Review

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The Economist's New Clothes

by Alex Millmow

Lindy Edwards, How to Argue with an Economist
Cambridge University Press, 2002

Frank Stilwell, The Contest of Economic Ideas
Oxford University Press, 2002

There is more to Lindy Edwards’ book than the appealing title and striking cover, even though these alone have made it a minor best seller. Essentially, Edwards wants to conduct a dialogue with conventional economists aimed at expanding their worldly view of matters. It’s a pity, then, that many orthodox economists are deaf to such overtures, all the more if they come from dissenters from the faith. Edwards’ slim volume is in the genre of anti-economic-rationalist books and it reopens the debate on contemporary economic policy.

Her book is presented in the form of a DIY guide to modern economics. This is always a dangerous activity — even Keynes warned of the dangers of thinking alone in economics. Edwards, however, does a rare job in escorting the novice through the thickets of modern economics. Her mission is to contrast the economic rationalist view of the world with that of the punter. It is the punters — surprise, surprise — who have the better, more enriching, balanced view of the world. John Howard proclaims that his Government no longer pursues economic rationalist policies; Edwards, who worked as an economist in the Department of Prime Minister and Cabinet, knows otherwise.

Her thesis is a consolidation of the Michael Pusey line, conveyed in his Economic Rationalism in Canberra, that Australian economic policy has been hijacked by libertarian economists within the central economic agencies. Nearly thirteen years after Pusey published those findings, Edwards points out aspects of the darker side of the neoliberal economic experiment. While our economy has become the wunderkind of the Asia Pacific, it is also, apparently, a joyless economy. We might be living longer and, in some sense, have never had it so good, but the Australian heartland remains sceptical. Edwards thinks it is an appropriate time to reconsider the economic model we want to impose upon our society. To do that involves bringing the economists into dialogue with the commonfolk, about their perspectives on how the economy operates, but more importantly on what we actually want from the economy.

It is here that we have a failure to communicate with economists who are reluctant to take their hands off the economic levers and explain themselves. Moreover they feel that the streamlined Australian economy is performing as beautifully as their theoretical results said it would. Edwards’s ambition is to offer something better than the suburban views of Pauline Hanson or the city views of Tony Blair. She seeks, therefore, to open the debate about political choices for the new millennium instead of pursuing the desperate politics of economic necessity which both major political parties cling to. She argues that neoliberal economic policies are running down the community’s degree of social capital. Yet the ideals that underlay the Australian settlement — values like mateship, a sense of community, egalitarianism and the fair go — are still extant.

Edwards’s desiderata for a new economic order (not utopia) would include downplaying the role of the market in favour of the state. In Edwards’s imaginary republic there would be adequate minimum wages, environmental taxes to reflect social costs, job sharing, the restoration of universal education and the GST mothballed. For all this to happen, we need an alternative economic framework built on moral philosophy rather than value-laden mainstream economics which masquerades as purely scientific.

The fact is that there is a swag bag of economic doctrines other than orthodox economics, but do first-year economics at university and you’d never be made aware of it. All the text books are clones of Samuelson, and they form a key strategy in maintaining the faith, or the paradigm. The leading lights of the profession invariably try their hand at writing the definitive successor to Samuelson. Now, the best selling economist and columnist Paul Krugman is having a crack at it. The best economic prose writers in the world have not been able, however, to arrest the dwindling interest in economics, particularly in Australia.

The prolific Frank Stilwell has written his own ‘big book’, The Contest of Economic Ideas, to sway young minds back into economics. Sydney might be the Emerald City but it is also the home of Australian heterodox economics. Sydney University still boasts the only degree course in political economy and Stilwell holds the only chair in that subject in this country. His book invites controversy and dissension, not the ritualistic squawking that ensues, as Joan Robinson once said, from ‘the parrot house of equilibrium economics’. It provides an overview of political economy. It was written in the belief that economic issues are intrinsically important but must be dealt with not by mainstream economics (which usually involves flights of fancy and the suspension of disbelief) but rather by a hard-edged course in political economy. Stilwell wants the reader to see the big picture from the outset; to perceive the economic system as a whole and how it connects with the social and political environment. There is no talking down to the intended readership here. Everything is made explicit.

I dare say most first year students, including business students — if they have a degree of sense and interest — would relate to this book better than the glossy, elementary first year micro-economic texts. It shows not only the inherent richness of the discipline, but also, in equal good measure, its deviousness. Unlike its mainstream rivals, this feast of a book brings out the contending schools or paradigms of economic thought — hence the subtitle: ‘the contest of economic ideas’. Consequently the reader can partake of digestible chunks. Such a book would be ideal for university students, but also for an interested lay audience. In that sense, it complements Edwards by offering a smorgasbord of economic traditions that have graced the history of economic thought. On the menu, then, are generous offerings of classical political economy, and Marxist, Keynesian, Institutionalist and modern political economy. There is also an excellent summary of first-year mainstream/neoliberal economics.

Those not wanting the whole course can take shortcuts provided by Stilwell in the preface. The text also provides capsules containing pen portraits of the titans in the political economy as well as some central issues in economic theory.

 

Alex Millmow is a lecturer in economics at Charles Sturt University.


 

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