Cover Photo: University of Colorado at Boulder, Faculty of Economics (public domain)
Volume 1, Number 1: September 2018 | Editorial
Among academic economists the discipline of economics is assumed to be value-neutral, yet still a social science. To understand why this is misleading comes from an understanding of history and how economic ideas evolved. What is economics? What many modern students of economics may not understand is that economics was originally – and some would argue still is – a branch of moral philosophy which deals with questions of right or wrong, good or evil, and better or worse. Today, these issues are mostly addressed in what is known as normative economics, but the framing of the normative analysis is based on a biased set of underlying values and assumptions that are often not subject to debate. It is important to subject these values and assumptions to scrutiny and, hence, this is why history and philosophy are important for understanding economics if the discipline is to serve the greater needs of society rather than the narrow interests of those who are dominant within the economic system.
Around the middle of the twentieth century, there was a shift in the academic discipline. Prior to World War II, economists were seldom sought for policy recommendations. Some have argued that this was due to a lack of a “concert of opinions,” which is understandably difficult in such a philosophical discipline. It was under the state-sponsorship of the United States, within the Cold War context, that economics became part of the war effort by developing a unified set of analytical tools and by focusing on greater mathematical rigor. The trade-off involved sacrificing some valuable insights in favor of tractable models. This introduced a subtle bias into the discipline – economic conclusions were taken seriously only when presented in a mathematically rigorous fashion.
This bias was reinforced when top journals made it standard that, in order to be published, an article must be mathematically rigorous, with a few exceptions. This conscious effort is evidenced by the flagship journal of the American Economic Association, The American Economic Review (AER), when they declared that they would no longer publish articles in the less rigorous fields of history or philosophy. This is significant, because these are two areas that are the most likely to offer criticism of the direction of the discipline. So what happens is that a certain value system becomes institutionalized and protective barriers are erected. Anyone who wishes to become recognized in the field will aim to publish in the top journals, so they will not spend much time researching and writing on topics that will not be recognized by the top tier.
Is it important for economics to be taught within the context of history and philosophy? It depends what the goal of economics education is. If the goal is to use economics to promote the current economic system, then it makes sense to abstract from value questions in teaching because the underlying values are already built into system and the mainstream economic curricula. If the goal is to use economics to help society, then it is important for a number of reasons.
If people do not understand the historical context, then simple facts can be used to push an ideological narrative with the supposition that the narrative is non-ideological. The illusion of ideological-neutral positions is an effective strategy to promote the interests of those with power in a given hierarchy, because it discourages debate. One should always try to identify power hierarchies and recognize what role a given institution plays in the broader system, because power is most effectively wielded when it is not exposed. It is important to view history from as many perspectives as possible, since those with power will use their resources to suppress elements of the truth if those elements are deemed as threatening to their position. While those seeking to undermine power could push a completely opposite narrative, who is to be trusted? This is why critical thinking is important, because the truth is often not in plain sight. It must be inferred using one’s best judgment. A good question to ask is why should history be marginalized within the discipline of economics? Is it because it is not important to economic analyses or is it because knowledge of certain historical context could expose existing power hierarchies?
Embracing our discipline’s philosophical roots is important because it keeps us, as economists, coming back to the questions of what do we, as a society, really value and what is the ethical foundation upon which we construct our social norms and public policies. Adam Smith’s most recognizable contribution, along with his exposition on division of labor, has been used to promote self-interested behavior and free markets. These ideas form the ideological foundation of many right-wing think tanks – some even borrow his name. However, Smith’s philosophical contributions go much deeper than that. Unfortunately, many are unaware of these other ideas, because many have not read Smith directly and these other ideas are not often discussed, if at all. Smith understood that a properly functioning market system is one in which society’s lowest members see a maximization of their benefits. He was also deeply suspicious of merchants and manufacturers. On the one hand, he celebrated capitalism as the most effective system of wealth accumulation, while on the other hand he was pessimistic about the dehumanizing potential of industrial society. Smith’s Wealth of Nations is comprised of five books, but the first two are the most referenced. Many editions only published some of the books of this original work. Book 5 is the longest and makes up almost twenty-five percent of the Wealth of Nations, but is the one most often omitted from publications. Why? Here he goes into legitimate roles of government expenditure. Does this contradict the narrative of free market and limited government? Some would say, yes. In book 4, he argues against colonialism and empire. This potential omission could be important for understanding a global economic system, which is led by a military superpower with over 800 bases in some 80 countries all across the world.
Economics should not just be about understanding how humans behave and why they behave the way they do – this is known as positive analysis. Economics should be focused on the normative prescriptions of how to manage the household in a sustainable and inclusive way. With a strong foundation in critical thinking and a clear understanding of the analytical framework which shapes our evaluative criteria, students of economics could use their understanding to help develop and promote institutions that will serve the needs of the lowest in society, while also promoting a healthy and just society for all. The problem is that within the current system, it does not do an effective job of rewarding socially beneficial contributions. It does, however, in many ways compensate people handsomely for socially destructive behavior. If economics continues to promote the current system as the best that society can achieve, and extinguish critical discussion about improving its institutions, then it may seem ironic, but operating within a capitalist system, economics in many ways has been promoting uneconomic behavior.
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