Economics: A woman’s touch

Alex Millmow, Charles Sturt University

Lindy Edwards How to Argue with an Economist, Sydney, Cambridge University Press 2002 (172 pp). ISBN 0-52152-532-2 (paperback) RRP $27.95.

Deirdre McCloskey How to Be Human* * Though an Economist, Ann Arbor, The University of Michigan Press 2002 (287 pp). ISBN 0-47206-744-3 (paperback) RRP $53.00.

A common theme linking these two books, apart from their eminent readability, is their wish to inject a little softness, a little humanity, into the macho world of high-powered mainstream economics. The policy platform that emanates from grand theory, namely economic rationalism, is a term of abuse in this country. Consequently, few economists are willing to be identified as subscribing to it. Both books are written by women, which in itself will do a power of good for economics. The lack of women in the profession, McCloskey suggests, is one reason why ‘malestream’ economics has become insular and autistic. At the policy level too, at which Edwards’ book is focused, there is a gulf between how the punters, or middle Australia perceive the world, and how economists do. The founding father of modern economics, Alfred Marshall, and his successor A.C. Pigou were frightful misogynists, and judging from the paucity of female postgraduates breaking into the discipline, undercurrents of that bias are still alive today.

The fact that both books air some of the dirty laundry of economics will elicit questions from the profession about the authors’ true loyalties. Both authors, however, are conscientious and committed economists who wish, as Deirdre McCloskey eloquently puts it, to ‘ ... break through the phony rhetoric of modern economics and bring economics, that glorious conversation since Adam Smith, back into the conversation of humankind’. That said, most mainstream economists will not care to read either volume. That is a pity, for McCloskey’s commentaries on the economics profession suggest images of Oscar Wilde penning a tract on the everyday etiquette of being an economist: how to write, how to organise a conference, and so on.

McCloskey, however, wishes to style herself more as the ‘Agony Aunt’ of the profession, especially when it comes to highlighting the foibles of the methodology underpinning modern economics. She went to some lengths to achieve that status. You see Deirdre McCloskey was, in an earlier incarnation, one Donald McCloskey, a conservative economic historian with an impeccable Ivy League background. McCloskey now sees economics from a whole new perspective. True, the inclination was always there, with McCloskey long regarded as a gadfly, but the gender switch has given a new twist to economics being known, in Cambridge circles, as the gay science. McCloskey’s ‘crossing’ at the ripe old age of 53 might strike some heterodox economists as going to physical extremes. McCloskey recounts the vignette of informing his departmental head, behind closed doors, about his habit of cross-dressing. The head, a staunch neoclassical, was mightily relieved to find that McCloskey was talking about a gender switch, not a gestalt switch of economic paradigms.

That reaction summarises how most economists — the frozen chosen — have reacted to McCloskey’s change of identity. They didn’t bat an eyelid, but still turned a deaf ear to McCloskey’s strictures about following correct methodological procedure. Her oeuvre has been to analyse the technical wherewithal of modern economics, with the most notable contribution looking at how the powers of persuasion determine which arguments come out on top in economics discourse. Apart from being a rhetorician, McCloskey is an arch critic of economists’ modeling assumptions, tests of statistical significance, and penchant for deriving policy implications from blackboard models. McCloskey has become the great chronicler of the American economics profession, examining its sociology, exemplars, axioms and consciousness. She has been a regular columnist in the liberally inclined Eastern Economic Review, and much of the pot-pourri of academic topics in this volume is sourced from there.

The lack of women in the profession is one reason why it has become insular and autistic.

Like Edwards’ attack on the economic zealots within Treasury, McCloskey criticises her colleagues for concentrating too much on mathematical formulation, while ignoring less discrete factors that might account for peoples’ behaviour. McCloskey agrees that while people are primarily motivated by self-interest, people also act out of love or what Adam Smith in his Theory of Moral Sentiments called a sense of altruism. This is something, McCloskey laments, that the ‘boys in the sandbox’ of arcane economics are yet to realise, as they model economic behaviour in a mechanical and unrepresentative way. The only way of deflating male pomposity over the primacy of models is a woman’s sarcasm. Alas there are not enough women in the trade and, of those that there are, few Joan Robinson types.

It has been just over ten years since Michael Pusey alerted us to the phenomenon of economic rationalism infecting the upper echelons of Australian public service. John Howard and the Federal Treasury might disingenuously declare they know nothing of that fungible concept, but Lindy Edwards assures us it is very much alive and kicking. Edwards should know, having served in the Department of Prime Minister and Cabinet, and more recently as economic advisor to the former leader of the Australian Democrats, Natasha Stott-Despoja. In writing a book on how to take on the Mandarinate, Edwards enters into the dangerous territory of providing a ‘do it yourself guide’ to economics. It is this aspect of the book that is its main selling point. The danger, in providing a Cook’s tour of economics is the risk of oversimplifying and presenting a seeming of things. There is plenty of scope for caricature and misrepresentation of what economic rationalists believe. Few economists would agree with Edwards, for example, that if the distribution is not fair, it is not efficient.

Economists suppose that economics can be separated from cultural and social milieu.

That aside, Edwards has something meaningful to say in detecting a sense of widespread unease (crisis is too strong a word) with the grand economic experiment Australia has undergone in the last two decades. Beneath the tinsel and gloss of the Australian miracle economy lies a turbulent sea of anxiety and insecurity. Overworked and overstressed, we are not a happy breed. With the wasting of the Australian Settlement we have become a more uncaring, selfish society, with every decision affecting human welfare reduced to an auditors’ parody. The cloth of social capital, mateship and trust embedded within the Australian Settlement is fraying at the edges. These concepts, Edwards contends, form no part of the economic rationalist’s cost-benefit calculus. Even if they did, they would be considered namby-pamby, of no relevance. Moreover, apart from having their own sense of market-oriented morality, economic rationalists focus only on the ends, never the means.

Edwards insists, however, that it is the means that truly matter in shaping our identities, hopes and lifestyles. Consequently, economists subscribe to the idea that economics, and in turn economic policy, can be separated from cultural and social milieu. This fundamental presupposition isolates economists from what middle Australia thinks. Thus we get market driven economic policies that tend to alienate and divide, instead of unifying us.

Edwards believes that if only economists could be convinced that the invisible hand of the market sometimes does not lead to the common good, then her book will have made a contribution. Actually most mild-mannered university economists have long accepted this, though the caveat seems to get lost in the transmission of principle into policy. As Joseph Stiglitz discovered about the inside workings of the International Monetary Fund, those who benefit materially from a change in the economic architecture are the ones driving policy. Edwards’, and presumably the Democrats’, vision of nirvana is where economics and social values are reintegrated and the incubus of economic rationalism fades away. Amen to that.

Alex Millmow lectures in economics at Charles Sturt University.

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