Critical Economics

The idea of a critical economics is one that – once complete – avoids the accusation of unworkability.  However, practical applicability (i.e. policy prescription) must come at the expense of full description (i.e. as is the case in the simplified economic model).  In this way critical economics is differentiated from many of the other social sciences, such as cultural anthropology (with deepest respect and apologies to a few of my very best friends that happen to be anthropologists – and inspirational ones, at that).  At some point, the description must end if any changes are to be implemented.  Leaps of faith – leaving behind infinite attention to detail –  are, unfortunately, implicit in all activity. 

Critical economics recognizes that the favor its mainstream brethren enjoys with Western governments and corporations arises as much from its willingness to promote the interests of the powerful as from its explanatory power; indeed, the causation runs both ways, and critical economics is both humbled by, and fascinated with untangling, this interplay between politics and economics. 

Critical economics is not rooted in some petty dispute with neoclassical ideas of rationality; though there be something to bounded rationality, it is not yet a cohesive theory – more of an assemblage of unsynthesized factoids about the deviations of mostly western human behavior from a set of assumptions.  To achieve the label “theory”, it must be a suitable replacement for the behavioral assumptions of neoclassical, unbounded rationality.  Bounded rationality, however, is not simply psychological, but related instead to biocognition and context. The field of behavioral economics, insofar as it exists as a combination of mainstream economics and theoretical (i.e. nonphysiologically based) psychology, may very well be following a big red herring altogether. 

Critical economics avoids the Marxist aversion to capitalism, but it also avoids the common economist’s disavowal of socialism/communism.  Neither has ever existed independently; let’s accept that fact and move on.  Whatever the economic system that prevails, it is always buttressed by the attending political situation.  Economic systems are created and supported by the politcal, the social, the contextual.  Only once established does the causation run both ways – does the economic start to affect the political.  It is high time all economists are humbled by the fact that purebred Homo economicus is not only extinct:  he never really existed.  Nothing that we associate with any economic system is innate. 

Critical economics is interested in replacing the self as individual with a more generalized model of the decision-making self.  The individual is an outdated, outmoded conception of the human being.  For economists so loved the individual as an analytical unit, they have developed theories to explain instances of self-sacrifice, marriage, altruism, and more just to account for all the difficulties such a conception creates.  In the process – by, say, incorporating the individual into the family and using the family as the analytical unit (see Becker) – they have come close to an important fact, yet still they seem to miss the point.  Critical economics wants another Copernican revolution – it wants to propose that the individual is orbitting the self, along with many other planets (selflets?) – predicates of self, like the family, the clan, the state, the human race.  Such a reworking of the self lends itself nicely to theories of choice while avoiding the baggage of corrolaries and axioms and apologias that the current economic conception of the self – the individual – requires. 

Critical economics is just that – critical.  It makes mistakes, examines itself and subjects itself to examination, is refined, and is applied again.

Critical economics is subject to empirical analysis and inquiry.  A difficulty of many social sciences is that it is very hard to verify results, and for every proponent of one explanation there are at least two detractors.  This the nature of academic debate, and is healthy, but when it stalls progress, it can doom a field to irrelevance.  Mainstream economics has tended to avoid this problem, but at the expense of universality.  Critical economics faces a doubly difficult task:  It must use existing methodologies while simultaneously working to perfect new ones.  It must use current analytical units (utility, income, wealth), but it must recognize the limitations, and it must work more appropriate means and units of measurement.  Utility, income, and wealth are very poor methods of measuring human behavior outside of the modern, industrial nation-state.  The critical economist uses such units gingerly when outside of that context, and recognizes the implicitly normative, untestable nature of those units.  “There’s telos in them thar hills!”

Corrollary:  Nonetheless, critical economics is willing to grant that human weigh benefits and costs, and that this is a prejudice induced by the undeniability of the explanatory power of 20th century economics.  It is doubtless an approximation, but it is not necessarily an unfounded assumption.  Insofar as humans respond in predictable ways, insofar as pattern recognition and patterned behavior ares observable in all human societies, insofar as humans make decisions: humans appear to weigh benefits and costs.  It is, however, vital to understand the structure of that pattern, the structure of the society and its language and thought, in order to flesh out just what constitutes the quality and magnitude of benefits and costs.  In this critical economics draws from new institutional economics and structuralist thought in general. 

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3 Responses to “Critical Economics”

  1. The Self and Othering « Confessions of a Disgruntled Economics Major Says:

    […] Self and Othering In my first post about critical economics, the first paragraph related to the workability or testability of new […]

  2. Claus-Peter Pfeffer Says:

    You know what, once upon a long time ago I thought similar thoughts such as these. One advice: Don’t make it too philosophical…
    Actually I went on and did a PhD in it, which I put 4 free on scribd, I called it “Plutopia – Policies for Globally Sustainable Common Wealth”, moved on and got a job…
    yours
    cp

  3. philosonomics Says:

    I don’t think that what I’m discussing here is the development of an economics that promotes sustainability or equality or any other utopian ideal. I don’t make many claims to a deep knowledge of human nature or about the capacity of humans to live harmoniously with one another.

    I do, however, claim that mainstream economics ignores much of the empirical evidence that speaks to the myopia that afflicts its assumptions. Homo economicus is a very narrowly defined model of human interaction, and prevents the development of more generalized models and theories of exchange and economic development… in my humble opinion….

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