Freedom in China and America

We, the West, were blindsided by the GFC largely because our mainstream economists kept reassuring us that everything was wonderful.  Our leading economists were and are trapped in a world that neither knows nor understands Marx.  In other words, they don't understand Capitalism, though they present themselves as experts. So this essay, thought bit academic, is an interesting investigation into the mechanism by which informed debate on a life-and-death subject is silenced in a "free" society.  You will find VASTLY greater breadth of debate on this subject in China, which IS familiar both with Marx's criticisms AND with Western capitalist thinking. The Chinese even employ, at great expense and at their top universities, caustic critics like Professor Michael Pettis at Tsinghua University, whose widely-published articles constantly and loudly criticize the Chinese Government and its economic policies.  A former hedge fund manager, he has no sympathy for the government, its aims, or its accomplishments.  But China pays him one of the countries' highest academic salaries, give him dream working conditions and elite graduate students precisely so that he will continue to challenge their post-Marxist orthodoxy. Not us. This essay by Philip Pilkington, though confined to academia's role, shows how debate is silenced in a "free" country: Philip Pilkington: Neoclassical Economics and the Foreclosing of Dissent – The Inner Death of a Social Science By Philip Pilkington, a writer and journalist based in Dublin, Ireland. You can follow him on Twitter at @pilkingtonphil Convictions are more dangerous foes of truth than lies. – Friedrich Nietzsche Heterodox economists – that is, those that do not subscribe to the neoclassical research program – often claim that they are marginalised within the profession. Anyone who has had dealings with academia would instinctively take such complaints with a pinch of salt. Indeed, academic quarrels often have as much to do with who said what at a dinner party as they have to do with questions of high theory. Academics, for better or for worse, are often characterised by their independent-mindedness… and with it: their stubbornness. This often leads them to partake in intellectual factionalism. Personally, I’ve come across some of the very worst of this and it has always turned me off. Often it appeared to me similar to that joke in Monty Python’s ‘The Life of Brian’ about the Judean People’s Front . That is, I saw it as simply factionalism for the sake of factionalism, which often seemed to have more to do with personalities than anything important. However, when I started studying economics and talking to heterodox economists, it quickly struck me that something wholly different was going on. Yes, there appeared to be the old factions that you would find elsewhere in academia – in economics these were characterised by what are called in the US the ‘freshwater school’ and the ‘saltwater school’, which translates to: ‘hardcore neoclassicals’ and ‘not-so hardcore neoclassicals’ – but between these schools there seemed to be a sort of solidarity that I hadn’t really encountered in other social science disciplines. I’m not the only one who thinks so. Leading neoclassical Greg Mankiw wrote the following: An old adage holds that science progresses funeral by funeral. Today, with the benefits of longer life expectancy, it would be more accurate (if less vivid) to say that science progresses retirement by retirement. In macroeconomics, as the older generation of protagonists has retired or neared retirement, it has been replaced by a younger generation of macroeconomists who have adopted a culture of greater civility. At a superficial glance one might think that economics have succeeded where other disciplines had failed. But all is not so rosy; in actual fact this ‘civility’ was won by a de facto exclusion of literally anyone who disagreed with certain precepts from the upper echelons of the profession. Such exclusion one would rarely encountered outside of a cult or a religion, and it was cast upon a number of groups who make up a fair amount of the profession (broadly speaking we could refer to the neo-Marxians, the Austrians, the neo-Ricardians and the post-Keynesians – although there is much overlap between the different groups). One could imagine the Monty Python crew’s Judean People’s Front and their People’s Front of Judea meeting in similar formal gatherings or sharing information about their common goal – but not the orthodox and the heterodox economists. This isn’t just whisperings behind someone else’s back at a conference; this is a ring-fencing, a wholesale exclusion of anyone that dissents. “Why are you Doing This?” As I looked into it more and more, two key points emerged that made sense of the schism. First of all, the reason that the heterodox had been left by the wayside was because they felt that many of their arguments completely undermined the entire neoclassical research program. Thus the neoclassicals had, at some point in history, made a fairly violent institutional attempt to supress dissenters. This actually makes a lot of sense if you understand that many neoclassicals see themselves more akin to hard scientists than to social scientists – an idea most scientists and philosophers of science deride, but the neoclassicals just ignore them (starting to see a pattern here?). This brings us to point number two – which, to be honest, shocked me a little. I got a strong impression that there was a subtle bullying of sorts going on within the profession – a sort of fascistic atmosphere through which rules of behaviour and thought were enforced. Indeed, I increasingly got the impression that this was precisely what allowed for the ‘civility’ that Mankiw referred to – the exclusion of an out-group being a well-known prerequisite among social psychologists for strong, quasi-totalitarian in-group formation. This phenomenon was hard to pinpoint and I was reluctant to write anything based on the complaints of those who saw themselves as victims (or even those in the public eye who vouched for them). But recently I stumbled upon an anecdote from a neoclassical economist that highlighted precisely this very dynamic. The following anecdote is told by Dani Rodrik who, although part of the neoclassical ‘club’, nevertheless maintains more cautious views on a number of issues of doctrine than many of his colleagues. It is taken from a blog entitled ‘Is neoclassical economics a mafia?’ which is a response to a piece written by Christopher Hayes and published in The Nation in 2007 about the exclusion of heterodox economists in the profession: Hayes makes a number of good points about how ideology permeates a lot of thinking by orthodox economists. Anybody who strays from conventional wisdom is in danger of being ostracized. Some years ago, when I first presented an empirical paper questioning some of the conventional views on trade to a high profile economics conference, a member of the audience (a very prominent economist and a former co-author of mine) shocked me with the question “why are you doing this?” Rodrik goes on to reflect that the methodology of neoclassical economics has served him well and he has never found it constricting. That’s fine – but is he not moving the goalposts here a bit? It seems that to move the conversation from an anecdote about a very strange sort of censorship being imposed through a pretty creepy sort of groupthink to reflecting on the relative merits of said groupthink is to miss the point entirely. If a cult member related to you a story where someone clearly dictated to them, in a strange, indirect and suffocating fashion, what they should and should not be allowed talk about (remember, Rodrik was talking about empirical research here!) and then moved on to tell you about the relative value of the cult’s belief system would you not feel a bit alienated? Would you not think that the person’s scepticism had been almost wholly absorbed into the cult mind-set – then sanitised, sectioned and channelled into assent? Very Orwell. Perhaps readers will think me biased because I don’t subscribe to neoclassical methodology and have often attacked it in the past, but Rodrik’s blog post strikes me as alienating and weird – and I invite readers to read it carefully and judge for themselves in this regard. As heterodox economist Matias Vernengo put it in response to this anecdote: Clearly his co-author was concerned with the effects that being critical of free trade might have on Rodrik’s career. Rodrik’s co-author is, most likely, just a good friend, but his question reveals a lot about the dark corners of the edge of the profession. The media has occasionally picked up on this general weirdness too. In addition to Hayes’ piece cited above, Playboy recently ran a piece on exactly this topic which Bill Black responded to over at Bezinga. Then, of course, there was Charles Ferguson’s excellent film ‘Inside Job’ which dealt with one side of this issue. In fact if you think about it, it is quite unusual that the media would weigh in on factional fights in academia. But if the above is taken into account it should not be hard to understand why the economics profession might pique the media’s interest. Basically, it’s a pretty damned weird place! The fact is that there is something pretty nefarious going on in economics departments across the Western world, something that is making them resemble more so a church or a cloister than an academic institution. Adherents such as Mankiw call this shift – which seems to have taken hold over most of the last generation of economists – one of ‘civility’ to one’s fellow economists, but when looked at from without it more so resembles the formation of a powerful sect which violently demarcates the lines of accepted discourse to ensure that their hegemony is maintained. An Intellectual Hierarchy Of course, simple pushiness alone would not be sufficient to maintain such an institutional structure intact – institutional defences of various types must exist to prevent intruders from gaining entry. And when we scratch the surface of the economics profession this is precisely what we find. The structure is maintained for the most part through a hierarchy of journals. In order to secure a job in economics departments that are dominated by neoclassicals – which is most of them – a person must have published in one of these “leading” journals. Yet, in order to do so a person’s work must also be undertaken within the neoclassical paradigm. Any work that does not conform to this paradigm is outright rejected by the editors of these journals. Economics professor Steve Keen summarised this well in his book ‘Debunking Economics’: Up until the early 1970s, non-neoclassical authors were regularly published in the prestigious journals of the profession – for example, a major debate over theories of production and distribution between neoclassical and non-neoclassical economists, known as the ‘Cambridge Controversies’, largely occurred in the American Economic Review, the Economic Journal and the Quarterly Journal of Economics… However, by the mid-1980s, these and their companion major journals, the Journal of Political Economy, the Journal of Economic Theory and many other minor journals had become bastions of neoclassical thought. Papers that did not use neoclassical concepts were routinely rejected – frequently without even being refereed. (P. 8-9) This side-lining of critics not only ensured that it would be difficult for them to find employment if they did not fall into line with the dominant research paradigm, it also stymied any real and fundamental dissent with that paradigm. Later in his book Keen lays out a critique of the neoclassical theory of competition and relates how it was examined and rejected by a number of the editors of neoclassical journals – including the Economic Journal and the Journal of Economics Education. The responses Keen received from referees were occasionally bizarre; one of them basically claimed that since Keen’s criticism was contrary to the dictates of equilibrium it was irrelevant. The hierarchy of journals is also used indirectly as a means to put pressure on any non-neoclassical departments that have managed to form against the odds. The fate of the economics department in the University of Notre Dame is a case in point. The department had long been a bastion of heterodox thought but came under pressure from administrators who complained that those within the department were not publishing in any of the “leading” journals. Eventually, some neoclassicals were hired to boost the supposed credibility of the university and the economics department was split in two. Soon after it was announced that the heterodox half of the department was to be dissolved. The timing couldn’t have been better. The dissidents were turfed out in 2009, shortly after the 2008 financial crash and the resulting public backlash on mainstream economics. One heterodox scholar from the department summed it up well: “In light of the crash of the economy, you would think there would be some humility among economists, some openness to new approaches,” says Charles K. Wilber, a professor emeritus of economics at Notre Dame. “There’s not a lot.” But as far as administrators were concerned the falsifiability of neoclassical economics – which could not have been given a better test then 2008 – was not at issue. The desire to have their economics department “rated” through the system of journals was far more important… for their bottom line, presumably. Professor of economics Fred Lee summed up the situation well in a paper entitled ‘Ranking Economics in a Contested Discipline’: The Notre Dame case dramatically illustrates how bibliometric (and peer review) based methods can be used to silence dissenting voices and to render invisible heterodox ideas and departments in a contested discipline such as economics. The neoclassicals for their part are flippant about these problems. For the most part they assume that they hold a doctrine of Absolute Truth and that anyone who disagrees has simply made an error of some sort. Some of them have the audacity to refer to their doctrines as proof that the economics discipline itself is perfectly functional. Harald Uhlig, chair of the economics department at the University of Chicago, responded to Business Week in a particularly bizarre fashion when asked what he thought of the structure of the economics profession and the training of PhD students. Above all, I do not believe in central planning. What is true in private markets is true in PhD education as well: It is good to see different places try different approaches, to let the PhD students decide where they want to be educated, and to let the marketplace for future scientists decide what works and what does not. Thus, because Uhlig “believes” in perfectly functional private markets and because, in his opinion, these can also be said to exist in academia then if some ideas are better than others they will become dominant. Of course, Uhlig cannot consider that institutional power may play a role in what ideas PhD students choose to study because the ideas he espouses do not take the role of institutional power seriously. Like a man who tells his psychiatrist that he is indeed God’s messenger on earth because, being God’s messenger, he cannot entertain false ideas, Uhlig summons his own ideas as a sort of “meta-reference” in order to “prove” that these ideas are indeed correct. As one commenter on the article put it: You’ll never hear any scientist say “above all, I don’t believe in [insert something his science is supposed to be studying]”. When economists become ideologues, any pretence of science goes out the window. Look, personally I don’t like neoclassical economics. I think, institutional framework aside, it’s founded on quasi-theological principles (teleology/equilibrium etc.). Nor do I think it conforms to real scientific methodology. Not to mention the fact that, contrary to what some of its more naïve practitioners assert, it almost certainly acts as an ideology for the powers-that-be. However, all this aside I hope that people will believe me when I say that something weird is going on in the economics profession and has been going on for over 30 years; something that I strongly believe it would be in the educated public’s interest to scrutinise closely. Perhaps this wouldn’t be so important if economic discourse were not today the language of power in much of the world. But it is. And for these reasons, the conduct of the economics profession should be subject to some sort of serious outside scrutiny whether informal or – preferably, in my opinion – formal. http://www.nakedcapitalism.com/2012/06/philip-pilkington-neoclassical-economics-and-the-foreclosing-of-dissent-the-inner-death-of-a-social-science.html#comment-749928