In the wake of the global financial crisis austerity measures have forced people to come to terms with more limited life chances due to market failure. This project aims to empower people through providing them with new ways of thinking politically about the modern economy's major institution. It asks questions about how market ideology has become so prevalent in everyday life and what might be done to challenge the social authority of the economic models on which that ideology is based. It also asks how market ideology has evolved from an often unpromising start, revealing the little known history of the failures of the theories on which these economic models are based.
Professor Matthew Watson, Project Lead
Modern meanings of 'the market'
The ease with which economic concepts today cross over from abstract academic work to concrete everyday practices typically obscures both the intellectual and political battles which had to be fought to entrench particular understandings of economic life over others. Most people in the UK are only too familiar, for instance, with what it feels like to be surrounded by the institutional apparatus of a market economy and to be hailed as a conscious market subject who must be wary not to transgress the related behavioural norms. Yet very few even amongst the academic community are aware of the precise circumstances in which the struggle took place to impose the modern meaning of 'the market', nor yet the pedagogical strategies through which that meaning increasingly became accepted. These are questions that cry out for historicisation, so that market models can be understood through reference to the contexts in which they were first formulated. It is thus important to move away from a mode of telling the history of economic thought whereby economists are believed to have been involved in a single 250-year process of perfecting basic market models. The actual history is much more fraught than this, involving serious soul-searching about the outer limits of these models' usefulness as well as outright condemnation of the image of economics that they call forth. The history of economic thought contains as many stories about the failures of basic market models as it does its successes, and only the subsequent political whitewashing of the former has allowed the latter to stand unchallenged. To be hailed as a conscious market subject might well merely represent today's political common sense, but it occurs against the background of significant contradictory evidence.
A method of efficient resource allocation?
Markets are typically treated in political discourse today as if they are the unquestioned mechanism of efficient resource allocation that appears in the most primitive demand-and-supply diagrams of introductory economics textbooks. In everyday language this often translates into an allocative logic acting upon the coordination of individual economic behaviour: markets know best; they can be trusted to deliver to all of us a better way of life; they are not to be second-guessed. Such language is used without the users typically knowing much about its provenance in the murkier depths of the history of economic thought, but my project aims to uncover these links. It will do so by combining historicised, history of ideas and historiographical approaches to study the cultural and political frames through which the concept of 'the market' has taken on its distinctively modern meaning. This, in one sense, allows me to explore the intellectual journey of my own life. I developed my initial political awareness in the 1980s, during a period of British history in which 'the market' first managed to escape the textbooks and began to fire everyday life. But none of this went unchallenged when the abstract idea was made manifest in new economic institutions, as the benign bringer of comfort to some proved just as capable of imposing hardship upon others. I vividly remember economists being called upon as defenders of the new faith and their ever more frequent appearances in the media became a constant thorn in the side of those who were wary of signing over an increasing proportion of everyday life to market logics. However, the further I have subsequently searched in the history of economic thought the more that it has become apparent that there were economists on both sides of the argument at every stage in the development of the idea of efficient resource allocation. Recovering the reasons for the initial disputes and tracing how the opposition was eventually marginalised therefore has significant political implications today. It tells us that however boldly political claims for market regulation of economic affairs are made in the current context, those claims have far from certain intellectual foundations in economics itself. We overlook the omnipresent sources of dispute at our peril.
Three Key Questions
I will be asking three main questions as the project research deepens. Each of them will eventually give rise to book-length treatment of the issues they place centre-stage.
- How and why has economics methodology evolved so that the issue of successful market coordination of individual economic behaviour is increasingly treated as a given of allocation functions? Research Outcome #1 This is not only an issue for economists themselves; indeed, it could now be said under the influence of a process of 'economics imperialism' that it is no longer primarily an issue for economists. Over the past forty years, the same basic structure of market models has made its way across numerous social scientific boundaries and now sets the running in many other subject fields as well. The political embrace of the idea of 'the market' thus appears to have produced social scientific trends cast in its own image.
- How and why are allocation axioms passed on to new economics students as the preferred means of conceptualising the essence of market institutions? Research Outcome #2 At one level there is an easy answer to this question: this merely represents the most straightforwardly intuitive way of grasping the abstract notion of what a self-regulating market system might look like. But this in itself begs the rather more important question of why it should be important that economics students learn first to manipulate relationships in a pure market economy. Socialisation to abstract ways of thinking does, after all, have subsequent effects on what might be seen in the world, as every student of Kuhn knows only too well.
- How and why has orthodox economics opinion managed to renew and reassert itself in the face of a global financial crisis rooted in quite clearly dysfunctional allocations? Research Outcome #3 On the face of it, it appears rather remarkable that barely a political scratch has been left by the global financial crisis on those who wish to promote the idea that economic affairs are best left to market coordination of individual self-interest. The global financial crisis cannot really be seen as anything other than the most colossal failure of such a system of economic regulation. However, convenient scapegoats have been created politically to divert the blame from the underlying economic ideology and to allow the world to continue marching to much the same tune as before.
The book to arise from answering the first of these questions will be written for those who share my political science specialism of International Political Economy. It is provisionally entitled, International Political Economy and the History of Economics Imperialism.
Debate within IPE has become somewhat gridlocked recently because of a spate of methodological competition between the so-called American and British Schools, the most recent generation of the former advocating wholesale embrace of economics methodology whilst all generations of the latter have shown something approaching a pathological distaste for it. Repeated calls have been made by the field's biggest names for new research agendas to lead it away from the current impasse, and my efforts to unite IPE with an intellectual history of the market coordination problem represents a modest attempt to enact one such possibility.
The space for reflection provided by the Fellowship will enable me to situate these efforts more completely within a fully fleshed out history of ideas approach than I have been able to do thus far in my career. I will attempt to show how the encroachment of economics imperialism into economics has led to a general preoccupation with logical rigour at the expense of corroborating empirical studies of everday economic life. Such is the force with which methodologists of economics have condemned this move that a reasonably straightforward case can be made for why IPE scholars should be wary of also subscribing to economics imperialism.
The book to arise from answering the second of my research questions - once more still currently very much at the formulation stage - will be written for a wider social science audience interested in how particular meanings of economic concepts come to everyday prominence through their increasing familiarity within popular culture.
All historically specific meanings of the market have ultimately reflected the ideological structure of the society in which they have developed, and the use of literary sources provides for an understanding of how evolving forms of individual self-awareness have impacted upon those meanings. At the beginning of their programmes economics students are typically taught how to visualise basic market-bound behaviour through appeal to a Robinson Crusoe economy. This book will emphasise the significance of this way of 'seeing' the economy, and it is provisionally entitled, Robinson Crusoe and the Foundations of Economics.
It will show that the behavioural type appelead to in economists' use of a Robinson Crusoe economy reflects the late nineteenth-century political priorities that accompanied its introduction, whereas Daniel Defoe's original character of the same name was an altogether different behavioural type, this time reflecting his own early eighteenth-century political priorities. This finding will then be taken forward to explore many different literary Crusoe characterisations and the implications that they have for more plural approaches to economics.
I have published the first book to arise from the project, which answers the third of the broad questions animating my Fellowship. This is a 40,000-word book which appears in Palgrave's SPERI Pivot Series, Rebuilding a Sustainable Recovery, and it is entitled, Uneconomic Economics and the Crisis of the Model World.
It focuses on the discussions that have taken place about the future of economics in the wake of the global financial crisis, and this will be my closest engagement during the Fellowship with the changing politics of the crisis. I chart the way in which the fundamental political definition of the crisis has shifted from one of financial market logic to one of overextended state expenditures, and in this move it has also gone from being a crisis of orthodox economics opinion to a crisis for which orthodox economics opinion seems to have the solutions.
My conclusion, though, is that insofar as these solutions begin and end with austerity they are a red herring, albeit an important red herring because they allow for the reproduction of what I call a distinctly 'uneconomic economics'. By this I mean one that is adept at exploring the logical possibilities encompassed by manipulating relationships within an only ever hypothetical abstract 'market' environment rather than one that explores the way in which people are socialised to actually existing market arrangements. I make the case for a return to a genuinely economic economics, but also show why this move is easier to advocate than to activate.
I am eager to share my thoughts on the concept of an uneconomic economics with any interested non-academic user.