Source Direct: Dismal Science

When it suits, we defer to those dismal Laws of Science. When it doesn’t, we are contemptuous of these same “scientists” as naked ideologues. But economic science is a flawed discipline.

SEVERAL WEEKS AGO, a report by the LSE’s Centre for Economic Performance appeared to pour cold water on the prospects for Scottish autonomy. The headline figure suggested the mixture of independence and Brexit could reduce incomes by £2,800 per person. Predictably, the usual suspects made routine responses and nobody appears to have changed their minds.

Rather than respond directly, I instead want to reflect on how these forecasts are processed. Economic science has a peculiar impact on politics. Consider the following. A Labour leftist will cite economic forecasts to suggest that Brexit or Scottish independence would herald the apocalypse. Science says so! Yet when those same “scientists” made similar claims about, say, John McDonnell’s plans, that is because economics is a nasty, neoliberal profession.

The same is true in any part of this ideological triangle. Brexiteers greet economic forecasts about leaving the EU with a cavalier snort – who needs “experts” anyway? But if “experts” make similar claims about Corbynomics or independence, that’s quite another matter – as Mrs Thatcher always said, “loony leftism” will be an economic disaster.

And a section of Scottish nationalists, naturally, play the same game. Many spent years playing Cassandra over Brexit or sharing reports that dismiss Corbyn as a communist maniac. When those same authorities monger doom about Scottish independence, well, isn’t that just proof that academic economics is tainted by unionist ideological bias?

When it suits, we defer to those dismal Laws of Science. When it doesn’t, we are contemptuous of these same “scientists” as naked ideologues. The familiar interpretation of these behaviours is that political bias taints interpretation of Economic Fact. That may be true, but not in the way people suspect. Indeed, in many respects, Brexiteers, Corbynistas and Scottish nationalists are all correct to defend their respective causes from the doom-saying of academic economists. Economics may not be a unionist, a Europhile or even (necessarily) a neoliberal profession. But naked ideology is in the DNA of the discipline’s orthodoxy.

It is easy to detect the underlying commonality between all these forecasts, whether on Brexit, Corbynism or Scotland. Economics tends to imply, as it has done for decades, that any democratic control over the forces of production, distribution and exchange will inevitably spell disaster. Since the eighties, the discipline has functioned largely to sell this story. It has been handsomely funded for doing so, because the story is convenient both for wealthy elites and for politicians, who declare themselves powerless to buck market forces and change things for the better.

Naturally, all negative economic reports will provide a caveat. Of course, the authors will say, we would never “tell” citizens what to do. That is their own free choice. Our role is merely to advise based on the disciplinary techniques built up by our profession…And, to be clear, I have no doubt they sincerely believe this, because that is precisely how ideologies function. Then again, if citizens do consider putting democratic control above economic authority, the claws come out. Alarmism ramps up. The “generous” deference to citizen opinion becomes heavily qualified.

The basic problem here transcends Scotland, Brexit or the Labour Party. It consists in this. For a generation, economic technocrats have effectively overridden democracy to prescribe a necessary, all-purpose model of free markets, free trade and economic “openness”. This was all combined with hysterical invective against any democratic control – and a reduction of democratic behaviour to the marketplace. And you can’t buck the market. As Margaret Thatcher said, there is no alternative. As Tony Blair said, trying to change globalization is like trying to change the weather.

Today, we are living with the results. Social services on their knees against a pandemic. Ecosystems and a planet on the verge of irrevocable changes. Democracy effectively abandoned, save for hysterical movements for and against populism based on rampant distrust and conspiracy theories on all sides. Vast inequalities. Decades of economic stagnation. All prescribed by the model social order to which academic economists would like us to return.

Conversely, I find something a little inspiring in Scottish independence, Corbynism and even Brexit. In all these cases, vast groups were willing to put their desire for democratic control above the authority of economists. And, at some stage, that spirit of citizen defiance will be necessary to raise our failing states out of decades of malaise.

Science matters. And naturally people want to mobilise scientific authority to their side. But a true economic science must take account of history and politics, as even Adam Smith would have done. And, as citizens, we have to reckon with the undeniable collapse of a generation of academic authority. Uncritical deference to the dismal science is no longer an option.