“The social power, ie the multiplied productive force”, wrote Marx, appears to people “not as their own united power but as an alien force existing outside them, of the origin and end of which they are ignorant, which they thus cannot control.”
I was reminded of this by a fine passage in The Econocracy in which the authors show that “the economy” in the sense we now know it is a relatively recent invention and that economists claim to be experts capable of understanding this alien force:
As increasing areas of political and social life are colonized by economic language and logic, the vast majority of citizens face the struggle of making informed democratic choices in a language they have never been taught. (p19)
This leads to the sort of alienation which Marx described. This is summed up by respondents to a You Gov survey (pdf) cited by Earle, Moran and Ward-Perkins, who said; “Economics is out of my hands so there is no point discussing it.”
In one important sense such an attitude is absurd. Every time you decide what to buy, or how much to save, or what job to do or how long to work, economics is in your hands and you are making an economic decision.
This suggests to me two different conceptions of what economics is. In one conception – that of Earle, Moran and Ward-Perkins – economists claim to be a priestly elite who understand “the economy”. As Alasdair MacIntyre said, such a claim functions as a demand for power and wealth:
Civil servants and managers alike [he might have added economists-CD] justify themselves and their claims to authority, power and money by invoking their own competence as scientific managers (After Virtue, p 86).
There is, though, a second conception of what economists should do. Rather than exploit alienation for their own advantage, we should help people mitigate it. This consists of three different tasks:
- We should help people make better decisions for themselves. This needn’t consist of “nudging”. We might do it by increasing their information. Or we might do it by warning people to avoid the most common errors of judgment. This is what I do in the day job. By this standard, Martin Lewis is one of country’s leading economists.
- We shouldn’t engage in futurology. That’s the job of soothsayers, necromancers and charlatans*. Instead we should help build resilience to shocks. At the individual level, this consists in helping people to make choices, such as in building well-balanced portfolios. And at the social level it means helping to build institutions which allow people to bear risk: this can be private insurance markets as well as a welfare state.
The difference between these two conceptions has been highlighted, inadvertently, by Jeremy Warner. He says economists have had a “terrible year” because their warnings of a Brexit shock were wrong. Maybe, maybe not. But this allegation only applies to economists as priests. In our second conception, economists have had a good year. For example, most actively managed UK equity unit trusts have under-performed trackers, which supports our longstanding advice in favour of passive management.
I should stress here that the distinction between economists as priests and economists as dentists is separate from the heterodox-orthodox distinction. Orthodox economics, when properly used, can both serve a radical function and help inform everyday decisions.
You might object here that my distinction is an idiosyncratic one. Certainly, economists as dentists earn less than economists as priests: I know as I’ve done both. But there are reasons for that, which have little to do with economists’ social utility.
* OK, I do it sometimes – but only to keep my editor happy.