Listener: 6 May, 2000.

Keywords: History of Ideas, Methodology & Philosophy;

The economics profession had a high standing 40 years ago. Clergymen would mention that before they took orders they took an arts degree in economics. An oft repeated joke was the accountant who wanted to be an economist but did not have the personality. It is ages since a priest made that confession to me, and today the joke reverses the professions. It is not that today’s economists lack the passions that drove their predecessors. Rather, the morality has changed, and with it the public perception. Whatever the individual ethics of today’s economists, the discipline has been increasingly developed around the notion that people primarily pursue their self-interest. Even altruism is marginalised, explained as another way of pursuing selfishness. Economics may be the only “profession” that does not have any code of ethics.

Forty years ago, economists were less powerful, or at least they seemed so to the public, if they were noticed at all. Admittedly the clergy had studied economics hoping to find an answer to the devastation of depression of the 1930s, but economists were not eagerly consulted on questions on which they had no expertise – they were hardly consulted at all. The Treasury was already the most powerful department of state, but its profile was low.

The Anti-Economist Papers does not trace this change. Instead it presents economists as Paul Bieleski sees them today. However, despite its title, the book does not distinguish between economists and economics. The book’s cover says it is “entertaining and hardhitting”. True, although most economists will not be amused. But it is more a harangue than a thoroughly researched study, The book’s presentation is picaresque, leaping from topic to topic. The editing is a bit perfunctory, with the same joke told on three different pages

I’m afraid the book is littered with errors and inaccuracies. It says that when two billiard balls collide, kinetic energy is preserved. In fact, some of the energy is turned into heat, the balls slow down, and eventually stop. There are equally nonsensical economics mistakes, or exaggerations and misrepresentations. (It always takes more space to explain an economic mistake than to make it.) Even where the book is broadly correct it can be misleading. The defects of the measurement of economic activity (eg, GDP) have been well known for years, although critics overlook that the non-economists’ complaints were anticipated by economists. (New Zealand economists were struggling with how to measure the non-market economy decades before environmentalists and feminists complained.) The trouble is that no one – economist or non-economist – has worked out how to resolve the technical issues. This book is stronger on criticisms than alternatives.

Moreover, the book often attributes to all economists the views of a single economist, especially one subject to ideological excesses and poor analysis. Doing this ignores the debates within the profession, albeit less healthy ones than 40 years ago. Where it criticises economics, the book still uses economic analysis. It is illogical to argue to ‘ban the study of economics’ when the book is part of that study. Although many books have advocated censorship, this may be the first one to advocate proscribing itself.

But behind the rhetoric there are serious questions that the economics profession has to face. Bieleski’s conclusion that ‘economists practice a religion, one devoid of spiritual or human concerns. They pretend to have a science of economics, but their gospel is anti-scientific’ reflects a widespread public perception. It is, of course, foolish to say this applies to all economists. There are some brave and wonderful exceptions, and most economists are honest, if perhaps limited, craftsmen and women.

But consider the public’s perception as reflected by Bieleski. He was taught economics, apparently badly (and by economists, mark you). He uses anecdotes as proof, as do far too many economists. He reports from a media in which the economic commentators regularly make obscure and misleading analysis or selfserving mistakes. Surely the public has a right to be cynical when a bank economist provides ‘independent’. commentary to the media on a Reserve Bank monetary policy announcement, and within a week is defending the bank’s interest rate hike that follows.

Journalists are cynical, too, for they no longer bother trying to get the economics right. Recently, two business journalists, presenting what was purportedly an informed review of the first 100 days of the new government, described the terms of trade as ‘the difference between what New Zealand exports and imports from overseas’. In fact, it is the ratio of export prices to import prices. (They then gave a ‘D’, when the government has little control of this foreign-determined ratio.)

Should economists ignore such widespread criticisms and misunderstandings? Surely a profession is the custodian of its discipline. If it fails to meet the challenge that the book poses, it will fail in its custodianship. The consequence, as we are seeing, is a hurnpty-durnpty world in which words have only the meanings the speakers give them. Frequently they mislead the audience in favour of the speaker’s, or paymaster’s, interests. Too often some economists use power without responsibility – like a harlot.

Will economists accept the book’s challenge? One must be deeply pessimistic about the economics profession in general. Economic theory predicts that professions do not reform themselves without external intervention. But I have derived this conclusion from using an analytical framework that remains one of the powerful means of improving the material lot of mankind if its discipline is properly pursued.