Saturday, January 20, 2007

Does 'economics' corrupt our moral senses? 

As I start trying to fill some of the holes in my formal knowledge of economics, two unsettling questions. Why are economists distrusted and even loathed so much? And does studying economics degrade our moral capacities?

And are these questions relevant to current debates within the LibDems?

Georgetown University economist Pietra Rivoli notes this about her discipline:

As a classically trained financial and international economist I share with my colleagues the somewhat off-putting tendency to believe that if everyone understood what we understood – if they “got it” – they wouldn’t argue so much. More that 200 years after Adam Smith his case for Free Trade in ‘The Wealth of Nations’ we are still trying to make sure (people) “get it” because we are sure that once they understand, everyone will agree with us…

Now I wonder if reactions to this ‘evangelist’ approach explains some of the tensions between so-called ‘wings’ in this party…

And a further depressing thought culled from debates in the Management Education field. It seems that students on economics courses put their moral framework at risk. Note this from an old Simon Caulkin column, citing work by Jeffrey Pfeffer at Stanford Business School:

In an 'incredibly depressing' range of studies, business and economics students have been found to be more prone to cheat, free‑ride, and violate codes than those of other disciplines. What's more, unlike contemporaries, they undergo negative moral development during their courses. In other words, they more and more resemble the rational utility maximiser ‑ rational economic man ‑ that is the starting assumption of their disciplines. Economics and business courses, sums up Pfeffer, are 'hazards to your moral health'.

An increase in arrogance and a degraded moral compass – do I really want those outcomes?

Well a few crumbs of hope. Rivoli agrees this is a somewhat abrasive bias –and in her book ‘Travels of a T-Shirt in the Global Economy’ she has a hard look at her biases. She was inspired to research her book by anti-Globalisation protesters at her University. She expected to help them ‘get it’. At the end of her study she “got” what they were talking about and addresses the importance of moral issues in trade debates, while offering a liberating message supportive of Free Trade.

And there is a massive debate in progress on how to rescue economics and business from moral abrasion. I have just downloaded some papers by Pfeffer and by the late Sumantra Ghosal to read over the weekend and mull over while delivering leaflets.
One thought from Pfeffer:

Ghoshal is certainly right when he reiterates an argument that he first made a
while ago: that the assumptions of much of economic theory and the effects of
these assumptions on people and institutions can be harmful (Ghoshal & Moran,1996). In fact, as I will discuss presently, I think Ghoshal if anything
understates the potential downside to the inculcation and acceptance of economic
language, assumptions, and theory.

Sobering warnings and reflections as I start trying to grapple with formal economics.


Rivoli, P. (2006) ‘The Travels of a T-Shirt in the Global Economy: an Economist Examines the Markets, Power and Politics of World Trade’ Wiley.
Simon Caulkin "That's the theory and it matters", Observer, 1 Oct 2005
Ghosal, Sumantra “Bad management Theories are Destroying Good Management Practice” Academy of Management Learning & Education, 2005, Vol. 4, No. 1, 75–91.
Jeffrey Pfeffer “Why do bad management theories persist?” Academy of Management Learning & Education, 2005, Vol. 4, No. 1, 96–100.

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