The Problem With Economics

Imagery provided by Joanne Theaker

Imagery provided by Joanne Theaker


Writing in1820, Nassau Senior commented that the new science of economics, as it was then, "will rank in public estimation among the first of the moral sciences in interest and utility". When a discipline becomes so influential there is a tendency amongst some to claim more than the discipline can offer. Even Milton Friedman had to admit in 1972 that "I believe that we economists in recent years have done vast harm to society at large and to our profession in particular - by claiming more than we can deliver.”  Nevertheless there is a positive attribute in being so influential insofar as the pressure on economists to find solutions has often been far greater than that on other social sciences. Thus there has been a major motivation to explore new areas, and economists may be the one social science that is in a position to suggest and effect possible solutions. In the light of this there has been many new developments in economic theory. Some of these developments, outside of mainstream neoclassical analysis, have come to reflect an ecological awareness and social awareness based on holistic notions of the world. Mainstream thought in economics has concentrated on specific relationships, such as that between money supply and inflation or aggregate demand and unemployment. However, it is rare to find any discussion on what man's fundamental relationship to money is and how this may affect individual and societal demand patterns for example. Mainstream economics has succeeded to date in largely ignoring man's relationship with the physical planet on which he lives.  But even more fundamentally, economic thought has failed to consider the nature of man's psychological make up, especially in the light of now clear understandings of consciousness coming out of the psychology and neuroscience community.

However, this view may cause some psychological disturbances within the minds of economists themselves. Having become an incredibly specialised branch of people, having a language all of their own, economists have personal interests at stake here, not least their jobs: Economists' power has been gained by their claims to being scientific. In the scientific orientated society we live in the claim has become the key to acceptability. Consequently in 200 years of the history of economics change has been slow. Galbraith has pointed out that "familiarity may breed contempt in some areas of human behaviour, but in the field of social ideas it is the touchstone of acceptability.”   Galbraith goes on to introduce the notion of Conventional wisdom to describe this process. As time passes conventional wisdom, aided by debate, becomes increasingly elaborate and attains, what Galbraith calls, an almost mystical quality. This forms the ultimate line of defense for conventional wisdom. Defenders of conventional wisdom are able to refute attackers by arguing that they have not mastered their intricacies.  Insofar as they have failed to do so they are not good scholars.  So conventional wisdom becomes the yardstick of what is to be recognised or not. There remains however one 'enemy' that even conventional wisdom cannot withstand. "The enemy of conventional wisdom is not ideas but the march of events."  Thus when reality unkindly contradicts our notion of what is right we are forced eventually to change our attitudes. There can be little doubt that economics now faces such a crisis. Problems of mass poverty, unbalanced disposition of non‑renewable resources, have slowly forced economists into a corner.

Lynn White Junior in his thesis 'On the Historical Roots of Our Ecological Crisis' traces these roots to the mainstream Judeo-Christian tradition in western culture (as opposed to the often less reported spiritual traditions of Christianity). In these beliefs he feels lies the essence of the deep psychological division between man and his environment.  At this early level of the development of western science the interconnection between religion and science is indeed strong even on the surface. From the 13th Century every major scientist including Liebritz and Newton explained his motivation in religious terms. It was not until the 18th Century that the concept of God was dropped by many scientists. However modern western science was cast in the matrix of Christian theology.

This notion of viewing the development of science from the point of view of its underlying value system was most notably adopted by Mex Weber. In his thesis on protestantism and the rise of capitalism, the development of the capitalist mentality came from the religious idea of a 'calling'. Thus it became the way of achieving God's grace ­by working hard. Weber showed us how religious attitudes were projected into the secular world. In this vein much has been written since. Lynn White Junior follows in this tradition as does K. Boulding, 0! Riordan, Black, Swift and Harris.8 O'Riordan asserts that man and nature are separate entities - the concept revolves around "part of man's seemingly infinite capacity to rationalise in his ability to fix blame, preferably on people or forces beyond his control."

This division can certainly rarely be seen more clearly than in mainstream economic thought where bigger is closer to better; equal to equitable; goods sound good; disequilibrium sounds uncomfortable; exploitation sounds wicked; and subnormal profits, rather sad.  The discipline is full of undefined hypnotic nominalised language forms rather like a cult might be.   Economists are beginning to realise that they have built a rather elaborate edifice on rather insubstantial, narrow foundations.  "A man with a hatchet in the middle of Amazonia can, for a very long time, cherish with impunity that the forest goes on for ever, that it is infinite. If he is joined however by hordes of people, all of whom are equipped with the latest and most sophisticated bulldozers, it will not be long before his notion of the forest will be found wanting and its fundamental flaw exposed." [Kenneth E. Boulding].  Alan Coddington goes on to say, "economic growth has rendered many things obsolete and one of the things is economic theory.