Editor’s Introduction, FSE Papers and Proceedings

I am pleased to edit this special issue of the FSE which includes selected papers from the annual meetings of the Association for Social Economics (ASE) at the Allied Social Sciences Meetings in Philadelphia in January. This is the second year in which the papers and proceedings have been edited by the ASE President-Elect, who is also responsible for the ASE program. The format allows the President-Elect to construct the program with an eye toward curating the collection of papers that will appear in the FSE.

The theme for this year’s meetings was “The Democratic Crisis and the Responsibility of Economics.” As stated in the Call for Papers (CfP), “both the Brexit vote and the subsequent election of President Trump can be read in part as rejections of the authority and privileges of experts who advise democratic governments in pursuit of economic wellbeing and other valued goals.” The CfP prompted scholars to consider whether, to what degree, and in what ways the economics profession contributed to the rise of what is now commonly referred to as “populism” in the US, Britain, the European continent, and beyond. After many decades in which the ideologies of political and economic liberalism (including global neoliberalism) appeared to be secure and immune to challenges from the left or right, and during which the authority of economists was widely if grudgingly accepted, a wave of angry, nationalist, nativist, anti-intellectual movements now threatens the liberal project and the relevance of the economics profession. Those suffering the consequences are not the 1% targeted by the popular, progressive movements of just a few years ago. To date the financial elite are the primary beneficiaries, at least in the US where there is a pronounced move toward regressive tax reform. Instead, the victims are the particularly disadvantaged “others” who are now seen to be stealing opportunities from those deemed deserving. Particularly hard hit so far are the migrants living (legally or illegally) in advanced economies and the citizens of low-income countries and countries in conflict that now face increasing obstacles to escape from poverty and repression by migrating to Europe or the US. The speed of the rhetorical turn away from liberalism and internationalism has been stunning; and the rebuke to the economics profession has been sharp.

The first set of questions, then, concerns what economists did or did not do that contributed to the illiberal turn. The CfP put it this way:

What are the connections between predominant economic prescriptions and economists’ practice over the past two decades or so and unfolding political events? In what ways did the profession contribute to economic and political conditions under which political reaction and nationalism could flourish? Is inequality or “globalization” partly to blame, for instance, and if so, to what degree is the economics profession at fault for long emphasizing “efficiency” and growth over equitable distribution of income, wealth, or capabilities?

These are contentious and difficult questions for economists to engage—not least since the catchphrases of the new illiberalism are so repugnant to most economists in the center and on the left and right. They also risk blame-shifting. Surely our tribe of economists is innocent of the behaviors that induced illiberalism. It’s those other tribes of economists who pushed an agenda that was so shortsighted and dangerous. It is nonetheless vitally important for social economists to engage these questions with open minds to see what we can learn about our profession’s and our own unwitting contribution to the dangers we now confront.

Economists on the right and left have much to contribute to this discussion. Austrians can point with some justification to Hayek’s famous account of “why the worst get on top” in The Road to Serfdom. In that account the culprits are the well-meaning social democrats and interventionist economists who sacrifice personal liberties bit by bit in a rush to solve pressing social problems through illiberal means. For Hayek, the Trumps of the world ascend to power when impatient citizens who have lost sight of the value of individual liberty search for a strong leader who can “get the job done.” The demagogue achieves goals via strategies that more responsible leaders—those who are unwilling to violate basic rights and political norms—refuse to pursue. Political paralysis opens the door for the authoritarian who has no such scruples about political liberalism and ridicules the squeamishness of his political opponents as he tramples basic political rights.

In contrast, many contemporary institutionalists and social economists follow Karl Polanyi’s brilliant account of the rise of totalitarianism in the interwar period in The Great Transformation (which, like The Road to Serfdom was published in 1944). Polanyi explains the emergence of illiberalism by reference to inherent contradictions implicit in the pursuit of a utopian liberalized, self-regulating market economy during the nineteenth and early twentieth centuries. The parallels with the late twentieth-century neoclassical–Austrian project to install global neoliberalism are clear. Polanyi explores the “double movement” that emerges as society inevitably takes steps to protect itself from the most damaging effects of the liberal economy. In this account, those necessary measures interfere with economic self-regulation and ultimately yield political, economic, and cultural crisis that opens the door to forces of reaction. For both Hayek and Polanyi, then—and despite the sharp differences between their accounts—economists’ consequential errors must be a part of the story as we wrestle with our culpability for the dangerous contemporary shift in political rhetoric and practice.

The question of the responsibility of economics was also intended to prompt economists to ask the question, what do we do now, in this new political and economic environment, to fulfill our obligations to promote widely shared, valued goods—goods such as economic security, equality, genuine freedom, and political inclusion? Hayekians and Polanyians will answer this question differently, but we should not think that either Hayek or Polanyi answers the question in full. Moreover, other theorists (such as Thorstein Veblen and Albert O. Hirschman) and other traditions (such as feminist political economy) provide valuable insights into our current conjuncture—as is evidenced by their appropriation in the essays that follow. To ask what is to be done now is not to presume a narrow or unique path back toward reason, but to hope that economists can contribute to recognition of the vast range of projects that are now badly needed and potentially productive of more just political and economic arrangements. There should be an urgency to this discussion. Trumpism will come to a conclusion, perhaps sooner rather than later. But as both Hayek and Polanyi would warn us, what comes next could be substantially worse (cf. Brooks, 2018).

Many of the papers that appear in this issue address one or more of these questions. The first eight papers can be read as direct responses to the CfP. Aigret and Dimand explore a previous moment in US politics, during the 1890s, when populism rose up to challenge economic orthodoxy. The case involves the storied fight over bimetallism in the US. By contemporary standards the fight was conducted in civilized terms, even if passions ran high. The papers by Galbraith, Sherman, and Pühringer and Ötsch are diagnostic, exploring how things have gone so terribly wrong while conveying warnings about how things could yet become still worse. The analyses on offer are insightful and compelling. Galbraith reaches back to Veblen to make sense of the ways in which the economics profession has undermined its own authority and the authority of other professions, paving the way for the overt cynicism that allows a Donald Trump to flourish. The critique is searing: economists have come to enable the oligarchy and predator class in part by putting a price on all values and denying the value of all other professionals. Sherman’s account investigates the commodification of speech which has had the effect of eroding the trust upon which expertise depends. Speech commodification is associated with the construction of distinct “attention clusters,” each bombarded by messages that confirm their members’ beliefs (and biases). The targeting of marketing makes it difficult for experts to achieve trust across clusters. Pühringer and Ötsch add to the worry, examining structural and conceptual affinities between market-fundamentalism and contemporary populism. They raise the frightening specter of a new authoritarian neoliberalism.

The papers by Grabel, and by Christoforou and Adaman combine explanation with prescription, engaging both CfP senses of the responsibility of economics. There are affinities between the two papers. Both call for reformed practice by economists. They challenge the privileged position of economist as oracle who knows enough about the economy to dictate appropriate strategies, and in place of that paternalistic model demand greater humility and democratized economics that features empowering citizens to chart their own strategies by engaging in learning by doing and trial and error. Grabel grounds her argument in the work of Hirschman, who understood the profound dangers of professional hubris, while Christoforou and Adaman draw on ecological, feminist, and post-structuralist traditions within political economy.

The papers by ASE President Elect Julie Nelson and Rick Wolff conclude the symposium. These are short talks—thought pieces—rather than formal academic papers. Both are provocative and engaging, and both prescribe reforms for the economics profession. Nelson would have the profession discard theoretical principles and models that normalize self-interest and undermine social solidarity. Wolf is now engaged in the practical work of building workplace democracy in the form of worker-managed enterprises. He presses the profession to take account of diverse economic forms in scholarship and teaching so that students come to understand that more humane, democratic, and solidaristic forms of economic provisioning are already thriving, even in the heart of capitalist economies. Like several of the other essays in the symposium, the contributions by Nelson and Wolff entail knocking economists off their pedestal in hopes of helping communities now suffering economic hardship to reclaim their economic agency and security. In that sense the papers are deeply consistent with values at the heart of social economics.

The next set of papers investigate a range of other issues that are central to social economic concerns. The papers by Wentzel-Long, and Weller and Hanks explore the impact of recent economic developments—especially financial innovations and the great recession—on economic inequality. Both find that the recession is associated with increasing vulnerability of low income groups—especially racial minorities and female heads of households. These papers, too, provided clues into the illiberal turn, perhaps substantiating Polanyi rather than Hayek as financial liberalization during the 1990s and up to the great recession failed to generate the widespread benefits it promised. McIntyre examines the status of social economics in France, where the state acted decisively to promote worker-directed enterprises in the 1980s. McIntyre explores the subsequent evolution in thinking about autogestion, including by the French labor federations, which came to marginalize these initiatives until the crisis of 2008. Today, the environment for social enterprises in France is propitious, McIntyre argues, even if key institutional supports are eroding.

Male and Wodon are World Bank economists who have long pursued intensive, careful empirical investigation of issues that are central to human development and equality. The paper in this issue explores gender inequality in Central and West Africa. The paper examines trends in and linkages between girls’ access to primary and secondary education, and the prevalence of child marriage. The paper is diagnostic and prescriptive, in the best tradition of social economics.

Taken together the papers in this issue demonstrate the breadth and power of contemporary social economics. The careful reader will discern linkages with other traditions in political economy—from institutionalism, to Marxism, feminism, and post-structuralism—which like social economics have much to offer as economists grapple today with urgent questions pertaining to our responsibilities to those communities we hope to serve. In this regard, we should heed the advice of John Kenneth Galbraith who applied “the test of anxiety” to economic scholarship: “The ultimate test of a set of economic ideas…is whether it illuminates the anxieties of the time. Does it explain problems that people find urgent?” (1973, p. 198; cited in Stanfield and Stanfield, 2011, p. 166)

I submit that these papers rise to Galbraith’s challenge.