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© National Institute of Economic and Social Research 2019

Do We Have Confidence in Economic Institutions? – Background note
17 November 2017

This pre-discovery meeting will examine how cultures of economic expertise impact on decision making in public institutions and on all of our lives. At its centre will be a socio-cultural analysis of the ethos, knowledge practices and social hierarchies within the ‘tribe’ of economists. It will also reflect on how universities, central banks and government departments might diversify their forms of knowledge and networks to generate more equitable and effective policies.

The outcome will be a series of initial recommendations about how we might rebuild macroeconomics into a more policy relevant discipline that acts for the public good. We will achieve these aims by looking at cultures of expertise in two linked sites: academic macroeconomics and economic institutions. It is through academia that economists are socialised, and it is through the policies of economic institutions that their ethos and networks impact on all of our lives.

Economics, like many disciplines, is hierarchical. But unlike experimental sciences, where existing orthodoxies are regularly challenged and overturned by experiment, economic ideas can be maintained by doctrine. It might be argued that this is a necessary component of a non-experimental science. But the events of the 2008 great recession have led to widespread perception that the existing dominant approach, DSGE and New Keynesian economics, is broken and it is time for a major shift in knowledge practices. Policy makers have been experimenting in an improvised fashion with new kinds of measures, but changes in dominant forms of knowledge have been slow to emerge. We would like to reflect on why this is and how we might intervene in cultures of expertise and social networks to change this.

Academic Macro-Economics

What are the cultures of expertise that reproduce orthodoxy in academic macroeconomics?

It is through academic cultures of expertise and social networks that new generations of economists are socialised into their professional ethos. This socialisation is built around exclusionary practices of identifying ‘genius,’ mentorship and good performance. It occurs through implicit and explicit means in the classroom and outside. Some of the implicit practices have been revealed in a recent article in the New York Times, which drew attention to a student paper by Alice Wu.  Alice carried out a textual analysis on an economics internet site, Economics Job Market Rumours, that acts as a message board for young members of the profession. Alice split a large sample of posts into those that referred to male versus female economists and she uncovered a disturbing culture of misogyny among a largely male graduate student population. This gives us a small insight into the larger networks and structures of disciplinary exclusion, which we would like to explore.

More explicit networks are revealed in a recent paper by Svornik and Hoover. This drew attention to the fact that the senior members of the American Economic Association have been predominantly drawn from five elite US institutions. There is a similar concentration of power in the award of prestigious Sloan Fellowships which act as a signal to the profession as to who are ‘rising stars.’ The same concentration is found in editorship of top journals, which is particularly problematic because promotion is linked to publication in just five of these outlets.

This concentration places immense power in the hands of the editors and may well prevent the dissemination of alternative views. We would like to explore how these forms of capture occur and what their impact on the recreation of orthodoxy may be. We would like to examine whether these inequalities are reinforced by the Research Excellence Framework (REF) and research metrics in ways that prevent risk-taking in economic departments. In addition we would like to trace whether the top journals have incentives to put procedures ahead of subject to maintain their status—generating conventional areas of study.

Think-tanks form a parallel culture of expertise, which we would also like to explore. These unaccountable organisations funded by groups or individuals with partial approaches mediate between academia and the public. Working with techniques of ‘communication’ and ‘PR’ they may well disproportionately shape media debate on the forms and consequences of policy action. Close connections with the top of government are known but informal.

We would like to explore their methods and impact in relation, in particular, to the explanations for, and solutions offered to the economic crisis of 2008 and current policy initiatives in economic institutions. The financial media, too are part of this culture and network, so we would like to explore their relationships.

Economic Institutions

What are the cultures of expertise in economic institutions that shape and limit policies? How do the actions of various institutions intersect to produce unintended effects? How do policies affect the economic practices and social relations of banks, firms and the public?
We will track macroeconomic institutional landscapes using insights from anthropology and sociology along with innovative forms of new institutional economics (first developed by Coase, Olmstrom and Williamson). Focussing on finance ministries, central banks, multinational institutions and government departments we will explore their cultures of expertise and social networks. We look to examine to what extent these limit innovation, and how policy orthodoxy impacts in unintended ways on the economic activities and social networks of banks, firms and the public.

We seek proposals to help develop new macro-economic approaches and to test these by relating policy action to its dispersed, unintended consequences in society. We also wish to explore experimental forms of coordinated planning, institutional structure and democratic communication that may redress the current lack of legitimacy of economic institutions. Can networks and engagements with central bank and treasury departments influence or shape academic economists?

Turning first to cultures of expertise and networks, we will seek research that traces how macro-economic policy decisions are taken. This occurs within a complex social field of formal knowledge practices, narratives and social hierarchies. Within a single institution there may subordinate and dominant perspectives on how to proceed and the outcome is reached through social negotiation