Our time here is ending, but I did want to add a follow-up to my previous post on economics and humanism. Since these kinds of discussions are often carried out on an almost maddeningly abstract plane, I wanted to give more specific examples of how a certain kind of "scientism" has harmed economics.
One example that comes immediately to mind is that economists have tended to confuse "markets" with "capitalism". The neoclassical school did seem to feel at some level that it had created a science of markets, one that it was quite proud of. In so doing, it turned its back on an earlier, more sociological tradition rooted in Marx and Weber that saw capitalism as a much broader phenomenon than just markets. Capitalism in this tradition requires a particular culture to support it, a particular kind of government and politics (not so much a democracy as a strong but non-arbitrary government), the emergence of particular sorts of class identities, a particular sort of relationship with applied technology, a new orientation toward investment among the business class, etc. In short a whole bunch of supporting cultural institutions that make markets function in a recognizably "capitalist" way. Now, it is easy to criticize that tradition for being overly deterministic in its theory of how culture was related to economic change (Weber was not an optimist about China's ability to develop capitalism). But in ignoring cultural factors economics also developed its own sort of institutional determinism -- "build free markets and the capitalists will come". Not always...sometimes a gang of thieves come instead.
I think this failure of imagination is related to the poor record Western economists have had in guiding countries across the developmental divide between pre-capitalism and modern capitalism. There have been a number of disasters in that area (led by Russia in the 90s). Just as the earlier tradition would have predicted, successful development often seems to have more to do with the maintenance of pre-existing cultural traditions and the transformation of pre-existing forms of social solidarity into more "capitalist" versions than with institutional change alone. The success of Asian countries (Japan, Korea, China) in following some very non-neoclassical routes to development success seems relevant here.
But economic development is notoriously difficult. I think that the impoverishment of the "culture of capitalism" side of economics is also related to some of the things we saw in the "New Economy" frenzy of the 1990s. Economists pushed stock options hard as a means of linking managerial pay to performance. Yet they greatly underestimated the ways in which stock options themselves could become a means of rent extraction. To put it more plainly, they got taken for a ride and ended up making a significant behind-the-scenes contribution to the quick-buck culture that actually destroyed a lot of value during the stock market bubble. There are value-creating ways of maximizing profits and other ways that do not create value. A lot of what healthy capitalism is about is developing a business culture that accepts only a limited subset of the possible ways to maximize profits. (This has a good deal to do with future orientation, but I think future orientation is too vague a concept to do justice to it).
Thinkers like Daniel Bell have argued that modern capitalism is actually dependent on its pre-capitalist cultural heritage to remain healthy, a heritage which some critics argue is being depleted. I find the work in this tradition to be too casual methodologically and more provocative than convincing. But the ideas in it deserve greater development. Honestly, that kind of development is already starting to happen in economics.
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