I have read a fair amount of economics, and I often experience a certain discomfort with it. There are theories that make perfect sense in the textbook, but just don’t work out in the real world. They don’t reflect the complexity of human experience, or stand up to the slippery reasoning of our decision making.
I find these problems hard to articulate, because I’m largely self taught. If the theory doesn’t seem right to me, I have to wonder if it’s because I haven’t understood it properly. But then I go back and read up on it, and still find it doesn’t sit right.
In his book I Spend, Therefore I Am, Philip Roscoe puts his finger on why this might be. Economics, he believes, has significantly overstepped its remit. It is a useful way of thinking, but its reductionist models of the world have been applied with too much enthusiasm into too many areas of life. “Economic relations” says Roscoe, “epitomized by self-interest, have colonized our lives.”
Economics assumes that we’re all self-interested. But, says Roscoe, language is ‘performative’ – it changes things. It creates the world it describes. Assuming people are self-interested is one thing, but when acted on “in the wild” it creates systems in which people have to be self-interested. It becomes learned behaviour.
So higher education becomes a market place where prospective students must weigh up future earnings and work out if their course is a sensible investment or not. Online dating subscribers browse potential partners like goods on shelves, seeing sets of attributes rather than complex people with life stories. Economists run cost-benefit analysis to see which bits of the country they will allow to flood in order to get the best value for money out of a shrinking budget.
There are some great examples in the book of how economic reasoning hides the true cost of things and narrows our decision making into simple profit-maximising. There’s an insightful dissection of the supermarket price label, for instance. All that matters in the price, and how the goods were made and by whom are all invisible. Other examples are less compelling. There’s a long section on online dating sites, and then at the end of it is a passing mention of a survey done in the US. It found that a third of marriages in America now begin online, and that they tend to be more satisfying and more stable than those that begin offline – which is intriguing, is left unexplored, and rather undermines the critique.
Economic thought is supposed to be rational and objective, but it’s not, the author argues. It is political. It is often arbitrary. There are always a host of hidden calculations and assumptions. And ultimately, somebody had to decide what the end goal of everything is. Cost benefit analysis “can only tell us what we should do if we have already decided that what matters most is maximizing a nation’s wealth.” But when did we decide that?
Economics needs to be put back where it belongs, the book concludes. It should be on a par with engineering – “an engineering that is subservient to principles and decisions made through a democratic process.” There are some areas where economics is not wanted. “We should not economize on love, care, or even art” says Roscoe. “Altrusim and civic virtue, love and care grow through exercise, and are not scare resources to be economized.” Indeed.
Unfortunately, the closing section on reclaiming an economics of human flourishing only really scratches the surface. It mentions LETS schemes and complementary currencies, but admits these are often symbolic rather than practical. It briefly describes Islamic finance and risk sharing, and celebrates the work of Alvin Roth as an example of “economic engineering at its best”.
There’s so much more that could be in here – what about the challenges to conventional economics from collaborative consumption, the commons movement, anarchic online cyptocurrencies like Bitcoin, or postgrowth economics? And surely there are other economists worth looking into as examples of a more human-centred economics?
We need more of these examples and challengers because the narrow, individualistic self-interest of modern economics will only get us so far. “The collective action that global crisis demands will require an entirely different kind of social contract, with self-interest perceived as inextricable from global survival”.
I Spend Therefore I Am is an intelligent and tightly argued book. It’s not a difficult read, but it’s not a quick one either. It warrants close attention. It’s helpful in articulating the shortcomings of economics, and the consequences of over-relying on economic reasoning. Where you go from there, is up to you.
The Earthbound Report 
It’s Descartes who provides part of the reasoning for a people-centered form of economics.
“7. Descartes, mathematician/philosopher, finally got around some fifteen centuries later to further analyzing the questions of what exists, what is real. He went past numbers to the question of whether he himself even existed. He posited that some entity, some manner of consciousness and material world in the form he found himself, must necessarily and logically exist in order to ponder the question to begin with. He concluded “cogito, ergo sum.” “I think, therefore I am.” Thus demonstrating that he, and by the same argument other humans, have firm evidence that we exist, and are not mere fantasies or cognitive constructs of an Evil Genius imagining all of us, the world, and the manifest universe. Human beings exist. He was not able to reach a similar conclusion about numbers, nor has anyone else, nor is it possible to reach any such conclusion because it is not possible to separate thinking of numbers by a human being from the human being himself or herself without eradicating the human being. In which case, there would be nothing to speak or think further. “
Something of a philosophical paradox then. Descartes gets a mention in the book, as it happens. There’s more to the title than a passing reference.
The trouble with decrying ‘rational economics’ is that you are left with irrational answers.
Resources are always going to be limited. Economics is a way to allocate those resources. If you don’t have a cost benefit analysis but decide that certain things are ‘priceless’ then you end up spending lots of those limited resources on somethings and not having resources left for other things. The choices are then down to who is deciding what is ‘priceless.’ I know what is in my interests better than anyone else, I don’t know yours and don’t know what everyone wants – see Hayek and the role of the market in processing information. So if I’m the one making the choices I’ll choose what I think is priceless, you might differ but since it is irrational, how do you argue with me and once I’ve spent everything on my ‘priceless’ objectives what if left for yours?
Economics helps us make those trade offs. It isn’t and never has been the be all and end all. We make decisions not grounded in pure economic rationality all the time. I do feel that often people who decry ‘economics’ want to impose their own ideas and solutions, just they can’t persuade people to buy into them without coercion.
Re. your last sentence – I’m sure that is sometimes the case, but often, they are people who hope to see more ethical thinking in the ‘economic’ box of trade-offs.
Who’s ethics?
Hi DC. Of course, whose ethics is another question and a good one. I’m sure there are many ways to answer it, but, off the cuff, I’d say any that is ‘better’ than that which the history of economics has produced so far. You may care to ask the meaning of my ‘better’. I’d answer something that will fight harder to remove greed and poverty, much more than we have done.. High hopes and basic answers, but I do not profess to know how to implement it. In fact, I doubt it’s possible to alter the prime objective of economics (specialism tends to become single minded about itself), but that is no reason to give up stating it and trying in ones own life.
Got to be careful not to make things worse. Our current ‘neoliberal’ economics has seen the greatest reduction in poverty in the history of the world. Good ethical results.
Ah yes, because China and India are so famous for their neoliberal focus on open markets and hands-off small government. Right?
I’m thinking more about the focus of global trade openness. If we hadn’t opened our markets China wouldn’t have done so well.
Then those who have seen the biggest reduction in poverty are not those who adopted neoliberal policies, but those who abused the free markets of others to flood their economies with cheap money and goods. Not sure that’s a victory for neoliberalism.
“It isn’t and never has been the be all and end all.” Exactly, and the book makes that point. This is not about decrying economics per se, but keeping it in its proper place, knowing the limits to what it can and can’t explain.
It’s more a reaction to things like Freakonomics, Tim Harford’s books, or Robert Franks’ The Economic Naturalist – those popular economics books that quite shamelessly claim that economics does explain everything.
It does seem like a book that is wacking at a strawman- what the author thinks is economics rather than what it is. In doing so he goes off the rails in the opposite direction to the problems with Freakonomics.
There are occasional moments of overstatement, noted in the margins of my copy. Generally I found it was very thoughtful and pretty balanced. It’s not overly political and it’s certainly not off the rails, but I guess you’d have to read it find out for sure.
Predictably Irrational by Dan Ariely might be worth a read to fill in the gaps. Comparisons between “standard economics” and “behavioural economics” showcase reasons why the standard model just doesn’t reflect reality.
Thanks, I’ll look that up.
Jeremy, this has just arrived in my email but it doesn’t appear on this blog! –
franklin county auditor site commented on I Spend, Therefore I Am, by Philip Roscoe.
in response to Jeremy Williams:
I have read a fair amount of economics, and I often experience a certain discomfort with it. There are theories that make perfect sense in the textbook, but just don’t work out in the real world. They don’t reflect the complexity of human experience, or stand up to the slippery reasoning of our decision making. […]
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