Book Review

The Skeptical Economist

Revealing the Ethics inside Economics

by Jonathan Aldred,  Earthscan, 2009

The overall theme of this book is a challenge to the claim of economics to be either value-free, or a science.

This it does in some detail, and frequent reference is made to the unreality of conclusions based on the mythical being, ‘Homo economicus’. The author notes that, however, theories of how ‘homo economicus’ behaves can influence reality to tend to adopt that behaviour, not always in desirable ways!

It is a book which should be read by all students of economics, as a warning of the pitfalls which application of its theories can open up.

In chapter three, the author cites much evidence to debunk the myth that ‘economic growth’ makes people happier, and that it is needed to tax-fund, for example, better health and education services. He remarks, however, that ‘A zero-growth economy would probably bring higher unemployment, which might persist even if radical changes to our working practices were implemented’, without questioning the concept of ‘unemployment’.

 The problems of measuring ‘happiness’ are explored, noting that despite the difficulties of this, various estimates indicate that, given basic security, increasing income does not increase happiness or life-satisfaction – in fact, by many estimates, these have declined over the last several decades as GNP/capita has grown in the ‘West’. The issue of ‘happiness’ then has its own chapter, in Chapter Five.

On ‘The Politics of Pay’ – Chapter Four – he argue that three beliefs are mistaken: that ‘we own our pre-tax income’; that income tax generally damages the economy; and that differences in market rates of pay are, or could be, justified as deserved.

Chapter Six argues strongly against the attempts to use cost-benefit analysis to price life and nature, and to discount the future, while Chapter Seven is concerned with the extension of placing monetary values on things which cannot realistically be so valued.

A remark from the introductory chapter tells a truth rarely mentioned: ‘… many of those who call themselves economists peddle a narrow or simplistic view of economics to serve vested interests and political ends’.

This, I believe, is the reason that almost universally, including in this author’s view, ‘economic growth’ and ‘full employment’ are unthinkingly considered valid aims for economic policy.

The vast increase over the last century in the capacity of mechanisation and automation to produce goods with ever-less human input should long ago have brought about a ‘leisure society’, provided only that this productive capacity was used to distribute a fair share of its potential abundance to everyone.

This has not happened; instead, we have the obscenely wasteful and destructive policy of ‘planned obsolescence’, used to keep production levels increasing to increase profits for the few and ‘full employment’ for the many despite the disastrous effects on society and the environment. This is not mentioned by the author of this book; nor is the way our money is created, the effect this has on the ‘need’ for everlasting ‘economic growth’, the growing extremes of wealth and poverty, or the almost total failure of economists to address these questions, or to make the link with the present ‘credit crunch’, despite their over-concentration on monetary-based measurement.

-Brian Leslie