Since the global economic crisis of 2007 discontent with mainstream contemporary academic economics has gained significant traction. From amateur blogs,[1] to student societies,[2] to academic texts,[3] to the Queen,[4] people both inside and outside the discipline are asking more and more difficult questions about the fashion in which economics conducts its business. The Left in particular have been keen to reject the main claims of modern mainstream economists, often citing their failure to predict the economic crisis as a major reason for disregarding their opinions on contemporary matters. However, modern day economics is a complex field largely conducted in the arcane language of mathematics – often incomprehensible to the uninitiated – and consequently many of those who feel strongly that there is something deeply wrong with modern economics struggle to locate the precise point at which its arguments go astray. This essay is an attempt to use an idea of Theodor Adorno’s to contribute to the precise articulation of the strong, but often vague, feeling amongst many that there are serious flaws in contemporary economics.
It is tempting to claim that locating just where modern day economics goes wrong is a superfluous and time-wasting activity for those who are striving for a more relevant and accurate economics. According to this view the failure of contemporary neo-classical economics to account for the financial crisis of 2007, and to provide satisfactory and relevant answers to the sorts of questions we should care about, is sufficient grounds for its rejection – the theory succumbs to a reductio ad absurdum critique. If an argument delivers such obviously incorrect conclusions, it must either be invalid or rest on false premisses, and consequently can be rejected without further criticism. However, regardless of whether or not the conclusions of neo-classical economic arguments can be regarded as ‘obviously incorrect’, I believe that a more precise articulation of the discontent with mainstream economic thought is a crucial first step towards the establishment of a sounder economic theory: learning from the mistakes of the past is key to self-improvement, and thus a more detailed diagnosis of just where neo-classical economics went wrong is more likely to yield a creative solution.
The main claim of this essay will be that neo-classical economics utilises a form of argument which, though not strictly speaking fallacious, nevertheless trades on a fallacy in order to receive the argumentative force which it often claims. By exploring and expounding an argument that was hinted at in a paper delivered by Theodor Adorno to the Conference of the German Society of Sociology in 1961 I hope to show that neo-classical economics is often guilty of a particular, and particularly subtle, form of fallacy. In so doing I hope to contribute to the articulation of the critique of bourgeois economics that is often so keenly, if vaguely, felt by those on the left, and thereby contribute to the more creative project of constructing a more relevant and accurate economic theory in its place.
Adorno’s Argument
The quotation that forms the basis of my argument comes from Adorno almost in passing as part of a broader, and to my mind far more contentious, critique of ‘positivism’ in the social sciences. However, even if Adorno himself does not elaborate upon it in detail, I believe that the following brief paragraph contains a profound insight into the details of precisely where bourgeois economics goes wrong:
The gesture of scientific honesty, which refuses to work with concepts that are not clear and unambiguous, becomes the excuse for superimposing the self-satisfied research enterprise over what is investigated. With the arrogance of the uninstructed, the objections of the great philosophical tradition to the practice of definition are forgotten. What this tradition rejected as scholastic residue is dragged along in an unreflected manner by individual disciplines in the name of scientific exactitude. But as soon as there is any extrapolation from the instrumentally defined concepts even to the conventionally common concepts – and this is almost inevitable – research is guilty of the impurity which it intended to eradicate with its definitions.[5]
The basic structure of Adorno’s critique is as follows: In accordance with ‘scientific honesty’, bourgeois economists give strict and rigid delineations of the terms they use, to prevent confusion. However, given that the concepts themselves resist such tidy definitions (concepts such as ‘institution’, or ‘family’ refer in common language to a diverse range of phenomena which often do not have a single unifying feature, but are better categorised as a loose bundle of diverse phenomena connected only by ‘family resemblance’) this attempt to reach clarity can in fact lead to confusion. People misinterpret the strict implications of the argument through importing the connotations of the ordinary language term into the strictly defined social science term. As such, the ‘research is guilty of the impurity which it intended to eradicate with its definitions’.
It is important to note the subtle nature of the fallacy that is in play here. The deductions from premisses to conclusions may be entirely sound–a watertight argument that cannot be avoided if one accepts the truth of the premisses. Consequently, the bourgeois economist cannot be convicted of a straightforward logical error. However, the conclusion which is drawn makes use of ordinary language terms which have been given precise definitions that do not fit each instance of the diverse possible applications of the terms in common parlance, replete as they are with various conceptual baggage in various different contexts. Furthermore, the role which the argument is needed to play in the broader arguments of bourgeois economics (such as the justification of the free market as the most efficient tool for the distribution of economic resources) requires the connotations of the ordinary language terms in order to attain the necessary argumentative force. So although no fallacy has been committed in the formulation of the argument itself, the role of the conclusion in the broader projects of bourgeois economics can only be assumed if, as Adorno puts it, we perform an ‘extrapolation from the instrumentally defined concepts even to the conventionally common concepts’.
Demand: A Case Study
The argument can be illuminated with an example: the case of ‘demand’. In order to reach a level of mathematical precision and clarity neo-classical economics defines the term ‘demand’ strictly as ‘willingness and ability’ to pay for a good. If lots of people are both willing and able to pay for a particular good at a particular price, demand is said to be high. With this definition economists are then able to reach certain results, such as the tendency of free markets to equilibrate supply and demand. That is, the tendency of free markets to ‘meet demand’ with supply. The arguments employed appear to be rigorously tested deductions – the conclusions follow from the premisses. However, as Adorno predicts, it is extremely difficult to resist the temptation to extrapolate from the ‘instrumentally defined concept’ of demand to the ‘conventionally common’ one.
In ordinary language, demand is often not related to willingness and ability to pay. When the downtrodden of Moscow demanded bread in 1917, for example, they were decidedly unable to pay for it. So when a bourgeois economist says ‘the demand for bread has been met’ in a market they do not mean the same as the ordinary language statement ‘the demands for bread have been met’. The economist’s statement means that all who are both willing and able to pay for bread at that price have got bread. The ordinary language statement means that everyone who wants bread has got bread (regardless of ability to pay). It is worth dwelling on the extent of the distinction here between the doublespeak of bourgeois economics and our ordinary language utterances. On the definitions of bourgeois economics the demand for food in an economy can be met even when the vast majority of the population are starving – the impoverished may desperately need and desire nourishment, but their incapacity to pay the going price ensures that their (ordinary language) demands do not constitute (the bourgeois economist’s) ‘demand’.
Furthermore, in celebrating the free market’s capacity to equilibrate supply and demand bourgeois economists often falsely trade on this ambiguity. Meeting demands in the ordinary language sense (giving people what they want) is a more straightforwardly desirable end than meeting demand in the economist’s sense (giving people with ability to pay what they want). By defining their term esoterically the economist invites the ‘extrapolation from the instrumentally defined concepts even to the conventionally common concepts’, and in so doing invites error.
This example also illustrates the significantly subtle nature of the fallacy at work. Although the economist’s argument above is misleading it is not, strictly speaking, misled. Although it invites error, it is not in error. The argument itself (that, on the definitions spelled out by the bourgeois economist, ‘free markets tend to equilibrate demand and supply’) is perfectly sound. Rather, it is the way in which it is expected to be interpreted (given the ‘inevitability’ of the ‘extrapolation’ from the strict definition to the ordinary language term) and the role that it is expected to play in a broader argument (e.g. that free markets are therefore desirable) that rests upon fallacious reasoning. In this way the bourgeois economist is able to avoid the charge of a straightforward error whilst advancing an incorrect, or at least importantly misleading, thesis.
In this fashion Adorno’s insight into the way in which modern economics frequently abuses language, and in so doing ‘is guilty of the impurity which it intended to eradicate with its definitions’, can offer one a potential articulation of the critique of bourgeois economics. What is now necessary is for this diagnosis of demand to be applide to other key economic concepts, such as equilibrium and efficiency – terms which, like demand, often exhibit a diversity of meanings in ordinary language that resist any reduction into one set of necessary and sufficient conditions. As such, Adorno’s critique can contribute to the more general project of conducting an in depth post-mortem of neo-classical economics with an eye to finding the cure to the diseases to which it succumbed. In ascertaining precisely how bourgeois economics misleads and misguides we both better equip ourselves to identify and resist ideology and aid in the construction of a more accurate, more relevant, and more liberating economic theory for the future.
Callum Macrae studied Philosophy, Politics and Economics at Wadham College, Oxford.
[1] See, for example, Unlearning Economics http://unlearningeconomics.wordpress.com/.
[2] Philip Inman, ‘Economics students aim to tear up free-market syllabus’, The Guardian, 24 October 2013 http://www.theguardian.com/business/2013/oct/24/students-post-crash-economics [accessed 30 January 2015].
[3] See, for example: Rod Hill and Tony Myatt, The Anti-Economics Textbook: A Critical Thinker’s Guide to Microeconomics (London: Zed, 2010); Keen, Debunking Economics: The Naked Emperor Dethroned? (London: Zed, rev. edn 2011).
[4] Andrew Pierce, ‘The Queen asks why no one saw the credit crunch coming’, The Telegraph, 5 November 2008 http://www.telegraph.co.uk/news/uknews/theroyalfamily/3386353/The-Queen-asks-why-no-one-saw-the-credit-crunch-coming.html [accessed 30 January 2015].
[5] Theodor W. Adorno and others, The Positivist Dispute in German Sociology, trans. Glyn Adey and David Frisby (London: Heinemann, 1976), p. 73. See also http://www.autodidactproject.org/other/positivismusstreit/contents.html [accessed 30 January 2015].
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