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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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