Economic theory, anti-economics, and political ideology

Don Ross

University of Alabama at Birmingham and University of Cape Town

dross@commerce.uct.ac.za

1. Introduction

Economics is the only established discipline that is regularly charged not just with including ideologically motivated research programs and hypotheses, but with actually being (at least in its institutionalized mainstream form) an ideology. As Coleman (2002) documents, this charge has followed economics since its modern inception as `political economy’ in the eighteenth century. There is a veritable tradition of what Coleman calls `anti-economics’, most famously populated by people such as Ruskin and Carlyle, and extending in the contemporary environment to include philosophers John Gray[1] and John Dupré,[2] numerous popular agitators associated with environmentalism and the self-styled `anti-capitalist’ and `anti-globalization’ movements, and no small number of disillusioned economists.[3] Of course all disciplinary establishments rightly attract critical literature; but as far as I know no one has ever published a book called `The Death of Geology’ featuring a hangman’s noose on the cover.[4] Coleman’s compendium of evidence shows conclusively, in case anyone hasn’t been keeping their eyes and ears open, that economics is actively hated by a substantial number of people. There is no other discipline of which this is true, except insofar as some people hate all actual and would-be scientific disciplines from religious, green, or aesthetic motivations.[5]

My aim in this essay is to examine this situation as a philosopher of science. It is partly economists’ claims to be doing science, rather than politics, that make the stakes so high when it is alleged that economics is ideology. The expertise and authority that economists claim are those accorded to science. This plays a key role in inflaming critics; economists present themselves not as merely bringing one among various possible sets of policy opinions to the democratic table for consideration, but as informing laypeople, from the necessarily non-democratic institutional precincts of science,[6] that certain policy ideas are factually impossible or so costly as to be implausible. It is the conjunction of a high enlightenment scientific stance and preoccupation with policy that makes economics so toxic to some. Although a fraction of economists concern themselves with questions of basic scientific interest,[7] most economic modeling and data analysis are directly motivated by social and political problems. This can be said of social sciences generally. However, a distinctive feature of economics, and the final one necessary for explaining the antagonistic passions it arouses, is that uniquely among the social sciences economists can claim to have a clearly dominant set of rigorous theoretical foundations, as a result of which they need not hedge their claims to epistemic authority in a way that a sociologist, forced to justify all her particular conceptual assumptions at every turn, cannot avoid. Uniquely among social scientists, economists are not forced by theoretical instability to be humble. (Hence the tireless efforts of debunkers of economics to exaggerate such pockets of disorder as can be found in economic theory. See Dasgupta 2002 for review and rebuttal.)

Let me be clear at the outset that I do not really believe that the charge that most (let alone all) economics is ideology is plausible. If such a belief were required to motivate the inquiry in this essay then I would not elect to undertake it. However, as I will explain, different economists answer the charge in divergent ways, partly because the content of the charge itself has varied, but also because economists have held different positions on both the actual and the appropriate relationships between economic theory and normative opinion (both as regards policy and political philosophy). Therefore, considering the charge in its various manifestations and evaluating its similarly various answers, is of value for light it sheds on both the nature of economics and on fact / value issues in the philosophy of science.

It would be impossible to say anything significant about the relationship between economics and ideology at less than monograph length without first delimiting the scope of each. By `economics’ I refer to the establishment economics of the global academy. This is difficult to analytically define, but easy to pick out ostensively, thanks to the fact that there is a single standard undergraduate and postgraduate economics curriculum taught in the majority of the world’s universities. Though many programs make room for optional units of heterodoxy, virtually every economist hired by national treasuries, reserve banks, large corporations, private investment banks, and policy analysis institutions has their core training in the standard curriculum. Like any living institutionalized tradition, mainstream economics is fuzzy on its boundaries. It includes elements of Marx as part of its `inside’ history, but interprets him as the second main figure in a Ricardo-Marx-Sraffa-Robinson historical sub-current, rather than as the prophet of the pathology and coming demise of capitalism. It is now clearly making room, after some resistance, for behavioral / experimental methods and much greater attentiveness to institutions and their evolutionary dynamics than it allowed during a strong anti-historicist phase that lasted from the 1930s through the 1970s. But it does not, in any precinct, accept verbal argument as a substitute for rigorous modeling, and it is therefore committed to an axiomatic style. Though it will entertain almost any secondary interest – including interest in justice – as legitimate, interest in efficiency is always the primary interest, and this is what makes something count as economics according to the mainstream. It treats microeconomics as more fundamental than macroeconomics, and this is reflected in curriculum requirements. The theoretical core of establishment microeconomics is neoclassical consumer theory and game-theoretic industrial organization, auction, bargaining and market microstructure theory, and the empirical core is analysis of household consumption data and dynamic pricing and production modeling. In macroeconomics the establishment recognizes considerable theoretical uncertainty, though its basic conceptual framework is still that established by Keynes and Hicks, albeit with emphasis on a much wider range of policy instruments and variables and no commitment to the Phillips curve. The economics of financial markets is a distinct specialization with its own foundational models. Law and economics is another optional specialization, but with less sui generis foundations that are based in core micro theory. Finally, all economists learn at least a basic set of econometric techniques.

The entire discussion in this essay applies to economic theory. A great deal of the activity carried out by economists is measurement, which it is silly to regard as ideology. Still more activity, foundational work in econometrics, is theory of (distinctively economic) measurement. This, likewise, cannot be ideology. Though some anti-economists, influenced by post-modern ambitions to show that every `text’ from plays to laundry lists can be deconstructed to yield ideological motivations and presuppositions, aim to find ideology in econometrics, their cause does not require them to try or to succeed at this. They need simply point out that it is economic theory in interaction with policy ends and means that determines the classes of events and types of processes econometricians seek to measure and to learn to measure better. Anti-economists can thus think that econometricians waste resources measuring poorly motivated classes of events and processes without having to argue that they are first-order peddlers of ideologies.[8] It is enough for their purposes if they can convict economic theorists and policy advisors of occupying that role.

On `ideology’ we must take our lead from sociologists and political scientists. Freeden (1996) is representative of the main prevailing conception among them. First, ideologies simplify, often with considerable distortion, models of causal relationships in political, social and economic domains that usually have some basis in intellectual work. But the primary function of an ideology is not explanation, prediction or understanding. Rather, it is coordination, for purposes of political behavior (including purely rhetorical behavior), on meanings for normatively freighted concepts such as `liberty’ and `justice,’ which the academy treats as essentially and permanently contestable. As Freeden puts it, “an ideology will link together a particular conception of human nature, a particular conception of social structure, of justice, of liberty, of authority, etc.. `This is what liberty means, and that is what justice means, it asserts …” (p. 76). Furthermore, these conceptions are always made in more-or-less explicit contrast with alternative, also ideological, conceptions already in play. (The rise of a new ideology often, then, causes adjustment in prior ideologies with which it sets up oppositions, development with which the newer ideology may then feel a need to grapple, and so on recursively; ideologies are inherently dynamic even when, as with Soviet-style Marxism in Stalin’s time, they are centrally and deliberately controlled.) Though some ideologies, such as most versions of socialism, aim to have universal scope, others, such as racist Shintoism in Japan and Islamic and American conservative versions of political-religious fundamentalism, are avowedly parochial. An economist is bound to note that, in light of the idea that ideologies are systems for coordinating action, evolutionary game theory is the obvious technology for modeling their dynamics. They plausibly have much in common with rituals, as recently modeled by Chwe (2003). Many proponents of ideologies will typically indulge some degree of bad faith – from consciously or semi-consciously suppressing counter-ideological data and arguments to deliberately prevaricating – but it is crucial to the vigor of an ideology that most of its promoters believe themselves to be epistemically or morally conscientious or both; when this ceases to be the case, an ideology is on its way to death.

The fact that ideologues are roused to unusual excitement by economics is just one side of the discipline’s peculiar relationship to ideology. The other side is that economics and ideology closely share their history and developed under one another’s profound influence. Though there have long been bodies of religious thought that function politically and socially as ideologies do, the modern idea of secular ideology is exactly as old as political economy / economics, and arose in response to the same historical contingency: the rise of mass markets based on specialization of labor and on institutions for concentrating capital so as to efficiently allocate risk.

Modern ideologies are popularly conceived as lying along a one-dimensional spectrum from right to left. Since they are totalizing – this being part of what makes them ideologies – people who think by means of them tend to sort anything that contests them on this same spectrum. As a result, a prevailing `ideology of ideologies’ denies that there are comprehensive and coherent political views that have no assignable place on the spectrum. The spectrum itself arose in the context of the French Revolution, when it was used to order political agents according to the extent to which they were in favor of discarding, reforming or conserving traditional institutions. Almost from the start those on the left found their most salient and coherent criticism coming from the new, and then extremely fashionable, self-announced science of political economy, when Edmund Burke invoked its principles (as he interpreted them) to claim that all points left of a particular point on the spectrum were doomed to be self-undermining as a matter of scientific fact. Given the left’s perfect record of political failure until the mid-nineteenth century, it was incumbent on left advocates to find theoretical grounds for denying Burke’s claim – they could not answer him simply by pointing to experience. In the process left ideology developed its initial characteristic principles based around deliberate redistribution of property in the interests of greater equality; the institution of private property in the means of production came to be seen as the traditional institution on which other traditional institutions depend for their tenacity.[9] Marx’s was of course the towering contribution here, and Marx chose theoretical political economy as the fundamental site for his dialectic.

Dominant ideological attitudes and prevailing paradigms in economics shadowed one another closely through the twentieth century. Before World War I, the governing ideology in the industrial societies stressed the imperative of leaving price setting to the interaction of supply and demand,[10] just as did high neoclassical economics. The left came to regard this as an apology for the status quo in property distribution, and even if this was unjustified as a generalization there is no doubt that wealthy interests often appealed to economic theory in defense of rents. In the1930s economists discovered, or thought they had discovered, the virtues of regulation and planning. Because of the popular linking of free markets with status quo property protection, this was taken to be a leftward shift on the spectrum, which governing political sentiment influenced by the Great Depression closely tracked. Within a few years Karl Polanyi (1944) had re-written the history of industrial society, to the satisfaction of most non-communist academic and journalistic opinion, so that the formerly triumphant rise of market-focused society had become the story of the tragic suffering of the working class along the rough road to the rationally managed welfare state. Galbraith (1960) rings the same theme with more complacency and greater emphasis on practical policy. But by two decades later, the Lucas critique had re-convinced dominant policy opinion in economics that market processes are necessarily relatively autonomous, while on the popular level Thatcher and her imitators invoked Hayek to justify ideological celebration of the retreat of the state (even if the Thatcherite state did not actually retreat so much as re-allocate its resources from ownership of assets to regulation[11]). As of present writing, prominent voices advocating pragmatically judicious mixtures of private and public institutional governance scold yesterday’s “extremists” of both sides, in economics (Stiglitz 1996, 2003) and populist political economy (Frank 2001) alike. In summary: left, right and centre have partly defined themselves for decades around the question of how much state regulation of markets is appropriate, with complete suppression of markets amounting to the limiting case on the extreme left. However, fascism and democratic forms of right communitarianism fit awkwardly into this scheme, since they favor subordination of market-driven motivations to nationalistic and civic virtue considerations respectively.

An economist of whiggish inclinations might read this familiar history as consistent with the idea that dominant popular ideology just simplifies and moralizes whatever policy perspectives scientific economists first discover by rational investigation to be best justified. On this interpretation, ideological economics is just pop economics, and is ultimately controlled, with lags, by professional economics. This view is not nonsense and should not be waved aside as entirely simplistic and self-flattering. For one thing, there is a reliably observable lag between academic and popular enthusiasms with respect to large-scale economic policy frameworks, and it would pay implausible tribute to economists’ cultural and political prescience to imagine that they unerringly sniff the coming wind so as to position themselves in front of populist parades. It is more realistic to suppose that they often make genuine discoveries that others repeat subsequently, partly by reflecting on experience and partly by encountering and reacting to ideologically spun popularizations of professional economics. Still, we also know that ideologies coalesce gradually, and from many of the same forces that cause academic consensus to crystallize. The latter do so faster because academics form a tighter community of opinion and devote more resources to coordination of ideas than other people. To some extent, then, professional and popular policy fads are products of common historical causes. There surely can be no serious doubt that economics and ideology have been locked in a close dance, where neither side yields uncontested lead, for the entire short histories of both modern economics and secular ideology.

Let me now integrate this point with my opening one: while similar dancing might go on to a limited extent between popular philosophy and all scientific disciplines, the extent to which economics and ideology influence one another is qualitatively distinctive. No discipline is remotely as significant to ideological shifts as economics; and, as stressed at the outset, no discipline conducts its business under the relentless ideological scrutiny and pressure that economics does. The basic reason for this is plain: economics is the discipline most directly concerned with the social distribution of resources, and secular ideologies are, first and foremost, devices by which people coordinate on norms for regulating flows of resources among social groups. Economics dances closely with ideology because they are, at any given time, listening to the same band, even if with different sensibilities and levels of appreciation.

I have now said enough by way of background framing to state the goal of this essay. I will offer grounds for accepting that economics is entitled to scientific status despite its close and unremitting dance with ideology. As noted earlier, I am less interested in this unsurprising conclusion per se than I am in what the details of the answer tell us about the nature of both professional economics and ideology. Let me also note that I do not intend my strategy for defense to apply to other social sciences, except insofar as they (or branches of them) have theoretical foundations that are as transparent to their users, and as practically powerful in framing empirical investigation and modeling, as those of economics. My view here is not that such foundations are necessary for objectivity, so I am not suggesting that a sociologist or anthropologist is necessarily trapped in ideology to a greater extent than an economist. My point is much more modest. Where there are relatively consensual foundations it is a great deal easier to identify disciplinary boundaries than where there are not. As a result, the philosophy of anthropology (for example) is harder than the philosophy of economics (or of physics, or of biology) and I disavow any attempt to address the former here. That is just to say, then, that this essay is not an exercise in philosophy of social sciences other than economics.

2. Anti-economists and markets

As noted above, essential fuel for hatred of economics is the widespread view that economics pretends to be science while in fact being ideology – in particular, ideology produced for the benefit of the powerful, for which economists are paid in kind. Some anti-economists explicitly say that they regard economics as being ideology, while others insist that economics is essentially a tool that serves ideology. To still others we can attribute opinions about ideological dominance of economics on the basis of other things they claim. What is meant by such self-attribution and attribution, and what justifications for their views do anti-economists tend to offer?

Coleman (2002) concludes, on the basis of ample evidence he reviews, that “Anti-economics has commonly presented one supreme ground as to why economics is a bane: that is, that economics is sympathetic to the market. Anti-liberal anti-economics (both Right and Left), and their [sic] allies in nationalism, in the religion of love, and in the cults of nature and art, have all tried to show that economics is a bane on account of its sympathy towards the market” (p. 232). We will consider later how far it is correct for anti-economists to attribute `sympathy towards the market’ to economists generally; for the moment our concern is just with what unites anti-economists. They begin from the observation that market institutions are of great political and social importance in (at least) modern industrial and post-industrial culture, and that market-focused behavior is more reliably rewarded in this culture than any other generic type of behavior. On various grounds, sometimes radical and sometimes conservative, they deplore these facts. They then allege that the very purpose of economics is to help entrench them. Economics is generally held to do this by a combination or subset of four main activities:

(i) showing how market mechanisms may be made to work better in their own terms;

(ii) encouraging celebration of market institutions and market behavior by promoting the belief that societies in which production, and therefore capital resource allocation, is dominated by market-focused institutions[12] are systematically likely to be more efficient than other sorts of societies, and therefore tend to produce higher per capita welfare that leaves even poorer citizens materially better off than they would otherwise be;

(iii) encouraging celebration of market institutions and market behavior by promoting the belief that as market-focused institutions become more dominant in a society, this tends to widen the scope of liberty and/or democracy in the society in question;

(iv) promoting the belief that dominance of societies by market-focused institutions is natural and so ineradicable or uncontainable, by claiming scientific authority in offering theories and even `laws’ that purport to state objective truths about relationships between markets and other types of social structures and processes.

We will consider the extent to which it is reasonable to ascribe these ambitions to economics throughout the essay. For the moment, let us just note that it is easy to cite particular leading economists who engage in all of the activities above.

The reader may have noted the absence of reference to a value that has been crucially contested during the history of ideological responses to economics, viz., equality. Left anti-economists are suspicious of or hostile to markets mainly because they believe that markets amplify and perpetuate material and social inequalities; and some right anti-economists dislike markets because they believe that markets undermine differences in status they hold to be valuable. However, few anti-economists have attributed to economics the first-order goal of either reducing or promoting equality of outcomes. This is for the good reason that few economists have, in fact, supposed that any specifically and narrowly economic programme, by itself, tends necessarily to either undermine or enhance equality of outcomes. Many, though by no means all, economists over the years have believed that equality of outcomes is a prima facie good that is traded off against others, including aggregate and / or average and/or minimum welfare levels. Many have also supposed that there are in-principle trade-offs between equality of outcomes and liberty. (Equality of opportunity has often been partially equated with liberty.) Anti-economists have not in general disputed the second supposition, though they have of course defended (different) very strong views about where the trade-off between equality of outcomes and liberty ought to be struck. However, few on either side have taken this to be in itself an economic dispute; thus a view on it has not generally been constitutive of what is baleful about economics according to anti-economists; rather, they have generally maintained that economics helps to encourage libertarian stances on this trade-off as a causal product. As regards putative trade-offs between equality and welfare, left anti-economists have often denied that these are necessary. However, they have generally seen belief in such trade-offs as arising from commitment to market-focused institutions. Thus this aspect of economics has generally been treated by anti-economists as a second-order rather than a first-order bane. This explains its absence from the list above. We will return explicitly to issues around equality towards the end of the essay.

On the basis of the foregoing, we may distinguish between five stances on the relationship between economics and ideology, each of which contributes to a distinct grade of anti-economics:

Stance 1: Economics aims at goals (i) through (iv) and succeeds at none of them except insofar as it fashions and promotes an ideology.

This stance is equivalent to the strongest possible anti-economics, holding that economics is all or mainly promotion of `pro-market’ ideology. One might expect to find it maintained only by extreme ideologues. In fact, however, the main route to it by critics who do not rant is by way of sweeping methodological criticisms, often very sober ones whose motivation is not (or at least not mainly) ideological. Philosophers of science who are critical of what they take to be the general foundational edifice of economics belong in this sub-camp of anti-economists. Leading examples are Hollis and Nell (1975) and Hausman (1992).[13] Hausman, the most sophisticated proponent of the stance, sets up general equilibrium reasoning as the theoretical core of all of economics, and then argues for the more-or-less complete irrelevance of general equilibrium reasoning to empirical or policy problems. It is hard to see how this conjunction of opinions does not imply the strongest possible grade of anti-economics. On the other hand, if Hausman adopted the broader conception of mainstream economics in use here, it may be that this would lead him to endorse a weaker grade or to entitle him to say that he is not an anti-economist but just a critic of derivations of policy from general equilibrium reasoning. Because anti-economist philosophers of science are more likely than others to recognize the motivational warrant of epistemological and methodological conservatism within science generally, they are less inclined than other anti-economists to attribute ideologically motivated bad faith to economists. But, typically, neither do they explicitly disavow such attributions, at least as applied to many or most economists, and because they are legitimate scholarly authorities they provide powerful ammunition to more overtly ideological anti-economists. Some economists (e.g. Heilbroner and Milburg 1995, Ormerod 1997, Lawson 1997, Blaug 2002) echo the generic methodological criticisms of philosophers, and for polemical purposes their authority is even more useful. They are also, in general, less circumspect in their rhetoric than the philosophers.

Stance 2: Economics aims at all or some of goals (i) through (iv) but succeeds (sometimes or often) by means other than ideological construction and promotion only at goal (i).

This stance is equivalent to holding that activity in economics divides into two parts: (a) technical activity performed in service to market-promoted interests, and (b) promotion of `pro-market’ ideology. As Schumpeter (1950, p. 129) observes, anti-economists can concede that economists are often technically successful. The most influential anti-economist of all, Marx,[14] certainly allowed that Smith and Ricardo had gone far in achieving (i). In general, for anti-economists who insist that economics is ideologically committed to (rather than scientifically justified in pursuing) goal (ii), little is at stake over the question of whether they sometimes or often succeed at (i).

What crucially separate stronger from weaker forms of anti-economics are different views of economists’ success with respect to goal (ii). Marx, of course, thought that communism would be even more productively powerful than capitalism, so he did not concede (ii) to mainstream economics except insofar as it criticized feudalism and agrarianism. A different route to entire rejection of (ii) while conceding (i) is taken by some environmentalists who define productive superiority in terms of what they call sustainable productivity, and who hold the very radical view that markets are incapable of that. Environmentalist E.F. Schumacher (1973) and his 21^st-century followers at least approximate this position, since the scope they leave for markets as compatible with sustainability is so pinched that it is no longer clear they are imagining markets, as most economists understand them, at all. (See Brecher and Costello 1994, Bello 2004.)

Stance 2 is a strong form of anti-economics because, in denying that market-focused institutions are even a basis for productive superiority, it leaves little hope of explaining the institutional significance of economics except by recourse to the hypothesis that economists are, wittingly or unwittingly, stooges of the powerful.

Some anti-economists deny the value, rather than the achievability, of goal (ii), which then knocks back onto the justification of the intellectual and other resources lavished on goal (i). Most 19^th-century romantic and many contemporary green anti-economists agree that economic analysis shows market mechanisms to be productively superior to alternatives, but deplore economics because, on moral grounds, they deplore increased material productivity. A major impediment to the popularity of this stance, at least on the left, is that it seems to entail the view that the world’s poorer people and regions should refrain from attempting to catch up to rich ones, and that people in rich parts of the world are obliged not to help them to do so. There is of course nothing logically incoherent in such a position, but anyone who advocates it and is not herself poor must expect more ridicule and abuse than counter-argument. Meanwhile, defenders of the attitude are even scarcer in the third world than they are in the first. Note that an economist who points this out – and I think it morally dubious not to point it out, whenever the attitude emerges – thereby engages in direct normative argument with ideological critics of economics.

Stance 3: Economics aims (at least) at goals (i) through (iii), succeeds (sometimes or often) at goals (i) and (ii), but in seeking to show that market-focused institutions are more conducive to liberty or democracy economics becomes ideology.

Varieties of anti-economics that are motivated by imputing goal (iii) – as well as (iv) – to economics and then declaring them to be ideological will seem to many economists to simply be peddling populist confusion. Whatever particular economists might have believed and defended in their non-professional capacity, it will be said, scientific economics is not in the business of defending abstract political norms as in imputed goal (iii), or metaphysical claims as in imputed goal (iv). For reasons I will now explain, I will refer to this as the `turtle defense’.

While it is certainly true that the vast majority of papers in economics never mention liberty, democracy or laws of markets (and many never mention even markets; see below), responding to popular anti-economic stances on the basis of this is hasty for several reasons. While no one should regard it as a proper scientific aim to lobby for freedom or democracy, economists certainly study, in a scientific spirit, the causal and/or equilibrium foundations of liberty and democracy / justice (Jackman 1973, Przeworski et al 2000, Binmore 1994, 1998); and on the basis of such study a significant number of economists have indeed concluded that strong market-focused institutions are at least a necessary condition in a society for both (Usher 1981, B. Friedman 2005). Given the irreducibly normative character of the concepts of liberty and democracy / justice, arguments for the truth of this proposition will inevitably be taken as advocacy for market-focused institutions. But few economists will agree that arguments for the propositions, whether ultimately successful or not, are necessarily ideological. Since anti-economists claim that they are, we here have a dispute between economists and their critics that should not simply be avoided by denying that economists harbor ambitions to comment professionally on grand normative questions. Economists’ theses on these questions might be true; and we should not guarantee our own inability to discover this as a consequence of a tactic adopted for dodging often irresponsible anti-economists. In fact, I will argue later, the most convincing defenses economists have given of the importance of markets for welfare and productivity have tipped unavoidably into direct consideration of these questions; Schumpeter, I will maintain, remains the most impressive voice from the side of economics on imputed goals (i) – (iii) and their interrelationships. Finally, economists can completely retreat from goal (iv) only by embracing a degree of historicism and relativism that is not borne out by the practice of most of those who engage in theory at all. (To reiterate: I recognize that most economists do not.) The intellectual standards of most anti-economists – excluding serious methodological critics such as Hausman – are generally shoddy; but their imputations to economics of goals (iii) and (iv) are not baseless, and to try to ignore them by pretending that they are is at best to bypass interesting questions. At worst it is to enhance the cogency of their case by appearing to add hypocrisy and arrogance to their list of motivated grievances.

Stance 3 is virtually unoccupied. Those who seem to occupy it generally do so because they re-define `liberty’ so that it no longer means in the versions of liberal theory with which many economists have been associated. It invites less confusion to understand such people as adopting the next stance.

Stance 4: Economics sometimes or often aims at goals (i) and (ii), succeeds in showing that there is a systematic relation of mutual reinforcement between dominance of societies by market-focused institutions and personal liberty in those societies, but in seeking to show that market-focused institutions are more conducive to democracy economics becomes ideology.

This grade of anti-economics is advocated by those who insist that libertarian conceptions of freedom are self-undermining, leading to Hobbesian anarchy and insecurity rather than genuine – typically, in some sense, Hegelian – freedom. Stance 4 is occupied by many conservative communitarians and so-called `post-colonialist’ social critics who regard the liberal-individualist ethos as a modern and peculiarly Western pathology, and who therefore insist that liberty requires redefinition if it is to be a consistent positive ideal. One sometime diagnostic feature of the stance (though not the feature that, per se, makes it a version of anti-economics) is emphasis on the idea that liberty and democracy are wholly distinct ideals. A recent systematic exposition and defense of the stance as a brand of anti-economics is Hamilton (2003). Proponents can concede that markets promote individual liberty of the sort they reject as a norm, while arguing that what is traded off for it is something genuinely valuable, be this community cohesion and shared purpose or the welfare of the less well-off. The first charge typically used to come from the right and the second from the left (though not from Marx, who supposed that communism would promote everyone’s freedom better than market-focused society), but recent left critics have been more inclined to echo the right on this point. This is explained by the fact that the populist left has over the past few decades appropriated environmentalism, which began as an aspect of right anti-economics.[15] It is plausible to suppose that the existence of establishment economics as a foil for the ideological left was crucial for this appropriation.

Some anti-economists have been willing to concede that economics succeeds in both aspects of (iii). Advocates of Soviet-style Marxist, fascist, or theocratic-fundamentalist anti-economics positions can all cheerfully[16] admit that market institutions promote democracy, either because they disapprove of democracy, or think that the kind of democracy in question is worthless because it is `bourgeois’ or individualist. However, none of these normative standpoints are currently taken seriously (as first-order standpoints) outside populist contexts. What about conservative communitarians? I would argue – though, because this would carry us at length into deep issues political philosophy, I will not do so here – that to be a conservative communitarian and to admit that market institutions promote productivity and freedom and democracy and to nevertheless be against economic defense of market institutions would be tantamount to losing all perceptible distance from fascism.[17] Though I think there are in fact a non-trivial number of current fascists who don’t realize that they endorse fascism, I will assume that a view’s being (wittingly or unwittingly) fascist is sufficient to make it unacceptable. This is ultimately because all normative arguments so far advanced for fascism are easily shown to be unsound. I assert that the same can be said of Soviet-style Marxism. It is eventually reasonable to pronounce movements intellectually dead under such circumstances, even if they are not politically dead under different labels.[18]

Stance 5: Economics aims and sometimes or often succeeds at goal (i), with or without success at goals (ii) or (iii), but in seeking to show that dominance of societies by market-focused institutions is natural, economics becomes ideology.

This is well-worn theme in both academic (Dupré 2001, Mirowski 1989, 1994, 2002) and popular (T. Frank 2001, Aune 2002) criticism of mainstream economics. In the non-populist context, there are two routes to it. One is generic: extreme humanists who believe that all attempts to show that there are non-trivial natural limits on plausible norms of social organization that social science can discover[19] are disguised ideology apply this conclusion to putatively scientific economics along with other disciplines (especially cognitive and behavioral sciences). Dupré (2001) is a representative instance. The other route tries to isolate economics as making special, and deluded, assumptions about what is natural. Scholarly versions of this criticism are found in Mirowski (1988, 1994, 2002) and Ingrao and Israel (1990). It should be noted that critics of the second route are less likely to emerge as anti-economists than as advocates of less (in their terms) megalomaniacal economics. That is, they tend to favor clear abandonment by economists of goal (iv). Critics of the first route are almost invariably anti-economists due to the conjunction of two things they believe: first, that there is no humbler station available for economics to retreat to in search of objectivity; and second that whereas other putatively objective human sciences are products of metaphysically confused culture, economics is attempted ideological hijacking that plays a first-order role in blocking that culture’s path to self-understanding. These critics thus combine Stance 5 with Stance 1.

This form of anti-economics is the version with which philosophers of science (as opposed to political philosophers) have mainly dealt. Rebutting it requires two steps. The first is metaphysical: one must make the case against route 1 critics that social sciences can and do discover objectively true generalizations. There is a large philosophical literature on this matter to which I have no new contribution to make. Then one must show that economics is not a special failure in this regard. Part of this task consists in making the case that economics suffers from no systematic and endemic methodological or ontological pathologies. This also lies outside the scope of the present essay; the reader is referred to Dasgupta (2002) and Ross (2005). Another part of the task consists in replying to the other versions of anti-economics, in order to defeat the stance 5 critic’s contention that economics is disguised ideology. That is part of the objective here, but is pursued as an aspect of answering stances 1-4.

It should be noted that one logical possibility in the space of anti-economic stances remains unconsidered. In principle, someone could accept that economics aims and succeeds at goal (iv) while also claiming that it aims and fails at goals (ii) and / or (iii). For an anti-economist, this would amount to a position of romantic fatalism, involving regretting the truth. As Coleman (2002) documents, such fatalism has not actually been rare (especially among artists[20]), but it almost always derives anti-economics from a more general anti-modernity, and it is the exclusive preserve of conservatives. Since it is typically wistful or theatrical rather than activist (either intellectually or politically), I will henceforth ignore it.

If we therefore set aside consideration of goal (iv) as a variable that depends partly on the values of the other goals, then the possible ways of not endorsing anti-economics are as follows:

E1: Economics aims at, and for non-ideological reasons often succeeds at, goal (i); but economics does not aim at goals (ii) or (iii).

E2: Economics aims at, and for non-ideological reasons often succeeds at, goals (i) and (ii); but economics does not aim at goal (iii).

E3: Economics aims at, and for non-ideological reasons often succeeds at, goals (i) and (ii); aims to show that market-focused institutions are superior to alternative types of institutions for allocating scarce resources at promoting personal liberty and often succeeds, for non-ideological reasons, in showing this; but economics does not aim at showing that market-focused institutions are superior to other institutions at promoting democracy.

E4: Economics aims at goals (i) through (iii) and often succeeds, for non-ideological reasons, at all three.

E5: Economics does not aim at any of goals (i) through (iii), but aims and succeeds at something else.

There are, to my knowledge, no defenses of economics based on claiming success at goal (iii) while denying it of goal (ii), since conclusions concerning (ii) always serve as essential premises in arguments for achievement of (iii). The same point applies on the relationships between goals (i) and (ii).

Many economists might jump to say at this point that E5 is the obviously sensible, and empirically best justified, position. The simple reason for this would be that (i) – (iii) all concern markets, and quite a lot of economics does not seem to be about markets. Economics is the science that studies relative efficiency in response to scarcity.[21] Then, famously, we are applying economics when we study Robinson Crusoe allocating his labor between harvesting breadfruit and making a fishing rod (Robertson 1957), even though he faces no market. We are applying economics when we study games among small numbers of agents, bears foraging for food, and development agencies or governments parametrically choosing project investments. None of these activities involve attention to markets. Therefore, it might be urged, all anti-economics makes a version of the mistake I attributed above to Hausman, of beginning from an overly narrow conception of economics’ fundamental character. There can be scientific economics even if everything economists have ever said about markets is motivated by ideology.[22]

This response partly repeats the turtle defense discussed above, and so invites the same reply. But one might think that E5 should at least be part of a full response to anti-economics. Notice, however, that it engages the anti-economist as if hers were an exercise in analytic philosophy, in which the battle is about what to mean by `economics’. No anti-economist – not even Hausman – means to only be attacking an analysis of economics. The anti-economist’s target is the history of intellectual activity that, citing Hausman again (now with approval) establishes the tradition of economics as a separate science. If there had never been a tradition of seeking systematic generalizations about markets, then the examples of non-market-related topics for economists listed above would be grouped together as instances of study of optimization. Crusoe’s would be parametric optimization. If we were not studying Crusoe in preparation for embedding him in social processes – specifically, markets – after Friday comes along, we would have no reason not to treat his parametric optimization as just another dimension of his psychology. Nowadays, we’d approach it using the methods of behavioral economics and neuroeconomics (McCabe 2003); but there would be no motivation for calling it any such thing. It is exciting, for example, that the model of asset pricing in markets has turned out to apply to the value predictions of the brain’s dopaminergic reward system (Montague and Berns 2002), because this means that we can draw benefit in neuroscience from decades of modeling of markets. Without relationships of this kind, the neuroeconomic model would be just another computational model of a particular neurotransmitter pathway. As for nonparametric optimization, in our other examples above, the context provided by two centuries of studying markets is relevant in a similar way. Where people in institutional settings are concerned, we typically take one crucial aspect of the rules of their games – the strategies available to them – as known by virtue of the fact that we know what sort of market is constituted by their interaction. As often with things taken for granted, there’s seldom any need to explicitly mention this. To see that a situation is a game of a certain sort is to see that it instantiates a certain sort of imperfectly competitive micro-market.

If this argument seems fussy, this is just because the tempting quick leap to E5 in response to the anti-economist is an attempt to finesse her charge rather than respond to it on its own terms. Economics indeed goes beyond the study of markets. But the tradition that gives economics the distinctive character that it has, and that the anti-economist dislikes and regards as ideology in disguise, is a tradition derived from the study of markets. The tradition has been so derived because markets have been thought by almost all economists to be of central significance to optimization among groups of agents. Furthermore, economists have overwhelmingly been motivated, in the policy contexts in which the issues over ideology are mainly interesting, by the conviction that existing markets could be improved, or markets established where they have not been operating, to good welfare effects; or that some useful properties of markets could be simulated by planners. In light of this real history of their disciplinary tradition, economists concede too much, and too much that matters a great deal, to anti-economists if they fail to defend one of E1-E4.

What of the possibility that economics (crucially) studies markets, but is not committed to any of goals (i)-(iii) because it might reach or has reached mainly pessimistic conclusions about markets? This suggests a response not included in E1-E5. However, no actual economist makes this response. Of course, some economists have been pessimistic about free or about perfectly competitive markets, but these are different claims (to be discussed at length below). Marx was pessimistic about (all) markets in one sense, but as we saw he accepted that economics succeeds at goal (i) and, up to a point, at goal (ii). (He is an anti-economist because he also thinks that economics necessarily aims higher and then fails.) Schumpeter was pessimistic about markets in a different sense. According to him economics is a success at goals (i) and (ii) but, because markets promote democracy but democracy doesn’t promote (efficient) markets, markets undermine themselves in the long run. Thus, relative to the anti-economist, Schumpeter is simply an economist who responds by means of E3 – and happens to add a pessimistic sociological theory. Mirowski (1989, 2002) is about as skeptical concerning mainstream economics as it is possible to be without being an anti-economist. But even he doesn’t steer clear of anti-economics by being too pessimistic about markets to be accommodated within E1-E4: Mirowski (2002) defends E1 (and might, for all he says about this, accept E2) but with the caveat that the markets in question are essentially historical, embedded in institutions, and structurally complex.

I will therefore now go on to analyze the relationship between economics and ideology in terms of the above set of anti-economist stances and economist’s possible replies.

3. Economic theory and the normative status of the market

As noted above, anti-economic criticism has generally been motivated by dislike or fear of the widening and deepening of markets, conjoined with the conviction that economics promotes such expansion. By expansion is generally meant: (1) relaxing regulations on production, distribution, or licensing requirements or eligibility, such that wider ranges of people are able to produce given goods or services for sale, and (2) relaxing regulations such that goods and services which could not formerly be legally traded for mutual gain, including monetary gain on at least one side, become available for such trade. Elimination of a state monopoly or group of exclusive licensees is an obvious instance of an expansion of type (1). Allowing people to subdivide land estates and sell off small parcels where formerly this was not permitted is an instance of (2). Elimination of legally protected craft guilds, and other labor market liberalizations, are simultaneously instances of both (1) and (2), since anyone who deems their skill at the craft adequate to find demand at the reserve selling price may then enter the relevant labor market, and labor services of a kind which could not formerly be sold become marketable.

In this section, I focus on the extent to which economic theory has indeed promoted market expansion, and on the theoretical bases on which it has done so when it has done so. I will consider these under two general classes of motivating arguments: (I) arguments from static efficiency and (II) arguments from conditions promoting technical innovation (dynamic efficiency). No argument for policy measures such as market expansion can follow only from premises reporting scientific discoveries. In the case of arguments for market expansion from (I) and (II), the background normative premise is that welfare efficiency is prima facie desirable. We will consider the status of that premise in the context of ideology in the next section.

3.1 Markets and static efficiency

There can be no serious question that modern political economy began by placing great weight on efficiency, conceived in terms of what we would now characterize as comparative statics. Furthermore, it did so in a way that took a strong policy norm for granted. Adam Smith and his immediate successors assumed that the task of the political economist was to pick out a class of general policy regimes in which a nation’s stock and flow of wealth are optimized (at least, relative to other policy regimes explicitly considered, including most importantly the status quo). Then Smith thought that markets should be expanded in the specific sense of eliminating tariffs for the equally specific purpose of improving efficiency by reducing the opportunities of what we would now call rent-seekers: inefficient producers and rentiers whose levels of profit depend on the existence of the market restrictions created by tariffs, and which accrue to them at the direct expense of greater achievable national wealth. Similar remarks about motivation apply to Ricardo.

Thus classical political economy before Marx was closely associated with goals (i) and (ii) as imputed by anti-economists. So were Smith and Ricardo advocates of an ideology? It would be premature to try to answer this question directly at this point – a verdict on whether or where ideology is to be found in economics is intended to emerge dialectically over the whole course of the paper. For now, let us just begin to sneak up on an answer. As Backhouse (2002, p. 184) points out, Smith in The Wealth of Nations was engaged in what we would now call welfare economics. In so doing, he produced the first analysis as such of the modern notion of comparative-static market-wide efficiency. It would be obtuse to try to make much argumentative weight against claims that he was an ideologue (to some extent) from the fact that he produced no explicit novel conception of justice by which to coordinate support for policy reform. He certainly did hope to contribute to coordination of policy reform, and regardless of what is or isn’t explicit, he implicitly offered a conception of justice that conflicted directly with the prevailing, loosely Aristotelian, idea according to which there is natural justice in some people having special, purely positional, entitlements. So our ultimate verdict on ideology in economics will have to be consistent with their being at least an incipient ideology in Smith.

As many commentators have observed over the years – but especially recently (see Rothschild 2002) – Smith’s later appropriation as an ideological icon to be invoked specifically against the left typically involves historical ignorance. Smith’s two most straightforward policy prescriptions, removal of tariffs and provision of universal state-sponsored education, were motivated by his concern to undermine established interests who owed their advantages merely to their being established. To this extent Smith’s incipient ideology tends to the left. On the other hand, the later use of Smith against the left was not merely a case of expropriation.[23] Smith’s great theme so far as the means to his favored ends was concerned was division of labor. Marx, of course, later equated this with alienation. If emancipating people from the division of labor is taken to lie at the core of left ideology, Smith cannot be a theorist of the left, and left ideology will tend to cast Smith’s political economy as embodying a rival vision. This issue will be revisited near the end of the present essay.

As Muller (2002) shows, the ideal ideological foil for Smith, insofar as Smith is interpreted as advancing an ideology, comes from the right rather than the left. This foil is his contemporary Justus Möser. Möser, like Marx, objected to the division of labor, but on conservative rather than Marx’s emancipatory grounds. He feared and called for resistance to all market expansion because he agreed that markets increase productive efficiency and material well-being. They thereby strongly tempt people to embrace the division of labor and in doing so to abandon the traditional social roles that are taken by Möser to appropriately define their whole beings in indissoluble relationships to their communities. Smith is often regarded as the economist’s economist. On similar grounds, Möser is the anti-economist’s anti-economist, since he doesn’t merely oppose what he takes economics to be despite his believing that it achieves goals (i) through (iii); he opposes it because he thinks it achieves these goals, including promotion of democracy. Expansion of the market, he fears, will enable people to consume `unnecessary’ luxuries such as “leather gloves, wool stockings, metal buttons, mirrors, cotton caps, knives and needles” (Muller 2002, p. 98). It will allow for the funding of improved roads that will in turn allow traveling salesmen to get more easily and widely about (ibid, p. 97). A contemporary communitarian might be amazed to find that Möser opposes even weekly local markets because “they would draw women and children away from the `bourgeois tranquility’ … of the home and into the marketplace, where they would chat and waste money on snacks and pleasantries” (ibid, p. 99). Going beyond Smith in imagining what market expansion might achieve, Möser worried that poverty might be eradicated, in which case the virtue of the rich could no longer be aroused and activated by the suffering of the poor.

The degree to which these opinions and their justifications make a contemporary reader boggle suggests that, if economics is in part an ideology, it has successfully annihilated its complete opposition, at least from the right. Möser’s is almost the only sophisticated written expression one can find of stance-5 anti-economics that doesn’t concentrate critical attention on goal (iv). It is slightly poignant that this voice is heard at the very dawn of modern economics, and then never again.

The reason one must find a figure like Möser to present a clean ideological contrast to Smith is that the latter’s advocacy of market expansion is tightly restricted by contemporary libertarian standards. And it is also for this reason that Smith’s enlistment into more contemporary ideological conflicts has usually involved misrepresentation by both right and left. Ideologues egregiously disregard his writings in attributing to him the conviction that unlimited market expansion is normatively ideal. (For example, Polanyi 1944 implies such an attribution, though he is sly about it, produces no quotations which, if read in context, would support his insinuation, and ignores the copious counter-evidence in Smith’s writings.) Smith famously thought that the invisible hand was superior to sympathetic intentions in allocating some kinds of goods – in particular those of the “butcher, brewer and baker” whose “self-love” leads them to contribute their services more reliably than would their benevolence (Smith 1970 [1776], 119). However, there is no textual or biographical evidence, and much against it, for the claim that he thought this principle applied outside of a comparatively narrow sphere of material goods and quotidian services. This claim first appears in anti-economist tracts, then associated itself with the popular image of Smith as the `father of capitalism’ and then found its way into casual statements by some later economists who, one must infer, had never read past the first few pages of The Wealth of Nations.[24] By this mechanism a legend was invested with economists’ authority and amplified.

Someone determined to construct a more ideologically provocative Smith might argue that the expansion of markets as Smith favored it, once embarked upon, is bound of its own natural accord to continue unchecked to embrace all social spheres, at least until people learn this consequence and a backlash occurs. (This is certainly what Polanyi maintains, though he asserts it rather than presents evidence for it.) If it were an economist rather than an anti-economist who advanced such an argument, and without the caveat about the backlash, this would be a way of trying to achieve goal (iv). But there is no sustainable evidence for the assertion that Smith wittingly promoted it.

Indeed, the idea that economics promotes goal (iv) on the basis of claims that markets are necessarily optimally efficient, though deployed with persistent rhetorical relish by anti-economists,[25] is almost grotesquely mistaken in light of the actual relationship between treatments of market efficiency and attitudes to policy in most of the history of the discipline. Walras of course generalized from the limited cases considered by Smith to conceptualize the perfectly competitive market, and argued that this represented a limiting case of static efficiency. However, as Backhouse (2002, p. 270) observes, citing standard evidence, none of the great early neoclassical economists, including Walras, were supporters of laissez-faire policy. Walras recognized that perfect competition is a logical / analytic rather than a normative ideal for actual markets, both because perfectly competitive markets cannot arise, and because it is unclear how to think evaluatively of a hypothetical institutional scenario in which there are market-determined rates of interest and private firms set prices, but there is no cost of capital and all profits converge to zero.

Certainly, there was an important period, following Walras’s argument that perfect competition implies welfare maximization, when prevailing opinion among economists took perfectly competitive equilibrium to be a regulative ideal for planners.[26] The idea here was straightforward: if perfect-competition analysis identifies an economy’s welfare frontier, and if welfare efficiency increases with approximation to perfectly competitive general equilibrium, then the planner can keep re-allocating inputs so as to get, by trial and error, as close as possible to the frontier. Note that this program required an assumption utterly incompatible with goal (iv) as so often imputed to economists by anti-economists. If markets are, in addition to being welfare-efficient, also natural, then any role for a planner is otiose at best and more likely to delay or impede achievement of the ideal equilibrium. The rationale for the view that planning is more likely than the market to carry an economy to its welfare frontier was, though already clear enough to a majority of economists in the 1930s and 1940s, given a significant boost by Samuelson’s (1954) theory of pure public goods as fundamental market failures. This closely followed the Arrow-Debreu welfare theorems of 1951. These are often celebrated as the proper demonstration of Smith’s inductive conviction about markets, though scholarly commentators generally recognize that it is really Walras who is vindicated. However, for the reason just indicated, Arrow-Debreu represented the high-tide achievement for welfare economics based on central planning. Perfect-competition economics as practiced was the antithesis of popularly so-called `free market economics’.

The program for planning economies to welfare optima fell on hard times soon after this greatest moment. Standard explanations emphasize one or both of two routes to trouble. Most economists give priority to the Lipsey-Lancaster theory (1956) of the second-best, which shows that one cannot infer from an allocation’s getting closer to the perfectly competitive equilibrium that the allocation in question is necessarily increasing in efficiency.[27] It is testimony to the depth of popular confusion in this area that one easily finds instances in public affairs journalism of this result being invoked as a “disappointment” for “free marketers” (Allen 2004.) If anything, given the rationale for central planning that the result severely complicated, it is the reverse. Related problems for welfare economics based on planning stemmed from the fact that its most complete possible formulation occurs in the context of Arrow-Debreu general equilibrium theory, the policy relevance of which was called into question by the so-called excess demand literature of the 1970s.[28] If, in consequence of these developments, contemporary economists devote less attention to central planning than left anti-economists think they would were they not ideologues, then it must be emphasized that this part of the history of theory has absolutely nothing to do with goal (iv). Perfect competition was never thought by most economists to shed interesting light on the probable consequences of real (let alone `natural’) markets, and was eventually found not to shed policy-relevant light on the consequences of planned economies either.

To make her case in this area look at all plausible without introducing outright confusion, the anti-economist must emphasize the second trend in the literature that helped to discredit policy-focused economics built around planning. This builds on the famous Coase theorem (1960), according to which, in a world of zero transaction costs, private bargaining in isolated bargaining games will produce efficient allocations relative to those games alone regardless of legal allocations of rights. This idea probably comes as close to a (relatively[29]) rigorous articulation of goal (iv) as one finds in economics. I say an `aspect’ because it directly implies nothing about the social optimality of markets: the conjunction of a set of efficient solutions to isolated bargaining games is not necessarily equivalent to any social welfare optimum as this has been (variously) understood in economics if agents can link these games by forming coalitions (as, of course, they typically can and do). However, the Coase theorem plausibly captures the claim at the heart of goal (iv), which is that the workings of markets cannot be suppressed in a principled way by ordinances. (Of course they can be distorted in unprincipled ways by uses of physical force.) This does not show that goal (iv) is actually achieved by the Coase theorem. There is, after all, nothing `natural’ about zero transaction costs. Furthermore, the theorem has no applicability to real bargaining outcomes or contracts in the presence of asymmetries of information; but these are ubiquitous in `natural’ economies (Stiglitz 1996 and elsewhere).

Of course, the anti-economist is not surprised that goal (iv) isn’t achieved; she insists that aiming at it constitutes ideology because it is unachievable. The relevant question in the present context is whether it is reasonable to attribute the goal to mainstream economics. The best case the anti-economist can make out for doing so requires her to identify mainstream economics with the so-called `Chicago school,’ to which Coase himself is a leading contributor. Certainly, some University of Chicago economists, notably George Stigler, Milton Friedman and Gary Becker, have been highly visible in economics since World War II, and (at least in Friedman’s case) exercised influence on macroeconomic policy. One must concede that, at least in the cases of Stigler and Friedman, it is often (but far from always) difficult to cleanly disentangle scientific motives from political ones in their work as economists. Note that Friedman has consistently championed the idea that `positive’ and `normative’ economics are distinct but legitimate parts of economics; so although he would deny the verdict that they cannot always be pried apart in application to his own work, he would acknowledge no reason to apologize for the kinds of polemical activities that anti-economists would call ideological. In the concluding section of this essay, I will go some distance toward granting him his case here, for reasons I haven’t yet introduced. For the moment, however, what must be pointed out is that the Chicago school has been far less influential in economic theory than it has been in economic policy or (especially) on popular economic discourse.

Where theory is concerned, there have been two `Chicago schools’: a macroeconomic policy school led by Friedman and Stigler, and a school focused on applications of economics to law, whose proximate originator was Coase and which is given its classic expression by Posner (1998). Underlying Chicago law and economics is a sophisticated microeconomic model of human behavior developed mainly by Becker (e.g., 1976), to which Stigler has also contributed (Stigler and Becker 1977). Unification of the schools is thus instantiated biographically in Stigler.

How persuasively can an anti-economist try to maintain that Stigler is a representative leader of post-war economics? Liner (2001) reviews citations of journal articles by economists in microeconomics, macroeconomics and econometrics textbooks used in American graduate school courses in the 1996-97 academic year. This provides a more interesting measure of an economist’s status than publication counting, since it assesses his or her relative weight in the reproduction of a new generation of economists. Among leading contemporaries of Stigler, Paul Samuelson by this measure has overwhelmingly stronger claim to be regarded as influential: he is still the fifth most-frequently cited economist, decades after the end of his period of peak activity, while Stigler is not among the listed top 50. (Friedman is 42^nd, with fewer than half as many citations as Samuelson.) None of the distinctive Chicago School properties that an anti-economist would emphasize are true of Samuelson: on macroeconomic policy he has been broadly Keynesian, and in microeconomics he initiated focus on market failures.

Where Coase’s and Becker’s respective levels of influence on theory are concerned, in neither case has the direction of development of their ideas been that which an anti-economist would have predicted. Economic analysis of law in the broadly Coasian tradition is increasingly preoccupied with applications of game theory[30] and behavioral economics,[31] reflecting the growing recognition of the importance of information asymmetries and incomplete contracts. The contemporary figure who can make the most persuasive claim to have inherited Coase’s mantle as the most influential theorist of law and economics, Cass Sunstein, is indeed at Chicago; but by no stretch can the anti-economist depict him as a promoter of ever less regulated markets. As for Becker, his greatest (and enormous) domain of influence is in applications of economic analysis to micro-level phenomena dominated by shadow prices rather than monetary prices, such as family dynamics, criminal behavior and deterrence, addiction and much else. But this area is dominated by the new behavioral economics which, while acknowledging historical precedence to Becker, now almost uniformly applies game theory rather than deriving propositions from assumptions of market efficiency (Camerer 2003). In the vast majority of behavioral models the lifetime-consistent agent who maximizes a global utility function across a network of linked implicit markets promoted in, inter alia, Stigler and Becker (1977) has been replaced by the meliorating agent of Herrnstein (1997), who struggles to avoid being exploited in markets due to his natural disposition for hyperbolic discounting and cyclical preferences. What saves this economic agent from being money pumped is a combination of the absence of many consistently rational agents to do the pumping, plus the limits on feasible informational efficiency (Cubitt and Sugden 2001) that have become the hallmark of post- general equilibrium modeling throughout the profession.

At this point the anti-economist is down to one last source of hope for showing that economics is committed to goal (iv) on the basis of static efficiency considerations. This is a source identified by Dasgupta (2005). He cites a number of critics, mainly philosophers,[32] who accuse contemporary development economics of being an “ethical desert”. Now, development economics is plausibly the current part of the discipline that has inherited the burden dropped by analytic welfare economics when it hit the three walls of the second-best theorem and the excess demand results mentioned above, plus Arrow’s impossibility theorem; that is, it is the part of economics most directly motivated by concern to improve the plight of the less well off. Why, despite the fact that, as Dasgupta says “it is a concern with ethics that has prompted many of us to study the phenomenon in the first place” (ibid, p. 270), might development economics be deficient in its attentiveness to ethics? The answer, according to the critics Dasgupta answers, is that it focuses on efficiency (under one conceptualization or another) to the exclusion of morality. Since it is obvious that contemporary development economics accords constant attention to roles that can be played by governments and public institutions, and not just or even mainly to markets, the charge is relevant to the imputed goals of economics only in a roundabout way. Perhaps the reason economists think we should ignore considerations of ethics in favor of considerations of efficiency is that efficiency equilibria, whatever combination of free markets and active public policies we use to reach them, are naturally stable in a way that ethical orders are not. Thus, the critic alleges, economists think they are being practical in ignoring ethics; but this causes them to value only what markets can value and pay no attention to central dimensions of good living.

Dasgupta roundly rejects this conclusion. Current policy packages studied in development economics are uniformly based on a strong ethical consensus among economists that poverty is an evil we should aim to eradicate, and on which large expenditure of resources is appropriate. This consensus may not have clear intellectual, as opposed to merely intuitive, foundations. However, as Dasgupta documents in detail, it is because it is so strong in its content that economists can leave questions of its ultimate justification to philosophers, and devote themselves to the (extraordinarily difficult) factual questions concerning which policy mixes promote development and make inroads against poverty. Anti-economists, as noted, routinely imagine that development economists are too preoccupied with monetary indicators of well being because they suppose that the only real value is that measured by markets. They often cite Sen (1999) to try to demonstrate that mainstream economists have a pinched view of the ends of development, which (Sen argues) they inherit from the history of welfare-economic theory. As Dasgupta observes, this history as presented by Sen is a caricature (ibid, p. 224). Development economists usually measure changes in well being by measuring changes in household consumption expenditure (Revallion 1994). This is for the simple reason that HCE has empirically proved to be the most reliable proxy for every one of Sen’s touted development goals that anyone has any clear and practical protocol for comparatively measuring at all.[33] The overwhelming majority of policy work in development economics is closely and regularly connected to fieldwork at the micro level, with constant and multi-sourced feedback from the project level. The idea that its agents are ethically insensitive, and that this is attributable to a tradition in economic theory of