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E meets P & P: a Case of Lost and Found

Datum:26 mei 2017
Auteur:Harry Garretsen
A case of lost and found
A case of lost and found

In much of modern or mainstream economics as it developed after WWII,  the economist is looked upon as a kind of engineer.  Free of  judgements of value, the economist only looks at the hard facts and leaves any normative judgement to others, notably to politicians and policymakers.  This division of labour in economics came about after WWII and owes much to work of Lionel Robbins who argued that “economics deals with ascertainable facts; ethics with valuations and obligations. The two fields of enquiry are not on the same plane of discourse” (Robbins, 1932, p. 132).

This notion of economics as social engineering was strongly criticized by arguably the  greatest economist ever, John Maynard Keynes, who responded to Robbins by saying that economics was first and foremost a moral science, where introspection and value judgements are key. Indeed, in the 1930s economics as an academic discipline was still strongly intertwined with philosophy and, dating back to Adam Smith in the 18th century, it was also looked upon as political economy. This all changed after WWII when economics set out on a course where there was little room for neither philosophy nor politics. One of the flagship academic journals in economics, with its editorial base at the University of Chicago,  is the The Journal of Political Economy (JPE) and for many years after WWII Keynes would have had a hard time to come across papers in the JPE that would deal with political economy proper, let alone economics as a moral science.

The steering away in economics of its philosophical and political roots or connections has, however, come to an end or so it seems. Research on political economy is back with a bang, and the same holds for the academic interest on the importance of for instances values for the analysis of economic decision making. The reasons for this shift are twofold. On the one hand, economics  has gradually moved away from the social engineering perspective by incorporating insights from psychology, history and also political science and philosophy, which in a nutshell have all contributed to the idea that economics is after all not a natural science but a moral science as Keynes already proclaimed in the 1930s.  On the other hand, real life “events” have also brought upon this rediscovery of the intellectual roots of economics. Economists have found out the hard way that it is (increasingly) difficult to make sense of say the 2008 financial crisis, globalisation, Brexit or the rise of Trump without including the 2 P’s that join forces with economics in PPE.  In this respect economics has come full circle and it is once again on its way to become the discipline where values and politics are not put aside but an integral part of the main body of thought. The start of the MSc PPE here in Groningen is therefore not only timely because it connects with current developments in economics, but also because it does justice to a view of economics that was temporarily lost but that has now thankfully re-surfaced.

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