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Comptes rendus

Joshua Cohen (ed.), Economics after Neoliberalism

Pauli Huotari
p. 409-414
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Joshua Cohen (ed.), Economics after Neoliberalism, Boston: Boston Review, 2019, 173 pages, 978-194651145-4

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Crédits : Boston Review

1Economics after Neoliberalism is a forum-style book edited by Joshua Cohen. The book is structured around an essay, titled “Economics after Neoliberalism”, by Suresh Naidu, Dani Rodrik and Gabriel Zucman. The essay is followed by forum responses, which are then commented by the authors of the opening essay. The rest of the book is dedicated to five essays that approach the title of the book, and of the essay, from different angles and from the perspectives of various disciplines. Naidu, Rodrik and Zucman state the purpose of the book and pull together the responses from other authors. Consequently, my focus in this review is on what they have to say.

2The starting point for Naidu, Rodrik and Zucman is the claim that different forms of inequality and consequences of climate change, whose roots are traced to neoliberalism, are on the rise and social scientists have a responsibility to participate in finding solutions to these issues. Economics is not an exception. According to the authors, “economics is in a state of creative ferment that is often invisible to outsiders” (12).

3Following this ferment, Naidu, Rodrik and Zucman have founded a network of economists called the Economics for Inclusive Prosperity (EfIP) to promote public discussion and policy proposals around the idea of “inclusive prosperity” which considers human prosperity broadly and takes into account the whole distribution of prosperity outcomes. The project stands in opposition to the market fundamentalism, which, according to them, is often wrongly connected to economics. The authors write fondly of new ways of thinking beyond neoliberalism and of the need for genuine alternatives to it. According to them, many of the present policy ideas are not supported by sound and modern economics. One of their missions is to persuade non-economists that economics has a role to play in positive societal and political change. The authors seek to recognize valid criticism of economics, while correcting misconceptions and outdated notions about it.

4For example, Naidu, Rodrik and Zucman point out that outdated simplifications, such as homo economicus, are already being abandoned in economics. Instead, contemporary real world issues are rising to the fore: for example, distributional issues are making a comeback in economists’ agenda. Orthodox assumptions in economics do not rule out distributional issues but these issues have been neglected for many decades. Yet, the authors admit that “[e]conomists still have a strong bias towards market based-policy solutions” (17).

5Another point discussed by the authors is the claim that economics has become much more applied and empirical since the 1990s. They believe that “[t]his is important because systematic empirical evidence is a disciplining device against ideological policy prescriptions” (18). On the other hand, Rodrik has also stated elsewhere that ”[e]conomists necessarily lack evidence about alternative institutional arrangements that are distant from our current reality. The challenge is to remain true to empiricism without crowding out the imagination needed to envisage the inclusive and freedom-enhancing institutions of the future” (Rodrik, 2020). In my view, there is a tension between these statements. Interpretation of empirical facts is not exempt from ideology, whereas imagination is especially strongly connected to ideological underpinnings. And that is not necessarily a bad thing, if one understands ideology as a way of imagining alternatives, taking the constitutive potential of ideas seriously, and as critique of current ideologies as well.

6Finally, according to Naidu, Rodrik and Zucman, “[t]he abstraction with which economists perceive complex bundles of institutions also gives practitioners tools to help design large scale alternatives” (18). That is a bold statement. If there is such a potential in abstractions, the challenge is in its realization. Influential policy prescriptions based on orthodox economics are often focused on facilitating markets. This means, for example, smaller or bigger steps towards market liberalization, or, alternatively, marginal fixes to market failures. Economics might have progressed but the Friedmanian notion that positive economics always comes first and normative economics will have to operate within positively defined framework (Friedman, 1953, 5) still prevails. This is contrary to, for example, institutional economics, which has long emphasized the open system character of the economy and the dialectical relationship between economic agents and institutions, and, consequently, seen economics as inherently normative (see, e.g., Hodgson, 2000). As long as these Friedmanian ideas prevail, there will be little room for imagination or large-scale alternatives.  

7On the other hand, Naidu, Rodrik and Zucman seem also to give clout to politics in some genuinely radical ways regarding, e.g., who should own companies. They recognize that economics should address the issue of power more seriously, which is one of the most criticized shortcomings of the discipline.

8This initial essay is followed by eleven forum responses and a final commentary from the authors. Naidu, Rodrik and Zucman group the forum responses into three categories which are useful for our reviewing purposes as well: the book includes contributions “that want post-neoliberal economics to be more explicitly normative …; those that ask for greater methodological and institutional pluralism …; and those in defense of some version of neoliberalism in the interest of the global poor.” (88). There are also forum responses which don’t clearly fall into any of these categories.

9The forum section of the book varies a lot in content and it looks like an attempt to gather critical voices from across the political as well as the social scientific spectrum. The texts include such different titles as “In defense of neoliberalism” and “What about developing countries?” Although many of the responses deal with economics too, a better title for the book might have been Alternatives to neoliberalism or Political economy of neoliberalism. The overall tone of the book is progressive and different democratic arrangements are being considered as a way forward, but Caleb Orr (70-75) reminds us that even giving more primacy to democracy does not exclude more conservative political and societal outcomes.

10Economics after neoliberalism is like a hung-over politicization after a long night of ‘there is no alternative’-party. The project kind of wakes up to realize that institutional arrangements need to be politicized in order for a change to happen but it is still constrained by how things are currently perceived in the light of an epistemic culture, typical of social scientific knowledge production of our time, that tends to reproduce existing conditions. This kind of epistemic culture gives rise to economism, in which the “economic” is perceived as its own sphere, detached from other social and historical processes (about economism, see e.g. Teivainen, 2002). Connected to neoclassical presumptions of universal behavioral patterns and constant conjunctions, economism has left policy space significantly diminished. The book is looking beyond status quo-reproducing economism but is getting flashbacks from the still ongoing party.

11Although Economics after neoliberalism is a collection of rather different takes on the title, I next seek to assess how the book appears as a whole. The book starts from the remark that humanity faces problems that call for radical change. I read it to mean that these problems remain irresolvable under the vaguely defined neoliberal political and economic regime. The thesis of the book is that economics has a role to play in finding solutions. The various contents of the book analyze current policies which suggest new roles for economics as well as ways to develop it as a social science. 

12In my opinion Arvind Subramanian (53) highlights one of the most important issues regarding the broader discussion around the relationship between social sciences and politics: “Economics might well help us understand the world but gives us little guidance on how to change it”. This paraphrase of Marx on philosophers only interpreting the world helps to contextualize the discussion that Economics after neoliberalism partakes. What kind of roles can economics as a social science have in changing the world? This question remains open, but as many writers in the book remind us in different ways, pluralism of approaches and connecting “the economic” to “the historical” and to “the social” would be a precondition for economics to be able to contribute to a genuine change and overcoming neoliberalism. 

13The concluding chapter of the forum section by Naidu, Rodrik and Zucman is titled "Economists should enable democratic priorities". This sounds like a radical suggestion in the context of economics, which has long sought to a priori define possible societies by using relatively narrow methodology and assumptions of human behavior. To afford primacy to politics, democratic or otherwise, is new in this arena. In the social sciences in general it has always existed.

14The state of “creative ferment” the authors suggest economics is in, partially ends up as a lukewarm brew. As a group of complexity economists state in their forum response “A Transdisciplinary approach”: “We believe that Naidu, Rodrik and Zucman do not go far enough in their calls for reform. The vision they paint is still focused on the discipline of economics and anchored in the core ideas of neoclassical theory that dominated the field in the twentieth century” (64). One example of the narrow reform line is the CORE Econ project which seeks to renew the teaching of introductory economics. It is praised in Robert Manduca’s (98-111) somewhat sentimental essay “Selling Keynesianism” as well as in the interview of Samuel Bowles by Joshua Cohen (112-123), and it also quite well sums up the Cohen-Naidu-Rodrik-Zucman–approach to economics. The point of CORE is to introduce more realistic elements to introductory level economics and to take into account more real world phenomena and substantive contemporary issues. On the other hand, CORE is rather restrained in accounting for the lack of theoretical and methodological pluralism in economics. The head of communications for Rethinking Economics, a student network engaged in advocating for greater pluralism in economics, Daniel Lapedus has signaled that CORE is a step in the right direction but instead of embracing the rich set of different approaches and traditions in economic research, it ends up absorbing some elements from different approaches to the orthodox line of economics (Lapedus, 2018).

15That being said, there are some more far reaching suggestions and more comprehensive critiques in the book as well. The forementioned group of complexity economists seems to call for genuine pluralism. Ethan Bueno de Mesquita, in turn, problematizes dogmatic quantification in “The Perils of quantification”. According to him, it has led us to “unreflective crass utilitarianism” (77). I think that, in addition to CORE-like reforms, introducing these kinds of points to the mainstream of economics could really act as fermenters.

16Although I have been critical of the seemingly radical reformism of the book, I don’t want to downplay some of the genuinely alternative ideas it presents. For example, even though employee ownership in corporations (124-140) might not be a new idea, it would be a real challenge to neoliberalism if put into practice. It may be worth mentioning that Cohen, Rodrik and Zucman are signatories to the Democratizing Work initiative, which is also a serious challenge to how we currently organize work (Global Forum on Democratizing Work, 2020). The ideas regarding democratizing work also transcend the state/markets dichotomy that is quite prevalent in this book as well as in orthodox economic thinking in general, although there are relatively famous figures like Elinor Ostrom who have opposed this false dichotomy.  

17However, I would slightly contest both the “new thinking” and the claim that “economics doesn’t stand in the way of alternatives”. The thinking might be new for mainstream economics, but for the social sciences in general most of the book’s content is already familiar. The book tries to present itself as radical, but mostly includes versions of old critiques. Sure, economics can have a role to play in overcoming neoliberalism, but many of the old ideas still prevail at the intersection of economics and policy. Progressive ideas seem to be on the fringes. Also, economistic hegemony biases the knowledge base of policy making. More pluralism in the epistemic base of policymaking would allow more genuine alternatives to emerge.

18To conclude, most of the book seems to go against economism in a real-world context. Most of the matters dealt with in the book are real world policy issues connected to surrounding historical, political, social and institutional realities. Naidu, Rodrik and Zucman also recognize the role of democratic agency in producing, e.g., institutional change. What the authors fail to recognize in their project is that when it comes to mainstream economics, there are still obstacles to more comprehensive societal changes that it could induce. The problem is that economism is quite strongly embedded in mainstream economics and it is reproducing economic power relations of neoliberalism. As the power of the economistic epistemic communities remains strong in policy making under techno-economic capitalism (Sorsa and Eskelinen, 2018), the consequences of economistic methodology and theory radiate into the real world. For economics as a social science to be able to contribute to overcoming neoliberalism, it must abandon economism.

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Friedman, Milton. 1953. Essays in Positive Economics. Chicago: University of Chicago Press.

Global Forum on Democratizing Work. 2020. Work: Democratize, Decommodify, Remediate. Global Forum on Democratizing Work Initiative.

Hodgson, Geoffrey M. 2000. What Is the Essence of Institutional Economics? Journal of Economic Issues, 34(2): 317-329.

Lapedus, Daniel. 2018. Will the Real Rethinkers Please Stand Up? OpenDemocracy.  

Rodrik, Dani. 2020. The Changing Face of Economics. Project Syndicate.  

Sorsa, Ville-Pekka and Teppo Eskelinen. 2018. Taloustieteellinen Asiantuntemus Teknotaloudellisessa Kapitalismissa. Politiikka, 60(1): 79-88.

Teivainen, Teivo. 2002. Overcoming Economism. Review (Fernand Braudel Center), 25(3): 317-342.

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Pauli Huotari, « Joshua Cohen (ed.), Economics after Neoliberalism »Œconomia, 11-2 | 2021, 409-414.

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