Pluralism in Economics: A Retrospective View

Julie A. Nelson
University of Massachusetts Boston
julie.nelson@umb.edu

COPYRIGHT: American Review of Political Economy; Julie Nelson

Introduction

Let me start with some personal background. I began graduate school in Economics in 1980 at the University of Wisconsin Madison, with a keen interest in social justice issues. The education there was mainstream, though, at the time, more heavily policy-oriented than most programs. The only sorts of alternatives that seemed to be around back then were the Union for Radical Political Economics (URPE), to which some students belonged, and a Post-Keynesian student-organized study group in which I participated. There was also a vestigial bit of Old Institutionalist economics around the department, which I found out more about as I worked on compiling historical materials for celebrating its centennial. I had been exposed to feminist critiques of the other social sciences  before starting graduate school, and it was my intention to bring that critique to economics—as well as, I hoped, learn something that could be of use in addressing issues of global inequality and policy.

While this mainstream education made me even more sure that different approaches were needed, it also provided me with the tools for developing visible credentials. I was pretty sure no one would listen to me without them. So I got the PhD, and got my first publication into Econometrica, with later ones following in JPE, ReStats, and other top journals. Then, when I could, I also worked on launching feminist economics, a field that in the 1990s developed its own flourishing international organization and journal (Ferber and Nelson, 1993). Since then, I’ve also been active in ecological economics, social economics, and in developing alternative approaches to economics education.

The States of Mainstream and Heterodox Economics

The first charge to speakers in this plenary is to characterize the states of mainstream and heterodox economics. Let me say a few words on this.

I consider the “mainstream” to be the neoclassical orthodoxy and those (slight) variations close enough to it to be acceptable at top-ranked departments.  It is not identical with extreme neoliberal economics, though the mainstream’s core tenets certainly have tended to lend free-market and free-trade advocates a lot of intellectual imprimatur. I would say that its state is surprisingly healthy, considering the public shaming it received as a result of utterly failing to predict the 2008 financial crisis. One might have thought that event would have caused some disciplinary reflection and soul-searching, but whatever of that did occur was very short-lived. One the other hand, cracks keep appearing, and it is not clear to me that the discipline’s Teflon-shedding of critique will go on forever. In particular, I am thinking of the controversies over p-hacking, publication bias, and failures of replication that have become quite strong in medicine and psychology, and are creating at least ripples within economics. A lot of standard practice in empirical economics is, it is becoming increasingly clear, very poor science even from a very dry statistical viewpoint (Nelson, 2018). That the U.S. branch of the profession is finally paying a bit more attention to its gender problems—spurred by a student paper about the misogyny of the Economics Job Market Rumors (EJMR) website—is another small opening.

I consider heterodox economics to encompass all particular schools that are not part of the orthodoxy.  Over the decades I have been an economist, there have been both gains and losses, good directions and less helpful ones. Marxian, social, Post-Keynesian, institutional/evolutionary, and Austrian schools of economics have continued to exist—which is no small accomplishment!—although from my perspective they do not seem to have gained much ground. In fact, some ground has been lost, as attested to by the purges of political economy at Notre Dame and UC Riverside. Feminist and ecological economics have newly emerged and become substantial fields in their own rights, with journals and conferences.  While feminist economics has had, in my view, very limited effects on the mainstream in general, its accomplishments in the field of development economics have been notable.  Some new sources of financial support and dissemination have arisen. The Institute for New Economic Thinking (INET) has been the first big funder of at least some projects in alternative economics, though its notions of approaches what are “new” and innovative are in my opinion somewhat odd.  Student-led protests, the Real World Economic Review (RWER), the World Economic Association (WEA), Evonomics, and several other initiatives have developed and are keeping the call for a wider variety of approaches alive.

Sometimes—as in the charge for this panel—we see both the terms “heterodox” and  “pluralist” used to refer to the membership of ICAPE. I consider myself more of a pluralist, than a member of any particular heterodox school or schools. In fact, I think that heterodox schools can sometimes get into habits that make them each nearly as narrow as the neoclassical orthodoxy.

To my mind, doing good quality social science means doing open-minded, systematic investigation. I think I am preaching to the choir here to say that the mainstream orthodoxy instead represents a case of hegemonic, and hence pernicious, dogma. One is told to use the standard models and methods, or get out.

But dogma can also be a problem for heterodox schools.  A good sign of this is if debates are framed as “our model/theory/approach is right, while mainstream (and perhaps everybody in other heterodox schools) is wrong.”  I also see signs of this when departments are formed around a single heterodox paradigm; when powerful faculty advise disciple-like students; when reviewers for specialized journals look more at whether the methods used and who is cited conform to a standard than at the actual quality and usefulness of the work;  and when groups engage in excessive backwards-looking at The Greats who created the field rather than engaging with current issues; these tendencies can make a program self-enclosed and careerist-motivated, rather than knowledge-  and/or justice- oriented.

Strategies Going Forward

For both research and teaching,  I suggest a “BQBT” approach, which stands for “Broader Questions and Bigger Toolbox” (Nelson, 2011a).

About broader questions: If you are going to spend your life working on something, it might as well be important!  Relaxing an assumption on an obscure theorem, or adding one more variable to someone else’s model, are probably not going to make your life worthwhile. Limiting economic analysis to questions of rational choice, money, or markets is also not broad enough. I prefer to define economics in terms of what it is that people think we do! Many of us in various schools have adopted a “provisioning” definition, which I tend to phrase as “Economics is the study of the ways that societies organize themselves to provide the survival and flourishing of life (or fail to do so).” This definition includes us working to keep us from cooking ourselves and future generations with climate change; for gender justice or racial justice; against the rise of oligarchy and fascism; to reduce poverty and oppression; to increase well-being through better workplaces, healthcare, and education; and so on. We may only, being limited human beings, be able to address one small corner of the world’s problems. We may also, when graduate students or junior scholars, have to do a certain amount of purely careerist dissertation-committee-pleasing and resume-building. But if we lose the bigger motivation, and just do economics for a steady paycheck and some local acclaim, we are likely to lose sight of the goal of adding to knowledge, and making our time on earth be worth the effort.

About a bigger toolbox: Be willing to use all models and methods (whether in your home school or home discipline, or not), while being skeptical of all models and methods. The question is whether a model is “true” and or “false.”  Models are usually a bit of both, by design! The real question is when and where a model or method is useful, versus where it doesn’t fit, or even serves to hide the most important things. Determining this requires real thinking and reasoning, not following some cookie-cutter pattern.  Let me give two, perhaps provocative, examples.

First, consider the model of firms as profit maximizers. The mainstream came up with this theory, and follows up with the idea that an explicit concern with ethics is largely unnecessary in business life due to the beneficent effects of the invisible hand of competitive markets. Many heterodox economists have accepted the “truth” of the idea that firms are essentially about the bottom line, but just give it a negative twist: Identifying profit-seeking with greed, they therefore conclude that ethics are impossible within capitalism. But be skeptical! Actually, there is no mandate to profit maximize in corporate charters, and this economist-spawned belief has served to erode a much longer counter-tradition of business as a broader human activity (Nelson, 2011b, 2016). So both the mainstream and much of heterodoxy unnecessarily financialize and commodify business itself!  Tools from history, ethics, organizational behavior, economic sociology, on the other hand, could help us understand the wider scope and depth of firms as social organizations.

Second, consider the use of a variety of methods. I have already mentioned reasons to be skeptical about econometrics, given problems of p-hacking, etc. Yet, with proper care and real thinking, such methods may also be useful. I have often found that people assume that feminist economists are primarily more friendly to softer, more qualitative techniques.  (I take this as evidence that some heterodox economists are willing to consider feminists as allies, but draw the line at actually reading feminist economics texts.) Yet I have recently educated myself about meta-analysis, with some interesting results. Combining techniques straight out of statistics with knowledge I have gained from linguistics and philosophy, I have gained insight about what is going on in an area of behavioral economics. (Nelson, 2018). Old dogs can, indeed, learn new tricks.

So take on the big questions! Think!

References

Ferber, Marianne A. and Julie A. Nelson, Eds. 1993. Beyond Economic Man: Feminist Theory and Economics. Chicago, University of Chicago Press.

Nelson, Julie A. 2011a. “Broader questions and a bigger toolbox: A problem-centered and student-centered approach to teaching pluralist economics.”  Real World Economics Review,  http://rwer.wordpress.com/2011/12/12/rwer-issue-58-julie-nelson/.

Nelson, Julie A. 2011b. “Does Profit-Seeking Rule Out Love? Evidence (or Not) from Economics and Law.” Washington University Journal of Law and Policy 35(69): 69-107.

Nelson, Julie A. 2016. “Poisoning the Well, or How Economic Theory Damages Moral Imagination” in  The Oxford Handbook of Professional Economic Ethics, ed.. G. DeMartino and D. McCloskey. Oxford: Oxford University Press. 184-199

Nelson, Julie A. 2018. Gender and Risk-Taking: Economics, Evidence, and Why the Answer Matters. New York: Routledge.