Tag Archives: review

Women and our economics problem

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The Committee on the Status of Women in the Economics Profession was established by the American Economic Association in 1971. Its first survey found that just 6.7% of faculty in US universities were women and more than two thirds of them were on the lowest rung of the profession. Gender and the Dismal Science: Women in the Early Years of the Economics Profession by Ann Mari May documents the route to that shameful situation. It is not surprising that in the late 19th and early 20th century women struggled to access higher education and academic jobs, but economics was distinctively sexist in sustaining 19th century practices into the 1970s.

The book uses archival material to document how this came about. Some of the factors were indeed common across disciplines, such as unwillingness to grant women access to PhD studies, or to hire or retain female members of staff who got married. As US universities professionalised, professional associations determined the boundaries of the discipline and regulated access to PhD programmes and the network of contacts these grew. Two aspects of economics seem distinctive, however.

One is the early dominance of professional journals by what are still referred to as the ‘top 5’, which were run by a remarkably concentrated group of men – in two cases, by individual top departments (Harvard and Chicago). This facilitated the rise to status of an old boys network – it still operates as reflected in long-serving editors disproportionately publishing papers by those they know – and the journals still have outsize influence on professional advancement.

The other is the fact that many early female members of the American Economic Association were associated with social reform movements. And of course the subject matter of economics has significant implications for job markets, monopoly power, migration and other politically-contentious issues. But the resolution of early intellectual conflicts within the AEA went against advocacy and in favour of “disciplinary boundaries that made clear the scientific nature of economics.” Campaigning was for sociology, or theology; economics would deal in facts. Female membership of the AEA didn’t climb above 5% from 1890 until 1928.

The situation has improved in the US – or rather, it did in the 1980s and 1990s – but economics remains a male-dominated field. Cognitive narrowness and a narrow range of experience matter for any subject but particularly for a social science with policy influence. May reports on a survey she and co-authors conducted finding that male and female economists in the US and Europe have systematically different views on some issues. It isn’t obvious, ahem, that male views are more correct. At least now both the AEA and the Royal Economic Society are self-aware, and some male colleagues are truly concerned about the continuing evidence of systematic bias. And of course it extends far beyond women to the even lesser representation of people of colour and people from low-income backgrounds.

The historical perspective in this book is an interesting supplement to the recent literature on this structural deformation of the economics profession – both the new empirical documentation of the scale and scope of the problem, and the history of thought approaches that emphasise the desire to be ‘scientific’ (often linked to logical positivism but evidently with roots back in the early days of universities and the emergence of disciplinary boundaries). The data May has assembled on the history of the US profession is a real trove. And the individual stories of injustice make one’s blood boil…

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Fitting economics into a theory of justice?

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I spent a relaxing week at the Welsh coast doing only light reading, but have a few posts to catch up on about books I read before the holidays – including a couple out in September, Brad Delong’s Slouching Towards Utopia and Jacob Soll’s Free Market: The History of an Idea. First up, though, some thoughts prompted by A Political Economy of Justice, a collection of essays edited by Danielle Allen, Yochai Benkler, Leah Downey, Rebecca Henderson and Josh Simons. That’s a wonderful line-up of editors, and the chapters emerged from a seminar series at Harvard. As with all essay collections, they are variable in quality and cover a wide range of subjects – from ‘Beyond GDP’ to theories of change in a democracy to the US ‘prison industrial complex’. Nevertheless, the book is well worth it for the introduction alone.

The intro makes the case for considering capitalism as a multi-level system whose economy is institutionally embedded, reflects power relations, depends on social norms and instantiates certain values. It thus argues that neoliberalism as an economic ideology ignores these contextual aspects, claiming an impossible universalism (although the book isn’t particularly interested in the varieties of capitalism literature). The editors also argue strongly for the discussion of social justice and the values of the capitalist economy to focus on the organization of production as well as – or rather than – the distribution of income and consumption. They want economic analysis to rediscover politics and to make explicit issues of justice such as race and gender, or corporate purpose and sustainability.

Individual chapters focus on specific issues and proposals – there’s a clear progressive slant to all, however. Interestingly, the editors note that one area on which they could not reach consensus was the question of effective freedom and property rights in a market economy: does ownership inevitably imply unequal power relations?

There’s also some discussion – interesting to me! – of the implications of economic measurement, the definitions and metrics particularly GDP, for social justice: “Contemporary theories of justice have given these questions little sustained attention.” The introduction takes it as a given that the specific aim of growth in GDP should not guide a fair society. The chapter on this issue (by Julie Rose) takes the perspective of a history of thought about idea of the stationary state, invoking Mill, Keynes and Rawls. It argues for an alternative aim: “To fairly and reliably expand people’s opportunities,” and paints GDP growth as a subsidiary aim. Fine as far as it goes, but not actionable – although I must say I’d expected a traditional ‘degrowth’ argument and was relieved to find Rose doesn’t fall in to that trap. Although an analysis of the argument from a social justice perspective would be telling. Throughout, the book assumes the inadequacy of GDP growth but is vague about alternative metrics, while clearly sympathetic to the capabilities approach.

This and much more. While the focus on institutional specifics is welcome, it means the book is almost wholly US-focused. There’s also an inevitable tension between acknowledging the specificities of time and place and articulating a reasonably universal theoretical framework. The book goes heavily for “historically grounded explanations” involving “socialized or embedded individuals”, and with power and conflict central to economic relations. “There is no Archimedean point on which to perch microfoundational agents….” I tend to agree that economic analysis needs far more history, social relations and politics – but take it too far and ‘political economy’ loses the economics part.

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Ethics, culture and economics

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It was thought-provoking reading Deirdre McCloskey’s Beyond Positivism, Behaviorism and Neoinstitutionalism in Economics right after Jamie Susskind’s Digital Republic. They’re about different subjects of course, but also have contrasting philosophies. The Susskind book points to more government action, much more, in shaping digital markets, and I agreed with some – althoug not all – of his suggestions. McCloskey is concerned to make the case against the frequently-heard kind of analysis that market failure X requires government action Y to fix it. And I sort of agree with her too. Am I just hopelessly inconsistent?

To take a step back, this book has three messages. One is that it’s incorrect and misleading of economists to claim – as so many of us always do – that the positive and the normative can be separated, and all we’re doing is the objective, evidence-based analysis. In this section the book targets a 2017 paper by Werner Erhard and Michael Jensen that I haven’t read but sounds philosophically naive. For a little reflection – really only a little – shows this to be false: if we’re recommending an action for its good outcomes, ‘good’ is an inherently normative, evaluative criterion. I wholeheartedly agree with McCloskey on this point and wish I’d been able to read this book before writing those sections of Cogs and Monsters.

McCloskey’s second point is to argue for a broader, multi-dimensional, humanities-inflected approach to economic analysis. She takes particular aim at ‘neoinstitutionalists’ from Douglass North to Daron Acemoglu for their reductionist view that economic institutions are wholly described by incentives and utility-maximising outcomes, arguing that standard economic models alone are insufficient for explaining modern economic growth. Her own view – set out in her major Bourgeois virtues trilogy – is that a change in culture toward liberal (in the old-fashioned sense) ideas are needed to explain the scale of change between 1800 and now. Changes in incentives bring small (Harberger-triangle sized) gains, not increases in incomes by many multiples. I’m on board with this too, while still thinking the economic max-U approach brings interesting and useful insights.

Her third aim, though, is to argue for a more libertarian public philosophy: governments mess up economies more than they fix problems, and policies had little to contribute to the massive growth of the past 200 years. Here is where I diverge. For sure there have been many government failures too. Indeed, markets and governments tend to fail in the same contexts and for the same reasons (natural monopoly, externalities, incomplete markets etc). But I disagree with her implied counterfactual that there would have been an even more massive improvement in living standards in the era of modern growth without government. Collective action problems need collective action even if the location of the need shifts over time with technology, or with the complexity of high fixed-cost markets characterised by technological or other uncertainties, or with social expectations. So yes, there are a lot of simple-minded government-can-fix-it proposals – on this point McCloskey takes aim at Mariana Mazzucato‘s claim that the government in effect brought us the smartphone, albeit caricaturing it somewhat. But I’d contend we’ve of late had too little market-shaping policy rather than too much – including in digital domains.

Some of the terrain will be familiar to McCloskey’s readers – the importance of ethics in economics, of culture in growth, the misleading cult of statistical significance. I enjoyed reading this book nevertheless – her style is a bit of an acquired taste and I like it although I know others don’t. And it’s a compact discussion of some crucial issues economists should be contermplating. Even where I disagreed, it made me think.

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Casting off the digital chains

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The joy of travel to conferences – conversations with people you wouldn’t set up a Zoom to chat to, hearing new research you wouldn’t dial in to a webinar to hear, and the travel time for reading. It definitely (still) outweighs the aggravation of checking in. My recent Eurostar journeys saw me through Jamie Susskind’s The Digital Republic: On Freedom and Democracy in the 21st Century.

We held a workshop on a first draft of the book at the Bennett Institute, where Jamie is an affiliated researcher, so I suppose I’m bound to look kindly on it. It’s an ambitious and largely persuasive diagnosis of the political problems caused by the power of big tech, and a set of proposed solutions. It’s thoroughly argued – as you’d expect from a skilled lawyer –  and avoids the sweeping generalisations and analytical wooliness of some well-known attacks on the digital giants.

The book has many parts. It starts by setting out the fact of digital power and why this is a significant political problem – and one created by law: “There is nothing natural about the power of modern business corporations. They accrue power because the law allows them to.”  It follows this with an analysis of the more granular problems, such as dark patterns, the coding of significant ethical decisions, the pretence that ticking the T&C box is meaningful consent (“When we click ‘I agree’ we are usually surrendering, not agreeing”), and so on.

The book then moves on to set out four republican principles (NB not in the US party sense of the word, but in the engaged, free citizen sense):

  • the preservation principle: democracy must be protected
  • the domination principle: no power can be unaccountable
  • the democracy principle: powerful tech should reflect the moral and civic values of those it affects
  • the parsimony principle: governments shouldn’t constrain companies more than they have to.

All seem perfectly reasonable, at least in the abstract. Then, refreshingly for a book about the need for countervailing power to big tech, Jamie has a lot of proposals. Among them are:

  • deliberation and mini-publics to determine the limits of digital behaviours
  • tribunals to hear complaints about treatment by big tech
  • professional certification of software and ML engineers
  • an inspectorate of algorithmic decision making
  • a duty of openness on tech companies
  • more appropriate anti-trust policies
  • minimum standards for social media platforms eg to prevent harassment, foreign interference in elections etc

I don’t agree with all of the suggestions – some (eg compulsory licensing for anyone who codes software) seem to fall foul of the parsimony principle – but that isn’t the point; the point is that governments are not powerless in the face of digital power. Indeed there is an awful lot they could be doing to tackle the ills while recognising the great benefits the tech titans have brought.

Anyway, I enjoyed reading the book, and relished its can-do approach. I agree about the need for constraint on unaccountable digital power. Was I wholly persuaded? No, and mainly because there’s an assumption of beneficent governments doing all this on our behalf. It’s reasonable to doubt either their goodwill or their competence. More on this in my next post after I’ve finished reading Deirdre McCloskey’s latest offering.

61pyJfOI4FL._AC_UY436_QL65_Other reviews: Joahn Naughton in The Guardian, Andrew Lilico in The Telegraph….

What comes after the Knowledge Economy?

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Nick O’Donovan’s Pursuing the Knowledge Economy: A Sympathetic History of High-Skill, High-Wage Hubris is an interesting evaluation of the policy consensus of the 1990s and early 2000s concerning the opportunities afforded by digital technology and globalisation for a transition to better jobs in the western economies. My own 1997 book The Weightless World (25 years ago this year!) features as one of several capturing that economic policy zeitgeist, what the book terms (following Peter Hall) a ‘growth regime’ – “a set of economic policy ideas and assumptions that are underwritten politically by a distinctive coalition of supporters.” In other words, a mental model of how the economy can prosper that becomes the policy zeitgeist. (Although I’d challenge the focus of this concept on just firms and governments, as the concept ignores the household and voluntary sector, both large and being affected by digital.)

The book traces the historical evolution of the policy ideas, mainly the centre left (Blair & Brown in the UK, Clinton in the US), and the way the financial crisis torpedoed any optimism about new opportunities to upskill the workforce and create satisfying new jobs. It also politely critiques the knowledge economy analysis in itself, essentially for unfounded optimism about the scope for new technologies to complement rather than substitute for labour and for ignoring the transition costs associated with globalisation. O’Donovan also points out the policy blind spot – until very recently – about increasing market concentration and rent extraction. Just a few people have long pointed to this as a source of economic problems, among them Brett Christophers.

There certainly was plentiful hype – Thomas Friedman’s books leap to mind. I’d defend The Weightless World on the basis that it predicted greater spatial and income inequalities and paid attention to social tensions, and would argue that I was prescient (much too soon…) about gig employment patterns and new digital currencies. But I also overlooked the costs for some people of the reordering of global production, or at least assumed policy would be sensible enough to look after them. At the same time, the Knowledge Economy paradigm did encapsulate some significant changes under way in the structure of the economy. I think O’Donovan somewhat underplays the insights while rightly pointing out the irrational exuberance.

The book ends by linking the failure of the Knowledge Economy growth regime to post-2008 political polarisation, and hoping that the current period of disillusion and volatility will in fact prove an opportunity for a new, better “growth regime” to develop. Let us hope….

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