that there are (at least, some) price-making agents, and that they bargain. You cannot escape the problem, as is so often done by saying that "the market does this" or "the market does that" and by speaking of “market forces”, “the law of supply and demand”, “equilibrium point“, which are just words or metaphors that suggest some mysterious “mechanism” that is constantly engendering prices. Worse still: these prices are supposed to be efficient if they are not hampered by rent controls, agricultural subsidies and trade barriers, as in Caldwell’s examples.
You may give the impression of rigor by drawing supply and
demand schedules on the blackboard (they give this impression to people who
have been brought up on them); but you don't escape the logical flaw. If you
want to draw something, then draw Edgeworth’s
box; it at least allows you to introduce some of the more elemental problems
of bargaining. Deirdre McCloskey gives an example of “applied microeconomics” (sorry, “price theory”): the rise of oil prices in 1973. This is exactly the kind of important historical event that it is silly to explain by using nice supply and demand curves. This is a very, very complex case of multilateral bargaining (with price-makers involved)! There are OPEC and non OPEC countries, quotas decided by some of them, and not by others, strategic and political problems between countries, expectations of traders about what will happen in the future (see what is happening now, with the US-Iraq affair). Even Cournot's model (where there is an auctioneer) is of no use here. I am sure that a certain type of student is very happy
when we use “applied price theory” to explain the oil crisis (and
the French Revolution and the decline of Spain, as is so often done) - it's
so nice to understand without studying. But I doubt if we are able to do it,
even though there are a lot of people publishing papers on the oil question. Caldwell and Nelson give the Ricardo comparative advantage
example of microeconomic reasoning. OK, but where are supply and demand
curves in this case? Do they think that Ricardo is a
“micro-economist”? I have never seen his name in micro-economics textbooks. There is also the (inevitable) question of elasticities and of the impact of taxes - a normative question, for sure. It is obvious that if you take general equilibrium prices (with an auctioneer, etc.) as a benchmark, then every change in prices is sub-optimal (in the sense of Pareto) - because Arrow-Debreu general equilibrium is a Pareto optimum. As Samuelson remarked a long time ago, you don’t need the “surplus” concept, and the demand and supply schedule, to explain that. That’s for the abstract theory. If you want to study the problem in practice, you start from the fact that agents are more or less sensitive to the price movements of different goods; if you want to know just how sensitive, you can ask them, make polls or use different kind of econometric methods to (approximately) evaluate this sensibility; then you have an approximate idea of the effects of varying taxes (elasticity, in the mathematical sense, is a local notion that only gives information about small “movements” around a given - observed - point). I also don’t agree with Ann Mayhew6 when she says that “explaining the behavior of small firms that operate in markets consisting of other such firms” is a “simple problem” for which “there is certainly something worth keeping in standard microeconomics”. Because it is “a simple problem” only if you suppose that there is an auctioneer with price-taking firms (and consumers). But does anyone consider that these are “simple”, or relevant, assumptions? En résumé, and
again: if you want to be a consistent neoclassical theorist (starting from
individuals, tastes, technology and endowments), you have to start from the beginning: generalized bargaining between
individuals. Unhappily, you cannot go very far in this direction; you can
perhaps say something about Nash (normative) solutions, about
Salop-Rubinstein models with complete and perfect information, about the core
of the economy (without production), and about its “shrinking”
when the numbers of agents of each type increase. But nothing more. I suppose
that’s why microeconomic textbooks don’t start with bargaining,
and prefer the (invisible) walrasian auctioneer. Now, in practice, what do we observe around us? With the exception of the stock market and commodities prices, most (relative) prices are quite stable: why? That is a very interesting question. We are constantly teaching that prices adjust with supply and demand; but, in fact, it is quantities (stocks) that adjust, and most relative prices don’t move, or move slowly. And this is a very important and happy fact: if prices were moving constantly and everywhere, as in the Stock Exchange (the famous “volatility”), then no middle or long term calculation could be made, and there would be no investment - and, finally, no production. People would spend most of their time bargaining, searching “the lowest price”, and so on. A long time ago, John Stuart Mill - who didn’t use “supply and demand” curves (and not because he was intimidated by (elementary) mathematics) - explained that competition could not be separated from custom. He tells us of competition (supply and demand) that "it rather acts, when it acts at all, as an occasional disturbing influence; the habitual regulator is custom modified from time to time by notions of equity or justice . . . , when competition does exist, it often, instead of lowering prices, merely divides the gains among a greater number of dealers" I think that you cannot study economic relations if you don’t pay attention to institutional arrangements, customs and traditions, mass psychology, class conflicts, and so on. Obviously, this is very difficult, and you have to be very modest when you teach these things (it is much easier to tell our students that “theory - mathematical models - show this or that; if you do this, then you will have that, etc.” than to say “well, I don’t really know, but in my opinion . . . . ” Now we come to the last, and eternal problem of the “alternative theory”. Well, first we have to be cured of our inferiority-complex with neoclassical theory. If we think that it is a bad, empty theory, then, there is no problem: any theory can be at least as good as it is. Classical economists (Smith, Ricardo, Mill) say a lot of interesting things; Marx and Keynes, too; there are some good ideas in “old macroeconomy”, in the IS-LM fashion. Leontieff and Sraffa models allow us to think about inter-depencies in the economy. Economic history is quite fascinating - especially the evolution of capitalism (in the way done, for example, by the French “regulationniste” school). Neoclassical models - with utility
and production functions, and maximizing agents - have nothing to say about all
this. And we have to explain why, again and again. I don’t think that we will some day “produce” a new “great theory”, whether in the axiomatic way or not. But do we need it ? Even without it, we can say a lot of interesting things about the world and how to change it. Economists always have something to propose.
Appendix: On McCloskey's and Friedman's "price theory"Deirdre McCloskey gives her Applied Price Theory (www.uic.edu/~deirdre2)
and David Friedman's Price Theory
as examples of good economics. Sorry, I don't see the difference between
these two books and other standard micro-economics textbooks (almost all the
"examples" in these two books are imaginary and made up) and I find
in them the same logical fault that I pointed out in my main critique of
microeconomics. Here is the proof. Both (McCloskey and Friedman) have a special chapter on
exchange – Friedman, Chapter 6 “simple trade”, McCloskey,
Chapter 5, “trade” – where, among other things, both
present the Edgeworth box. 2. Deirdre McCloskey, “Yes, There is Something Worth
Keeping in Microeconomics”, post-autistic economics review,
issue no. 15, September 4, 2002, article 1. http://www.btinternet.com/~pae_news/review/issue15.htm 4. Julie A. Nelson, “What should be retained from standard
microeconomics”, post-autistic
economics review,
issue no. 14, June 21, 2002, article 8. http://www.btinternet.com/~pae_news/review/issue14.htm 5. Jacques Sapir, “Response to Guerrien’s
Essay”, post-autistic economics review, 6. Anne Mayhew, “Superior Analysis Requires Recognition of
Complexity”, post-autistic
economics review,
issue no. 14, June 21, 2002, article 7. http://www.btinternet.com/~pae_news/review/issue14.htm _________________________ SUGGESTED
CITATION: Psychological
Autism, Institutional Autism and Economics* James Devine (Loyola Marymount
University, USA) As an economist with a son having heavy autistic leanings, the discussion of the “Autistic Economics” quickly caught my attention. I had never thought of the economics profession or its neoclassical orthodoxy as “autistic.” I think that this way of thinking can be useful, at least as a preliminary step, allowing the economics profession to eventually transcend autism. But as with all analogies, we must examine not only the similarities between autism and orthodox economics, but the differences. The Autism Spectrum
As a layperson interested in psychology, I have reached a preliminary understanding of autism, based on others’ research and on discussions with other parents of autistic or semi-autistic children. “Autistic disorder” is a social communication disorder and a developmental delay, involving “restricted, repetitive, and stereotyped patterns of behavior, interests, and activities.”1 I interpret this constellation of symptoms as being the result of an organically-based (neurobiological) sensory-processing problem which is much like the opposite of being deaf. Instead of hearing too little, a person with autism may hear too much, and be unable to filter out the noise or to prioritize the information received to make it intelligible. The external stimuli that most treat as normal seem to be a constant barrage of blackboard chalk scraping the wrong way. Not surprisingly, an autistic person slams hands over his or her ears, trying to shut out the meaningless cacophony. Alas, for that person, information overload occurs not simply with sound, but with the other commonly-known senses (sight, taste, smell, touch), along with proprioception (the sense of movement through space) and the vestibular sense (understanding one’s own body’s internal signals). So folks with autism tend to not only shut out external stimuli, but to be extremely anxious, communicate poorly with others, and be physically uncoordinated. Just as with “neurotypical” individuals (i.e., many or most of those reading this essay),2 each person with autism or autistic tendencies is unique. Different individuals with autistic problems have different combinations of these sensory-processing difficulties, so that one may be better at screening sounds than at prioritizing and understanding visual information – and so forth. Some, but far from all, compensate for processing problems in one sphere with genius in another, as with cinema’s “Rainman.” There are also degrees to which the whole neurobiological package hits an individual – and the amount of emotional or intellectual resources she or he has to resist impairment. Thus, professionals write of the “autistic spectrum,” the continuum from hard-core autism to high-functioning autism, to Asperger’s syndrome or borderline autism (AS), to the loner mentality so common among professors, accountants, and computer specialists.3 In terms of behavior, folks on the autism spectrum tend to be isolated from the world; have troubles with communication with others; engage in repetitive body movements; insist on sameness, repetition, and routine; and seem to treat others as objects.4 Those with AS have been described as follows: “Persons with AS show marked deficiencies in social
skills, have difficulties with transitions or changes and prefer sameness.
They often have obsessive routines and may be preoccupied with a particular
subject of interest. They have a great deal of difficulty reading nonverbal
cues (body language) and very often the individual with AS has difficulty determining proper body space. Often overly
sensitive to sounds, tastes, smells, and sights, the person with AS may prefer soft clothing, certain
foods, and be bothered by sounds or lights no one else seems to hear or
see.”5 This is just a partial list of symptoms, but the general idea is clear: people with autism have a hard time doing anything but to live inside their heads, no matter how friendly the social environment is. It is not surprising, therefore, that one autistic mother that I know had to explain to her two autistic children that there was something “out there” called “society” which had norms and mores which they had to learn and obey. Those on the spectrum instinctively see Baroness Thatcher’s dictum that there is no society, only individuals6 as self-evident. Autism and Economics
The orthodox economist’s a priori agreement
with Thatcher’s assertion – i.e., its commitment to
methodological individualism – suggests that the textbook homo economicus (HE)
might be autistic. For example, as with HE,
autistic individuals often have preferences that are little shaped by their
social environments (or at least seem that way to frustrated parents or
partners).7 But there are major differences. First, unlike for neurotypicals or HE,
information-processing problems are extremely important to autism, as with
Herbert Simon’s “bounded rationality.” Second, just as with
neurotypicals but unlike HE, people with autism have consciences, are torn by inner mental
and emotional conflicts, and often want to connect socially with other human
beings, if they can.8 Instead of being autistic, HE is more robotic or cybernetic in nature. The use of this kind of one-dimensional “man” in theoretical work is appropriate to a profession suffering from “institutional autism” (see below). Someone with autism is likely to treat other human beings as if they were furniture or automatons. Put another way, like those with autism, the economics profession’s dominant vision lacks a “theory of mind.” This means that, like autistic individuals, those who employ HE as a theoretical concept “do not understand that other people have their own plans, thoughts, and points of view… [and] have difficulty understanding other people's beliefs, attitudes, and emotions.”9 Turn now, before any analysis of their etiology,
to other specific “autistic” symptoms of the profession. The original statements by the rebellious
French economics students10 define autistic economics in terms of
its one-sided and exclusionary interest in “imaginary worlds” (as
opposed to empirical study), “uncontrolled use of mathematics”
(as an end in itself rather than merely as a tool), and the absence of pluralism
of approaches in economics (the monopoly of the neoclassical approach). The first two of
these characteristics seem at first to fit with the idea of autism. Indeed,
they merge into one symptom in many cases, since mathematics almost always
portrays an idealized and thus imaginary world.11 However, there
is a major difference from autism here: many folks with autism have
difficulty with abstract thought, since they are overwhelmed by the concrete
details of life. While the focus on an imaginary internal world is an obvious
result of autism, the use of abstraction should be seen instead as a defense mechanism against the confusion
arising from the blooming, buzzing, confusing concreteness of the empirical
world. The third
characteristic – a tendency for a single paradigm to dominate –
seems to fit well with the an autistic person’s rigidity and desire for
sameness, expressed as a preference for clear simple answers rather than
intellectual debate or critical thinking. However, it does not explain why
neoclassical economics – which includes methodological individualism
and the focus on HE – is the
prevalent orthodoxy. Nor does this list of “symptoms” say
anything about treatment. So the profession must be described. An Autistic Profession?
It would be a mistake to apply the psychological description of autism to economics in an unvarnished way. Even though high-functioning autistic people are often attracted to academia, where they can lecture others without listening, engage in research alone, and develop beautiful mind pictures, it is hard to say that a majority – or even a large minority – of economists have autistic tendencies. Individuals on the autistic spectrum do not have to specialize in economics to succeed in academia since there are other outlets for expression of their proclivities besides economic theory.12 Being able to “work well with others” helps one achieve success in academia, as in most spheres, so that those with autistic tendencies would need to be very smart or to work very hard to compensate for social-skills deficits. In sum, self-selection can only be one part of the basis for autistic economics. More profoundly, it would be a mistake to apply an autistic person’s own highly individualistic perspective, i.e., seeing “economics” as a simple aggregation of isolated economists. Instead, the economics profession is an institution, spawning a collective product and should thus be analyzed in a sociological or social-psychological (institutionalist) way. The profession trains people to accept autistic assumptions (and attracts those who do so already) and rewards them for doing so. Thus, the autistic aspect of the field involves more than the sum of its parts. Again delaying a full discussion of the basis for this institutional autism, it must be stressed that the French students’ summary does not apply exactly to the empirical world. As with psychological autism, there is a spectrum. The hard-core autistic walling-off from the societal environment can be seen most strongly in the specific, highly abstract, axiomatic, or “Bourbakist,” school that the students protested against.13 Further down the spectrum toward “normal,” the approach of only dealing with the world by lecturing or dictating to it (as with Asperger’s syndrome) can be seen with the International Monetary Fund, which applies the same preconceived vision of the ideal market system (and the same neo-Liberal set of policy imperatives) to every country it encounters. At the other end of the spectrum, there are all sorts of economists who work for government, business, foundations, and even labor unions; the fact that these real-world institutions are willing to pay for their contributions indicates that these economists’ degree of social connectedness is adequate to the task. They may use abstract math or econometrics, but it would be libelous to apply the autistic tag to these economists.
The existence of a spectrum does not mean that the profession itself lacks institutional autism. The autistic economics of the Bourbakists and their Anglophone counterparts or the I.M.F. and similar organizations define the most prestigious segment of the economics profession, the one that “smart young economists on the rise” wish to emulate. Thus, autistic economics tends to dominate the “Big Name” departments, along with most professional journals, departments, professional associations, and textbooks. Since much of the socio-institutional basis for the prevalence of autistic economics is shared with other academic fields, the nature of the subject matter must be considered. As a “soft science” dealing with the complexity of human social interaction as participant-observers, economists cannot approach the objectivity – and the ability to attain consensus – of the physical sciences. But we deal with a much simpler subject-matter than does, say, the sociology profession, so that some hope of consensus arising exists, at least on key issues. That is, economics is in the middle of a spectrum between obvious consensus on many issues and the extreme inability to form one. In this context, economists seem to have an autistic drive for sameness – a “physics envy” wish to imitate the natural sciences’ ability to attain consensus. Unlike sociology, for example, they can do so partly by restricting the subject-matter to easy topics such as markets and market-like processes and thus by restricting the acceptable ways of thinking. To finally explain physics envy and other autistic symptoms, the profession must be understood as an artificial societal institution, created by people, that has taken on a life of its own partly independent of individual preferences while feeding back to shape those preferences and perspectives. Having roots in medieval guilds, academic institutions such as the economics profession center on a hierarchy topped by Big Name professors, universities, professional associations, and journals. Lacking a basis for true scientific objectivity, the identity of these Big Names cannot be decided as in physics. Thus, which professors, universities, professional associations, and journals are most influential are selected by the already-existing Big Names, i.e., by “the insiders” or the “superstars.”14 Thus, the dominant ideology of the past is perpetuated over time. Despite the top-down organization of the profession, it would be a mistake to assume that either a monopoly or a conspiracy exists. Competition also plays a role, in which “success” is defined by rising in that hierarchy. By the pyramidal nature of such hierarchies, the rise of one individual toward the top excludes others from such success, so that competition encourages individuals to over-invest time and effort in order to succeed.15 Departments, associations, journals, and textbooks also compete to attain the pinnacle of prestige and power defined by the current in-group. This system implies a dynamic that perpetuates autistic pathology over time: people at the bottom of the hierarchy are not only trained to think and practice the dominant ideology, but find it in their professional interest to do so whole-heartedly and sincerely. Otherwise, they do not get the desired publications, jobs, promotion, tenure, attention, and fame. Those who accept the dominant world-view most profoundly are most able to be creative in developing new applications and are seen as wunderkinder who can rise to the top. This result is reinforced by self-selection, as the deviants leave the profession or sink into professional backwaters. Of course, those who rise feel they must teach it to those further down the hierarchy (students), since they believe in it and want the students to succeed at the higher levels of a profession they value. Those textbooks produced by Big-Name economists (or their conceptions) tend to dominate, while the “winner-take-all” nature of the textbook market limits the number of textbooks available.16 Finally, the neoclassical approach of excluding critical thinking and intellectual debate makes the task of teaching easier. The self-referential nature of this system encourages the focus on imaginary worlds, including that of mathematics. The latter also plays a major role because of its use in grading subordinates’ success, a crucial part of any hierarchy. It has always been very difficult to judge how hard or well an academic actually works, while such decisions often threaten to become unpleasant political processes. Student course evaluations are almost always inadequate, as is the number or size of a professor’s publications (along with the number of times they are cited). But most feel that the quality of her or his mathematical technique can readily be judged. Simultaneously, the ambitious scholar can bemuse the older professors whose mathematical techniques are rusty or out-dated by applying the newest and fanciest methods. Just as we see the prevalence of jargon or obscurantism in other fields, in economics the one-upmanship of academic competition encourages the over-use of mathematics and the embracing of physics envy. However, the institutional autism
of the profession exists in a societal context. The economics profession
cannot be understood without stressing its separation from the other social
sciences. During the last century or so, the economics profession has defined
itself in comparison to other fields. This, along with their self-satisfied
sense of mathematical virtue, has encouraged economists to sneer at other
specializations (especially sociology), the way the hatters’ guild
mocked the laborers – or to try to conquer them, as Gary Becker and his
school does. Either way, the main flow of information is from economics to
other fields, rather than vice-versa. This Asperger-style
elitism means that the profession eliminates whole sets of questions and
parts of society from analysis, restricting the empirical and theoretical information
that economists have to process, adding order to a complex and confusing
reality. It allows the economists to maintain their beloved assumptions,
however unrealistic. Of course, the economists’ guild exists in a modern capitalist environment, not a medieval one. It must sometimes prove its usefulness to business, government, and other societal institutions, which can threaten to de-fund academic programs that are totally “irrelevant.”17 This, of course, explains why the dominant form of economics is neoclassical (studying idealized markets), just as a different style of economics (one emphasizing planning) prevailed in the old Soviet Union. This role for the societal environment implies that the profession cannot be entirely autistic, just as no individual can be so. This point is reinforced if we define neoclassical economics. This approach can be seen as involving adherence to (1) mathematical method, with an emphasis on (2) utilitarianism and methodological individualism, (3) equilibrium, (4) naturalism, and (5) positivism.18 Last but hardly least, in the neoclassical ideal, (6) all human activity is seen as exchange or as organized by markets, in reality or as an ideal. In terms of the discussion above, all but one of these may be seen as reflecting the profession’s autistic attitudes, at least in part. I have discussed the first two of these above. Moving down the list, the centrality of equilibrium seems a symptom of totally autistic thinking in a society such as capitalism in which endogenously-driven change – sometimes drastic, as with financial crises – is the norm.19 Related is item (4), i.e., the view that human-made institutions such as markets can be reduced to “natural” forces such as individual preferences and technology, in which the complexity and artificiality of human institutions is abstracted from or forgotten. The profession’s positivism – i.e., its view that value-free research is an achievable ideal, that the observer is unaffected by being a participant in the system, and that serious philosophical reflection is unnecessary – also fits with a generally autistic attitudes. However, the emphasis on markets and exchange – as opposed to other kinds of human institutions such as tradition, democratic cooperation, and hierarchy – clearly reflects the society in which economists live and learn. Though the neoclassical’s vision of exchange and markets may be unduly restricted, idealized, formalized, static, and individualized – symptoms of autistic attitudes – the fact that he or she is actually engaged with a real-world problem gives us a glimmer of hope. Cures?
Returning to the case of neurobiological autism, there is no cure at this point. That is, there is no known method (such as a pill) to definitively prevent or end this disorder. But autism represents a developmental delay – which opens the door for a long-term struggle to speed up that development, to improve an individual’s functioning in society. Various methods (from behavior modification to active effort to engage a person socially in his activities20 to occupational therapy) can speed up an individual’s ability to learn to cope with the shower of stimuli. Pills can help handle symptoms (such as anxiety), making it easier for therapists to apply other methods. All of these involve trying to break down the walls between the autistic individual and the empirical world. What about “curing” the economics profession of its institutional autism? It should not surprise anyone that there is no quick fix. The persistence of autistic symptoms (as described by the French students) is based in the hierarchy and the competition to rise in those ranks. This autism encourages, and is in turn shored up by, a refusal to engage with other social scientists in a serious way, as peers. In addition to efforts to get rid of unnecessary hierarchy and competition, outsiders and deviants may be able to push the profession up the developmental ladder to minimize solipsism. These efforts might be helped by the course of events, as when the shock treatment of the Great Depression pushed the profession away from classical economics and toward Keynes. In any event, the effort to force the profession to actively engage with reality must be central. But such empirio-criticism is never enough. Just as autistic individuals need help making sense of reality, it takes a theory to trump a theory. In many cases, that means that we need to do better than the neoclassicals, presenting improved theories to understand empirical reality. These would be conscious of the limits of mathematical method, embrace the heterogeneity of empirical reality, take a deeper understanding of individual social psychology into account, treat economies as undergoing hard-to-reverse processes, involve institutionalist insights, eschew excessive pretensions of unjustified scientific objectivity, and avoid reducing all activity to exchange, partly by learning from the other social sciences.21 If enough people are willing to make the effort, perhaps the profession will move toward pluralism. In terms of research, it would be a major mistake to reject the profession or even neoclassical economics totally. In my experience, many interesting insights can be drawn from the more sophisticated work of neoclassicals, especially if treated skeptically with an eye to finding the valid aspects of their work rather than simply rejecting them. Despite their problems, it is better to know the state of the orthodoxy’s knowledge than to be ignorant of it. Finally, there are reasons for hope. Magazines such as The Journal of Economic Perspectives, which center on presenting ideas without unnecessary formalism, along with such fields as experimental economics, which are by necessity empirical, show the possibility for improvement. Notes
* Thanks to Edward Fullbrook, Barkley Rosser, and Lynn Kilroy
for their input. Of course, the full weight of any blame for misleading,
inaccurate, or ambiguous content is on my shoulders. 1.
See the Diagnostic and Statistical Manual (DSM-IV), Washington, DC:
American Psychiatric Association, 1994 4th ed, category 299.00. 2.
See http://isnt.autistics.org/ for
an analysis of “neurotypical disorder,”
which affects 9625 out of 10,000 individuals. 3.
See, for example, Attwood, Tony. 1998. Asperger's
Syndrome: A Guide for Parents and Professionals (London ;
Philadelphia : Jessica Kingsley Publishers). 4. A more complete list can be found in many
places. Mine is based on a web-page of by the Los Angeles-based United Autism
Alliance (http://www.unitedautismalliance.org/knowledge/).
5.
See “What is AS?” at http://www.udel.edu/bkirby/asperger/.
6.
In reality, she said that “there is no such thing as society. There are
individual men and women, and there are families.” (See http://www.cooperativeindividualism.org/thatcher_society_and_responsibility.html) 7.
Contrary to this assertion, autistic children, like neurotypical
children, can be very suggestible, absorbing all sorts of attitudes and
preferences from the popular culture. 8.
Despite its lack of conscience, HE
is also not sociopathic or psychopathic since a
person with antisocial personality disorder (to use the up-to-date term)
often exploits society’s mores for his or her selfish aims. This shows
a clear understanding of society that both HE and the autistic
individual lack. 9.
From Stephen M. Edelson of the Center
for the Study of Autism, “Theory of Mind,” at http://www.autism.org/mind.html.
The concept – also used in animal ethology
– was first applied to autism by Uta Frith. 10.
See the “Open Letter From Economic Students to Professors and Others
Responsible for the Teaching of this Discipline” and “Petition
for a Debate on the Teaching of Economics” (from June and July of 2000,
both found at http://www.paecon.net/). 11.
Of course, it is quite possible to describe an ideal world without math, as
in utopian novels. 12.
However, I doubt that very many autistic individuals study sociology or
social psychology, which (as their names suggest) are inherently societal in
their nature. 13.
See, for example, Philip Mirowski and Roy Weintraub. “The Pure and the Applied: Boubakism Comes to Mathematical Economics,” Science
in Context, Summer 1994, 7:245-272. A classic case of Boubakism
is Gerard Debreu’s Theory of Value
(New York, Wiley: 1959). 14.
On the former, see for example, Olivier J. Blanchard and Lawrence H. Summers,
“Hysteresis and the European Unemployment
Problem,” NBER Macroeconomics
Annual, 1986, pp. 15-78. On the latter, see Sumner Rosen, “The
Economics of Superstars,” American Economic Review 71(December
1981): 845-58. 15.
For this vision of competition, see Frank, Robert H. and Philip J. Cook.
1995. The Winner-Take-All Society: Why So Few at the Top Get So
Much More Than the Rest Of Us. New York: Penguin. 16.
Again, see Frank and Cook, 1995. 17.
Critics of autistic economics should recognize the possibility of the rise of
an economics which is totally subservient to these interest groups. 18.
See, for example, Philip Mirowski, 1988. Against
Mechanism: Protecting Economics from Science. Towota,
NJ: Rowman &
Littlefield, pp. 24-5. 19.
This point should remembered by those who confuse the opposition to autistic
economics with left-wing economics, since the generally conservative Austrian
and Schumpeterian schools reject the static conceptions of the orthodox
school. 20.
By coincidence, Dr. Stanley I. Greenspan, the advocate of active social
intervention (“floor time”) is the brother of economist Alan
Greenspan. 21.
For one of my efforts on this front, see “The Positive Political
Economy of Individualism and Collectivism: Hobbes, Locke, and
Rousseau,” Politics & Society, volume 28 number 2, June
2000, 265-304. A draft is available at http://bellarmine.lmu.edu/~jdevine/HLR.html.
__________________________ SUGGESTED
CITATION: ”Efficiency”:
Whose Efficiency?
Richard Wolff (University of Massachusetts, Amherst, USA) I. The concept of “efficiency” common to most contemporary economic theories holds that analysis can and should determine the net balance between positive and negative effects of any economic act, event, or institution. Sometimes, in practical economic applications, this same notion of efficiency refers to “cost-benefit” analysis. A quantitative measure of all the positive and negative effects of an economic act, event, or institution is undertaken to determine whether, on balance, the positives (benefits added up) outweigh the negatives (costs added up). If so, it is judged to be “efficient” and should be undertaken; if not, the reverse holds. Such
a definition and use of the term “efficiency” prevails at both the
micro and macro levels of social and economic analysis. The building of a
factory extension may or may not be micro-efficient. An interest rate
increase may or may not be macro-efficient. At the level of society as
a whole, the institution of a “free market” may or may not be
efficient. This same efficiency concept serves in comparative economics. Two
or more alternative acts, events or institutions are compared as to their
efficiencies. Then, the one that has the greatest quantitative net balance of
positive over negative aspects is designated the “more/most
efficient.” II. Such a concept of efficiency requires and presupposes, in all its usages, a rigidly and simplistically determinist view of the world. That is, it presumes that analysis can and does regularly (1) identify all the effects of an economic act, event, or institution, and (2) measure the positivity/negativity of each effect.1 In sharp contrast, an overdeterminist view of the world renders that concept of efficiency absurd.2 In this view, any one act, event, or institution has an infinity of effects now and into the future. There is no way to identify, let alone to measure, all these consequences. No efficiency measure – in any comprehensive, total, or absolute sense – is possible. Thus, none of the efficiency “results” ever announced, however fervently believed and relied upon for policy decisions, possessed any comprehensive, total, or absolute validity. Overdeterminism undermines the efficiency calculus and
the absolutist claims made in its name in yet another way. When considering
the “effects” of any particular economic act, event, or
institution,” an overdeterminist standpoint
presumes that each of such effects actually had an infinity of causative
influences. The “effects” can thus never be conceived as
resulting from only the one act, event, or institution chosen for the
efficiency analysis. What efficiency analyses deem to be
“effects” of a particular act, event, or institution are never
reducible to being solely its effects. Hence, such “effects”
can not and do not measure the “efficiency” of any particular
act, event, or institution. This too renders the usual efficiency calculus
and the efficiency concept null and void.3 III. It follows logically that all efficiency analyses and results are relative, not absolute. They are relative to (dependent upon) a determinist view of the world, a determinist ontology that presumes unique causes and “their” effects. Efficiency as a comprehensive, total, and absolute concept-cum- policy standard has no validity in and for analysis that presumes an overdeterminist rather than a determinist ontology. IV. To say that all efficiency analyses are relative to a determinist ontology opens the way to a further critique of them. Given their notion of cause and effects, they all necessarily select a few among the many effects they attach to any particular act, event, or institution whose efficiency they choose to determine. No efficiency calculus could ever identify and measure all such effects. What distinguishes one efficiency analysis from another are the different principles of selectivity informing each.4 Usually, one principle of selectivity reigns hegemonic: one set of selected effects is deemed “important” and worth counting while others are marginalized or ignored altogether. These days, economics textbooks teach their readers which effects are to be considered in “applied economic analysis.” This has often provoked criticism. Feminist economists have shown how the hegemonic efficiency calculus has usually ignored the effects that pertain to women, households, reproduction, children, and so on. Likewise, environmentalist economists have shown how the hegemonic efficiency calculus has ignored ecological effects, and so on. All too rarely have such critical economists gone beyond the demand that formerly ignored effects be henceforth added to those selected for inclusion in the hegemonic efficiency calculus. That is, their critique of the hegemonic principle of selectivity has focused chiefly on getting their preferred effects included within the hegemonic set. The same applies to much Marxist work. It seeks to challenge the hegemonic efficiency calculus by showing especially how it ignores all sorts of class effects of economic acts, events, and institutions. Yet all such critics could deepen and strengthen their arguments if they took the next step to challenge the hegemonic efficiency calculus per se on conceptual grounds. The relativism of all efficiency arguments and claims creates vulnerability for them and critical opportunity for those who challenge them. From an overdeterminist perspective, the economy is an object of struggle among historically conditioned social groups. As such groups emerge within the circumstances of their time and place, they develop particular understandings of their problems and devise different programs for their solution. In so doing, they inevitably concentrate on some problems rather than others (and the causes associated with them), conceive and decide among some solutions rather than others, attribute some (rather than others) effects to such solutions, and so on. When formalized into “efficiency calculi,” the different social groups perform them differently: they operate different principles of selectivity in identifying their problems and solutions, their causes and their effects. These groups often clash. Struggles emerge that usually include conflicts over which principles of selectivity will govern the analysis of problems and solutions, which principles of selectivity will be hegemonic in their society and hence in their efficiency calculi. Each group tries to impose its particular principles of selectivity, its particular efficiency calculus, by transforming it into the absolute set of principles of selectivity for all efficiency calculi for all members of the society. In place of contending efficiency calculi there is to be one calculus to which all social conflict is to be subordinated: social conflict is to be resolved by determining what is the efficient policy or program to follow. Advancing their own particular efficiency calculus as if it were the absolute notion of efficiency is thus one form taken by the social struggle for hegemony among contending groups. In today’s world, the hegemony of social groups favoring capitalism is expressed and sustained by their heavily promoted presumption of an absolutist concept of efficiency and by policy decisions legitimated thereby. Not surprisingly, that absolute concept turns out to be their particular principle of selectivity. V. An overdeterminist
critique of efficiency focuses on deconstructing the claim that any one
efficiency calculus – one subset of the countless effects attributed to
any act, event, or institution – has some absolute or socially neutral
validity. There is no single standard of efficiency. Society always displays
different, alternative understandings of and solutions for society’s
problems. Different social groups struggle for their alternative social
programs utilizing an arsenal of weapons that includes, for many, their
respective efficiency calculi. When and where an absolute efficiency calculus
is believed to exist, there one particular efficiency calculus and one
particular group (or set of groups) has established its hegemony over others.
Success in the struggle by those others to undo that hegemony requires
undermining its absolutism as a key component of that struggle. An absolutized efficiency calculus will be used by the
social groups that support it as a weapon to suppress contending social
groups, their social analyses, and their programs for social change.
Social Being as a Problem
for an Ethical Economics
1. Though economic theories, like any other branch of social theory, thrive on the articulation of their own coherence, they subsist in terms of their own contingence. Knowledge is always and everywhere fallible. 2. A social whole can be cut across in many ways, by an economics of aspects of economy that grasp elements of the diversity of the socio-economic experience and its processes, and by other forms of social theory that take as their remit and object some other problematic. 3. A social whole is open-ended and thus incomplete, no economic theory can totalise what is not total. Its object, the economy, is human, historical, conditional and transitive. The
challenge for heterodoxy can be located in terms of these axes.
Metaphorically speaking they constitute a commitment within which heterodoxy
can be grid-referenced as an ensemble of theories bridged by a family
resemblance that leaves open the possibility of corrigible dialogue and
commensuration. This too is a hallmark of a social scientific method,
for what else is progress to be in economics?
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