Some of you may be aware that I hold a degree in economics. But I was never a straight-forward ‘run of the mill’ economics student. I never went into the complex econometric models because I was too disturbed by the assumptions that many of them were based upon.
My personal definition of economics is that it is the study of how limited resources are distributed within a society of unlimited wants. No mention of money, finance or markets in that definition.
It’s been nearly a decade since I graduated – what value does that degree have ten years on? It was one of the reasons why I was pondering whether to go back over the subject in light of recent events. This is because I feel that so much of what I covered has found out to be completely bankrupt or corrupt, or both.
The mindset of several of the students I was with reflected the ‘minimum effort-maximum output’ approach of “if it’s not on the syllabus, I’m not studying it.’ Many trundled down a mainstream approach while I wandered off down an environmentalist route having stumbled across a 1993 article written by Herman Daly. It was the accumulation of little things combined with what I saw as the failure of economists to address injustices that really rubbed me up the wrong way at the time. And now we know why. They had been bought out by the banks – and Inside Job excruciatingly caught them with their trousers down as it shone the light of transparency over who was bankrolling them and through which revolving doors they were walking through.
Since the crisis broke several years ago, I had been waiting for a mainstream economics textbook to be published that would cover the financial crisis in a detailed but understandable manner – i.e. not trying to cover it all up with algebra and overly-complex mathematical theories. We lampoon astrologers for trying to predict the future yet give lots of credibility to economic forecasters about what’s going to happen and when. When The Queen is asking you in public why none of your profession saw the biggest crisis in its history coming, your profession is in trouble. Why didn’t they see it coming? Was it because too many of the big names had their heads too deep in the trough? Was it because others lacked courage? Was it because the private funding institutions were unwilling to provide research funding to those whose research interests undermined the paymasters? Oh – I’m still to find that mainstream economics textbook that explains the financial crisis. But hey, I guess you can’t put the term “conflict of interest” into an econometric mathematical equation.
In my final year of university I had a number of strong disagreements with several of my economics professors. One was completely dismissive of the issue of economic inequalities, to which I felt he was living in a neo-liberal bubble, and the second was over me calling for the costs of production and transport to be incorporated into the price of goods and services. He didn’t take too kindly to me acknowledging that this would mean that his wine from Europe would be a little more expensive given my call then – as with now – for a tax on aviation fuel and shipping fuel to be levied to compensate for the environmental damage done by these activities.
That’s not to say all of my tutors were bad. There were some that I really rated and probably would have intellectually got more out of if I hadn’t fallen ill during my time there. These were the people who understood that people and the planet were at the centre of economics, not mere commodities of it. It was in one conversation I made the case for big restrictions on party-political donations by businesses – in particular big business. Regulators are responsible to politicians elected by the people. The politicians set the frameworks within which markets are supposed to operate. But the dependence party politics has on big money donations means that the incentive is for politicians to come up with “pro-business” policies (which may not be pro-market). A tax break here, a subsidy there, a concession somewhere else…how about restrictions on and/or the break up of big businesses? How about preventing some of the big mergers and takeovers? After all, competition is good, isn’t it?
(As an aside, this would also mean significant reforms for trade unions – with a significant level of decentralisation in structures & the spending of membership contributions to Labour. This would ensure that Labour politicians would have to make more of an effort to engage with ordinary grassroots trade union members and would be far less dependent on individual trade union leaders).
Sticking in the economics subject area would have meant banging my head against a brick wall even longer, hence why I switched over to history – the subject of my heart after graduation. The really sad thing about my economics degree is that almost none of the core concepts that were taught were of any real use during my career in the civil service. It was the messing around with computers and spreadsheets that turned out to be the most useful – in particular some early insights into the number-crunching of data sets, and some things around statistics that make me an advertiser’s nightmare.
There is a crisis of economics – the subject of economics. The ongoing financial crises are testament to this. The conflicts of interest are testament to this. The complete and utter inability of those that constructed the system that got us into this mess are testament to this. Why do we still have a Nobel Prize for economics given the mess that we find ourselves in?
Economics professors were – and are still being bankrolled by the people such as the like that got grilled here.
So yes, I want my subject back.