Paradigm Change Through Authority and Arguments about Truth

So far in this series, we have encountered a number of answers to my central questions: why hasn’t neoliberal economic theory been thrown out as a result of its horrifying failure? Why hasn’t the paradigm change theory of Thomas Kuhn’s The Structure of Scientific Revolution worked? If Kuhn were right, then the utter failure of the neoliberals would lead to its rejection and replacement by a new paradigm.

Most of the people who followed Kuhn pointed to differences between the natural sciences and the social sciences as part of the reason. That led to explanations like the dialectic, in which an idea is met with an antithesis and eventually a synthesis emerges which solves the tension, but it then attracts its own antithesis, and so on. Another possibility is that bad ideas don’t ever die. We saw that with Keynes’ discussion of the end of the silly ideas of laissez-faire; he points to a number of reasons for its long life.

We might next look at the pendulum idea of intellectual history. There’s an excellent example of this in a paper by Ravi Kanbur of Cornell, The End Of Laissez-Faire, The End Of History, And The Structure Of Scientific Revolutions I’m going to skip that one, though, because I don’t think much of pendulum theories. They don’t help us see the forces that drive the swings. Instead, I’ll look at this paper by Mark Blyth, Paradigms and Paradox: The Politics of Economic Ideas in Two Moments of Crisis. Unfortunately, this excellent paper was published by Wiley, which is trying to screw money out of people, so perhaps you could find it through your library. Here’s the abstract.

This article argues that there is a paradox at the heart of Hall’s “Policy Paradigms” framework stemming from the desire to see both state and society as generative of social learning while employing two different logics to explain how such learning takes place: what I term the “Bayesian” and “constructivist” versions of the policy paradigms causal story. This creates a paradox as both logics cannot be simultaneously true. However, it is a generative paradox insofar as the power of the policy paradigms framework emerges, in part, from this attempt to straddle these distinct positions, producing an argument that is greater than the sum of its parts. In the second part of the article, I discuss the recent global financial crisis, an area where we should see third-order change, but we do no not. That we do not strengthens the case for the constructivist causal story.

This article starts as a discussion of a paper by Peter Hall on the shift of ecocnomic paradigm by the Thatcher government from Keynesian to neoliberal. The “Bayesian” story mentioned in the abstract is the standard version of Kuhn’s theory. It says that the normal process of change in institutional governance is cumulative: “an additive function of policy errors that begin with settings, moves to instruments, and then leads to goals as a function of environmental pressures.” Suppose a policy and a paradigm are accepted by the institutions of government and the private sector as controlling in a certain area. As things change and evolve, the institutions first change the settings, hiking or lowering interest rates or taxes, for example. Then they add or delete the instruments through which the policy is put into practice, perhaps adding a new tax or a new deduction. Only if these fail do questions about the paradigm itself come to the fore. These are the three orders of change in this discussion. Paradigm change only comes in the third order.

The alternative is the “constructivist” view. Blyth isn’t as direct in the definition of this idea, but here’s the general idea. The Bayesian view is that there are “transcendent, objective, and empirical standards through which observations of events and other ‘facts’ can be judged.” In the constructivist view, “Truth is a series of intersubjectively held conventions regarding “the way the world works” among a given community at a given moment.” The Bayesian view is probably eventually true in the natural sciences, even if new data or events can be interpreted in several ways under different paradigms that might exist at some point in time. It is much less true in the social sciences. There, different paradigms produce different facts. As an example, Blyth points to the claim of the monetarists (the sheep’s clothing of the neoliberals) that Keynesianism failed in the 1970s in a way that monetarism didn’t. Within the Keynesian paradigm, that wasn’t so, but the monetarists seized control of the narrative, and the bad performance of the economy was taken as evidence of failure of Keynesianism. Blyth says that the key step was the construction of the evidence of the performance of the economy by the monetarists as failure.

Blyth claims that the 70s did not constitute a natural test of Keynesianism, for reasons he discusses in footnote 8 and are beyond my power to assess. I’ll add that the solution of the monetarists was to hike interest rates and hike unemployment to ridiculous levels to stamp out inflation. The result was a catastrophe for the middle class and the working class, and it made life even more miserable for the poor. There was no reason to stomp on workers to end inflation, but there was a determination to protect the interests of the rich. This, I think, is the direct opposite of any policy Keynes would support.

In the constructivist view, then, truth is a matter for contest among the people allowed to participate in the discourse. Blyth quotes Hall:

Politicians, officials, the spokesmen for social interests, and policy experts all operate within the terms of political discourse that are operative within the nation at a given time, and the terms of political discourse generally have a specific configuration that lends representative legitimacy to some social interests more than others . . . and defines the context in which many issues will be understood (Hall 1993, 289).

This analysis focuses our attention on the actual decision-makers, not just the economists themselves, but the group with authority in any given setting to determine the bounds of discourse. Blyth points out that each of the schools of economics, rational expectations theorists, real business cycle theorists, post-Keynesians and Austrians, along with the neoliberals and the outright laissez-faire school of political economics, have explanations for the Great Crash, but they are all incommensurate, totally different paradigms. The argument, the social argument, is over which will dominate the discourse. That is a sociological problem, not a problem of economics.

Blyth uses this framework to analyze the persistence of neoliberal economics. I’ll summarize them

1. It takes time to work out a new system.

2. After Kuhn, people expect an all or nothing change. It’s quite possible that we have a failure of a paradigm, but no new paradigm to replace it.

3. Economics professors have tenure, and a huge stake in preserving their status.

4. Institutions like the World Bank, the IMF, the European Community Bank and others are slow to change for the same reasons economics professors won’t change.

5. The neoliberal consensus had taken such deep root and its adherents were in control of so many institutions that there was no way to get the public involved in demanding change. The few prominent economists calling the neoliberals out had to spread their attacks over such a huge area that there was insufficient firepower.

Blyth concludes:

… the singular lesson of the recent crisis for the policy paradigms model is that the sociological can trump the scientific precisely because the locus [of] authority did not shift despite the facts. Mere facts will (sometimes) not be allowed to get in the way of a good ideology. Being seen to fail, Obama’s stimulus, for example, can trump actual failure, such as Eurozone austerity packages. In such a world, the “truth” about the crisis and the ideas that made it possible really does depend upon what the most powerful members of a group (or society) consent to believe.

This explains why nothing changed: the people who define the policy also define the evidence and the tests that might question the policy. But there’s more, for another day.

Notre Dame undergrad (math); JD, Indiana University at Bloomington; 1st Lieutenant, US Army.; private practice in corporate and securities law; Assistant AG in Tennessee for consumer protection and securities; Blue Sky Securities Commissioner, Tennessee; private practice, bankruptcy and corporate law.

I have had a lifelong interest in economics. For most of my career, that interest was practical, focused on the problems in front of me. Lately I have been more interested in economics as a theory, especially its impact on the lives of people like those I met in my bankruptcy practice, and on the politics of money in the US. I also enjoy reading philosophers, starting in college and steadily expanding my reading ever since. I wrote at FireDogLake for a number of years.

Generally, I think the problem facing the US is the dominance of neoliberal discourse. I think it clouds the vision, and limits the kinds of problems that can be identified and solved. For example, the existence and danger of climate change can easily be identified in a scientific discussion. However, the problem does not fit the neoliberal discourse because science insists that the pursuit of individual and corporate self-interest will lead to devastation. In neoliberal discourse, the pursuit of self-interest always leads to Eden.

The neoliberal project has two prongs. One is the police function of crushing dissent and alternative views. The police function is provided by government agencies and private and institutional actors. The counterpart is the economic system , which is operated by government and by private and institutional actors. Some of these actors operate in both spheres. I focus on the second prong.

9 replies
  1. chris miller says:

    There’s another alternative that I keep ending up holding, what the buddhists might call “gaining intent”.

    Neoliberalism seems largely a way to rationalize “gaining intent”.

    After all, “greed is good”.

    I need a bigger sword….

    be well,
    cfm

  2. bloopie2 says:

    A quibble-question about one point early in your post. You write, “Instead, I’ll look at this paper by Mark Blyth, Paradigms and Paradox: The Politics of Economic Ideas in Two Moments of Crisis. Unfortunately, this excellent paper was published by Wiley, which is trying to screw money out of people, so perhaps you could find it through your library … “. 1. I wonder how Mr. Blyth and the employees of Wiley make a living. Is it by giving away their work product for free? Did you ask them, before slamming them? 2. Next time I do some work and ask to be paid for it, so I can support myself and my family, am I “trying to screw people out of money”? If you believe this, that is a very bad bias to have if you are writer about economics.

    • Ed Walker says:

      Mark Blyth is a scholar at Brown University. http://watson.brown.edu/people/faculty/blyth Writing papers is part of his job; he doesn’t get paid for that either by Brown or by Wiley, and Wiley doesn’t pay Brown either. If you want to support Blyth, then buy and enjoy his excellent book, Austerity: The History of a Dangerous Idea, 2013. You can buy it direct from the Publisher, Oxford Univ. Press, and keep the money in the scholarly publication business.
      *
      Papers are submitted in e-form, and held that way until printed. Wiley profits by selling subscriptions to its scholarly journals. The buyers are primarily libraries. These may buy hard copies for archive purposes or for ease of research for scholars nearby. They also buy on-line versions which are made available to those with access to the library. For most of us that means access through our public library. Many are members of groups that buy joint subscriptions so that their publics can have access to scholarly material. I have such access.
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      I assume Wiley’s business model produces profits from the arrangement. Wiley apparently stopped Blyth from posting his paper on his home site. For those with no access to a library, Wiley can make more money by selling access to single articles. The price bears no relationship to any costs Wiley might have. This is just price gouging, and it also hides scholarship from the rest of us.
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      Brown, of course, is a non-taxable institution. Part of the reason we do that is the agreement of universities to make their scholarship available to all of us. Many professors now post papers at SSRN, where people can access them for free.
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      This problem of journals running up profits off access to material for which they did not pay, and which was produced with public support through tax breaks, is a matter of concern to the scholarly community. It certainly is a matter of more complexity than the simple models we learn in Econ 101. I do not get paid to write here or at Naked Capitalism. I do it because I love to, and because I have some hope of making the complexity of real-world economics a bit clearer to myself and to interested people. Money is fun, but not really relevant to most interesting human activity.

  3. dutch says:

    There is no “science of economics”, and therefore no reason to expect Kuhn’s observations to hold. The field is but a subset of political philosophy – at best. In practice it amounts to an attempt to legitimize the policies of those in charge to benefit themselves.

  4. Nelson Lamborn says:

    I find Murray Bookchin’s Ecology of Freedom presenting a compelling paradigm, one that may well be guiding the Kurdish movements in Turkey and Syria via Ocalan’s influence. All the other paradigms are rooted in domination of something; labor, nature, resources, people.

  5. JThomason says:

    I haven’t been paying attention. But I am not surprised that this line of posts is now over here. I am not sure where to enter this discussion. Sometimes the abstractions seem to auger mechanical solutions.

    My thinking may be a bit dated however I will venture forth nevertheless. I had understood that there was some heuristic consensus that the limit of dialectical materialism as a sociological tool were met at the social boundary because the factors of human action in consciousness were not typically understood to be subject to mechanical manipulation. In other words that the moral dimensions of the arts, politics and religion were beyond a kind of utilitarian mapping and so relegated to a domain which might be characterized as “freedom of spirit.”

    Of course a narrative has emerged around social activity in the context of social media and neurological science that predictive social activity can in fact be governed beyond the traditional systems of punishments and rewards. In other words there are many out there selling a science of influence. We see it in media sites attempting to model interests and decisions by gathering personal data and data around impulses on the internet. Additionally we see neuro-semantic deployment of archetypal engineering in political campaigns but this level of programming is not necessarily readily apparent in content superficially. There is obviously a dream of control that underlies this activity and it accompanies the belittlement of education in general and in particular education in the humanities. The economic dream of separating humanity from the capacity of self-governance is compelling.

    There is much more to be said here especially around the separation of church and state and the personal development of a moral ecology around the temptations of mythological inflation and the concomitant dangers of this psychological phenomenon in the public sphere. While the idea of paradigms may be instructive as a tool of historical forensics the attempt to settle on a policy program from a pragmatic or utilitarian basis runs the risk diminishing the moral capacity to an extent where it has no efficacy in ultimately framing the emergent human standards that are available in policy contexts. And much of this becomes viable in time because of the underpinnings of movements in dialectical materialism including the refining of the material strata by the utilitarian tools of social data. In principle this thinking represents the hope for an understanding of the order of activity that is being considered in relationship to the consensus. And the truth of the matter is that at some point as has always been the case the higher orders of abstract behavior will have a life of their own.

    In the end I suppose my point here is about the value of affordable education and social engagement beyond the dynamics of personal spiritual development. There is temporal component to the emergence of the possibility for the expression of these value in a context of competing economic forces. The turn toward the Right Step and sustainability before the reactionary policies engendered in the reassertion of militarism in the first part of this Century is instructive in this regard. Perhaps the country will shrug off the impulse that has come home to roost emboldening forces that are compelled by the forces of the material tyranny. My suggestion I suppose is that there is a generally unprovable context in which the “gaining intent” might be more fully understood. I would hope there could be some agreement around this. Its nature is not self-provable, in fact its strongest basis is in the general time bound experience of a realization of the abstractions that typically describe this order of things. The biological bias in systems theory being one example in the abstract.

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