“…the tragedy of this is that there is, within the bloated corpus of economics, a perfectly nice slimmed-down little science struggling to get out. It’s a branch of control engineering; specifically it’s the branch of control engineering that deals with the control of recursive systems that can change their outputs in response to their local state. The trouble is that at some stage in its development, this harmless and beneficial branch of engineering got caught up in 18th and 19th century politics and philosophy and developed all manner of strange idiosyncracies (including a lot of fundamental assumptions about human psychology which clearly don’t belong there), coupled with a wildly inflated idea of its station in life.”

As to your point about “the general horizon-defining power that prevalent intellectual trends can have” – aren’t these usually undemocratic? I mean that ideas usually emerge from academic establishments or intellectuals and are then adopted by politicians (Keynes’ point about “scribblers from a few years back”). Where politicians get their advice from, and the intellectual climate in which politicians are raised, are not really things that we can reasonably do anything about, except continue to fight our own ideological corner as best we can (and criticism of an economic orthodoxy is a good way of doing this, so bravo again).

But yes, the basic problem is that economics as a subject has a whole lot of ideological assumptions that really need to be given the heave-ho if economists want to be thought of as scientists.

I probably should have made something clearer, which in fact my examples above have obscured rather than illuminated.

I’m not so much talking about individual policy decisions. What I have in mind is more the general horizon-defining power that prevalent intellectual trends can have. So with economics, it’s not so much the idea (as I crudely suggested above) that politicians want X and the advisers will say no, and so X won’t happen. But perhaps more accurately, that the ability to conceptualise X, or think X viable, or to come up with X-facilitating strategies and solutions, will be – if not consciously prevented – then made more difficult by the hegemony of certain value-laden theories which present themselves as definitive of the horizons of possibility.

On top of that, though, a friend of mine suggested yesterday that I also think about the really obvious cases of economic non-democracy, such as the chairman of the Fed or governor of the Bank of England, or the European Central Bank. Massively important institutions which are now independent from democratic control, because basically the economically-dominant school of monetarism says (oversimplifying, but it’s basically true), that controlling inflation via interest rates is the number one economic imperative, and this is best achieved via central bank independence. That looks like value-laden theory dictating the political process.

The failure of monetarism might make us think twice about such things…except Dave and George want to give more power to the City of London’s cheerleader-powerhouse on Threadneedle Street…

Interesting piece, though I am much more optimistic than you.

Firstly on your scenario of a politician being elected and then all the top economists telling them that they are not allowed to enact their policies.

This did actually happen in recent British history – in 1981 dozens of leading economists told the government that they needed to change policies or face economic disaster…and the elected Prime Minister merrily ignored them.

(This is different from the much more serious dilemma which Clinton faced in 1993, where the bond market told Clinton that he wasn’t allowed to enact economic policies to help the middle class because he had to reduce the deficit).

Point being that there isn’t actually any political cost to ignoring what economists say – politicians can pick and choose their advisers and follow maverick economic advice if they prefer. Indeed, just at the moment, there are probably significant advantages to doing so.

As for the left’s economic analysis, my three favourite are Larry Elliott, Duncan’s Economic Blog and D-squared Digest, all full of good ideas, though there is little waffle about “new models of growth” in any of them.

…so even if economic policy is fundamentally undemocratic, democracy still acts as a safety mechanism against this threatening ordinary people to too great an extent.

To be honest, this is why I disagree with you about the argued “death of the left”: I think that it isn’t a bad thing for politicians to begin by “tinkering around the edges”. Firstly, they’re far more likely to cause less serious problems. I appreciate that I contradict my earlier point about education policy here, but I think in the broader scheme of things, although New Labour’s increased application of the State has been damaging (the independent standards authority, for example), it hasn’t been particularly devastating, or resulted in a fundamental rethink in the way in which government helps people, thus forcing a period of extreme change in which lots of people suffer. I appreciate that this is largely calling a Conservative governments actions before it makes them — but other than retrenchment of the public sector, caused by budgetary concerns, I don’t think the Conservatives have plans to fundamentally change the nature of the State. At least, not yet.

Secondly, I think you can guarantee that these vague “new models for economic growth” will not even begin to be considered from the position of government until a) people actually have some kind of coherent idea as to what they are; and b) a certain amount of popular support for these economic reforms is built. This goes back to my earlier slight disagreements with you as to the nature of economic change and democracy in the 1980s.

Firstly, I think that you’re making the mistake of assuming that the issue is simply that the change in economic policy in the 80s did not work entirely as expected. I disagree — a far bigger part of it is that the economic ideas at the heart of British policy-making in the 1970s were failing. For this reason, even if people strongly disagree with monetarism and Thatcherite policy, they are far more likely to agree that the Post-war consensus was at least partly flawed, and that policy-making in the 1970s was part of the reason that Thatcherism was allowed to take such strong hold of UK policy.

Secondly, I think you’re making a far more fundamental mistake: believing that simply because an idea is not produced en masse, means that it is undemocratic. I disagree — if a broad idea gains traction with a large percentage of the electorate (such as deregulation and economic freedom) even if they do not particularly understand why the idea works, and why the previous ideas were flawed, then the support-building among the electorate means that idea has democratic backing. Of course, you may argue that this did not happen to sufficient scale to be considered democratic in the 80s, but it’s undeniable that Thatcher received some wider public support for her economic reforms, given that her party won re-election twice.

Modern economics is different. It is so highly conceptualised, so mathematically driven and so technical that to get to the stage where one understands the principles of – say – macro economics (to the point of understanding the principles and intricacies of how government involvement will affect the balance of outcomes and probabilities, in a world of unknown and unforeseen possibilities) requires a level of training, intelligence and (given the structure of the modern discipline) mathematical aptitude that is beyond the reach (and means) of the vast majority of people. It was certainly beyond my reach, I’ll admit. I tried, but I just didn’t have the maths.

So it seems fair to describe modern economics as “undemocratic” in this straightforward sense: it is inaccessible to the vast majority of people, by its constituent nature.”

…I don’t think this is the only policy issue which people have a lot of trouble with. One could almost argue that your central point about core policy objectives in other areas — “pretty much every normal adult human being is able to take a stand on whether they would like a society with more equality (be that in terms of wealth, income, opportunity or whatever) or not, and can at some level (however confused, however based on misunderstanding) argue and debate that with others” — can be applied to economic policy, too. After all, pretty much everyone can state what they support in terms of economic outcomes — healthy competition and low unemployment, consistent and stable growth etc. — the difficulty is the annoying little details that come with both determining and understanding policy decisions that drive such factors. As such, I don’t see economic policy decision-making as any more difficult as, say, education policy decision-making (which is truly stuffed up by a lack of understanding of the intricate details by politicians and people alike, and thus results in a worrying culture where, at the moment, politicians invariably see solutions as coming inherently from central government management).

…sorry to interrupt, but aren’t these the sort of economists that Kaletsky and others have been railing against recently for failing to predict what should have been a perfectly predictable economic crash?

This is all very tentative stuff at my end. I’m pretty confused about it, and there’s big gaps: e.g. what do I mean by “modern economics”; am I counting the pre-Friedman rough hegemony of “Keynesianism”, or am I only counting the ultra-mathematical econometrics that have come to the fore over the past 30 years? I don’t know, to be honest. But it affects my story, so I need to think about it.

As for “deep normative commitments”, frankly I’m not clued-up enough to give you a solid answer. What I can do, however, is argue by analogy.

When (what we now call) classic political economy emerged in the 18th Century – reaching its apex with Smith’s Wealth of Nations – it’s arguable that one of two paths was eventually chosen by Smith (as the intellectual culmination of many decades, even centuries, of debate). This path was to advocate a society which enshrined property rights as the foundation stone of economic production, organisation and management. This created something of a problem, however: huge numbers of people found themselves without property in actuality, and were at the mercy of those who controlled what Marx would later apty term, the means of production.

This appeared to create problems of justice: what if the masses were starving? What happened to the property rights of those who weren’t starving, and whose possessions could aleviate the suffering of the masses? Smith’s Wealth of Nations is, in large chunk, an answer to this question. He says, for a big start, that it’s less of a problem than you might think because commercial industrial society ends up making everyone better off (even workers at the bottom of the social pile in Britain are much better off than savages in America, or even workers in backwards Poland).

But Smith realises theres’ more to it than that – there will be times when right comes into conflict with justice (to put it very crudely). One maneouvre Smith makes – and here is is again following Locke (as he is in his Maxi-min reasoning above, so to speak), as well as Grotious and Puffendorf – is to say that a duties are incumbent upon those with resources to help those without. HOWEVER, these duties are what frequently get termed “imperfect” (e.g. a hundred years later in J.S. Mill); it would be ethically reprehensible for the agent not to help another, but there is no “perfect” duty incumbent upon them to do so; they have a right to withhold their property and not help – even though this withholding is rightly reprehensible in the eyes of others, and most especially, in the eyes of the Impartial Spectator who resides within all our breats (hence, Smith’s Theory of Moral Sentitments is very important).

But in taking this route – declaring that whilst it is morraly reprehensible to not help others, agents may still have right to hold onto their property, thus yielding a paradox of rights vs. [social] justice, but one that ends up defering to rights – Smith is, effectively, rejecting what is frequently termed the “civic humanist” or “classical republican” line of thought (what we today might brand “communitarianism”); that the good of members fo the polis, and the good life for all, depends upon these sorts of property rights playing second-fiddle to justice. I.e. when people are starving, rights go out of the window as the polis acts collectively to secure its people.

[Confession: this is massively over simplified. Smith actually wants to say that the poor and starving can take possession of the property of others in desperate times - and this is no ethically reprehensible thing. Necessity breeds, justice so to speak. He seems to be getting this from Aquinas, via Pufendorf and Grotius. Note: it's a prima facie case for Smith not being a Libertarian. But the above sketch gives you the right sort of idea. If you want more, Get Istvan Hont's book Jealousy of Trade and see the chapter on Smith's Wealth of Nations).]

Right, with that rough sketch in place, I can make my analogy. In choosing the path he did, Smith built-in value assumptions about justice and rights into the heart of his economic theory. This was profoundly influential given the impact of Wealth of Nations.

Now, I am not making some over-simplistic claim about modern economics being the simple legacy of Smith, and it (rightly or wrongly) reflecting his value-structures. It’s much trickier than that.

But I strongly suspect that all economic theory must, a-la-Smith (and of course, a-la-Marx in the next century), make value judgements as a matter of course. That it’s unavoidable.

I could, of course, be wrong. But I’d be surprised if economics in the 21st Century had somehow transcended the fundamental problems and frames of reference that the greatest minds to apply themselves to it had been unable to get away from…