Changes in the face of economics

Under internal and external pressure, economics is gradually developing in a good direction. In recent years, the populist rebound sweeping the advanced democratic countries has triggered some deep soul exploration in this discipline. In the final analysis, it is precisely the thoughts of these economists that have led to the current tightening, free trade agreements, financial liberalization and deregulation of the labor market.
At the beginning of January, when the American Economic Association held its annual meeting in Santiago, a new face of the discipline was presented. There are still many panel discussions on conventional topics such as monetary policy, regulation and economic growth. However, this year’s meeting procedures certainly have a different flavor. In the course of the meeting, what impressed people and attracted the greatest attention were the discussions that pushed the industry to a new direction. There were more than ten meetings on gender and diversity.
On the occasion of the annual meeting of the American Economic Association, Anne Case and angus deaton published a new book, “Death in Despair”, which is both eye-catching and poignant. The research by Keith and Deaton shows that a series of economic concepts in pursuit of “free market”, coupled with the obsession with material indicators such as overall productivity and GDP, have contributed to the epidemic diseases such as suicide, drug overdose and alcohol abuse among the American working class. Capitalism no longer works normally, and economics, at least, has become an accomplice.
A network of “inclusive and prosperous economics” led by me and others organized a group meeting on the same topic to discuss several new ideas that have recently replaced the original hot spots of economics. First, economists are required to shift their focus from “average” prosperity to distribution and non-economic aspects, such as dignity, autonomy, health and political rights, which are also crucial to people’s well-being. If these additional factors are taken seriously, it is likely to change the way economists discuss trade agreements or deregulation. Therefore, new economic indicators will emerge as the times require.
As Samuel Bowles and Wendy Karin pointed out at the same meeting, neo-liberalism assumes that individualism, ultra-moral individuals and free markets bring efficiency, but this requires complete contracts and “relatively rare market failures” to ensure. Bowles and Karin believe that we need a new paradigm that combines equality, democracy and sustainable norms with the current economic model in actual operation. This model will comprehensively use wealth tax and insurance popularization to control risk exposure, and will also emphasize policies such as workplace rights and voice, corporate governance reform, and substantial weakening of intellectual “property rights.”
At the same meeting, Luigi Singles accused economists of sticking to their preference for the country, often valuing specific results (e.g. efficiency) over other indicators (e.g. income distribution), and more easily falling into collective thinking and superstitions about specific economic models than others. To solve this problem, part of it is to attach importance to diversity and show more modesty. Other solutions, according to Singles, are to pay more attention to research in other social sciences, including history, sociology and political science.
The implication of all the above views is that economists must remain open to institutional choices and experiments. Cultivating such thinking is the main goal of the “inclusive and prosperous economics” network. The institutional basis of the market economy is uncertain to a large extent. We can continue to adopt a system that protects privileges and limits opportunities, or, in the words of Bowles and Karin, we can design a system that not only pursues common prosperity, but also expands the concept of freedom.
Empirical methods-especially causal reasoning-will be helpful, and their role in the economics industry has become much more important in recent decades. As far as the replacement of ideology by real-world evidence is concerned, no matter how chaotic the reality is, it is a good thing so far. However, focusing on evidence may also lead to blind spots-we can only obtain workable and infeasible evidence from actual experience, and we will inevitably lack data on selective institutional arrangements that deviate from the current reality.
The difficult problem faced by economists is to be faithful to empiricism while maintaining the imagination to conceive the future inclusiveness and strengthen the free system.