This week saw the launch of The Econocracy: The Perils of Leaving Economics to the Experts. With some irony, the event took place at the LSE, home of one of the most conservative economics curriculums there is. Despite that, the event was a sell-out, with students and faculty packing the Old Theatre space. The book was written by three recent Manchester University economics graduates: Joe Earle, Cahal Moran and Zach Ward-Perkins. Like many students, they had begun to question why their curriculum seemed so divorced from the real world. Like those others they joined the Rethinking Economics network, something that now encompasses 40 groups in 13 countries. Along with the Post-Crash Economics Society, amongst others, they have presented a bottom-up challenge to the intellectual and political dominance of mainstream neoclassical economics. This book takes this challenge one step further.
The event was a great success. The book’s authors, along with related interest group representatives and Andy Haldane of the Bank of England, all spoke eloquently. The Q and A flowed. The book has already been widely endorsed by a who’s who of high profile critical economists. The strong arguments are supported by new research, namely an analysis of Russell Group economics curricula and a YouGov survey of the general public. Unlike most economics books, it is accessible, clearly written, and relates economics (the profession and the theory) to history, politics, institutions and the real world.
The question is what exactly is this new neologism Econocracy? Having used it myself for a while I thought I would move to defining and fleshing out the concept here. According to the book, econocracy is: ‘A society in which political goals are defined in terms of their effect on the economy, which is believed to be a distinct system with its own logic that requires experts to manage it’.
In effect, economics and economically-constructed aims and objectives increasingly influence politics and wider society. Despite being presented as neutral, technical services, economists have a growing impact on a whole range of non-economic areas of social and political life, from education to the environment. This isn’t a new point. It has been made by a variety of critics of neoliberalism and ‘the dismal science’ for some years.
But the book adds some useful additional material in support. Before 1950, UK parties never mentioned ‘the economy’ in their manifestos. By the 2015 election it had become the most used electoral term and the most covered policy area in the media. The number of economists employed in the Government Economic Service (GES) has tripled this century, to 1600 people, all while overall civil servant numbers have declined. The number of ‘economic institutions’, government and other, all employing the new economic class, have grown tremendously, nationally and internationally. The authors offer several useful examples where the framing, public discourse, evaluation and institutional regulatory systems put in place, are increasingly shaped by economists.
What is also hinted at in the above definition is two further issues that lie at the heart of the book. First, concerns the nature of the ‘economy’ that econonocracy imagines and talks about, and second, how economics operates as a highly exclusive and exclusionary ‘profession’.
This first point is where the book makes its strongest statement. It’s the reason why it was written. As is made clear, economics, as it is taught in most standard economics university courses, is primarily neoclassical economics. The authors looked at 174 economics modules on 7 of the most prestigious Russell Group university courses. Only 17 of these ever covered any other school of economic thought, from post-Keynesian and Marxist to Feminist and Institutional. More than that, the large majority of content is focused on technical knowledge and developing a tool kit of modelling and advanced mathematical skills. ‘Critical evaluation or independent judgement’ is rarely required. History and the great economic events, from the great depression to the 2007-08 financial crisis, as well as larger issues of inequality, bank money creation and global warming are barely discussed. Where history, real world events and people (as opposed to calculating, utility-maximising agents) are mentioned, it is likely to be in an option module. In fact, in the study, 97% of all core module assessment questions required no critical evaluation or real world judgement to be deployed.
The flip side of this is that economics teaching produces economists who no longer mix with or consider real people and markets, and speak a language and deploy a set of tools that only they understand. As a consequence they have created a situation in which only they are able to legitimately speak about the economy … at least until the EU Referendum and US Election that is.
Thus econocracy is also defined by: its narrow, reductive definition of what constitutes ‘the economy’, based on neoclassical thinking; as a technical toolbox of abstract models and mathematical techniques that may have little link to real world economic experience; as an obscure, incomprehensible language; and a prestigious club with very specific entry requirements and a monopoly over legitimate discourse about the economy.
My own account of econocracy more or less casts off where these authors end. In a piece, soon to be published in Political Studies (available as a final submission here), the focus is on how neoclassical economics has helped maintain elite power networks and institutions in precarious times. Like The Econocracy, it traces the steady rise of economists in political and financial institutions but with one important difference. That is that UK leaders have moved beyond a reliance on expert economists, and are now more likely to be themselves economists, or have some educational or professional background in the subject. Thus, in 2014, 72% of FTSE 100 CEOs have studied at least some economics at university level, as opposed to 38% in the 1970s. 19 of the 45 front bench MPs in 2014 year had studied some economics, usually as part of an Oxford PPE degree.18 of the 25 permanent secretaries in the civil service has an economics degree and/or long professional experience working in the financial sector or the Treasury. The last three overall heads of the civil service have all of these three elements.
This emerging econocracy, now widely spread across elite networks, is as likely to share such an economics background as it is to have gone to public school, Oxbridge or be a member of an exclusive gentleman’s club. In fact, with all these traditional establishment characteristics in steady decline, econocracy performs a greater function when it comes to providing social cohesion amongst this top tier.
As I then argue, econocracy advantages contemporary power elites in several ways. First, it links disparate elite sectors and institutions together by providing a common ideology and policy framework. This ideology has created a series of standardised norms, values and objectives, as described in The Econocracy. As such, elite econocrats can now cohere around a sort of shared lingua franca (a point made in the book) that continues to operate regardless of institutional instability and elite mobility. Within this accepted normative framework, leaders across business, public administration and politics can develop and promote wider economic visions across networks and sectors. That professional econocracy operates ideologically and symbolically is evidenced by its continued purchase on public debate and state policy even when economies are struggling, or neoclassical economic theories are not born out (see the many critiques produced by those endorsing this book, such as Quiggin, Keen and Chang). Thus, despite the banking crisis and economic recession that has followed, most core elements of the neoclassical economic policy consensus remain in place. ‘Zombie economic’ theories, models and forecasts continue to operate and be espoused.
Second, econocracy operates as a form of governmentality, providing a system of metrological tools, practices and mechanisms to effect a top-down ‘rule by numbers’. Thus, even when the larger ideology and grander visions of econocracy break down, it persists at a more mundane and micro level of discursive practice. Central to econocracy’s maintenance is that its grand and vague ideas can be broken down into simpler econometric models and short-term accounting targets. Whether or not monetarism worked, dynamic stochastic general equilibrium modeling is accurate, or a ‘new economy’ is emerging, is all fairly irrelevant as long as specific targets associated with those narratives are reached. Thus, by default, econocracy, in practice, morphs into instruments and tools of econometrics and accounting targets. In so doing, the narrow vision of neoclassical econocrats can still prove their worth via their superior maths and modelling skills.
Third, econocracy operates as a means of elite accountability, competition and turnover. It is a very modern manifestation of polyarchy. It enables elites to assess and evaluate each other according to the agreed norms, narratives and tools of neoclassical economics. Instead of the clash of ideas there is a competition based on perceived economic competence by elites of other elites. These days there is a fast turnover of leaders across elite sectors. A 2014 audit of top CEOs, permanent secretaries and ministers, reveals that a majority move on within 2 to 3 years. However, econocracy also enables elites to successfully navigate this state of affairs. This is because econocrats, as well as their recognised discursive practices and tools, can now move across organisational sectors and networks.
Fourth, as econocrats are central to both promoting econocratic discourse and establishing the technical ‘rules of the game’, they are also well-placed to work round them. So, on the one hand, they ‘govern by numbers’, from the top of the pyramid down but, on the other, they are able to manoeuvre around those same targets if they need to. In fact, 2 to 3 year tenures are ideal for the short-term gaming of accounting systems and the evasion of long-term accountability. Thus CEOs can keep seeing huge rises in their pay and bonuses despite company growth and productivity being static. So politicians can hit all sorts of metrics that suggest a healthy economy, even as the economy is going backwards for a majority of the population … which leads us back to Brexit and the US Election again. Econocrats can then leave before the debt hits the fan. Thus econocracy becomes a fluid, malleable thing that reflexive elites may manoeuvre around while, at the same time, imposing its rule by numbers more rigidly on those below.
Putting this together we might further define in more detail the ways and means by which econocracy increasingly shapes and influences politics and society. First, in modern econocracies, the political system and institutions are further inhabited by those with some formal education and/or professional experience in neoclassical economics. This goes beyond the role of expert advisor to the leader with leaders themselves being more likely to be econocrats. Second econocracy contains a technical language and ideology of its own, that both coheres its members and excludes all others. This exclusion concerns both membership and the authority to define and comment on ‘the economy’. Third it is a means by which disparate elites can find social and intellectual cohesion, and is slowly replacing older educational and social structures. Fourth, it provides a meteorologically-based evaluative system by which elites may judge and replace each other. Fifth, it is a numerically-constructed form of governmentality, through which a broader ideology is actually enacted using daily practices and tools. Sixth, as with all fundamentalist structures of rule, it can be rigidly applied downwards but side-stepped by its creators. Thus, in each of these ways, econocracy not only facilitates the hegemony of economic objectives over democratic politics and society, it creates new structures for the maintenance of elite rule and inequality.