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Economists used to be arrogant. Now they’re absolutely perfect.

May 27, 2013

Diane Coyle at the Enlightened Economist blog has an interesting post about James Scott’s book Seeing Like a State: How Certain Schemes to Improve the Human Condition Have Failed. I haven’t read the book but will add it to my reading list. It’s about the consequences of several 20th-century authoritarian schemes such as Tanzanian viligisation, China’s Great Leap Forward and Le Corbusier’s urban planning in Brasilia. Coyle describes Scott’s main rules of thumb as to:

1. Take small steps – and stand back and observe in between each.

2. Favour reversibility. “Irreversible interventions have irreversible consequences.”

3. Expect surprises.

4. Plan on human inventiveness. “What is perhaps most striking about all the high modernist schemes is how little confidence they repose in the skills, intelligence and experience of ordinary people.” The less is ‘left to chance’, the less room for local experience and knowledge.

Coyle sees the conclusions for social science as to: “be far, far humbler about what we know than is typical. A lot of economic analysis suffers from the same high modernist blinkers as the disastrous social engineering described in the book.”

She’s right. And the parallels with my own book are striking (which uses social theory to inform development economics and isn’t about politics or the “human condition”, although I probably should have read Scott’s book). I reference some of the post-modernist literature which criticises modernists for amongst other things their arrogance, unwarranted certainty, universalism and top-down approach. My main target is the Washington Consensus, which dominated development policy from the 1980s well into the 2000s.

My own four-point taxonomy involves:

  1. An examination of the influence of values and norms. “Partly, the idea of being reflexive simply means having an open mind and looking at your own project… Being socially reflexive at an institutional level would require that the agents of a development process ask to what extent ‘grand theory’ is useful, distinguishing between objective advice and what is simply a reflection of interests or a projection of a different worldview.”
  2. An implicit assessment of the extent to which local context is important. Context matters because people in different societies behave in different ways; values vary; and institutions are different.
  3. A recognition that economic tools, concepts and policies can undermine themselves, even though they were designed for greater control. Economic systems are open-ended and events are often completely incapable of prediction, even as a stochastic process, a perspective implied by the Keynesian methodological approach.
  4. An allowance for theory to be revised if it proves inadequate or as circumstances change. Economists should be open to fallibility and to the possibility that theory may be proven wrong by events (again, this is pretty much Keynesian). Mainstream economists rarely revise theory in a fundamental way.

I also argue strongly for the use of the skills, intelligence and experience of ordinary people. Local experience and knowledge is in my view critical for successful development policy.

Scott’s book is clearly anti-state, and leftists should take note. The government can’t solve all of our problems. The best-intentioned schemes backfire; taxes aren’t socialist; debt isn’t good. It should be remembered that a strong strand of leftist thinking places emphasis on human agency: the ability of people to shape the world, to think and act for themselves. Parts of the left have  always been suspicious of state power, the state, it is argued, having become synonymous with corporate control (banks and multinationals now run government). A lot of leftists argue for the devolution of power on democratic grounds so that people can better control the environment in which they live. The left wing of the Scottish National Party is among its loudest. The Scottish Socialist Party campaigns hard for independence.

But it would be wrong to argue that only statists wear high modernist blinkers (not that I know whether Coyle or Scott think this). Thatcherism was modernist. It reduced individuals to atoms in a mechanical system which left little room for agency. If there’s no such thing as society then social behaviour can’t produce unpredictable consequences. The zeal for competition and deregulation of the 1980s and 1990s was as arrogant, teleological and, ultimately counterproductive as any leftist modernism. I’m not sure that water and council-house privatisation, the poll tax and the destruction of the unions were all that far from social engineering.

Neoclassical economics, which tends to be methodologically individualist, underpins much neoliberal thinking. It has been criticised for having a mechanistic approach; for imagining that its policy solutions apply everywhere; for believing that people are motivated solely by material ends; and for failing to show introspection. Neoclassical development economists, I would argue, often fail to root their analysis in the actual lived conditions of real people and should use genuine empirical techniques rather than crunch numbers in Western universities.

So both political poles have tended to resort to modernism. Economics, as Coyle points out, should be much more humble (OK, I know it’s not very humble of me to hang an entire blog post on a book I haven’t read). As it happens I think it’s possible to go a lot further than humility, which is quite a vague term — one person’s doubtful is another’s cocky — and to build in to economics syllabuses and analysis methodological foundations that preclude the kind of over-confidence we’ve suffered over the past century or so. Ingredients would include at least inter-disciplinarity, pluralism, awareness of the history of economics and of economic history, care about the use of maths and stats, greater use of case-studies and self-reflexivity. But that’s for another blog post.

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