The Mint: Good morning George, and thank you so much for giving up some time to talk to The Mint Magazine.
George DeMartino: Oh, Henry, it’s a pleasure. Thank you very much for the opportunity.
The Mint: Well, I love the title of your book, The Tragic Science, it’s certainly high drama there. Why did you choose that title?
George DeMartino: A tragedy is a problem that can’t necessarily be resolved. It’s not something we can fix easily just by doing better. A tragedy is a situation in which your best efforts often lead to disastrous outcomes. I argue in the book that economics is that kind of practise, that when economists try to do better, try to promote social betterment, they often also cause harm. This is true even when their interventions go the way they intend them to go. It’s also the case when things go very wrong and things in economics also often go very wrong.
The Mint: Okay, well you better give me an example of what you’re talking about then.
George DeMartino: Well, let’s take the big examples. From the 1980s on, the economics profession, the best minds in our profession coalesced around the idea that we needed to promote global neoliberalism. This was pursued in the global south, it was pursued in the post Soviet economies. The idea was that these economies were struggling because they didn’t have a free market economy, that the state was intervening in ways it shouldn’t. The strategy that was proposed, and in many cases imposed on countries was we now call shock therapy. The idea was that these economies had to be rebuilt, top to bottom, side to side, all at once, overnight, and that anything less than that would fail. In the event the results in many countries were disastrous. There’s been some important empirical work done in Russia which purports to show that in the years immediately following economic liberalisation, especially privatisation which led to numerous factory closures, the destruction of communities, there were 10 million extra deaths largely of working age young men who essentially died deaths of despair. Now, this was an enormous, enormous loss of life. I mean, in percentage terms, it’s much greater than what we’re losing in pandemics, even wars. And I would suggest that economists contributed to that disastrous outcome.
The Mint: And it’s sort of, I mean I’ve been aware of that because that’s been, with the Russian War and so forth, how much the current political situation is down to economists and the defence, I’ve heard someone who says he’s studied in debt so well, it wasn’t the fault of the economists because the powers that be, the oligarchs who emerged, et cetera, pick and chose what to follow for their own benefit and the economists didn’t really make much difference. And they would say, “Well, they didn’t really follow our advice properly.”
George DeMartino: This is the reply of the profession whenever things go wrong. When things go well, the profession takes credit without any reservations about doing so. But when things go wrong, economists are always able to say, “Well, of course it didn’t go well, they didn’t follow our advice to the letter.” Had they the counterfactual claim, which of course could never be checked is, had they just followed our advice, all would’ve gone great. This is a way of sidestepping responsibility. We know that the people we advise are never going to be able to adopt the policy 100%. There’s always going to be slippage there. We are not the decision makers. We have influence, but we don’t have control and this is a central theme in the book. And when you have influence but you don’t have control, such as in the case of Russia, let’s just say, when you have influence but you don’t have control, you are in position to do tremendous damage. Rather than anticipate that problem, economists just go blindly into the fray, make their prescriptions, come back home, and then of course things never go exactly as they had intended. The ethical obligation is to anticipate that you can’t have control and to think about how you need to modulate your intervention to anticipate that problem.
The Mint: So at the beginning you said it was tragic because a lot of these people are trying to do their best, they believe they are doing good. And I know analysis of economists tend to suggest, if anything, politically, quite often in their personal lives, they’re more to the left as well, a more social democratic. So what is going on deep down here that is meaning all these people, I suppose largely white men or quite a lot of them are, are going out to save the world and are actually doing the reverse?
George DeMartino: Well, there’s two issues here. One is of course that policy interventions almost always have uneven effects. Even if the policy promotes the betterment of some, it’s going to at the same time harm others. Economists have known this for a hundred years, we’ve wrestled with this problem. The problem here is that economists then take it upon themselves to be the society’s harm accountants deciding which harms are okay to impose for which social improvements. A deeper problem, or at least a second problem that the profession has denied, repressed is a better way to say it, is that economists think they know far more than it is possible for them to know. They operate with intellectual epistemic hubris. They believe that they can know the causal processes out there in the social world. But if the social world is head of complex systems, as many now argue, then you can’t. There are real limits to how much you can know.
George DeMartino: Economists have denied this. Economists have sought influence more than anything else in the world. They believe that by having more influence, when economists have more influence, the world is better than when economists have less influence, and they’ve worked very hard to promote that influence. The problem is that acknowledging our epistemic limits, all that we can’t know would undermine our influence in the world and so economists just don’t do it. We don’t train our students in what we can’t know, we train them in what we think we know. We ignore in the curriculum all the things that economists cannot possibly know, and so I’ll finish with this point. We send them off, these young economists, into the world, they want to do good, they have great values, they may have the same value and we may support what it is they’re trying to achieve, but they’re completely unprepared for the problem that they know far less than they’ve been trained to think they know.
The Mint: I’ve just taken back yes, this hubris, which is very interesting. It comes otherwise arrogance, and it’s not unusual in my experience and I think in others’ that economists come over as quite arrogant and they know best. I wonder, is that a form of defensiveness, maybe? That actually, because if you get a load of other social scientists, policy people, around the table with an economist, I mean maybe is it part of it that the economists actually can’t engage with these other groups in a collective dialogue so they resort to hubris or arrogance? They’re right. You just don’t understand.
George DeMartino: Yeah, I don’t know. That’s a good question. I don’t know the answer to that. I don’t know if the answer is that they don’t know how to interact with non-economists or if the profession attracts people who already had this notion that you can know and therefore control the world. And then that gets reinforced in their training so that by the time they leave their graduate programmes, that belief that they are now the social engineers has been so deeply infused in them that they take it as normal that they have the authority, they should have the authority, they certainly have the expertise in their minds, but they should also have the authority to make the key decisions. Anthropologists, sociologists, political scientists can’t possibly match that in this view and so others should defer to the judgement of the economist.
George DeMartino: I really think of it as a major problem in how we train economists to think about the capacities of our science. We’ve really presented, not just to ourselves, but we have certainly lied to ourselves, but the way we present ourselves also to society, such that we present ourselves as having a kind of expertise that is not accessible to lay people. So lay people shouldn’t try to judge what it is to say, we are the ones… There’s just got to be trust. The ethic here, Henry, is the, it’s paternalism. We know best, just like a parent does, therefore the parent should choose for the child we know best as economists, therefore society should defer to our judgement . And that applies to other experts as well, non-economists, they should defer to our judgments.
The Mint: It’s sort of ironic, isn’t it? Because economists have this model of humans as super intelligent, [inaudible 00:09:30] maximises, et cetera, et cetera. But at the same time, they’re not expected to understand economics.
George DeMartino: I think that’s exactly right. But what also is strange is this, for a hundred years there’s been this hostility towards state intervention by economists in the economy on grounds that we should be promoting people’s personal liberties. We should not endorse paternalistic policies by the state because that compromises individual freedom. But that’s exactly what we do vis-a-vis society, we say defer to us, don’t trust government, trust your local economist. It’s just as paternalistic.
The Mint: And maybe fascist. Yeah, there is an underlying fascist strand to economics, isn’t there? I mean, and hence the [inaudible 00:10:18], the Chicago Boys, they didn’t really believe in democracy or listening to people because they have the answers. Why do you need to listen to anyone if you have the answer?
George DeMartino: Yeah. And there’s a privileging of economic liberalism that is to say personal freedoms in the economy over democracy. When those two things have come into conflict, and now we don’t have to go all the way back to Hayek, we can look at, again, the shock therapy. The idea was if democratic movements are opposing a neoliberal transition in let’s say Russia or anywhere, the economists should partner with political leaders to get the job done as quickly as possible before civil society can mobilise to protect themselves. Now, to me, that’s a violation of democratic practises.
The Mint: Yeah, it is scary, isn’t it? And so you say this is embedded in the current way that economics is taught. Maybe could you expand on that? Maybe think, well, how would you change the teaching process?
George DeMartino: Good. I mean, there’s several things to be said here but I’ll just tick off a few. First, we have no field of professional ethics in economics. We’re one of the few professions that doesn’t. So the typical mathematical savant, this young student coming out of the best programme at the age of 23 who’s going to go off to work, let’s say at the World Bank, but let’s say in an academic department, has had zero training in the ethical questions or the problems that you and I are now discussing. So how can we expect better from them when they go off and make the mistakes that they make?
George DeMartino: Second point, there are alternative ways of doing economics where economists can contribute to social betterment, but in ways that are socially responsible. In the book I look at one relatively new tradition. It’s called decision making under deep uncertainty, DMDU, and listeners should go take a look at the DMDU website. Largely, DMDU practitioners are not economists, but some of the architects of the approach came out of the RAND and are economists. And this approach says, look, no more predicting the future impact of policy, no more cost-benefit analysis, no more trying to make 100 year projections about climate change. We are going to presume that we cannot know the future and we then ask ourselves, what does it mean to support good decision making in a world where we cannot know the future? Happy to tell you more about it, Henry, but to me, it rejects the paternalism of the economics profession and it empowers those who are going to be affected by policy outcomes to be central to the decision making process. It treats interest groups and others, other professionals, with respect rather than asking them for deference.
The Mint: And was there another one, I think, did you say three? So we’ve got lack of ethical training and a lack of recognition of uncertainty.
George DeMartino: Yes.
The Mint: One thing I wonder is one of the obsessions of economics, mainstream economics, seems to be data. That the only research, the only sort of knowledge that they might respect is quantitative and qualitative research is dismissed as easy talk. And I just wonder whether that also narrows an understanding. Once you’ve got into things into data, that itself is reductionist, isn’t it? To a large extent. You just see the bits and then you play with the data. Whereas if they actually went out and talked to people and they had qualitative research and they understood, they began to get to see the complexities, the differences of real economies and what really happens.
George DeMartino: So in my previous book, not this one, I argue in favour of what are called exposure and dialogue programmes. These are programmes that, there have been very few of these. The World Bank tried one, a wonderful development economist at Cornell has pursued this with an anthropologist, in which economists are actually put into the community of those who are likely to be affected by what it is economists do. They live in these communities and work in these communities only for a few days, because they can’t handle more, between 5, 7 days. Then they come back for a consultation with community leaders and then they come back home and they reflect on what they’ve learned. And what’s so stunning about this, when you read the reports of people who have gone through this, we’re talking three to five days, less than you send a child to summer camp.
George DeMartino: Those three to five days have fundamentally changed the way they understand things like markets, informal markets, in economies where the informal economy is large. They’ve come back and people have written to say, I now see things differently. I see for example that my free market model that I was using and that I had in my head to make sense of all this, doesn’t apply in these contexts. What I argued in that book is we should make this a normal part of our economic training for PhD students. We should cultivate opportunities for them to work both on the supply side as apprentices, going to work as interns at the World Bank say, but also on the demand side where we interact in respectful ways with those who are going to be directly affected by our interventions. This is completely lacking from our training as you know, you just [inaudible 00:16:07] that. It’s central to the training of anthropologists. We need to be trained more like anthropologists and less like mathematical savants who can find the truth of the world in just data sets.
The Mint: And maybe even at undergraduate level because I mean a lot of the damage in a way is done very early, isn’t it? By the time you got to a PhD, you’re totally indoctrinated with this is the way things are done.
George DeMartino: That’s right. And MA students as well, because a lot of the economic analysis that gets done in the world is done by those who leave with an MA in economics or some affiliated field. I think that that’s exactly right.
The Mint: And so is there anyone in mainstream economic departments engaging with these ideas, taking them forward at all?
George DeMartino: Yeah, so I mentioned economists at the RAND. They are at the forefront of decision making under deep uncertainty. They are having an enormous impact alongside [inaudible 00:17:14] systems managers, infrastructure, urban development planners, many, many other professions are involved in DMDU to reorient what we think we should be doing when we try to promote good economic decision making. In the economics profession there’s been a long tradition of people who have brought attention to the harm we do by virtue of thinking we know more than we do and going back to shackle and canes and that tradition, Hayek, more recently, Deirdre McCloskey. But also those in the centre and those on the left. Dani Rodrik at Harvard I think has done a really good job of trying to emphasise that we don’t know all that we think we know and that we better do better in facing, confronting what we don’t know so that we can be more responsible agents when we go out to improve, to enhance social welfare.
George DeMartino: So I think the crisis of 2008 was pivotal. After the crisis of 2008, you started to get some leading macro economists, micro economists as well, starting to say, we know far less than we thought we knew. As recently as the early 2000s, the profession was celebrating itself for having solved the problem of the business cycle. It’s stunning to go back and look as recently as 20 years ago, to see that the great moderation had set in. This was the narrative. The great moderation had set in, we have figured it out. 2008 completely disrupted that narrative. And now even the leading macro economists tend to be, at least some, tend to be more humble than they used to be. So what this might mean, practically, just to give you one example, the economics profession forever has been pursuing efficient economic outcomes. You want to find that point where this curve cuts off the curve. That’s the point you shoot for. That’s the target. That approach makes perfect sense in a world where we have perfect knowledge. But in a world where we have deeply, deeply imperfect knowledge, we need to be looking for robust policies. Policies that will do well enough come what may, knowing that we do not know what is coming down the road, shifting our attention away from efficiency to robustness would be an extraordinarily important move in policy circles.
The Mint: What about, I mean, oh yeah, clearly there are some people on the forefront of the profession out there in research, et cetera, but anything like this getting into textbooks? [inaudible 00:19:54]. Anyone doing an undergraduate degree anywhere that actually would get faced with this?
George DeMartino: Okay. So you’ve just touched on one of my next projects. I don’t have the answer for you, but I’ve been thinking about that very question. How, if at all, is this new insight about the limits to our expertise starting to shift and move into our training? My fear is that it isn’t. That the left and the right still have their preferred models, leading to preferred policy alternatives. And we’ve weaponized the allegation of harm and economics. Harm is what the other economists does. If my tribe was in charge there would be no more of this intuitive [inaudible 00:20:35]. My fear is that that’s what we’ll all see in the textbooks, but I’ll check back with you in another year once I’ve done that research because I think it’ll be really interesting. I think that’s the key question. One of the key questions in economics and economic pedagogy at the moment, what will the next generation of textbooks look like and will they be more responsible in terms of how they position what we know, what we don’t know, and what should be the authority and influence of the economist in the world?
The Mint: And are textbooks a good idea for start? I studied philosophy as my first degree. We never had textbooks. I mean, that would be a joke to have a philosophy textbook. You have various people you read and you get a view of a evolving, changing set of knowledge of debates, et cetera. And a textbook, it’s like, oh, we’ve solved it. It’s in this textbook. These are the answers. I mean, is maybe textbooks part of the problem?
George DeMartino: That’s a wonderful question. It gives the imprimatur of science, right? Philosophy is not a science so we don’t have to study the science, we go off and read widely and reach our conclusions. But once you settle an idea that a profession is a science, that leads to the natural idea that there needs to be a textbook that codifies the contemporary science so that people know what to study so they can become appropriate scientists. So Henry, I love this question you’ve raised. It’s never occurred to me before that the presence of the textbook might be central to the problem.
The Mint: I mean, I wonder what other social sciences use textbooks. I would be very surprised if anthropology has a textbook. But I also wonder, I mean of course one of the key gaps, I mean there are lots of gaps in mainstream economics, but is the study of institutions, isn’t it? And understanding culture, all the things that’s meat and drink that’s something like anthropology. So I wonder if we just sent these economist undergraduates, having been taught economics, out into the community, part of it would be shock because it’s one thing being humble, it’s another thing to decide you’re totally ignorant and quite a lot of what you see going on and how people talk, language, actions, relationship, all these sorts of things, are not part of any economic framework.
George DeMartino: Yeah, exactly. I’ll give you a funny example. A friend of mine years ago finished her PhD in economics. She was a macro economist. She got hired by a bank. This was quite a few decades ago when banks used to still hire economists, they do that less now. And she was asked to do some prediction, I can’t remember the details, but she was asked to do a forecast and she had a lovely model that she brought with her from her PhD training. One of the variables in the model was the interest rate so she started to plug in the parameters and the values of the independent variables and she went to put in the interest rate and it occurred to her, she had no idea what the interest rate was. At any given moment in the economy, there are dozens of interest rates and suddenly she had to confront for the first time, having finished her PhD, that she had no idea what the interest rate was and what was the appropriate interest rate for her model.
George DeMartino: So she had to get up from her chair and go talk to non PhD economists to learn about the interest rate. That’s exactly what you’re talking about. And again, in a lighthearted way, it reveals a really deep seeded problem. We don’t train economists in the economy. Now, can you imagine going to a doctor who’s never really studied the human body? Of course you wouldn’t. But in economics, the road to success has never involved actually learning much about the economy. There’s no other field where that can be said, that you become a star not by studying the subject matter that you’re supposed to be an expert in, but that’s the way it is.
The Mint: It is extraordinary, isn’t it? I mean, this is one of, I think, and maybe the deep problems is that economics has gone so far into this niche space and they’ve got so much sunk capital, if you like-
George DeMartino: Exactly.
The Mint: In this space, that if they understood more, maybe they do at some level, but they’re pretending not to know, how far they are from a position where they could actually start understanding reality. I mean, you are faced with an abyss. It’s like maybe you just run away from it and say, “Oh, well I still get published, I still get paid. Why would I submit to this realisation that could change my whole life and I’d have to leave the economics department?”
George DeMartino: It’s asking a lot for someone who has invested all this time in their human capital who has a certain toolkit instead of expertise and a reputation and a whole trail of publications behind them. It’s asking a lot for them to come to the moment where they say this, “I’ve been on the wrong footing. I need to fundamentally change how I proceed.” I can’t remember which was the great scientist, it might have been Pascal, who said, “Science evolves one funeral at a time.” Do you remember who said that?
The Mint: I can’t, but it’s, yes, it’s often quoted, isn’t it?
George DeMartino: But I think that there’s a degree of truth there. And so let’s end on, and let’s turn to a more optimistic note. There’s a fundamental change going on in economics. Young economists are not doing the same kind of economics that their professors are trying to teach them. They are moving much more into, rather than just grabbing data off the internet or taking government series and doing econometric tests, they’re actually going out into the world and trying to figure out what are the interesting problems and then generating their own data. Now, again, this is often quantitative not qualitative so it doesn’t speak to your full concern, but nevertheless, it’s actually so different from the way we were trained 20, 30 years ago, which was you grab data, you don’t go generate your own data, you just take what’s available and you play with it until you get a causal relationship and you publish. That’s not what’s happening and there’s a real shift toward much more careful empirical research and much… Now, this may be just wishful thinking, but my sense is there’s a greater appreciation of complexity of society and therefore of humility in terms of what we know when we claim to know something. Again, that may be more hopeful than an accurate description, but I do see it. I do see that [inaudible 00:27:05].
The Mint: Where abouts, are there particular universities or centres who you think are leading in getting their students out and if you are a young student, what university would you go to where you think you’d be supported in these sorts of approaches?
George DeMartino: Oh, that’s a good question. I can’t give you the list. It’s happening. I mean, the scholars who are now doing this kind of work are coming from many, many different places so I can’t actually give you the list. I think one of the factors here isn’t what is being taught, it’s who economics is being taught to. We are seeing an incredible diversification of students in the United States, in the US PhD programmes at the moment. The percentage of PhD students in American PhD programmes in economics who are native born Americans is only 30%. 70% are coming from other countries, many from Asia and South Asia. Now these are students who are not nurtured on neoliberalism the way I was and my generation was. They come with very different experiences and a wide range of experiences of economies and economic systems. I think that that’s part of it. I think that we are seeing a really healthy diversification of the profession and the old model, that old Cold War battles, they don’t mean anything to this young generation, so they don’t get attached to the neoliberalism the way my generation of economists did, thinking that they were saving the world from state communism or something. It’s just a much richer landscape of experiences leading to what I hope will be a much wider array of economic ideas and methods going forward. But again, this is my prediction and may very well be wrong.
The Mint: I very much hope you’re right. That is a good, I think, point with some optimism, which is often difficult to find in this area. But let’s see, and I’m very much interested to follow your next steps, looking at, well, what is the teaching? How could it work? And so forth. And all very exciting. Thank you very much, George.
George DeMartino: Henry, thank you very much for this opportunity. I really enjoyed talking with you.
The Mint: Brilliant.