real-world economics review, issue no. 90 subscribe for free
The “Nobel Prize” for Economics 2019… illustrates the nature and inadequacy of conventional economics Ted Trainer [Simplicity Institute] Copyright: Ted Trainer 2019
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Abstract The prize has gone to three people studying ways to get the poor to derive more benefit from existing “development” practices, such as improving their school attendance. Such a focus takes for granted and sees no reason to question the exiting market and growth driven economy and its derivative, conventional development theory. Thus this kind of research is no threat to the massively unjust global systems and structures that keep billions in poverty. The awarding of this prize provides a telling illustration of the mentality that drives orthodox economics. The most important contribution to eliminating global poverty that the economic establishment could identify need not involve any concern with how to alter the processes that deprive Third World people of a fair share of the world’s wealth. The most important concern is finding how to get a few more of them to do things like get credentials and jobs within the existing system.
The 720,000 pound Prize has been awarded for studies carried out in “developing” countries over several decades, applying randomised trials to determine the effects of interventions like school meals, small monetary incentives for school attendance and work motivation (Nobel Media, 2019.) Especially noteworthy are devices for reducing “…purchasing of temptation goods”, (…conceivably also of use in rich countries.) These are identified as “nudges”, only likely to make small differences in the right direction but claimed to be capable of adding to significant effects in large populations. Much if not all of this work would seem to be unambiguously worthwhile, such as exploring how to improve vaccination rates. But there are disturbing criticisms which go far beyond these studies to indict the tunnel vision and ideological nature of conventional economic theory and practice. The focus in these studies is on getting individuals to perform better within the system. The faulty individual is the problem; as Mader et al. (2019) say, “The idea is to ‘help’ poor people overcome supposedly irrational ‘risk aversion’ in order to be more entrepreneurial, or more ‘time-consistent’ and save for a rainy day.” Even leaving the issue of fault aside, this focus on individualism is the first problem; like “micro-finance” which helps the budding entrepreneur to invest and get ahead, it is about helping the most able and energetic to succeed, presumably on the assumption that if enough do so a good society will eventually result. This is to ignore the possibility that the problems are due to faulty social structures rather than faulty individuals, and the possibility that the best solutions would involve collective effort to establish radically alternative structures and systems. Thus the second major problem is that the approach takes conventional development theory and practice for granted. It reveals a complete absence of interest in the possibility that these are technically and morally unacceptable and a legitimization of structures and practices which have condemned billions of people to suffer extreme poverty for decades, and which continue to do so. Mader et al. reject the “behaviourist” approach to the study of poverty and argue that the concern should be “…the political, social and cultural questions about what causes poverty and inequality.” Kvangraven (2019) recognizes that poverty alleviation is not
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