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When social physics
becomes a social problem: economics,
ethics and the new order Juan Pablo Pardo-Guerra (Mexico)
©
Copyright 2004- Juan Pablo Pardo-Guerra
In an official speech just a few weeks ago, Inacio Lula Da Silva, the polemical and ever so intriguing President of Brazil, threw hunger and poverty into that fashionable category of ‘weapons of mass destruction.’ Mr. Lula’s words were uttered not in a time of worldwide prosperity but in the midst of an international crisis of pandemic proportions: while global resources become increasingly endangered, the global governance system stands on the verge of collapse as some of the most powerful nations of the world disdain collaboration over intervention, concordance over imposition and dialogue over unilateralism. On the economic side of this dire picture, an important sector of the world’s population has been driven to take to the streets to manifest its discontent with the surge in global inequality, often attributed to the malformed policies of organizations such as the World Bank and the International Monetary Fund. In contrast and following the long tradition of economic thought that has permeated the West for generations, the heads of these same global organizations blame countries like Brazil, the home of Mr. Lula, for not adapting their domestic policies to the demands of these liberal times we live in. If this were only an inoffensive divergence in worldviews, nothing important would be at stake. However, at the core of this discussion lies the fate of millions of people, from the marginalized citizens of Michael Moore’s suburban USA to the famished refugees in Sudan. The destiny of global security lies not only in the proliferation of weapons of mass destruction or in the expansion of terrorist activities; the real peril lies in the increasing gap that inexorably divides the people of our world, the rich from the poor, the informed from the uninformed, the armed from the disarmed. But who is to blame for the constant
growth of this gap? Who is ultimately right: the
alterglobalists1 that took to the streets in Seattle or the
high management of the Bretton Woods offspring?
Concerning
the Two Chief Systems of the World It is virtually impossible, if not
political suicide, to identify a single cause for the widening
socioeconomic gap that divides our world. The alterglobalists often blame ‘the system’ that lies on the
other side of the barricades, whilst those who work for ‘the system’ often blame the
alterglobalists for being blind to the benefits
of living in a global village. The fundamental problem here lies in the
fact that, in some sense, both parties see the world from different
perspectives and epistemological backgrounds, therefore making dialogue
among them a monologue in two voices. It is an outspoken clash of two
radically different cultures. The economists and policy-makers who
work in one of the myriad institutions devoted to putting some order into
the global economy grew up in a world that tagged them and their jobs as
eminently rational in nature; most went to colleges where they studied the
rationality behind choices; they were taught that economics is a science,
specifically a science of society; they read Adam Smith, John Maynard
Keynes, Paul Samuelson, John Stuart Mill, and even Karl Marx. They believe
they are following the right track simply because they are implementing
the very things they were taught to do. Activists, on the other hand, grew
up in a world where the premises that economists and policy makers
defended were simply not real; they saw the demise of the economic
policies of the last three decades; they’ve seen the poverty of those
affected by an uncontrolled globalization; they understood that economics
is not as scientific as it claims to be; and they know that rationality is
far from being carvings on a stone. The tools they have for understanding
the world, both learned from theory and from practice, usually are at odds
with those of mainstream economists. There are countless examples of this
philosophical divergence in the vast literature on both activism and
globalization that one can find in any average bookstore. Take, for
example, one of the central referents of many alterglobal activists, Naomi Klein. Consider the
following paragraph extracted from a column published during the first
days of the World Trade Organization’s 2003 ministerial conference in
Cancun, Mexico: [the
brutal economic model advanced by the World Trade Organization is itself a
form of war] because privatization and deregulation kill--by pushing up
prices on necessities like water and medicines and pushing down prices on
raw commodities like coffee, making small farms unsustainable. War because
those who resist and "refuse to disappear," as the Zapatistas say, are
routinely arrested, beaten and even killed. War because when this kind of
low-intensity repression fails to clear the path to corporate liberation,
the real wars begin. (Klein, 2003) These words, even at a rhetoric level,
are in sharp contrast with those of Robert S. McNamara, former president
of the World Bank, who in an interview with New Perspectives Quarterly
mentioned: Ninety-eight
percent of the protesters are young people who are extraordinarily highly
motivated, desiring to improve the welfare of the disadvantaged in the
world, particularly in the developing countries, in China, the Indian
subcontinent or sub-Saharan Africa. But they are totally wrong in their
judgment that globalization is somehow the cause of poverty or standing in
the way of reducing poverty. They are just totally wrong intellectually.
(McNamara, 2003) There is simply no immediate form of
bridging the positions of the pro-globalists who
believe in the predictions of the theory and the in situ practitioners who live the
reality of the policies. And as countless news reports show, the
combination of these two discursive worlds generates an explosive mix:
thousands of protestors, clashes with local security enforcement agencies
and—as was so terribly demonstrated during the 2001 G8 meeting in
Genoa—even fatal outcomes. But despite all, there is a fundamentally
simple way to defuse this deadly cocktail, one which is rather well-known
but seldom referred to. Perhaps the biggest obstacle that
prevents these two rather distant worlds from establishing a steady
dialogue can be traced back to the way in which economists are trained. I
have chosen economists as the focal point of this assessment for they, in
general, occupy positions that give them a more formal and official
validation than that given to alternative social movements. Focusing our
attention on economists is therefore following the track of political
power and the channels that have a higher impact on the construction of
history. But to understand and change the practice of economists one first
has to comprehend their trade and this in turn requires understanding the
complex web on which the modern economic discourse was
built. Building
the ivory tower
Economics has suffered a series of
dramatic changes over the last 200 years. From emerging as one of the
strongest arms of moral philosophy, it has now come to resemble a formal,
axiomatic dictum tailored with the patterns of physics and mathematics
rather than with those of sociology and culture studies. In some sense,
economics became an embodiment of the positive dream of a “social
physics,” a discipline capable of finding the general laws that rule our
societies and our lives (Comte, [1830] 2003). This is not at all
coincidental. As Philip Mirowski (1989) showed,
the development of modern economics was closely linked to the evolution of
19th century mechanics, a deterministic and materialistic vein
of thought that remains entrenched in the very fabric of many sciences.
With the dawn of the 20th
century, economics became ever so mathematical. The fast advancements in
the formalization of mathematics along with developments such as the
game-theoretical construction of Von Neumann and Morgenstern set the stage
for a new economic discourse designed to fit the many industrial, social
and political convergences of the 20th Century. The original
moral character of economics consequently became enclosed by a sea of
mathematical concepts, from Arrow and Debreu’s
theory of value, to Stiglitz’s asymmetric
information. Very few escaped the mathematization of the discipline; most of the
survivors were old school economists of the type of Frederick Hayek and,
to some extent, John Maynard Keynes. But today, decades after Bretton Woods and the institutionalization of
economics as the basis of the world order, it is rare to find an economist
who conceives mathematical formality only as a limited tool and not as the
core of modern economic theory. In the process of merging economics
and mathematics two fundamental things were left behind. On a theoretical
level, and repeating to some degree the path taken by physics, systemic
complexity became something that could not be handled within the mainstream theory.
Economic systems, just as ideal gases, were now seen as regulated by a
small set of rules (utility maximization, cost minimization, benefit
maximization, informational efficiency, general equilibrium and so forth)
all of which were immutable, additive and universal. Even today, in a time
where complexity studies have been present in academic circles for decades
in areas such as technological innovation and financial economics,
standard texts such as Hal Varian’s Intermediate Microeconomics (1999)
still contain deeply reductionist ideas such as
the one quoted below: Economics
is based on the construction of models of social phenomena. By a model, we
understand a simplified representation of reality. […] The power of a
model comes from the suppression of irrelevant details, which allows the
economist to focus on the essential characteristics of the economic
reality which he tries to comprehend. Furthermore, and on a purely
discursive level, the association between economics and mathematics
allowed for a quick dissociation from ethical discussions. What had
originally been in words of Kenneth Boulding a
‘moral science’ transmuted, due to the force of positivist influences,
into a ‘hard science’ (Averly, 1999). Along with
compacting complexity, this shift in worldviews allowed economists to
isolate themselves from ethical issues through the same arguments of
universality and value-independence that granted physicists a certain
degree of immunity when they were involved in questionable research
programs. One can still find amongst many mathematical economists the same
arguments of beauty and cognitive purity that were seen in the physics
community during the development of atomic weapons in the Cold War. From
the time economics became fortified with the tag of ‘being scientific’,
the global economic agenda was set beyond the boundaries of ethics, from a
domain were the only acceptable dictums were those of the factual laws of
our societies. Living in a pluricultural world We now start to see a familiar
terrain. The ‘ethics and science’ debate is part of an important tradition
that criticises the administration of scientific resources and the
consequences of research on our lives and the future in general. However,
and for the most part, this debate has been concentrated on the role of
hard sciences. Physicists are seen as the creators of nuclear weapons;
chemists are seen as the developers of mustard gas and other deadly
agents; and biologists and biochemists are associated to a vast array of
bioweapons that pose a great danger to all of
humankind. But rarely does anyone mention the other ‘weapons of mass
destruction,’ namely poverty and hunger, overall far more critical than
any of the weapons used so far in armed conflict. If we are to blame
economics for this construct, then how should we confront the challenge of
the ‘ethics of economics’? The answer is not necessarily simple,
though as a first step we could think of using the same strategies as the
ones used in other disciplines (such as physics) but adapted to a
primordially social context. This can be done by means of two different
though not contradictory paths: 1.
By strengthening the debate on the
theoretical limits of economics and the impossibility of existing
mathematical techniques to describe with no uncertainty or loss of complex
phenomena, therefore opening an avenue for an ‘economic precautionary
principle’. 2.
By eroding the division between theory
and practice in such a way that ethics becomes a necessary tool for coping
with complex economic issues. In this sense, cultural environments should
be thought of as the key element in the ethical debate: is it ethical to
export economic structures to regions of the planet that have a different
cultural background? How do we deal with inequality from an ethical
perspective? This is, in itself, an educational pathway, one that is not
present in most of the current curricula in
economics. The reason for establishing these two
paths is simple. Firstly, they both have a certain degree of appeal that
might draw important groups of non-economists into the debate, for example
activists, politicians and the general public. Hence, it is important to
see that, if incorporated into the educational process of economists and
policy-makers, ethics could potentially serve as a bridge between the two
worlds in which our planet is divided. Additionally, ethics serves as a
conveyer of the local needs of a specific population, being capable of
translating the local reality onto a variety of perspectives. This results
in a better communication between groups, one that might help alleviate
the problems of a vast sector of the world’s population. Secondly, they
open new areas of research and expand the current possibilities of
theoretical studies. Though complete awareness of our social universe is
impossible, such a shift in views might create the need for new
methodologies and analytical techniques not considered in the past. This
is, in itself, an immensely valuable expansion of economic
theory. Independently of the choice, it is important to remember that ethics has the potential of being the ideal communication scheme across cultures and borders, including between the advocates and the opponents of the current economic model. Therefore, it is important to incorporate the ‘ethics and economics’ discussion into the ‘ethics and science’ debate. A final note How does all this affect the Post-Autistic Economics Movement? For one, it opens the possibility of collaborating with a whole new set of movements, that is to say, with those involved in the study of ethics and science. But more importantly, it presents itself as a concise policy recommendation: economics cannot be without ethics if our real objective is to help the world evolve into a better, more equal state, and not to perpetuate the divide that segregates our citizens, keeping them eternally confronted. Note
1. The term alterglobalist comes from the Spanish word “altermundista” which categorizes all the movements
that are against the current mainstream economic trend. However, it is a
much broader term than “anti-globalists.” For
example, the Pugwash Conferences are an alterglobalist organization because they believe in a
world free of nuclear weapons (something far from being the global trend
over the past 50 years). However, Pugwash is not
against globalization per
se; instead it is
seen as a potentially beneficial force. References
Averly, J. 1999. An introduction to economics as a
moral science. The Independent Institute. Comte,
A. 2003. 1830. La filosofia
positiva. Mexcio: Editorial
Porrua. Klein, N. 2003. Free trade is war. The Nation,
September 11 2003 McNamara, R. 2003. New Perspectives Quarterly, vol. 7, September,
2001 Mirowski,
P. 1989. More heat than
light. Cambridge: Cambridge
University Press. Varian,
H. 1999. Microeconomia
intermedia. Barcelona: Antoni Bosch. ___________________________
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