Towards a heterodox and reflexive economics
After the 2008 financial crisis, the call for a more heterogeneous approach to studying and teaching economics intensified. But how can heterodoxy take up a more prominent place in economic science? A Cultural Anthropologist offers three suggestions.
From orthodox to heterodox
Even before the financial crisis, there was dissatisfaction regarding the way economists viewed, and taught about, the world. In 2000, French grande école students united in protest against the economics education they were receiving. They took objection to what they called the autisme-économie, believing that more attention should be devoted to pluralism. Since the financial crisis, the call for a heterodox economics has intensified. In 2009, with a donation from George Soros, the Institute for New Economic Thinking was founded because ‘Traditional economics is failing us’.
In 2013, economics students at the University of Manchester protested against the education they were getting, and they founded the Post-Crash Economics Society. Economics students from eleven other European universities have established local movements and joined the Post-Crash Economics Society. A few years ago followed the establishment of the International Student Initiative for Pluralism in Economics in which 31 countries participate, including the Netherlands’ Rethinking Economics NL. What follows here are three suggestions for how heterodoxy can take up a more prominent place in the way economists study and teach about the world.
Economists are very good at developing classifications. They devote a great deal of attention to the definition of the populations studied, describing with precision what, for example, a household is, or delineating what is or is not part of the national economy. These precise definitions and classifications are very important to economists because they are necessary for making comparisons, and in turn those comparisons are necessary for explaining something. If, for instance, you want to compare countries in terms of household income or inequality, it is important to use the same definition in all cases. This research approach is similar to how money works. For orthodox economists, each value must be expressible as another value.
The consequences of this way of defining and classifying are profound. The definitions and categories that economists develop and use are tied to specific political and ideological values. The definitions are usually legal categories that are embedded in our legal system, or in a specific political history. By using those definitions, you also incorporate that legal and political context in the research. The research can then become an extension of the legal or political context in which those categories originated, and can blind us to processes associated with categories which do not have this legal or political embedding.
I’ll give an example of the definition of the household (see for example the definition from Unstad). Though the term ‘household’ seems self-evident and neutral, it is not. It arose out of a specific European history, and that gives it a specific meaning that is not universal. Anthropological research reveals that the household is not serviceable for all cases. If you want to know, for instance, how children are cared for or how people spend their money, it is much better to investigate extensive social networks and volunteer organizations (see for example Bähre, 2007; Laughlin, 1974; Sharp and Spiegel, 1985). But the household just happens to be a major legal category—the state has very little knowledge of volunteer organizations—and that is why economists all too automatically incorporate the household in their research.
For a heterodox economics it is essential to call into question the universality of the definitions and classifications being used. To take diverse phenomena and classifications and make them uniform is a form of symbolic violence. It is not easy to stop this symbolic violence because stopping it contests the basis for the comparison, which in turn challenges economic explanations. If one uses heterodox categories, one can rightly wonder what can be compared and which conclusions one can draw. These are major intellectual challenges for a heterodox economics, yet to me it seems better to face that challenge than to try to make apples into oranges.
Out of the methodological black box
Economists wrestle intensively with a number of specific methodological problems, especially problems having to do with determining causality and representativeness. When it comes to the way data are collected – say, in the course of research – there appears to be a black box. I find it remarkable how little is known about research practices, and perhaps how little interest there is in them, considering that data collection is truly crucial. It really does matter how these researchers are trained, how they are paid, and what relationship they have with the people, businesses, or institutions they are investigating. This can be important even if there is no personal relationship, if only because research subjects have their own ideas about who the researchers could be and what their motives are.
Here is an example from my own research. When I began my fieldwork in the Cape Town township of Indawo Yoxolo, the residents were fairly clear on who I was. People were convinced that I was a police officer, development worker, or bailiff. Although I often told them who I actually was – a researcher from the Netherlands – people kept classifying me in those three categories. That is understandable, given the fact that the residents’ experiences with white visitors had been confined to those three groups. Only after quite some time and many introductions did people adjust their ideas, and that resulted in people telling or showing me different things.
Another example: at first I worked with a research assistant who helped me with translation and was responsible for my safety. I noticed that, during fieldwork, he often walked with one leg straight, so I asked if he was having trouble with his knee. He responded that he walked that way deliberately, hoping that residents would think he had a gun in the leg of his trousers. I was fortunate to discover this, and eventually I continued my work with a different research assistant. The second assistant, however, had a conflict with political factions, which also had an influence on the research (see also Bähre, 2007 and 2015).
These methodology issues are not to be dismissed as anecdotes told in a café, or as mere strange anthropology stories. These kinds of research circumstances are essential to the information you are collecting, even when that research takes place in a laboratory (see for example the field of Science and Technology Studies: Latour and Woolgar, 1979; M’charek, 2000; and Mol, 2003). A heterodox economics could bring these research practises into the analysis, and could wonder what the consequences are for the analysis of research data.
The way in which a science develops is partially dependent on the social context of that science. This is certainly true for social sciences such as economics. Societal developments lead to economists asking certain types of questions and developing certain methods that, in turn, have an influence on the development of theory. One familiar and extensively studied example is the political and ideological context of rationality.
The idea that people act rationally is not new; however, after World War II rationality was defined in a specific way as a result of the fear of emergent communism. In 1948 the RAND Corporation was established for the purpose of defending the USA militarily, economically, and ideologically. Scientists working for or associated with the RAND Corporation conducted research that was tailored to the values of liberal capitalism. In that research, terms like ‘solidarity’ and ‘community’ were avoided because those terms could help lend communism scientific legitimacy. The research at the RAND Corporation, and also at the Ford Foundation, established the basis for Rational Choice Theory—now one of the leading propositions in orthodox economics (Amadea, 2003; Mirowski, 2005; and Poundstone, 1992).
Photo: MonicaVolpin (Pixabay)
This political and ideological history does not mean that Rational Choice Theory is utter nonsense, but it is naïve to suggest that it played no role at all. Moreover, this event is not unique. Anthropology research demonstrated, for example, that relations between American elite universities and Wall Street created an environment in which taking big risks was stimulated. This provided a stimulus for new technological developments that increased risk (see Ho, 2009; Luyendijk, 2015; and Tett, 2009).
A heterodox economics reflects on the context in which economics research and education take place. A heterodox economics is dependent on diversity in networks, institutions, customs, and ideologies within which economists conduct research and provide education. A heterodox economics is therefore a reflexive economics which examines the social networks and political conditions of which economic researchers are a part. A heterodox economics reflects critically on the ideological formations of which it is a part, and poses questions regarding what influence this has on the questions that are posed.
Amadae, M. Rationalizing Capitalist Democracy: The Cold War Origins of Rational Choice Liberalism (Chicago: University of Chicago Press, 2003).
Bähre, E., Money and Violence: Financial Self-Help Groups in a South African Township, (Leiden: Brill, 2007).
Bähre, E., “Ethnography’s Blind Spot: Intimacy, Violence, and Fieldwork Relations in South Africa,” Social Analysis: The International Journal of Social and Cultural Practice 59, no. 3 (2015).
Ho, K., Liquidated: An Ethnography of Wall Street (Durham and London: Duke University Press, 2009).
Latour, B., and S. Woolgar, 1979, Laboratory Life: The Construction of Scientific Facts (Princeton: Princeton University Press, 1979).
Laughlin, C.D., “Deprivation and Reciprocity,” Man 9, no. 3 (1974).
Luyendijk, J., Dit Kan Niet Waar Zijn: Onder Bankiers (Amsterdam en Antwerpen: Uitgeverij Atlas Contact, 2015).
M'charek, A., “Technologies of Population: Forensic DNA Testing Practices and the Making of Differences and Similarities,” Configurations 8, no. 1 (2000).
Mirowski, P. “Sleights of the Invisible Hand: Economists' Interventions in Political Theory,” Journal of the History of Economic Thought 27, no. 01 (2005).
Mol, A., The Body Multiple: Ontology in Medical Practice (Durham: Duke University Press, 2003).
Poundstone, W., Prisoner’s Dilemma (Ann Arbor: Doubleday, 1992).
Sharp, J.S., en A.D. Spiegel, “Vulnerability to Impoverishment in South African Rural Areas; the Erosion of Kinship and Neighborhood as Social Resources,” Africa 55, no. 2 (1985).
Tett, G., Fool’s Gold: How Unrestrained Greed Corrupted a Dream, Shattered Global Markets, and Unleashed a Catastrophe (London: Abacus 2009).
This article previously appread on Me Judice. Translation by Diane Schaap.