The Politics of Economics

The Politics of Economics - 25 June 2020 - Performing Social Science? Disciplines, Expertise, and the Corona Crisis The Politics of Economics in the Time of COVID-19 Jana Bacevic will intervene on 'Performing social science? Disciplines, expertise, and the Corona crisis'. Co-hosted by Cléo Chassonnery-Zaïgouche and Jack Wright. The politics of economics is a research network exploring how economics impacts the world. The seminar series brings different perspectives together to discuss tensions and contestations of economic knowledge in the context of policy, expertise and political movements. We will host one-hour webinars consisting of a conversation with one of our moderators followed by questions from our online audience. This is not about presenting research results but rather sharing our latest thoughts and asking scholars whose expertise we trust to help us think through these strange times. #crassh #universityofcambridge #covid19

The politics of economics is a research network exploring how economics impacts the world. The seminar series brings different perspectives together to discuss tensions and contestations of economic knowledge in the context of policy, expertise and political movements. In this session Jens van t'Klooster (KU Leuve) will be speaking about 'The EU's technocratic crisis management' in conversation with Raf Danna (Cambridge). In this rapidly changing context, how are economists’ positions as experts changing? Will the COVID-19 pandemic upend economic orthodoxy? How does the lockdown affect politics and existing inequalities within the economics profession? How are these changes affecting the way economics engages public debate? How are they affecting the practice of economic policy? Due to the lockdown, we are moving our seminars online for the coming term, and changing the format of our research network. In a series of webinars, we will explore the ways in which the politics of economics is changing as well as how it is reshaping our world. In each episode scholars will have an informal discussion on the COVID-19 pandemic and the ensuing economic crisis. We will invite them to share their thoughts both on the basis of their expertise and from the perspective of their current location. We will host one-hour webinars consisting of a conversation with one of our moderators followed by questions from our online audience. This is not about presenting research results but rather sharing our latest thoughts and asking scholars whose expertise we trust to help us think through these strange times.

The politics of economics is a research network exploring how economics impacts the world. About this Event The politics of economics is a research network exploring how economics impacts the world. The seminar series brings different perspectives together to discuss tensions and contestations of economic knowledge in the context of policy, expertise and political movements. In this session Erik Angner (Stockholm) will be speaking about 'Epistemic Humility' in conversation with Anna Alexandrova (Cambridge) at 2pm BST. In this rapidly changing context, how are economists’ positions as experts changing? Will the COVID-19 pandemic upend economic orthodoxy? How does the lockdown affect politics and existing inequalities within the economics profession? How are these changes affecting the way economics engages public debate? How are they affecting the practice of economic policy? Due to the lockdown, we are moving our seminars online for the coming term, and changing the format of our research network. In a series of webinars, we will explore the ways in which the politics of economics is changing as well as how it is reshaping our world. In each episode scholars will have an informal discussion on the COVID-19 pandemic and the ensuing economic crisis. We will invite them to share their thoughts both on the basis of their expertise and from the perspective of their current location. We will host one-hour webinars consisting of a conversation with one of our moderators followed by questions from our online audience. This is not about presenting research results but rather sharing our latest thoughts and asking scholars whose expertise we trust to help us think through these strange times.

The politics of economics is a research network exploring how economics impacts the world. The seminar series brings different perspectives together to discuss tensions and contestations of economic knowledge in the context of policy, expertise and political movements. About this Event Elizabeth Popp-Berman (University of Michigan) will be speaking about 'Valuing life: statistics and the health/economy tradeoff?' in conversation with Mike Kenny (Cambridge) In this rapidly changing context, how are economists’ positions as experts changing? Will the COVID-19 pandemic upend economic orthodoxy? How does the lockdown affect politics and existing inequalities within the economics profession? How are these changes affecting the way economics engages public debate? How are they affecting the practice of economic policy? In a series of webinars, we will explore the ways in which the politics of economics is changing as well as how it is reshaping our world. In each episode scholars will have an informal discussion on the COVID-19 pandemic and the ensuing economic crisis. We will invite them to share their thoughts both on the basis of their expertise and from the perspective of their current location. We will host one-hour webinars consisting of a conversation with one of our moderators followed by questions from our online audience. This is not about presenting research results but rather sharing our latest thoughts and asking scholars whose expertise we trust to help us think through these strange times.

David Gindis (University of Hertfordshire) will present current research on the history of the Manne seminars and the role of conservative think-tanks in shaping the Law & Economics movement in the US since the 1970s. Steven Medema (Duke University, Senior Visiting Scholar Centre for History and Economics, Cambridge) will present on the history of the different perspectives within Law & Economics. The discussion will be introduced by Ann Sofie Clouts from Cambridge University. David Gindin’s paper (Law & Economics under the Palms: Henry Manne at the University of Miami, 1974-1980) is available upon request (please email Cléo cc2006@cam.ac.uk).

Dr Erin Hengel (University of Liverpool) Dr Anja Prummer (Queen Mary) Respondent: Carolina Alves (University of Cambridge) Abstract Recent studies by economists have highlighted multiple challenges that women face in the discipline. Drawing on this work, this seminar will focus on processes of collaboration, citation, peer-review, mentoring and networking to consider the inequalities that emerge in the modalities of the academy. While we will be examining these questions primarily by referring to the discipline of economics, many of these dynamics relate to wider issues in academia, as well as other workplaces. We also intend to explore how these dynamics might both reflect and intersect with other forms of diversity in the discipline, such as with scholars from the global south. As such, we hope to connect with questions of both diversity in other arenas and other forms of diversity in economics. In turn, we will also consider the possibilities and challenges in using the tools of economists to illuminate this problem, particularly network analysis and modes of quantification. While the seminar foregrounds gender in the economics profession rather than in economic models, there is also space to consider relationships between theory and practice in the discipline.

'Revenge of the Commons: Property, Debt and Collateral in the Evolution of African Financial Capitalism' Professor Keith Breckenridge (WiSER, Wits Institute for Social and Economic Research) This paper examines the history and economics of property forms on the African continent, and, especially, the long term effects of the colonial state's endorsement of informal communal land allocations at the start of the 20th century. Much of the work associated with the registration of land on the African continent has been motivated by a critique of the political project associated with Hernando de Soto's Mystery of Capital. This has led many scholars to emphasize the political dangers of formal titling and to downplay the economic and institutional effects of off-register land (and other asset) allocations - perhaps the most important of which is that, as Malikane has pointed out, African firms cannot raise formal capital. The paper shows that another - less visible - effect of the absence of paper-based forms of collateral on the frican continent has been the widespread turn to automated systems of high-interest, unsecured individualised debts.

Daniel Souleles (Copenhagen Business School) Abstract Private equity emerged in the late 1970s as a vanguard of financial capitalism; and private equity investment firms pioneered a number of the processes and logics that allowed companies, businesses, and people to be treated like fungible investments and according to a portfolio logic. This paper takes one case, the serial buyouts of Hostess bakeries and the humble American snack cake, the Twinkie, and catalogues how the financial management of a company can lead to a number of value conflicts between various social actors and groups in the context of American society. The paper will further suggest that some theories form the anthropology of value and exchange are useful for parsing this societal maelstrom, and identifying the repetitive social dynamics at play in a corporate buy-out.

Will Davies (Goldsmiths) Anna Alexandrova (Cambridge) Abstract This seminar will bring together William Davies and Anna Alexandrova to triangulate between three themes they have both worked on: a) tensions between well-being and economic indicators in the rise of happiness economics, b) the particularity (and ambiguity) of emerging conceptions of ‘well-being’ and c) contemporary challenges to expertise. Within this, the speakers will focus on particular strands. Anna will discuss how well-being science takes many forms, but that promoted by Clark et al in their recent report and book ‘Origins of Happiness’ is striking for its simplistic definition of well-being and implausible mechanical vision of causality. Meanwhile, William will consider how emerging digital methods of happiness science seem to have a bias towards positivity. Feedback is increasingly in terms of whether or not someone expressed positive affect, and not about quantities of hedonia or negative affect. However, this is tied up with the problem of how to capture affect in real-time, and what kind of knowledge is being produced in these processes. Will Davies is a Reader in Political Economy at Goldsmiths. His work explores the way in which economics influences our understanding of politics, society and ourselves. He is author of three monographs: The Happiness Industry: How the government & big business sold us wellbeing (2015), The Limits of Neoliberalism: Authority, sovereignty & the logic of competition (2014) and Nervous States: How feeling took over the world (2018). Anna Alexandrova is a Reader in Philosophy of Science in Cambridge and Principle Investigator of the Expertise Under Pressure project at CRASSH. She has written extensively on the philosophy of wellbeing and of economics, and is author of the monograph A Philosophy for the Science of Well-being (2017).

Poornima Paidipaty (Cambridge) Jason Hickel (Goldsmiths) Abstract In this seminar, Dr Jason Hickel and Dr Poornima Paidipaty will critically discuss the dominant economic measurements used to gauge global poverty and inequality. Based on his new book, The Divide, Jason will present arguments at odds with the dominant narrative of global poverty and inequality reduction, and unpack the political motivations behind this narrative. He will argue that the story of progress towards shared prosperity that institutions like the Work Bank likes to portray, is highly problematic. Poornima will focus on historical shifts in framing, measuring, and understanding inequality. Her historical investigation will invite us to critically examine our notions of equity and justice, as incomes have become the dominant lens for understanding disparity.

Johan Christensen (Leiden) Respondent: Ellen Quigley (Cambridge) Abstract The spread of market-oriented reforms has been one of the major political and economic trends of the late twentieth and early twenty-first centuries. Governments have, to varying degrees, adopted policies that have led to deregulation: the liberalization of trade; the privatization of state entities; and efficiency-oriented tax reforms. Yet some countries embraced these policies more than others. The talk examines one major contributor to this disparity: the entrenchment of U.S.-trained, neoclassical economists in national bureaucracies. It highlights the relationship between expert professions and state institutions – and its decisive influence on the formation of public policies.

Fabian Muniesa (Mines ParisTech) Discussant: Andrew Sanchez (Cambridge) Abstract Of the many ideas that control economic reasoning and the policies that go with it, that of 'value creation' is certainly a most intriguing one. Something called 'value' is assumed to be 'created' and this essentially virtuous process is supposed to guide not only economic conduct but the orientation of the transformation of the world altogether. Making sense of the operations of this concept from the perspective of a political anthropology of finance requires an examination of its rhetorical content, of the worldviews it carries, and of the political realities it fosters. Narratives of investor confidence, of fundamental value and of uncertain future can then be interpreted as nodal elements of this pervasive political technology.

Professor Ben Clift (Department of Politics and International Studies, University of Warwick) This paper explores the evolution of economic ideas within the IMF since the crash and the Great Recession, drawing on research contained in my new book, The IMF and the Politics of Austerity in the Wake of the Global Financial Crisis (Oxford University Press, 2018). Its starting point is that economic orthodoxy is historically contingent. Those who can make authoritative knowledge claims, such as the Fund, enjoy a privileged position within the intersubjective process of constructing economic rectitude. Focusing specifically on policy advice to and surveillance of advanced economies, this research analyses how the Fund uses its authoritative voice to fix meanings attached to appropriate post-crash fiscal policy economic policy. The analysis reveals the malleability of conventional wisdoms about economic policy, and the processes of their social construction. The IMF has long been in the business of developing and corroborating a prescriptive discourse regarding appropriate (and more importantly inappropriate) economic policy. Which economic ideas are drawn on, and how, to inform and underpin economic policy have important implications for macroeconomic policy space. The extraordinary turbulence within the world economy during and after the crash led to unprecedented macroeconomic policy responses, and the Fund played an important role on coordinating and legitimising these novel policy initiatives. It then went on to advocate more policy activism as the Great Recession drew on. This reveals a crucial but under-explored connection between Fund economic ideas and room to manoeuvre for advanced economy governments. The Fund urges advanced economy governments to ensure that the burdens of adjustment and benefits of economic recovery are distributed equitably, to target spending, transfers and automatic stabilisers on lower earners with a higher propensity to spend, and those with fiscal space should ‘backload’ fiscal consolidation. Furthermore, governments should adjust macroeconomic policy settings to further boost demand if growth continues to disappoint. Aggregated together, these policy stances entail an endorsement of activist, redistributive counter-cyclical fiscal policy which contrasts starkly with the IMF’s reputation for austerity. Another aim of the ‘politics of economic ideas’ approach taken in the paper is to explore how economic ideas, even when espoused by technocratic and self-avowedly ‘scientific’ institutions like the IMF, are always rooted in understandings of the principles of political economy – normatively-informed views of how the economy and policy work. It comes down taking a position on a spectrum of views about how far the market, left to its own devices, will likely deliver the most efficient outcomes, and to what extent (and under what conditions) public power should intervene to improve the growth and economic stability. In assessing fiscal policy’s efficacy, reputable arguments backed by respected methodological techniques can be mounted on both sides of the argument, such that no ultimate ’scientific’ judgement of fiscal policy effectiveness is possible. Therefore, economic assessments are built upon underlying views on the desirability of public spending and state intervention playing a major role in the market economy. It is, broadly speaking, the same ideological debate which pitched Keynes against neo-classical orthodoxy in the 1930s. All of which is uncomfortable territory for a Fund keen to retain a non-political character removed from such ideological considerations, and to assert its intellectual authority as a source of scientific, technocratic economic policy wisdom.

John O'Neill (Manchester) James Vause (UNEP-WCMC) Bhaskar Vira (Cambridge) Abstract How should economics be used to inform the solutions to some of our most pressing global challenges like climate change? Some scholars argue that environmental problems are first and foremost ethical problems. Others argue that the scale of environmental problems (global and inter-generational) is much too large for the tools used by economists. Nonetheless, the economy is intimately connected to environmental degradation and economics as a discipline is widely used to design solutions. Economics is and has always been a contested discipline. In light of this, how should it be used to best inform environmental governance? Can economics provide objective inputs into the environmental debate? If so, what do such inputs look like? How does economics shape our understanding of environmental problems and of possible solutions? This panel will discuss these and other questions relating to the use of economics in environmental governance. John O’Neill is professor of Political Economy at the University of Manchester. John's research lies in political economy and philosophy, philosophy and environmental policy, political theory, ethics, and the philosophy of science. He has been involved in a number of UK and European projects on environmental policy. James Vause is the lead economist at the UN Environment World Conservation Monitoring Centre (WCWC). Previously, James worked in the UK Government Economics Service and he has many years of experience applying environmental economics to a range of policy areas. Bhaskar Vira is professor of Political Economy at Cambridge and director of the University of Cambridge Conservation Research Institute. Trained as an economist, Bhaskar’s research is concerned with the often-hidden costs of environmental and developmental processes, and the need for scholarship to draw attention to the distributional consequences of public

Isabella Weber (Goldsmiths) Tobias Rupprecht (Exeter) Abstracts Tobias Rupprecht Pinochet in Prague. Latin American Neoliberalism and (Post-)Socialist Eastern Europe. After stepping down as Chilean president in 1990, Augusto Pinochet, still comandante-en-jefe of the Chilean Army until 1998, turned into an avid traveller around the world. As the former dictator had developed into a potent symbol of Cold War anti-communism, authoritarianism, and market radicalism, his visits usually made a great stir. While he faced much resistance and even legal persecution in Western Europe, Pinochet enjoyed an astonishing degree of popularity across postsocialist Eastern Europe, where, for some, his 'Chilean model' had become a source of inspiration for an authoritarian path of modernisation of their own countries. Indeed, an Eastern European interest in Latin American political economy predated the fall of state socialism. The geography and chronology of the 'neoliberal revolution' in Eastern Europe may thus need some rethinking: the global spread and implementation of neoliberal ideas from the 1970s was not exclusively a Western-led phenomenon. Isabella Weber China’s Encounters with Neoliberalism: Escaping a ‘Big Bang’ and Embracing the Market China is found both to be neoliberal and criticized for not obeying to the rules of neoliberal globalization. To illuminate the origins of this contradiction this paper analyses China’s relationship with neoliberalism from a historical and economic theory perspective. It is shown how the break with Maoism in the context of the deep economic crisis of the 1970s and the subsequent turn to a primacy of economic development and reform opened the door for foreign economists, including neoliberals. Yet, while neoliberal doctrines were vigorously promoted by foreign and Chinese economists their effectiveness was debunked in the great reform debate of the 1980s. China groped out its own distinct gradual embrace of the market and rejected the key tenet of neoliberal transition doctrine: a ‘big bang’ in price reform. Instead of liberalizing prices overnight, China drew on its bureaucratic tradition to pursue a dual-track system. In hindsight, not implementing a ‘big bang’ was a necessary condition for China’s growth success and was critical for China’s distinct development path. At the same time, China’s embrace of the market led to the integration of China into the global division of labor and China became an important player within neoliberal globalization.

Rosa Lastra (Queen Mary University of London) Abstract The consensus that surrounded the granting of central bank independence in the pursuit of a price stability oriented monetary policy has been challenged in the aftermath of the global financial crisis, in the light of the rise of populism on the one hand and the expanded mandates of central banks on the other hand. After considering the economic case for independence and the three Ds (distributional, directional and duration effects), the paper examines three different dimensions in the debate of how the rise in populism - or simply general discontent with the status quo - affects central bank independence. Finally, the paper examines how to interpret the legality of central bank mandates, and whether or not central banks have exceeded their powers. This analysis leads us in turn to consider accountability and, in particular, the judicial review of central bank actions and decisions. It is important to have in place adequate mechanisms to ‘guard the guardians’ of monetary and financial stability.

Wolfgang Munchau (Financial Times) Christopher Bickerton (Cambridge) Louise Haag (York) Abstract The crisis of social-democracy. The recent disenchantment of voters with existing political institutions is often depicted as resulting from a retrenching welfare state and growing economic inequalities. If this explanation is correct then it is striking that the policies enacted by so-called “populist” governments can hardly be described as social democratic. In fact, around the world social democratic parties are in a deep crisis. In the panel, we will discuss these topics and ask how those who are sympathetic to a strong welfare state should respond.

Avner Offer (University of Oxford) Respondent: Victoria Bateman (University of Cambridge) Abstract Economics assumes that every person is a free-standing unit with something to sell. But over the life-cycle, dependency on others is inescapable through infancy, education, unemployment, ill-health and old age. Social democracy and market liberalism offer different solutions to the same problem: how to provide for life-cycle dependency. Social democracy makes lateral transfers from producers to dependents by means of progressive taxation. Market liberalism uses financial markets to transfer financial entitlement over time. Social democracy is undertheorized but works. Economic theory is elaborate but fallible. It is underpinned by the prestige of the Nobel Prize in economics. In the process of responding to the success of social democracy economics shifted its norms from good faith to bad faith, providing a license of anti-social conduct. The Nobel Prize is the pinnacle of meritocracy. The adoption of meritocracy by social-democratic parties has undermined their effectiveness, and the challenge to meritocracy is the driver of the current political and economic crisis.

Martin O'Neill (University of York) Respondent: Clare Chambers (Department of Philosophy, University of Cambridge) Abstract In his recent article ‘Philosophy and public policy after Piketty’, Martin O’Neill brings out the wealth of political ideas to be found in Capital in the Twenty-First Century. He also explores what research agenda follows from this work and how Piketty’s findings should inform public policy. The article will be the basis for a discussion of income and wealth statistics, the way our understanding of inequality shapes politics and politics shapes our understanding of inequality. Martin's article can be found here

Dan M. Hausman (University of Wisconsin-Madison) Respondents: Anna Alexandrova (University of Cambridge) Toke Aidt (University of Cambridge) Abstract The vast majority of economists accept an idealized model of economic outcomes arising from the rational choices of consumers and producers. Although this model is an almost unanimous starting point, economists differ greatly on whether they find the model useful largely to help to identify the most important factors it leaves out or whether the model can, with few modifications directly guide policy. The former economists are more likely to be democrats in the U.S. or members of the Labour Party in the U.K. while the latter economists are more likely to be Republicans and Tories. What explains in part the surprising fact that members of different political parties differ in their purportedly scientific beliefs concerning how economies operate is that the differences in positive theory lead to differences in policy prescriptions. Those economists who see the fundamental model as accurately depicting how economies work trace failures in actual economies – phenomena such as financial crises and recessions – to government interferences with the market. The cure is to stop interfering. Those who look to the fundamental model for help in diagnosing the causal factors that prevent economies from running smoothly are more inclined to address economic problems with calls for more rather than less interference with the market. The recent “Great Recession” illustrates the point. Many prominent economists argued that to restore prosperity government needed to follow a policy of austerity that would reassure economic agents that government would limit its interference in economic life. Other prominent economists argued that what was needed were monetary and fiscal policies that would stimulate the economy, mainly by putting money in consumer’s pockets to thereby enhance demand, and make investments profitable again. Nobel laureates lined up on both sides, but after the initial emergency passed, austerity won the political battles in the U.S. and the U.K., and in most of the rest of the world, too. Why? Was it the strength of the arguments? Was austerity particularly attractive to those with greater political power? This talk attempts to sketch some answers, which have distressing implications concerning economic policy.