A new spirit of questioning

Continuing its remarkable run of pieces pulling the comfortable rug out from under mainstream economics, Finance & Development has now published a think-piece by Nobel laureate Angus Deaton. Excerpts:

Like many others, I have recently found myself changing my mind, a discomfiting process for someone who has been a practicing economist for more than half a century….

• Power: Our emphasis on the virtues of free, competitive markets and exogenous technical change can distract us from the importance of power in setting prices and wages, in choosing the direction of technical change, and in influencing politics to change the rules of the game. Without an analysis of power, it is hard to understand inequality or much else in modern capitalism.
• Philosophy and ethics: In contrast to economists from Adam Smith and Karl Marx through John Maynard Keynes, Friedrich Hayek, and even Milton Friedman, we have largely stopped thinking about ethics and about what constitutes human well-being. We are technocrats who focus on efficiency. We get little training about the ends of economics, on the meaning of well-being—welfare economics has long since vanished from the curriculum—or on what philosophers say about equality. When pressed, we usually fall back on an income-based utilitarianism. We often equate well-being with money or consumption, missing much of what matters to people….

Read more here.