Can Heterodox Economics Make a Difference?: Conversations With Key Thinkers, by Phil Armstrong, Published by Edward Elgar (advertised publication date 27 Nov. 2020, hardcover) https://www.e-elgar.com/shop/gbp/can-heterodox-economics-make-a-difference-97
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The book follows from my PhD primary research programme and my reflection that, on the face of it, the ability of mainstream economics to survive the global financial crisis with its hegemony seemingly intact is quite surprising. The profession claims to be essentially positivist in approach. They have described their own practice as consisting of developing theory on the basis of a priori assumptions about human behaviour. According to the received view, this theory, in turn, allows the profession to develop models which are essentially machines for generating empirically testable predictions. According to their own description of their method, these predictions are potentially falsifiable. However, examination of the reality of mainstream responses to apparent contradictory evidence suggests that they do not practice what they preach. Despite extensive empirical contradictions of their predictions, the profession has, to all intents and purposes, rejected the idea of falsification. Instead they have resorted to ad hoc modification and the widespread use of ‘immunizing stratagems’. From a Popperian standpoint the economics profession has been guilty of ‘bad science’. Such bad science might be considered as being typified by using the ceteris paribus clause as a ‘get- out’ clause without any convincing description of the counteracting mechanisms which might explain actual outcomes.
The behaviour of the profession certainly lends support to a Kuhnian view of science. Kuhn describes how a significant level of collective resistance to apparent contradiction is only to be expected. The question becomes ‘does our understanding of the real structures and mechanisms of the economy provide a rational basis for mainstream tenacity in the face of contradictions?’ I would argue that this attitude is unjustified and there is little or no rational basis for the retention of the NCM ‘paradigm’. When considering why this situation persists, a clue to one aspect of a possible explanation might lie in the fact NCM profession places such emphasis on consensus and believes in a ‘monoculture’ (of deductivist methodology, methodological individualism and the use of formal mathematical modelling). In such an environment, alternatives are unlikely to get a fair hearing. This issue is important if we agree with the view expressed by both Kuhn and Lakatos; namely, that scientific progress occurs when one theory or group of theories (such as a Lakatosian Scientific Research Programme) are replaced by a competitor. For this to have a good chance of happening, alternatives would have to be at least considered as feasible replacements and the possibility of such an eventuality occurring taken seriously. In any profession the existence of these circumstances requires the support of academic freedom. By this, I mean that although one ‘paradigm’ may be dominant, other approaches are at least allowed to co-exist and its advocates have fair access to influential positions and have their work published in prestigious journals.
To uncover the reasons for the apparent ability of mainstream economics to resist falsification, an understanding the sociology of the economics profession is required. I would argue that the absence of academic freedom (Bilgrami 2015)[1] has insulated NCM from heterodox criticism, in turn, allowing a ubiquitous formal mathematical deductivist methodology (Lawson, 1997)[2] to persist. A strong free-market bias has become ingrained in orthodox economics accompanied by support for unfettered markets and a corresponding criticism regarding the efficacy of government intervention. Such an approach has garnered significant support for orthodoxy from outside the academy, notably from business and financial interests which has further undermined the potential impact of criticism and reduced the possibility of paradigm change (Chernomas and Hudson 2017)[3].
In a series of in-depth interviews with leading economists from different schools; Austrian, monetarist, new-Keynesian, Post-Keynesian, Modern Monetary Theory, Marxist, Sraffian and Institutionalist as well as policy –makers, the book aims to examine the behavior of economists and the sociology of the economics profession by enabling economists to express their views on a wide range of issues. The interviewees are first questioned about their specialisms and the key issues relating to their fields, the importance of history and the role of mathematics in their work. The questions then focus upon the nature of money; the views of the interviewees on credit and state theories of money and the endogenous approach to money are established.
The interviews move on to consider the respondents’ views on whether the global financial crisis (GFC) provided significant evidence to contradict the expectations of NCM and the extent to which the interviewees consider that the mainstream has maintained its hegemonic status, post crisis. Following on from this, the interviews aim to establish economists’ opinions on heterodox economics, whether is it feasible that heterodox economics, in any form, might mount a challenge to the mainstream paradigm in the foreseeable future and to assess the extent to which different heterodox schools possess sufficient commonality and complementarity to allow the adherents to these different approaches to work together as part of a coherent alternative. The author goes on to establish the extent of the interviewees’ knowledge of MMT and whether they consider MMT’s conceptualisation of the monetary system to be valid.
The interviews then delve deeper into potential for cooperative work within heterodoxy and the respondents are asked about their opinions of the value of pluralism in all its forms and if it can be taken too far. The respondents are asked to consider the extent to which heterodox economists work within a community as opposed to within their own schools and, looking deeper, the feasibility of a heterodox paradigm. In the second round of interviews the methodology specialists are asked about their views of critical realism (CR), which heterodox schools (if any) they consider to be compatible with CR and what role, if any, they consider CR might have in ‘under-labouring’ a heterodox paradigm. The interviews draw to close by focusing on the importance of education, especially the benefits of a more pluralist economics curriculum and a consideration of the positive and negative factors which the interviewees consider to be likely to influence the likelihood of change in economics.
I believe that the book gives the respondents a platform to talk about a wider range of key issues at a greater depth than other interview- based volumes and, in addition, provides deep insights into economists’ perceptions of MMT – arguably the most radical and controversial development in economic theory in the last thirty years. The book’s focus on the importance of methodological issues and the tension between pluralism and consensus informs the debate on how the hegemony of the mainstream paradigm might best be challenged and as such, should prove a highly valuable contribution to the existing literature and a stimulating resource for researchers who are interested in the sociology of the economics profession and the key issues that the discipline might address going forward.
[1]Bilgrami, A. (2015), ‘Truth, balance and Freedom,’ InBilgrami, A. and Cole, J. (eds.), Who’s Afraid of Academic Freedom, New York: Columbia University Press.
[2]Lawson, T. (1997), Economics and Reality, London: Routledge.
[3]Chernomas, R. and Hudson, I. (2017), The Profit Doctrine: Economists of the Neoliberal Age, Northampton: Pluto Press.