Wednesday, December 5, 2012

Against growth: A conversation with economist Joshua Farley

Given the relation between economic production and ecological degradation, Joshua Farley is convinced that economic growth must stop. It is just a question of when. And whether cooperation will displace competition as the dominant concept in the economic paradigm.

Fortunately, there is now growing evidence from numerous fields that humans did indeed evolve to be capable of both altruistic, cooperative behaviour and self-interested, competitive behaviour. Evolutionists have shown several mechanisms that can lead to the emergence of altruism and cooperative behaviour, and provide compelling evidence that gene-culture coevolution has led to highly cooperative behaviour among humans... Markets, of course, are designed to reward self-interest and competitive behaviour, the opposite of what may be required. The neoclassical assumption of self-interested Homo economicus is poorly adapted for solving our most important economic challenges, but is also a poor model of human behaviour. 

Almantas Samalavicius: The concept of ecological economics differs fundamentally from that one of neoclassical economics. However, it is the latter that seems to dominate globally, despite its obvious failings in dealing with present crises, and construct a longitudinal perspective of sustainable economy. All of which inevitably effects economic activities worldwide, and contributes to what sometimes strikes me as being somewhat akin to colonization – the colonization of economic thought. So why are the concepts and suppositions of neoclassical economics still so powerful, despite their obvious drawbacks and limitations? What is being done and what can be done to shake off the false theoretical premises on which the thinking of the majority of professional economists rests? Are there groups of economists (other than ecological economists) who dissent from this stale approach to understanding economy and its functions? 

Joshua Farley: This question is one that has baffled me and other ecological economists for some time. I knew very little about neoclassical economics before I started my economics PhD, not even realizing that it relied so heavily on mathematics. My undergraduate degree was in biology, which gave me an appreciation of the scientific method, and I like math, so I was initially enthusiastic about this seemingly scientific approach. During my first semester however I realized that seriously flawed assumptions invalidated all the sophisticated math. Neither people, society, nor nature behave as the economic models require. The scientific method demands that we empirically test both our assumptions and our models, and reject them if they do not conform to reality. I found that economists either failed to test their models, or else when reality contradicted them, argued that we should reshape the world to conform to their assumptions. Economic textbooks even try to teach students to "think like an economist", which means they seek to change human behaviour to match their models! In retrospect, I realize that my scientific background inoculated me against belief in neoclassical economics. However, I also rejected economics on moral grounds, first because I did not believe that people were perfectly selfish, second because I did not believe that the goal of ever greater consumption was appropriate, and third because I believed that the physiological needs of the poor should take precedence over the luxury consumption of the rich. Talking with my peers in the program, it was evident that many of them shared my views. However, the sceptics either dropped out or changed their views over time. I only finished the programme because I won a fellowship to spend 15 months in Brazil explicitly to cultivate an interdisciplinary approach to economics, and while there discovered ecological economics. 

I have several different theories concerning why economists stick so vehemently to their views. First, I was told that my criticisms reflected my lack of understanding, and that I would only be qualified to criticize the discipline after I had mastered it. However, it takes years of study to master the discipline, at which point if you criticize it, you are basically admitting that you wasted years of your life studying something that is simply not true. It's actually even worse than this. Many people earning PhDs in economics, including myself, do so in order to become professors. An economics PhD primarily qualifies you for a job in an economics department, and in order to get tenure, you must publish in mainstream economics journals. You won't get published if you criticize the discipline, so you have to muffle yourself for seven more years. By the time you are a tenured professor free to openly discuss what you believe, you have spent at least 11 years following the party line. This is a problem inherent to modern academics, not just economics. I knew I could never work in a mainstream economics department, but was fortunate to find one job opening specifically in ecological economics, in Far North Queensland, Australia. 

Second, neoclassical economic theory is very appealing to people who are uncomfortable with uncertainty... 
read more
http://www.eurozine.com/articles/2012-11-30-farley-en.html