[As with all my posts here, this is not meant to be an academic paper – it’s simply a collection of ideas that I’ve typed out in my spare time. I do have some academic knowledge in this area, but not enough to assure you that I’ve not made any mistakes. For the sake of brevity and making this interesting enough for a wide range of people to read, some points are glossed over – but not distorted.]
About a year ago I wrote my honours thesis on the 1846 repeal of the Corn Laws in the United Kingdom. There were two key ideas underpinning my work:
a) That the rise of free trade is often and unfairly given a teleological treatment by historians. Doing so sidelines the role of people and institutions and legislation (among other things) in enabling free trade doctrine to move out of the realm of theory and into practice.
b) That the economics profession has historically occupied a contested place in public discourse and continues to do so today. The tension from this can be seen played out in public discourse; the Parliamentary debates on the Corn Laws show hostility between arguments that were derived from academic work in the field of political economy (out of which grew the economics field we know today), and arguments rooted in things like ethics, religion, foreign relations, etc. I believe that we still have not resolved this tension to this very day.
Point b) is something I’ve been extremely interested in for a few years now, but I was only able to begin thinking about it in a somewhat sophisticated way thanks to guidance from my honours supervisor, to whom I owe a great intellectual debt. I’ve now begun a PhD that will further explore issues of free trade and empire in mid-19th century Britain, and already I’m looking back on my previous undergrad work with a sceptical eye… I did pretty well in trying to make some high-stakes arguments with only one year and 16,000 words to work with, but suffice to say I look forward to returning to some of those topics when I’m better-equipped to handle them.
Recent political events in the United States have got me thinking back on this work, and especially on point b).
It’s perhaps not the most pressing news right at this moment, but President Donald Trump still has not picked a chairperson of the Council of Economic Advisors. Even when (if…) he does, it looks like this person will not be a part of Trump’s cabinet (though cabinet inclusion is not a requirement – Barack Obama just set a precedent for this). Past presidents have relied on and valued the expertise of the CEA team, which is comprised of the Chair, two Members, and a staff of economists and statisticians, and which provides empirical economic data, advice on economic policy, and more. The list of previous Chairs include superstar names like Alan Greenspan, Joseph Stiglitz, Janet Yellen, Greg Mankiw, and Ben Bernanke.
Trump has filled some key relevant positions, however. Gary Cohn, former Goldman Sachs CEO, is Trump’s chief economic advisor and director of the National Economic Council. Steve Mnuchin, former Goldman Sachs chief information officer, is the US Secretary of the Treasury. Peter Narravo, professor of economics and public policy at the University of California, is the Director of the newly-created US National Trade Council. Hey, there’s one economist! Alas, one who has produced no peer-reviewed work in trade economics or macro, and whose views on those things are not well-regarded in the mainstream.
As many have noted, Trump seems spectacularly uninterested in taking advice or guidance from economists or shaping his policy around convention. He hasn’t released any particularly detailed economic policy but we’ve seen snapshots of an ethnonationalist-protectionist outlook, deep suspicion of free trade deals, and a determination to re-create/re-nationalise aspects of the US economy that have long been lost to globalised trade and capital. Some relevant pages:
https://en.wikipedia.org/wiki/Economic_policy_of_Donald_Trump (I know, wikipedia, but it’s a good page)
Extricating itself so forcefully and suddenly from the global economy seems foolish, at best, for the nation that occupies such a vital role within it. Adam Tooze has a fantastic post on this – America’s Political Economy: Trump and the Global Dollar. It includes a link to and discussion of the extraordinary letter sent by Republican congressman Patrick McHenry to Janet Yellen, Chair of the Federal Reserve, in which McHenry heavily criticises the Fed’s participation in international forums/agreements including the Basel Accords (banking regulation). He demands that the Fed discontinue its involvement in such things “until President Trump has had an opportunity to nominate and appoint officials that prioritize American’s best interests”. It really has to be read to be believed.
Trump, and many of his team, have taken part in economic debates and discussions but have rarely made “economic” arguments within these debates. By this I mean that they’re not holding up graphs and academic papers and grey literature. They’re not looking to the economic orthodoxy for support or demonstrating that they even think they should be. They’re promising that “trade policies will be implemented by and for the people, and will put America first”. They are concerned with America’s “devastated manufacturing base” and want to “revitalize our nation’s suffering communities”. They tell us that “Americans have been forced to accept trade deals that put the interests of insiders and the Washington elite over the hard-working men and women of this country” (all quotes from White House page on trade; I feel they’re pretty typical of Trump’s rhetoric on trade and economics).
While certain topics like infant industry protection are contested within academia and the professional world, you’d be hard pressed to find a mainstream economist willing to go in to bat for Trumpian protectionism (and I’m sure not many in the heterodoxy would either). Does Trump care? Hell no. That’s the whole point. He’s giving two fingers to a group that he’s basically painted as a sinister cabal who plot to enrich themselves and their buddies at the expense of blue-collar American jobs and families. Important to turf them out of the White House, limit their power in institutions like the Federal Reserve, and then get to work Making American Great Again. I’m highly critical of claims that Trump is a true populist, but his language on trade and jobs is firmly in that vein.
As much as we have reason to be sceptical about Trump’s economic policies, we must recognise the sheer power of his arguments. There is no real indication that he can actually do what he’s promised to do – restore jobs, MAGA, etc – but people are passionate about the mere idea of it. They don’t want to hear wonkish arguments and read graphs. They want to hear things that mean something to them.
It’s clear that the authority of expertise doesn’t always carry the weight that many assume it does. Holding a particular job title or set of qualifications isn’t a guarantee that people will listen to you or respect you. Much can influence the standing of a given group in the public’s esteem.
One example that comes to my mind here is the Global Financial Crisis. The enormous shock of the GFC is still fresh in the minds of many. I think it’s fair to say that it cost economists a great deal of cultural capital (whether they deserved to lose it or not). The general public seems to consider them to be some kind of all-knowing, all-seeing wizards of money and markets, which isn’t a particularly good or correct thing to think, but here we are. With this impression in mind, the public watched the crisis unfold – and then they saw the wizards working their magic, not to stop the terrible events of 2007 and beyond, but to bail out the banks afterwards. The perception for many was that economists weren’t equipped to prevent what was likely the worst crisis since the Great Depression, and didn’t then lead the charge to punish those responsible for it but chose to give them handouts instead. Perhaps the GFC fallout led to a Wizard of Oz kind of moment for some: the curtain was pulled back, and behind it there were only mere mortals.
Of course, this version of events is not quite what happened – I’m simply trying to create a picture of what popular public perception was. That’s what I’m interested in, after all: how people viewed the economics profession historically and in the present day.
In the 1800s, “economics” didn’t quite exist as we know it. Work done by luminaries such as Adam Smith, David Ricardo, Thomas Malthus, etc was referred to as “political economy”. The boundaries between academic fields that we’re familiar with did not delineate intellectual work in this time (these boundaries are very recent inventions, but that’s a topic for another post). A political economist was never just that – he wrote on philosophy, politics, religion, science, and often many of these things together.
The period around the mid 1800s is of particular interest because it was a time of fierce debate, lobbying, campaigning, and agitating around repealing the Corn Laws, which can be seen as part of a push towards Britain shaking off its mercantilist chains and adopting free trade. In 1815 Parliament had enacted the tariffs known as the Corn Laws; these restricted importation of foreign grain and created a lucrative environment for British landowners who could continue to enjoy the high prices for their land’s produce which had been the norm during the Napoleonic Wars and were now artificially propped up by the Laws.
The Parliamentary debates over repeal give us a wonderful glimpse into the way that political economy was treated in political discourse in the 1840s. Note that this really is just a glimpse! I pored over thousands of pages of Hansard just to dig up these bits and pieces, mostly from 1846 (which spoiler alert was the year of repeal). In the future I plan to revisit this material to get a bigger and better picture of how political economy was received in the UK Parliament. For now – see how it was treated by politicians at the height of the Parliamentary debates over repealing the Corn Laws.
A little background, courtesy of Charles Pelham Villiers. Villiers was a prominent Liberal politician and one of the key proponents of repealing the Corn Laws. He outlined the tension between the goals of protectionists and supporters of repeal in his Parliamentary speeches: protectionists sought high prices for produce to ensure the livelihoods of farmers and income of landowners, but supporters of repeal sought lower prices for produce to ensure that workers could purchase food at affordable prices and have money left for other items. If food prices remained high, a large portion of a worker’s wage needed to go towards this necessary good, which left only a small amount to spend on manufactured goods. In this way, home markets were compromised by high prices for grain and other food goods. Compounding these issues, Villiers noted that the population of Britain has been growing throughout the nineteenth century and that those extra people would need employment and the usual necessities of life. The situation of low manufacturing wages and high food prices was unsustainable for all these reasons.
Some politicians, including Prime Minister and repeal champion Robert Peel, invoked the field of political economy and names such as Adam Smith as sources of authority. Some, like John Russell, leader of the Opposition, argued against protectionism with what we could slightly anachronistically call economic arguments. He criticised the tired-out, decades-old theories for protectionism being put forward and championed the progressive and modern ideas of free trade that had been developed in response to the changing nation and its economic condition. As to be expected, Richard Cobden, Radical and founder of the Anti-Corn Law League, considered political economy “the highest exercise of the human mind” and said so in Parliament. He stated that, barring “want of [mental] capacity, and having a sinister interest – I defy any man to look into this question [of repeal] honestly, and come to any other than one conclusion”. If a politician was of keen intellect and good character, and thus able to appreciate the academic work of political economy, Cobden felt that there was no reason for this man to come to any conclusion other than one in favour of repeal of the Corn Laws.
Chief among the critics of political economy was Benjamin Disraeli, who acknowledged its use but described it as comprised of “theories which never influenced human conduct, and which are incapable of ever doing so”. He was suspicious of the motives of those politicians who praised political economy, painting them as deceitful, and even suggested that “we ought to invent a limbo for political economists, where we might hang up all those arguments that have served their purpose, and which have turned out to be sophistries”. Seems a bit harsh, but pretty much par for the course for Disraeli. Others including Edward Smith-Stanley cast political economy as a dangerous, experimental field that could not be relied upon for sound policy guidance and would produce “hazardous and doubtful policy”. Henry Seymer even begged the House “not to be imposed upon by the scientific jargon of the political economists”!
William Rashleigh took a bleak view, warning that fellow parliamentarians “may rejoice and indulge in those theories of modern philosophy and political economy; but when you have endangered and destroyed the peace and happiness of a nation, you will have but a sorry return for your pains.” Others spoke of political economy as sophistry, charlatanism, or a purely esoteric pursuit with little connection to the real world.
This gives us an idea of some of the professed attitudes towards political economy that were held by UK politicians, but it’s what was not said that is also of great interest. While I haven’t done enough research to say anything conclusive, I am comfortable saying that political economy just didn’t feature that much in the Corn Law debates, as a topic of discussion or as a source from which arguments were derived. Much more time was given to discussion of the Irish Potato Famine, food security, welfare, and relations with foreign nations – topics which are certainly within the purview of political economy, but the salient point is that they were not being discussed and debated on principles taken from academic work and there was no need for or expectation of politicians doing so. An argument based on moral principles or religion or foreign policy concerns or whatever else was much more common and likely to be better received than a quote from Wealth of Nations.
The field of economics is clearly going through a rough time under the Trump administration. Its place in public discourse is always contested, but at the moment it’s taking quite a beating. Recently, economist Justin Wolfers tweeted about Trump’s failure to nominate someone for CEA Chairperson (and here’s a column he wrote about economists’ concerns about Trump). In noting the demotion of economic advice in the current administration, Wolfers said, “For all the valid criticisms of economists, it’s worth remembering our defense: We’re bad at understanding the economy, but others are worse“. Hard to argue with that. I myself have been known to partake in heated critique of the economic orthodoxy from time to time (considering my politics it would be a little surprising if I hadn’t), but it’s simply foolish to do what Trump is doing: dismissing an entire academic and professional field, jettisoning expertise and bodies of research entirely. Perhaps unfairly for it, economics has a lot of work ahead to rehabilitate its image (and interestingly, I’ve read a lot of articles and columns recently from economists critiquing their field and suggesting ways it can change). Its future challenges under Trump remain to be seen.