The Economist: What went wrong with economics?
July 17, 2009
The Economist has published an article by the inditing title ‘What went wrong with economics?’ (July 16, 2009). What is more interesting than the argument – that economists have made mistakes leading up to this economic crisis – is the argument’s form: the first two paragraphs go to great lengths to portray the economist as a heroic (male) figure.
Even if economic statements are ‘performed’ as the performativity thesis argues, their entry into theaters of action inevitably (as with all technological innovation) generates phenomenon that the statements themselves do not predict. A theoretical statement issued by an economist might be a starting point of a process of ‘economicization’ or ‘marketization’, but it must pass through layers of development and implementation as it is disseminated. These lengthy and intervening processes modify the statement and are as important to generating the content of downstream action as the original utterance. This is what the sociology of innovation means when it refers to the phenomenon of ‘translation’.
The Economist suggests that economists should have become whistle blowers as their insights were being ‘misused’. This argument implies that a) economics and finance professors have actually been correct all along; and b) they are able to monitor the every day details of financial activity. Part of the problem of course, is that nobody – least of all economists wrapped up in quantitative models – seems to have understood how distributed financial activity was unfolding on the ground. Nobody was really studying the insides of mortgage finance; it was just… happening, in the wild.
Denouncing which economists got it wrong and heralding those who ostensibly got it right only reinforces an individual centric analysis, which obfuscates how, both in boom times and in failure, financial markets are a fundamentally social achievement. If crises such as the current one are caused by collective action then the image of the economist fails not only because the discipline has not lived up to its own projected heroism as omniscient overseers, but also because the notion that desirable economic action depends upon the word of a few sage individuals – that is, the very centrality of the economist – has perhaps been overblown.
The economist has been discredited. Ok. What is more important to understanding contemporary economic conditions is to discredit the very idea that their disappointing performance should dominate the discussion.