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Unpacking the ignoble prize in economics

David Ruccio

I cringe when I listen to or watch some interviews. Here is a case in point – see with the Real News Network. This interview was based on my recent blog post, “Economics of poverty, or the poverty of economics”.

I would also like to recommend a recent piece by Ingrid Harvold Kvangraven [1], who argues that “ The interventions considered by the ‘Nobel’ laureates tend to be removed from any analyses of power and wider social change. In fact, the ‘Nobel’ committee specifically gave [the most recent prize] to Banerjee, Duflo and Kremer for addressing ‘smaller, more manageable questions’, rather than big ideas. While such small interventions might generate positive results at the micro-level, they do little to challenge the systems that produce the problems.

“ For example, rather than challenging the cuts to the school systems that are forced by austerity, the focus of the randomistas directs our attention to absenteeism of teachers, the effects of school meals on performance, and the effects of the number of teachers in the classroom on learning. Meanwhile, their lack of challenge to the existing economic order is perhaps also precise- ly one of the secrets to their media and donor appeal, and ultimately also their success. “


It’s the revenge of neoclassical economics, as reflected in this year’s prize in economics, which focuses attention on poor people’s “bad” decisions and away from the structural causes of poverty.

As I argued the other day on Twitter, it’s like saying the climate crisis will be solved by individuals turning off lights and recycling their garbage. Not bad things to do, certainly. But, together, all those individual efforts make up only 1- 2 percent of the solution. The climate crisis cannot be solved unless and until we direct attention to the real, structural causes. Here, I’m thinking not only of the fossil fuel industry, but also the way the rest of contemporary capitalist economies are organized around the use of fossil fuels — in the production of goods and services, cars as well as digital information. Such a system generates enormous profits, which flow to a tiny group at the top, and continues to destroy the commons, where most of us live and work.

It’s that economic system that needs to be radically transformed. And as long as economists are lauded for focusing on technical issues around the margins and not on the real causes — of Third World poverty, global warming, and much else — the discipline of economics will continue to be impoverished.

Source: Real World Econ Rev, 21 Oct 2019 impoverishing-economics/


Comment: The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, commonly referred to as the ‘Nobel Prize in Economics’ was established in 1968 by a donation from Sweden’s central bank — Sveriges Riksbank – to the Nobel Foundat- ion to commemorate the 300th anniversary f the bank.

Prof David F. Ruccio is attached to the Dept. of Economics and Policy Studies at the University of Notre Dame, Indiana, USA.

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