Performativity in policy

John Kay writes:

The contrast between the work of the [Roskill Commission in 1968-71] and the dismal quality of the material supporting the proposed new high-speed rail link to Birmingham is a measure of how far standards of evidence in policy making have declined.

Good judges share his lamentation about policy formation. And this is not a partisan issue; look at Labour's drugs policy, for example.

However, on the other hand, most of us would agree that, in important respects, economic policy is better now than it was at the time of the Roskill Commission, when we had prices and incomes policies, fixed exchange rates and an industrial policy that obsessed about British Leyland.

This raises a paradox. How can policy-making be both better and worse than it was 40 years ago? Here's a suggestion (only that). It's that the "neoliberal" turn in politics has two adverse effects:

1. If you believe markets know best and that centralized information-gathering is bound to be a deeply flawed process, then you'll invest less effort in it, or be sceptical of the product of doing so. Cost-benefit analyses will then be founded upon flimsier evidence, or won't carry much weight even if it is.

2. The increased belief in consumer sovereignty and decline in faith that "the man in Whitehall knows best" (to which "Nudge" economics is the counter-reaction) has devalued expertise. If politics is about giving voters what they want, you don't need experts and evidence, but just pollsters and market researchers.

In these senses, "neoliberalism" has had some performative effects upon policy. It doesn't just describe the world (whether well or not is another issue), but helps to create it.

Comments

[john b]

His slating of the work done by HS2 Ltd is bizarre, unsourced and completely incorrect, undermining what would otherwise be an interesting piece about evidence versus lobbyists.

[Will Davies]

Ah, you're slowly succumbing to our mad postmodern constructivist ways! This is a prized scalp indeed!

There is also a very perplexing feature of 'neoliberal' expertise, which is that it constantly flips between trusting markets and trusting economics. The former is the Hayekian sceptical strand, while the latter the more American positivist strand. But often the two become mingled in very confusing ways. However, the fact that some markets (i.e. financial markets) are only possible thanks to the constructs of economics, means that the performativity issue becomes impossible to ignore, as Donald MacKenzie's work shows.

[Tim Newman]

"If you believe markets know best and that centralized information-gathering is bound to be a deeply flawed process, then you'll invest less effort in it, or be sceptical of the product of doing so."

Huh? Centralised information-gathering is pretty much a pre-requesitie to partaking in free markets. How else do you know which products to market to which customers? You don't get much more neo-liberal than the modern supermarkets, and they spend millions on market research and information gathering.

The difference is that companies carry out market research and gather information in order that they know what to do next. Perhaps even politicians did this once. But nowadays, politicians gather information in order to support what they have already decided and are therefore highly selective in what they consider.

[chris]

@ Tim - true. But that just shows a point I've made many times - that companies are generally fundamentally anti-Hayekian, as they do believe in the merits of central planning and info-gathering.

[Rob]

Chris, surely a Hayekian wouldn't believe it to be necessary for market participants themselves to be Hayekian, so long as the system they're operating in is? Tesco can try all they like to believe that their central prediction of customer purchasing trends is the ultimate truth, but if they're wrong then they'll find out pretty quickly when their sales and profits fall. They're anti-Hayekian because they're trying very hard to beat Hayek, which is pretty much what every businessperson is trying to do.

It could be that the government lacks such incentives - what's the worst that can happen to a government minister getting something wrong on, say, HS2? The current government is on its third transport minister in three years anyway, and close association to HS2 has done Philip Hammond's career no harm. The government's anti-Hayekianism is simultaneously fundamental to the mindset of a government minister, but also half-hearted because they know that there's no competitive pressure. Put another way, why should a minister try really hard to make sure the details add up when nobody will notice anyway?

(OK, I'm not sure I believe what I just wrote. But it's not inconsistent with the data points in the original post, it just relies on very different mechanisms).