I started reading Elizabeth Anderson’s Value in Ethics and Economics, having read an intriguing profile of her in the New Yorker recently, and am about two chapters in. The book is in Michael Sandel territory. It got off to a bad start by setting up the usual straw man version of economics: “Markets are represented as the generically rational form of human organization,” she writes. “To count as rational, any other domain of human interaction would have to be governed by the same principles as the market.” This is passive voice, but it most economists I know certainly don’t think like that (there’s also clearly an issue about different meanings of the word rational’ but that’s another matter.

However, the book quickly improves by pointing out the limitations of the focus on individual choice with too little attention in economics to social influence. This for me is a problem in terms lack of conformity with reality, never mind ethics. The second chapter then hones in on the inadequacies of utilitarian consequentialism as a foundation for conceptions of economic welfare (although a Very Distinguished economist told me recently that if I wasn’t a utilitarian, I wasn’t an economist). Interestingly, Anderson seems to see a feedback loop between ethical value and social norms – “social norms are constitutive of rational attitudes” – it reminded me of Robert Sugden’s recent book, The Community of Advantage.

It’s slightly heavy going, as so much philosophy is. Oh for an equation or two to clarify the logic! But I shall carry on. I’m reading a second hand copy and amusingly one of the previous readers has heavily marked the book with references to God as the source of ethical value, challenging Anderson with citations to Corinthians I and so on. But luckily only for the intro and chapter 1, giving up on godless ethics at that point.

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I just re-read the famous Lionel Robbins Essay on the Nature and Significance of Economic Science. Every time one reads a book, it’s with new preoccupations and interests. So this time, here’s what jumped out at me:

“Value is a relationship, not a measurment. … It follows that the addition of prices or incomes to form social aggregates is an operation with a very limited meaning.”

“The idea of precise ‘correction’ of price changes over time is illusory.”

For Robbins, economics is essentially price theory. He wrote the essay of course in 1932, just before the development and subsequent rise to prominence of aggregate economic measures and price indices. But I think he was right to underline the pervasiveness of relative price changes and the consequences for aggregation.

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There are plenty of ill-informed criticisms of economics, alongside the very valid criticisms of the subject. It’s frustrating if one wants to see the discipline move in desirable directions – a higher proportion of women and people who aren’t white & middle class, less ‘boys’ toys’ abstraction, more open (again) to history, sociology and other related subjects, etc – because responding to ill-founded critiques is such a waste of time. Yet the false myths need busting if real reform is to take place.

A recent article by Larry Elliott in the Guardian was outstandingly ill-informed. So much so that it prompted some of the UK’s most esteemed economists to write an excellent reply in Prospect. Their most important single point is, perhaps, that the econ-bashers are feeding the dangerous current in politics of disparaging expertise. We economists need to be duly modest about what we know, but we certainly know more than, say, some current members of the Cabinet.

I tweeted the link to the Prospect article, which led someone to come back on Twitter with this.

NelsonSmythe @DianeCoyle1859 @prospect_uk Gonna throw a bit of Deidre McCloskey’s ‘Rhetoric of Economics’ in here: https://t.co/vyGzJiHRjx 21/12/2017 08:42

Here is the McCloskey quotation:

So I turned to my copy of McCloskey’s 1985 Rhetoric of Economics and particularly the postscript to the 1998 edition. There she is at some pains to correct readers of the 1st edition who’d concluded she is ‘against’ mathematics in economics, saying: “A lot of good work gets done in economics, new facts and new ideas. Economists are not stupid or lazy, not at all. I love the field. I belong to the mainstream.” Her target is what she describes as the ‘sandbox for boys’ games’ – ultra-mathematical and abstract – far from a wholesale criticism of maths in econ. Famously, she also condemns the unthinking worship of statistical significance – and indeed any economist worth their salt will also be absorbing the recent papers by Alwyn Young and by Ioannides et al in the Economic Journal.

Still, one can’t plonk The Rhetoric of Economics (remember, pub. 1985) down as a killer retort to the economists’ demolition of the latest dangerously misleading attack. As the Prospect economists note:

The way economics is done has been transformed in the past 30 years with an empirical revolution, meaning we now use fine-grained data on individuals, households and firms. In a recent survey of published work in top journals, over three quarters of papers analysed data collected either by the researchers themselves or from secondary sources. Economists provide evidence, increasingly using randomised control trials, or big data. Often this leads to theories being supported or knocked down: this is the bread and butter of modern economics.

My 2007 book The Soulful Science described a lot of the change since the 1980s this refers to. Perhaps it’s too much to hope for, but I do wish people who condemn economics would actually pay more attention to #whateconomistsreallydo

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