Category: Critique of Mainstream Economics

The Nobel Illusion: Why the聽Nobel Prize in Economics Needs to be Abolished

Dr. Dawa SherpaLeave a comment

Every year the Nobel Prize is awarded to different disciplines including Economics. And each year it generates a wave of euphoria and hype. But unlike literature and natural sciences, economics is the only social science where the Nobel is awarded. Even critical voices within the discipline get swayed by the hype of Nobel. Notwithstanding the problem of absolute marginalization of Blacks, Women and economists critical of Capitalism among award winners, there are other serious problems with Nobel Prize in Economics.

First of all, the Nobel Prize in Economics is not actually a Nobel Prize. The award in Economic sciences was not among the original set of disciplines included in the Nobel Prize in 1901. It was established by the Central Bank of Sweden (Sveriges Riksbank) in 1969, after 68 years, rather than by the Nobel Committee itself. The greatest irony is that this fact is mentioned even on the Nobel Prize website, which states, 鈥淭he prize in economic sciences is not a Nobel Prize.鈥� (NobelPrize.org, 2018). Hence contrary to all other Nobel prizes in different subjects/fields, the Nobel Prize in economics is called by the special name 鈥淪veriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel鈥�.Initially, members of the Nobel committee (including family members of Alfred Nobel) strongly objected to naming the prize given by the Central Bank of Sweden as the Nobel prize (Offer & S枚derberg, 2016). To quote Alfred鈥檚 great-grandnephew Peter Nobel, “Nobel despised people who cared more about profits than society’s well-being. There is nothing to indicate that he would have wanted such a prize”, and deliberate association of Nobel prizes in Economics is “a PR coup by economists to improve their reputation” (The Local – Nobel Descendant Slams Economics Prize, 2005).

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The nobel of influence in Economics or Why theories fail

Yaku1 Comment

The only Nobel Prize that has nothing to do with the will of its creator, Alfred Nobel, was announced on Monday, October 14th. As usual, the announcement sparked a range of reactions, and as economist . This time, the prize did its job and recognized the contribution of neo-institutionalism to economics. Its influence is undeniable, as can be seen from the fact that these authors are widely cited in macroeconomics courses. For instance, Daron Acemoglu had long been mentioned in academic circles as a favorite to win the Nobel, much like Leonardo DiCaprio was repeatedly named a favorite for the Best Actor Oscar. While we are already familiar with the kind of economics that dominates classrooms and the hegemonic media, as well as the economics that influences politics and shapes economic policies, it鈥檚 worth discussing the theoretical and empirical contributions being recognized and their main critical observations.

Daron Acemoglu, Simon Johnson, and James A. Robinson (AJR) have been awarded for studies of how institutions are formed and affect prosperity. Their work addresses what is perhaps one of the most important questions in economics: How do we explain the economic disparity between countries? Why are some nations persistently wealthy while others remain consistently poor? We should understand prosperity as the plain and simple economic growth. If we rule out biological, cultural, or geographical reasons, what remains is dimension of the historical-political order. Development, then, is largely dependent on one key factor: In the early stages of nations, before they became modern states, what forms of government, civil codes, and laws were established? According to AJR, the root of development lies in the different types of political institutions that were established across the world. Thus, inclusive institutions are in sharp contrast with extractive institutions.

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Is It Possible to 鈥楧ecolonize鈥� Economics?*

Eiman Zein-ElabdinLeave a comment

Calls for decolonizing disciplines, fields, even businesses have proliferated. The goals and meaning are not always clear, but any decolonizing process necessarily entails deconstructive and reconstructive tasks. In Economics, the first task must challenge dominant and domineering paradigms 鈥� orthodox and heterodox 鈥� and expose mechanisms of exclusion in the profession (Zein-Elabdin and Charusheela 2004). The constructive task, at least in part, consists of developing a theoretical vocabulary of economic meaning and well-being based on contemporary understandings of 鈥榲alue鈥� and its genetic relationship to questions of power and justice. Amartya Sen has aptly noted that 鈥渨hat moves us, reasonably enough, is not the realization that the world falls short of being completely just 鈥� which few of us expect 鈥� but that there are clearly remediable injustices around us which we want to eliminate鈥� (2009). I would argue that historical injustices, such as those brought about by colonialism or other forms of lasting domination, cannot be remedied without reconstructing the meaning of economic value and valuation. Confronting value, power, and justice as a mutually constitutive problem is a necessary step for any project of 鈥榙ecolonizing鈥� Economics.

More than a century ago, Thorstein Veblen noted that 鈥渆conomics is helplessly behind the times鈥� (1898). His remark then was made in reference to the rise of Anthropology and new biological sciences. Today, this statement could well serve to depict the sluggishness of Economics to engage with postcolonial critique. Nowhere is this engagement more needed than in theories of value where a contemporary view is lacking. Value is a dauntingly complex concept; it is interpretive rather than discoverable. For the sake of this argument, I broadly frame it as a reference to what enables material sustenance and general well-being. Among other things, a new theoretical framework must seek to: a) revalue different types of work, especially those performed by women and ethnic and cultural subalterns; b) recalibrate 鈥榟umans鈥� relationship with the 鈥榥atural鈥� world; and c) redefine 鈥榩oor鈥� countries鈥� contribution to life in 鈥榬ich鈥� parts of the globe. So far, most economists have studied social disparities in income and wealth, ecological degradation, and global inequality as analytically separable problems without much attention to their common foundational reliance on major concepts of value inherited from industrial European modernity. In this brief commentary, I suggest that new, less 鈥渂ehind the times鈥� interpretations of value in Economics are long overdue.

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When economists shut off your water

jethron akallahLeave a comment
Researcher Irene Nduta in Kayole-Soweto.

By Adrian Wilson, Faith Kasina, Irene Nduta and Jethron Ayumbah Akallah

In August 2020, people all over the development world   about water in Nairobi. There was a lot of anger, and some calls for sending people to the guillotine. The reason: the publication of  (RCT), run by two American development economists, working together with the World Bank. In order to compel property owners in Kayole-Soweto鈥攁 relatively poor neighborhood in eastern Nairobi鈥攖o pay their water bills, this experiment disconnected the water supply at randomly selected low-income rental properties.

There鈥檚 no doubt that water is a problem in Nairobi. As Elizabeth Wamuchiru , the water system in the city has a built-in spatial inequality inherited from the British colonial era. Visitors to the city can readily see the differences between the cool, leafy, green neighborhoods of Kilimani and Lavington鈥攕egregated white neighborhoods under colonialism, now home to rich Kenyans, foreigners, and NGOs鈥攁nd the gray and dusty tin-roof neighborhoods of Mathare, Kibera, Mukuru, and Kayole, home to the lower-income Kenyans excluded from Nairobi鈥檚 prosperity.

Today鈥檚 water system reflects this history of inequality. Nairobi鈥檚 water is harnessed from a combination of surface and groundwater sources; however, the city鈥檚 groundwater is naturally salty and . Piped water systems, provided to upper- and middle-income housing estates, do not exist in the vast bulk of the city鈥檚 poorer neighborhoods, where people must instead buy water from vendors鈥攐ften salty water pumped from boreholes, or siphoned off from city pipes through rickety connections that are frequently contaminated with sewage. In the richer neighborhoods, Nairobi Water Company, a public utility, sells relatively clean piped surface water for a fraction of the price paid by poorer Nairobians鈥攁 disparity that  to often be the case in other cities in the global South. , in poorer neighborhoods such as Kayole-Soweto, 鈥渨ater provision costs more, is less safe, and is less consistent than in other richer parts of the city.鈥�

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Neoclassical Economics and Urban Planning: A Contentious Theoretical and Policy Making Relationship

ngarzacsudheduLeave a comment

Neoclassical economics 鈥� and contemporary extensions of it 鈥� has an outsized presence in academic and policy making circuits. This position of privilege builds upon more than a century of theoretical development, comprising the contemporary 鈥渕ainstream鈥� of economic science. The characteristics and rise of this mainstream, determined in many cases by means beyond pure intellectual merit, has been regularly documented in the existing scholarship.

Economic imperialism has been one of the results of mainstream dominance, and its academic impact on other social sciences has been widely documented, including their corresponding areas of policy making. In this regard, I present here an approach to the problematic relationship between Neoclassical Urban Economics and Urban Planning. These are two related social science disciplines, which however have very different epistemologies and approaches to policy advice.

The main difference between academic mainstream Economics and Urban Planning is methodological, in terms of what is considered a valid approach to scientific knowledge. Economics builds upon logical positivism; it first performs deductive theory construction that 鈥渄escribes鈥� reality, and then subsequently tests its theoretical predictions, which in some cases (not all the cases) lead to policy prescriptions. In contrast, Urban Planning is an action-oriented and problem-solving scientific discipline. It inductively produces normative theory, which explicitly shows the analyst鈥檚 point of view regarding the topic and how to intervene on it (public policy advice).

Mainstream Economics is in essence defined by the method and theoretical approach, not by the topic (the economy). This allows it to engage with a wide variety of topics, one of them being the spatial analysis of the built environment, which is also the topic of academic Urban Planning.

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An acknowledgement of women鈥檚 work in economics – hits, misses, and a long road ahead

surbhi kesarLeave a comment

By and Surbhi Kesar

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2023 was awarded to Claudia Goldin, professor of economics at Harvard University, for 鈥渉aving advanced our understanding of women鈥檚 labour market outcomes鈥�. Goldin is now one of three women who have been awarded the prize, and, more importantly, this is the first time that the prize recognises research that makes a fundamental distinction between economic outcomes of men and women. Her work makes significant contributions to both the empirical and theoretical aspects of the theme, particularly in the context of the US.

Empirically, she applied innovative ways to unearth data for women鈥檚 labour market outcomes in the US at a time when the labour force surveys only collected this information for men. This allowed her to uncover the long-term trend of economic outcomes for women. Her work revealed that there was no linear relationship between economic growth and development and the women鈥檚 labour force participation. Instead, bringing together cross-country evidence and historical data, she empirically established a U-shaped relationship between women鈥檚 employment and economic growth. This implies that at low levels of economic growth, larger share of women tend to participate in the labour market, largely in agriculture. However, with economic growth and a sectoral shift away from agriculture, women鈥檚 participation faltered. Goldin argued that the 鈥渋ncome effect鈥� — the rise in household incomes alongside economic growth along with the increasing use of technology in agricultural activities — may explain women鈥檚 initial withdrawal from employment. However, beyond a certain level of economic growth, women鈥檚 participation rose as their education levels increased and as more white-collar emerged by replacing the factory jobs that are often stigmatised for women.

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Walt Rostow鈥檚 development theory shows that capitalism relies on brutal violence

benjaminselwynLeave a comment

Economist Walt Rostow advanced an influential development theory while working as an adviser to the Kennedy and Johnson administrations. Rostow鈥檚 advocacy of murderous violence in Vietnam flowed directly from his theory of how to promote capitalist growth.

Commonsense notions of development associate it with capitalist modernization. Such notions assume that cumulative economic growth enables poor countries to become more like rich ones.

To facilitate such growth, policymakers, international institutions, and many academics urge poor countries and their populations to adopt modern ways of thought and action, dispensing with familial or communal loyalties and embracing the benefits of capitalist markets and impersonal bureaucracies.

Those who adopt this perspective insist that such modernization will be beneficial for developing societies in the long run, even though there will always be those who lose out and seek to resist the process. However, since the benefits of economic growth and cultural change outweigh the losses, it is legitimate to forcefully suppress such opposition.

No thinker was more influential in theorizing and popularizing such notions of development underpinned by violent coercion than Walt Whitman Rostow (1916鈥�2003).

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The evolution of mainstream economics in five political-economic questions

Aabid FirdausiLeave a comment

The trajectory of mainstream economics can be understood in terms of how the discipline historically responded to moments of crises by attempting to 鈥渢heoretically fix鈥� the understandings related to five core 鈥渜uestions鈥� of capitalist political economy 鈥� namely land, trade, labour, state, and legal-institutional framework. This involved legitimising improvements in land that led to the dispossession and the destruction of the commons, justifying free trade based on comparative advantage as opposed to mercantilist state intervention, reducing labour to a factor of production that was supposedly rewarded based on its marginal productivity and hence not being exploited, legitimising state intervention to stabilise capitalism and developing a legal-institutional framework to protect markets from popular democratic pressures. These 鈥渢heoretical fixes鈥� served to ideologically legitimise, preserve, and perpetuate the core content of capitalist social relations even as it corresponded with the modification of the surface-level appearances of capitalism.

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