I wrote a short essay for the New York Times Room for Debate feature. The question was, “Have we given economists too much authority?” Here’s my answer, as edited by the Times. You can read the other essays and comments here.
Exceptions Overwhelm Economic Rules
There is a lot to be said for the common critique of economists: They see society as the product of freely acting, rationally calculating individuals for whom monetary reward is the primary source of motivation. Free markets, to them, are the pure expression of social function and economic growth through their realization is the only outcome that matters.
But people do not simply act rationally to maximize their economic rewards, because they can have incomplete or inaccurate information, ideological biases, conflicting desires or collective interests. Exploitation, dishonesty, violence, ignorance and demagoguery set vast areas of social life apart outside the model. The multiplying exceptions overwhelm the rule bringing the model’s utility into question.
Group behavior and social structure are central to understanding society. Collective identity yields networks of solidarity that drive social interaction in ways individual self-interest alone cannot determine. Economic growth is one of many legitimate goals.
In reality, many economists don’t hew so firmly to these mainstream dogmas. But economists’ influence is largely proportional to the degree with which their analysis comports with the interests of those who make the most influential decisions. The free market orientation, individualist logic and materialist values of some economists serve well the captains of industry (or, nowadays, of finance), who in turn reward their compliant consultants with privileged perches around the seats of power.
Jeb Bush reflected this alliance in his speech to the Detroit Economic Club on Wednesday, when he asked, “If a law or a rule doesn’t contribute to growth, why do it?” Going out on a limb, other justifications for government action might include reducing inequality, improving social cohesion, reducing conflict, enhancing health or protecting the environment.
If their influence is dependent on their contribution to already-powerful agendas, maybe economists don’t have as much real influence as it seems. On the other hand, people with training in the other social sciences have more impact than we often think, partly because they work not as “sociologists,” say, but under job titles such as analyst, demographer, statistician, consultant, teacher, organizer or survey director.
Of course, the common belief that economists have outsized influence is not wholly false, and they have worked hard to build it, but the uncritical acceptance of that image is part of what makes it a reality.