The Blurb On The Back:
A century ago the idea of ‘the economy’ didn’t exist. Now economics is the supreme ideology of our time, with its own rules and language. The trouble is, most of us can’t speak it. This galvanising book shows us why this is damaging democracy, and what we can do about it.
You can order The Econocracy: On The Perils Of Leaving Economics To The Experts by Joe Earle, Cahal Moran and Zach Ward-Perkins from Amazon USA, Amazon UK, Waterstone’s or Bookshop.org UK. I earn commission on any purchases made through these links.
The Review (Cut For Spoilers):
Joe Earle, Cahal Moran and Zach Ward-Perkins were founding members of the Post-Crash Economics Society at Manchester University. This sobering book highlights how university economics courses almost exclusively focus on neoclassical economics and modelling, to the detriment of other branches, which means that when a crisis hits, economists are poorly placed to explain why or to realise the impact their policies really have on ordinary people.
The first thing that becomes clear in this book is that it’s very much a generational affair. The authors were all reaching university at or around the financial crisis of 2007 and because it was such a huge event in the world and had such hard-hitting ramifications for everyone, they chose to study economics in the hope of understanding better what had happened. This is important because although there were economists who questioned the prevailing economic opinions in the run up to the crash (e.g. Nouriel Roubini) they were very much outliers who were disparaged by the economics establishment. One thing that gives me hope for the future is how “Millennials” like Earle, Moran and Ward-Perkins have seen what happened and used it as a reason to question establishment thinking in a way that older people are not able or willing to do.
The book’s starting point is that economics isn’t something that can be left to economics experts. The authors make a good case for showing how economics as a discipline has gradually moved in to dominate political discourse and governing opinion even though economists aren’t really able to consider the impact of what they’re talking about beyond a set of criteria that have a greater impact on people than they really understand. The authors also make a good case for showing how while the public has bought into the fact that “the economy” as a concept is important, they don’t really understand what it is or why it’s important. I hold my own hands up to that. We constantly hear how increasing GDP is good and public debt is bad but before I started reading more books about economics, I didn’t really understand why that was the case and a poll commissioned by the authors demonstrates that most ordinary people don’t get it either.
The authors then go on to show that economists can be remarkably close-minded in their thinking, focusing on existing models and failing to really acknowledge when those models go badly wrong (e.g. the financial crash). They also explain how economists fail to consider why economics policies may have a disproportionate impact on ordinary people, e.g. the focus on increasing GDP and lowering unemployment doesn’t take into account the impact of moving to insecure ‘gig economy’ jobs or the corresponding impact that unpredictable income has on consumer spending or personal debt. The impact of this is that ordinary people become disillusioned with the so-called expertise of economists, which means that they are reluctant to listen to their advice when it comes to making political decisions, e.g. the EU referendum in the UK.
The real value in this book though comes through how they demonstrate that a lot of the failings in how economists think and behave comes from the fact that economics degrees in the UK are remarkably narrow in terms of their curriculum. I was genuinely shocked by the authors’ revelation that the majority of Russell Square Group universities in the UK run courses almost completely dominated by neoclassical economics theory and modelling, with a focus on multiple choice answers and running models successfully rather than questioning theories or bringing other elements of economics theory into their analysis of a specific economic problem. As a result, students come out of university without the tools they really need to analyse, question and apply their chosen discipline.
What’s worse is that the authors then demonstrate how universities are essentially encouraged to do this because of the way research is evaluated (the scores for which can effect how funding is allocated) while the demand for economics students in high-paying jobs such as at financial institutions, means that you end up with a self-perpetuating group-think that disincentivises thinking outside the box or questioning the status quo (something that’s not helped by the focus on ranking universities according to average salaries on graduation). In fact, the pressure on students to get a good job after university coupled with the high value of student loans thanks to the introduction of tuition fees and abolition of student maintenance grants means that they many don’t want to rock the boat and will take the core courses and keep their head down.
I thought that Earle, Cahal and Ward-Perkins made some interesting suggestions for how economics curriculums could and should be changed and I also welcomed their suggestions for how the public can be encouraged to engage and understand economics more (e.g. by getting universities to open up out reach sessions to local communities). I also thought that they were very candid about the difficulties in keeping student pressure up on universities to change and how groups like Rethinking Economics have to work to make contact with other international groups. For those who question their analysis of university curriculums, they set out their methodology in an appendix at the back.
All in all, this is a tightly written book that’s pretty easy for a non-economist to follow and which makes pertinent points about the study and application of economics as a discipline. It’s certainly opened my eyes to issues with the discipline and I think that if you have any interest in the subject at all, it’s an excellent starting point.
Thanks to the Amazon Vine Programme for the review copy of this book.