Do Macroeconomists have Morals?

Laura Bear

As an anthropologist among the tribe of macroeconomists in the Rebuilding Macroeconomics network I have been impressed by their moral purpose. Our conversations quickly turn to inequality, low productivity and the problems of asset bubbles. I should not have been surprised by this because their ancestors founded these concerns. The suffering of the depression of the 1930s appears throughout Keynes’ General Theory, as does his vision that right kind of government action leads to the practice of individualism for the public good.

But the Global Financial Crisis and the subsequent lack of productivity growth has left macroeconomists with a dilemma—why is it that in spite of our moral purpose our tools do not appear to be working in the way they should? This has led to deep reflexion. It no doubt contributed to the ESRC’s decision to support a new macroeconomics network. Among these meditations is that of Jeffrey Sachs in the Lionel Robbins lectures at LSE earlier this year here.

Sachs called for economics to become a new moral science of human well-being. He argued for the foundation of a new “economic anthropology.”  This would track the universal forms of human economic thought. Alongside this, Sachs argues that economics should engage with moral science on questions of reciprocity and justice.  His mention of “economic anthropology,” might seem to resonate with the aims of my own discipline. But I would like to explain how the approach of my tribe is different from his. And why it might be helpful for macroeconomists and policy makers to explore collaborations with anthropologists.

This is a big claim—why should the tribe of macroeconomists need the anthropologist? Quite simply they need them to explore the social networks and cultural values that shape decision-making among economists and ‘in the wild’ in society. To help explain what I mean by this let’s consider the difference between what Sachs calls “economic anthropology” and what an anthropologist would mean by that.

Sachs takes the term anthropology from philosophy, in which it means a theory of the human. In this model the human is an individual engaged in thought, receiving information from the world and trying to act. If we follow this model then we can understand economic action by tracking thought processes, signals and action much as behavioural economics does.

For an anthropologist this is a very limited idea of what it is to be a human. Humans, we argue, are pre-eminently social and cultural. They are always part of relationships which affect their action (they are not ‘thinkers’ standing outside these relationships). They perceive symbols and narratives that have meanings (rather than process information). They act according to diverse community values (rather than from a single human motivation). Their decisions are formed from longer term relationships and social experiences (rather than being the result of a single event of a signal and a choice).

So a real economic anthropologist would study how relationships, experiences, values, tools, symbols and meaning affect economic behaviour over the long term within different institutions and social groups. They would also track the unintended impact of this behaviour on macro-processes. In other words, they would follow the diverse ecology of economic practices and how these intersect to produce large-scale unexpected effects.

This is why the findings of anthropology gathered through participant observation would be of interest to policymakers. They can potentially explain why particular groups in society such as firms, banks, corporations, consumers and communities are not responding in the ways policy makers would expect them to. And how social networks and values impact on decision making. They can also track the unintended consequences of policies as they interact with these social and cultural processes. Perhaps equally valuable would be the insights we could offer on the decision making of our economic institutions. We could trace how the training, cultures and social networks of macro-economists impact on their decision making and ability to prevent crises.

Let’s take the so-called ‘productivity puzzle’ as a concrete example. We could supplement the various interventions and forms of measurement summarised in a House of Commons Briefing Paper here using anthropological explanations and data. These would focus on key social nodes in which the economy is evaluated within communities of interpretation and their impact on investment, credit-taking and innovation. It would track how recent experiences and future fears of crisis, decline or even the ‘Brexit’ effect impact on these communities.

Our economic institutions, using this qualitative approach, could develop their informal practices of testing the mood, measurement and signalling. They could also understand how their policies to create productivity growth land in complex relationships generating unintended consequences. Perhaps they could even invite the anthropologist inside their walls in order to understand their own communities of interpretation (as in the work of Douglas Holmes, Karen Ho, Caitlin Zaloom).

Anthropologists could also help macroeconomics to build a democratic purpose. To return again to Sachs, he argues that economics can renew itself through engagements with moral philosophy. This he suggests will allow a deep meditation on foundational questions. Anthropologists in a more radical move would argue that we do not need philosophy to achieve this. People as they act in the economy have diverse, creative moral philosophies about what value and well-being is. They have their own collective visions of what the economy should be for (in my most recent research in India the working poor argue it should exist to generate flourishing,  fair social relations in a video here).

Anthropologists can engage with communities about these visions and bring them into conversations with macroeconomists and policy makers. This could generate new life in the discipline and enable it to act again in the public good.