On 19th-20th of October 2017, New School Economics (NSE) Goldsmiths members attended the first ‘Festival for New Economic Thinking’ in Edinburgh. This occasion brought together a range of ‘post-crash’ organizations that seek to rethink and embrace different perspectives in how economics is taught, studied and practiced. The festival offered lectures, workshops and film screenings, led by organizations such as Rethinking Economics and the Young Scholars Initiative. The focus was to provide an historical perspective on economic thinking and embed the economy on a more critical and deliberative ground.
NSE members predominantly draw from the Goldsmiths BA Politics, Philosophy and Economics degree which is itself a product of the post-crash movement, established in 2014 to broaden perspectives on what the economy is and who it serves. To this end, this course aims to study heterodox economic thinking by reflecting on the tradition of Marx, Schumpeter, Keynes, and Polanyi among others, who emphasize that capitalism is a dynamic and uncertain political-economic system. Within this framework, the study of the economy cannot be detached from the study of politics, ideas, and history. Thus the urgent need for a new interdisciplinary approach which includes anthropological, cultural, and sociological perspectives is paramount.
Indeed at the festival, Sheila Dow, Professor of Economics at Stirling University, reiterated to us the importance of other disciplines such as history and ethics in understanding the economy. In her remarks, she explained how the 18th century education of Adam Smith and his generation presumed a familiarity with ethics, and the study of economics was in fact treated as a practical way to discuss moral philosophy, rather than studying mathematical theory in isolation from its historical and ethical context.
This festival was particularly significant as it followed a number of political shocks including the outcome of the Brexit referendum, the election of Donald Trump in the United States, and a pervasive feeling of economic injustice across the world. There was a sense of urgency to rethink how we understand and conceptualize the economy in order to confront this growing political discontent and to devise a strategy for a new paradigm shift. In conjunction with this, at the festival we talked to Professor Michael Jacobs (left) and Laurie Laybourn-Langton who highlighted the failure of post-crash economic policy to adequately address the major issues facing developed economies. These failures range from missing anticipated rates of growth in the British economy, to the use of fiscal austerity measures to reduce the public deficit, and the stalling productivity and stagnation of wages despite the low rate of unemployment.
Underlying their report entitled ‘Moving Beyond Neoliberalism [pdf]’ is the idea that the neoliberal doctrine cannot be dislodged in the same manner that it was established. There is no single Keynesian or Hayekian figure to articulate a comprehensive alternative approach to understand the economy and public policy making, but instead multiple critiques of orthodox economic theories are needed. In the concluding recommendations of their report, Professor Jacobs and Laybourne-Langton argue for a new platform which aims to coordinate and accelerate efforts to move away from the neoliberal paradigm to an alternative, with a focus on communication and the development of an understanding to how new economic thinking groups can influence policy makers.
Another prominent critique of mainstream economic methods was delivered by Professor Steve Keen from Kingston University in his lecture entitled “Can we avoid another financial crisis?”. This provided a thought-provoking analysis of orthodox economics while warning of the inevitability of another crash. He argued that the mainstream’s derivation of macroeconomics from microeconomic foundations was key to understanding why crises were not predicted, as it led to a belief that financial markets tend towards a stable equilibrium, therefore crises could only emerge as a result of exogenous shocks. In his view, informed by Hyman Minsky’s financial instability hypothesis, financial crises are endogenous, and you can derive macro from macro; that is to say, empirical relationships found in the macroeconomy can form the basis for macroeconomic theory. Crucially, he asserted that private debt is the primary factor in sparking crises, and that when an economy with high private debt encounters a sudden cut in credit, a crisis will occur.
We conducted a brief interview with Professor Keen which you can view here:
One perspective of the crisis was shown in the 2012 documentary ‘When Bubbles Burst’, directed by Han Petter Moland, which was screened at the festival and introduced by economist Eric Reinert. It focused on the small Norwegian town of Vik, and how the crisis had devastating effects on their local economy, contextualising it within the history of technological revolutions and crises, differentiating 20th century financial innovations from previous cycles. The film manages to make the link between the abstract financial phenomenon of the crash, and the impact it had on communities in places like Vik. Scattered throughout the film are interviews with experts such as Joseph Stiglitz, former Goldman Sachs bankers, and venture capitalists, as well as the ordinary people who underwent terrible suffering due to the crisis. The film brought into sharp focus just how little has changed since the crash, with private debt on the rise, austerity pushing inequality towards dizzying new heights, and an emerging national discussion on the crisis of mental health.
Joe Earle, who co-authored the book ‘The Econocracy’, held a discussion entitled ‘Mental Health and Economics’, based upon the claim that these domains are inextricable, and that economics and psychology must communicate much more effectively. The discussion centred upon the aftermath of the 2007/08 financial crisis and the austerity policies which followed, citing how the slashing of expenditure on public services and increase in private debt has been met with questions around whether these factors are actually exacerbating mental health problems within the population. Contributing to the forum was Samiah Anderson, NSE Founder and PPE Graduate, outlining that research undertaken by Rethinking Economics should confront the neoclassical approach’s failure to consider the structural drivers of mental health, highlighted in books like Body Economic, the Happiness Industry by Will Davies and the Political Self. Economics can measure the effectiveness of different kinds of treatments, without tackling root economic causes e.g. unemployment, recessions, technology, inequality and poverty and the implications on social care.
Also participating in the discussion was Dr Ruth Cain, a senior lecturer in law at the University of Kent. Her research focuses on the impact of neoliberalism on mental health and well being. Cain’s concern is with current approaches to the measurement and treatment of mental health through happiness indices and mobile phone applications, how these are used in health care, and the way in which profit is extracted from this process. One part of Cain’s research examines the introduction of CBT (Cognitive Behavioural Therapy) by past governments, how it persists as something that is meant to preserve well-being in the population, and why it retained funding when other mental health funding was cut. She questioned the value attributed to this particular form of therapy, where it is thought that changes in the individual’s behaviour can improve and ‘fix’ their mental health, despite exogenous political and societal pressures.
Philip Mirowski, historian and philosopher of economic thought at the University of Notre Dame, delivered a comprehensive set of three lectures entitled Epistemological Breakdowns: Information Economics and Fake News. Mirowski posits several hypotheses about neoliberal epistemology, and why it has ultimately led to a post-truth world. He states that in this epistemology: individuals are always undependable agents; the market is the greatest information processor we have, and is thus the sole validator of truth; the problem is to get people to use their ‘freedom’ to subordinate themselves to the market; and that this doctrine hives liberty from autonomy. Ultimately, he states that people cannot be told these truths – so truth becomes unmoored from argumentation. With the shift from physical production, digital platforms have led data to become today’s ‘Big Business’ model through its monitoring, expropriation, storage, and retailing.
Fake news, for Mirowski, entails undermining people’s perception of the world so that they never really know what is happening, and that this befuddlement is used as a political strategy. Additionally, with the huge shift in how people gain their news and knowledge – for example through Facebook – news can be fabricated, making huge and sustainable profits for the platform capitalists who benefit from both the advertisements and the data-creating clicks of users. When, as well as this, both the creation of news and advertisements, and even the agents, can be automated through bots, the whole ecology of fake news becomes an automated system through which the platforms can endlessly harvest profit. Mirowski believes that this is the apotheosis of the neoliberal epistemology centering on the market as the ultimate information processor, and that this nexus of incoherence is destroying democracy, and that the only way to stop this process would be to halt the money-making mechanisms of platforms capitalists. He emphasised that the left must build a rival logic of markets, and of people within them, to put up any kind of fight to neoliberalism, and that those engaged in rethinking economics must put this at the centre of their project.
The festival provided NSE members with the chance not only to hear from leading academics, but to associate with other like-minded students engaged with the movement to broaden economic thinking. Communication is therefore a vital element, as economics has been perceived and portrayed as an isolated field dominated by experts, resulting in a public attitude demonstrated in a poll conducted by YouGov in 2016, which states how only 12% of respondents agreed that “politicians and the media talk about economics in a way that is accessible and easy to understand”. Rethinking Economics’ sister organisation Ecnmy.org campaign to demystify the complex phrases and concepts to engage a wider audience, thus attempting to encourage more informed democratic participation in reforming the economy. Therefore an important component of promoting new economic thinking is to train rethinkers to present ideas in a more concise, accessible and engaging manner. At the festival Laurie Laybourn-Langton, in his spokesperson training workshop, provided a set of effective tools that enable rethinkers to get their key points across while communicating on various media platforms. Such workshops are an important step for the Rethinking movement in promoting new economic thinking and wider participation to consult on, and criticise economic decision making.