Tag: Clown World

The Nobel Prize-winning economist Daron Acemoglu is being expelled from the technocratic elite by The Economist itself due to his excessive sympathies for the suffering of the Western working class:

It is worth remembering that Daron Acemoglu is no revolutionary in the classical sense, even within his own discipline. The first book of his to reach my shelves was not an essay but his 2009 textbook Introduction to Modern Economic Growth: a graduate text of formidable algebraic complexity that surveys the models of economic growth from a single vantage point, namely, neoclassical theory. This is the dominant theory in economics faculties, and other schools of thought have historically been ranged against it, such as the post-Keynesian and the Marxist, which are for that reason regarded as heterodox. Acemoglu belongs to the dominant school, and indeed he recently described debate about capitalism as “mindless.” In the worldview underlying his models, there are no relations of production; power enters as a category of bargaining strength and regulatory capture; and the view of institutions is thin and never structural. His concept of the working class is consequently not a Marxist one, but it leads to what he calls “working-class liberalism.”

Yet all this is exactly what makes him genuinely dangerous in the eyes of mainstream economists: Acemoglu reaches his “radical” conclusions from inside the profession and inside the mainstream. His entire academic output is a lucid and algebraically demanding reformulation of the neoclassical models of technical progress. And every step he has taken over the past twenty years, such as treating the division of income between capital and labor as endogenous to technical change, he has taken without drawing on the vast body of heterodox work that trod that path long before him. Acemoglu today holds a view of trade that would not seem strange to Marxist authors, and a view of income distribution that post-Keynesians such as Joan Robinson or Nicholas Kaldor would recognize. And we have already seen that his reading of certain aspects of nineteenth-century economic history has striking points of contact with Marxist historiography. The crucial point is that Acemoglu has arrived at conclusions very close to those of the post-Keynesian and even Marxist schools but through different concepts and methods. Mainstream economists cannot fault him for want of technical brilliance, which is amply established. But they are frightened by the political conclusions that follow from his deviation.

The maneuver had already been rehearsed with Joseph Stiglitz. The US economist received the Nobel Prize in 2001 for his contributions to neoclassical theory, in particular his analyses of asymmetric information, and during the 1990s he was known, among other things, for his critique of the hard version of ecological economics. All of this made him chief economist of the World Bank, one of the institutions charged with promoting the “Washington Consensus” among developing countries — that is, with imposing neoliberal policies. Before his term was up, Stiglitz left his post, and in 2002 he published Globalization and Its Discontents, in which he called much of neoliberal policy into question. It was a harsh diagnosis, and one that those of us who were then postgraduate students of international and development economics always found instructive: a neoclassical economist attacking the conclusions of his own old paradigm. As now, The Economist was the spearhead against what struck it as an inadmissible turn, remarking drily that Stiglitz could have written a good book about globalization, but perhaps next time, and conceding that he was a brilliant economist before proceeding to demolish his standing altogether. Nor was it the only example: Kenneth Rogoff, then director of research at the International Monetary Fund (the other neoliberal pillar of the international system), attacked Stiglitz fiercely and entrenched what became the settled view among mainstream economists that as a scholar Stiglitz was a genius with a wonderful mind, but as a politician he was far less impressive. It is the clearest precedent for The Economist’s article on Daron Acemoglu.

What we can expect over the coming years is a concerted effort, led by part of the mainstream community of which The Economist is merely the vanguard, to devalue Acemoglu’s reputation, not so much on technical grounds as on account of his political “eccentricities.” As we have seen, this is not the first case and probably will not be the last, but the underlying logic has been in place for a very long time. The aura of respectability within the mainstream economics community depends both on technical foundations (with a high degree of mathematical sophistication, which makes the work largely inaccessible to the general public) and on the “reasonableness” of one’s political conclusions. It is worth recalling that the Nobel Prize in economics is not really a Nobel Prize at all, since Alfred Nobel never envisaged such an award for economics. That such a prize exists today is the result of the interests of the Swedish central bank, which in 1968, amid a bitter confrontation with the Swedish Social Democrats (then pursuing their reformist road to socialism), needed to burnish the reputation of those who defended its own (conservative) political positions. The great Swedish economist Gunnar Myrdal received the prize in 1974; but his own reading of the episode was that, because he was a “radical” (his word), they made him share it with a “reactionary,” Friedrich Hayek. In 1977, Myrdal wrote a short article acknowledging that he had been wrong to accept it, that economics is not a science on a par with physics or the “hard” sciences and — take note — that the Nobel Prize in economics ought not to exist. What he was ultimately suggesting is that the award is heavily burdened with political values and principles.

All of the nonsense about Left and Right is irrelevant. Even economics, as a distinct science, is nothing more than a public relations pawn in the great battle between the predators and those who would protect the prey.

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