An expression that I coined in recent years is “If you want solutions to the economic crisis, don’t ask an economist” (it hasn’t caught on, in case you werere wondering). All humour aside, there is a much deeper point behind this rather facetious statement. Six years after a massive finance crisis and we have not attempted in any way to move away from the dogmatic neoliberal policies of free market economics.
Why? What is it that has to happen before we seriously start looking for solutions? Another crash? Perhaps more? What’s even more worrying is that in such a time of crisis, one would hope that soon the next generation of economists would be able to take to the stage with new ideas and a fresh perspective. Think again.
Now I do not study economics but I do know people that do, and from what I can tell it does not appear be the most fluid of subjects. For example, I was once discussing employment with one of my friends and he said that we could never have full employment, because there is this graph that says if we do the sky will fall in (or something like that). My first reaction to this was why? Why is it that there is this higher power dictating how our society is structured? Economies are not like molecules, they do not have a set structure. Surely there are plenty of ways we can manipulate these systems to achieve what we want from them?
Often I find this is not the way economists think. It seems that these ‘rules’ dictate policy, in some cases social as well as economic, rather than the other way round. Even six years after the finance crisis The Guardian recently reported that not one of the Russell Group universities teaches the crash in any depth. Basically, economists seemed to be carrying on like it never happened. They seem to be acting as if their discipline is not fundamentally flawed, when it clearly is.
Take, for instance, the new book by Thomas Piketty: ‘Capital in the 21st Century’. It is a deep look into inequality over the past three decades in a number of countries. What makes this book perhaps one of the most important of its kind is the focus on the data. Thomas Piketty himself has said that he finds American and British economics focus too much on mathematical modules abstracted from reality and not enough on empirical data. In a sense, Economics is becoming detached from its social scientific roots. It is pretending to be a science when it isn’t.
The lack of accepting the flaws and facing up to them in the field means that students studying Economics will be ill-equipped to deal with the problems in the future. As a critic of neoliberal economics myself, I often hear that I ‘don’t know what I am talking about’ and that ‘Thatcherite economics is just accepted now’ and, to me, nothing is more worrying. This lack of engagement with alternatives can only be a bad thing.
Whatever you believe about free market neoliberal economics you cannot argue that the theory has not matched the reality. What we were promised by Thatcher in the eighties has not occurred. Furthermore there is a much deeper point that our current economic thinking seems to be vastly ill-equipped to deal with some of the biggest issues we face in the current century: climate change, overpopulation and food shortages, to name a few.
Economics needs to return to its social scientific routes. It must engage with the reality on the ground rather than obsessing over speculation and mathematical models. Students need to learn to think out of the box rather than be trained to follow rules presented as scientific fact. Only then will we train the next generation to be able to effectively deal with the problems the world faces.