Dr. Carolina Cristina Alves is a Joan Robinson Research Fellow in Heterodox Economics at Girton College at the University of Cambridge, a co-founder of Diversifying and Decolonising Economics, and an editor of the Developing Economics blog. She sits on the Rebuilding Macroeconomics Advisory Board, the Progressive Economy Forum Council and the Positive Money. This educational series will focus on Heterodox Economics with emphasis on heterodoxy, Dr. Alves’s research, the current research situation, and decolonizing economics. Here we talk about the necessity of Heterodox Economics.
Scott Douglas Jacobsen: Today, Dr. Carolina Alves joins us. She is the Joan Robinson Research Fellow in Heterodox Economics at Girton College at the University of Cambridge. This educational series focuses on the subject matter of Heterodox Economics covering the expertise of Dr. Alves. We will emphasize heterodoxy regarding economics, where mainstream economics becomes ‘homodox economics,’ the broad strokes of Dr. Alves’s research, the current developments or situation in Heterodox Economics, and then aspects of decolonizing economics. To begin today, when an individual enters into the field of economics, what is economics?
Dr. Carolina Christina Alves: Economics as a discipline has had many definitions through time. These definitions, often, understood economics as a discipline concerned with the creation, appropriation, and distribution of wealth, where the social and political contexts were of equal concern to economists. However, as the discipline evolved, we saw growing debates around what economics is, with tensions, for example, related to the scientificity of economics and its normative and positive aspects.
It was not until 1932, with Lionel Robbin’s An essay on the Nature and Significance of Economic Science, when the profession seemed to head to an agreement on the definition of economics. With a view understanding that the technical condition of production and the history of the social construction of the ‘means’ are not directly part of the occupation of an economist, Robbins argues economics is “the science which studies human behaviour as a relationship between [given] ends and scarce means which have alternative uses.”
Robbins’ definition of economics is widely used and accepted. Thus, nowadays, there seems to be no doubt that economics narrowed down to studying human behaviour in the distribution of scarce means, with a focus on market analysis and choices.
Jacobsen: Following from the previous question, how is this considered mainstream or ‘homodox’ economics, henceforth economics or orthodox economics? “Orthodox economics,” in this sense, is descriptive, not pejorative. It is the mainstay of economics.
Alves: Modern economics, or what we call orthodox economics, is about studying human interaction mainly through markets, where markets are theorized as being about the interaction between demand and supply, with equilibrium as a central concept and enduring reliance upon methods of mathematical modelling. This approach went to become ‘the mainstream economics,’ as it is the main and widely taught and researched approach.
An important point here is that the definition of economics cannot be separated from the methods and methodology used by economists. It is not a coincidence that Robbin’s Essay paved the way for a decade where economic methodology would be widely questioned. Engagements with Robbin’s Essay focused on issues of economic theory versus empirical analysis, how economic theory is to be conceived, and the role of ethics in economics. It is not a coincidence either that Robbin’s definition came to ‘stay.’ As Backhouse and Medema (2009) argue, insofar as the Robbinsian conception deals with the influence of scarcity and human behaviour, it becomes an analytical definition. As a consequence, it allows for regularities and the homogeneity of the market economy. For Wootton (1938), a fierce critic of Robbins’ definition, it is like if all market processes ought to have a certain objectivity comparable to the regularities of the natural world, so that changes in the market can be predictable and show uniformity – not being subjected to ‘arbitrary caprice.’
For this reason, Robbin’s definition fitted very well to a familiar argument dating back to Walras’ and his idea that economics would gradually evolve into a scientific discipline similar to hard sciences, with economic laws being rational, precise, and as incontrovertible as the laws of astronomy. With a trend drifting economics towards a more inductive approach, largely limited to understanding social behaviour through the lens of equilibrium solution of mathematical models, the scientificity brought by Robbins wrapped in the ideas of equilibrium and generalization about human behaviour represented a happy – albeit some may argue unnatural – marriage that has since then flourished and become stronger.
There were many events in the last century that contributed to strengthening this marriage, which could be summaries in terms of a formalization and also uniformization of the economics profession since the 1950s. In this process, not only economics became apolitical and ahistorical, but also economists uncritically accepted the standard choice of taking market equilibrium and human rationality as the starting point of their analysis. This context led to the definition of orthodox economics mentioned above and to an increasing number of economists thinking of themselves as modellers, ‘simplifying’ reality through models and invoking the necessary assumptions regarding equilibrium, representative agents, and optimisation (see also Alves and Kavangraven, 2020).
Jacobsen: What made Heterodox Economics come forward into the fray of economics discourse?
Alves: Heterodox Economics, in the modern sense used, can be traced back to the 1960s; although not many economists, at the time, would not put their hands up and call themselves heterodox economists. The 1960s and 70s experienced the developments mentioned in the previous questions as a gradual and constant exclusion of theories and economists whose intellectual traditions did not lie within what would become orthodox economics. From institutional, evolutionary, and feminist economics to Marxian, Keynesian and structuralist economics, these years witnessed the formation of various different communities of economists who at the time were not necessarily connected or self-identified as heterodox (See Lee, 2009).
The stronger the movement narrowing down the definition and methods within economics, the greater was the need for other approaches to find a new home, institutional support. Therefore, it should not be a surprise that we see the Union of Radical Political Economy being founded in 1968, the establishment of Post-Keynesian Economics from 1970 onwards, the creation of the Council for the Development of Social Science Research in Africa (CODESRIA) in 1970, and efforts to revive and develop the Association for Institutional Thought (AFIT) in 1979.
The political, institutional, and ideological marginalization of other approaches and ways to do economics was violent; it did not take long for these communities to start claiming the need for pluralism within our profession. By the 1980s and 1990s, there was a slow integration of these various communities, which can be seen, for example, with the creation of The International Confederation of Associations for Pluralism in Economics in 1993, the Progressive Economics Forum in 1998, the Association for Heterodox Economics (AHE) in 1999 and the Society of Heterodox Economists in 2002 (See Lee 2009). Meanwhile, new heterodox organizations kept emerging, such as the European Association for Evolutionary Economics (1988) and the International Association for Feminist Economics (1992).
So, heterodox economics comes forward into the fray of economics discourse due to a battle within the profession over who defines and shapes the economics researched and taught in our field. The term is a large umbrella that will continue to expand as long as orthodox economics carries on being narrow and intolerant towards other approaches to economics.
Note, some economists like to argue: heterodox economics is everything that is not orthodox economics; it is a self-definition in terms of the other. Swiftly referring back to the etymological meaning of the word, Wikipedia or dictionaries, these scholars are adamant that no other definition is possible. This is wrong. If anything, it implies an economics that emerges as a sort of reaction to mainstream economics, which is not accurate, as approaches under the heterodox economics umbrella go way back to any coherent idea of mainstream economics.
Further, to think that heterodox economics can be defined by the negative denies agency to a rich and useful bunch of research that, quite frankly, could not care less about what’s happening in the orthodoxy of economics. Finally, in social sciences, one can only wish that concepts used to try and make sense of a word can be reduced to dictionary definitions.
Serious thought about what heterodox economics is starts with an investigation of when and how heterodox economics became a consistent and identifiable object. Two aspects stand out here: 1 – to trace back the term in history (where we look into the intellectual history of the term – how and when the term was first used and so on); and also 2 – to understand how different communities of economists started organizing themselves (that is, the sociology of heterodoxy).
In this sense, although the term heterodox economics can be traced back as far as 1863, the key point for us is that the more economics started narrowing down its methods, theory, and approaches during the last century (to then go and become essentially mathematical modelling and econometrics), the more other ways of doing economics were excluded from departments, syllabuses, funding, and journals.
These [excluded] economists essentially started looking for a home to live. That’s why the term is of crucial importance for our current historical moment. To think that the term is a mere definition of what is not is to overlook the institutional power within the discipline itself; it is to be complacent to the exclusion of many equally ‘rigorous’ and ‘legit’ economic approaches.
Jacobsen: In particular, what makes Heterodox Economics necessary for the advancement of the universe of discourse seen in homodox economics?
Alves: Pluralism of methods and ideas is key for the progress of any social science. Despite enjoying being the queen of social science, economics is not exempt from these dynamics. Mainstream economists like to argue that we are where we are because of the ‘evolution’ of economic ideas. Something like an evolutionary process where other approaches to economics were not able to survive. This could not be further from the truth, especially considering that these approaches were systematically excluded and marginalized.
Also, it is quite problematic to assume that one single approach and method is enough to understand social reality. Authors such as Colander (2009) and Coyle (2013) argue that the profession has been more open. For them, the inclusion of endogenous growth theory, behavioural and experimental economics, complexity economics, and other theoretical innovations have reduced the dominance of mainstream economics. Although this may be partially true – and, indeed, there are criticisms of economics coming from within – we have to ask ourselves two questions: 1) the extent to which these criticisms mean that economics, at the research and teaching level, became more open to different ways to do economics, to different communities of economists that are not placed within the mainstream basket; 2) the extent to which these changes also mean changes at the very core methodological assumptions and theories of orthodoxy. That is, are these changes and criticisms challenging mathematical deductivism, the idea of rational actors, selfish individuals maximizing their own interest, individuals as the units of analysis, the equilibrium state of the economic system, and so on?
Diversity of approaches and methods is necessary for our field. Both orthodoxy and heterodoxy have the same object of analysis, the economy, but their tools and assumptions are different, which can then lead to different policy recommendations, conclusions. We need a rich and vibrant intellectual environment where competing approaches allow us to see all the options available to tackle an economic problem. We need a situation where Queen Elizabeth II would not knock at the LSE door asking, “Why did no one see it coming?”, but, rather, “Why did orthodox economics not see it coming; what is the heterodoxy saying about all this?”
My brilliant co-author, Ingrid Kvangraven, whose ideas have helped and shaped most of the arguments expressed in this interview, and I have been forcefully vocal about the need to both i) acknowledge the existence of heterodox economics as a body of economists who rely on different methods and theories to analyze the economy, and ii) bring this body of economists together. This is partially a political strategy to reclaim a rightful space within departments of economics and partially a genuine attempt to open up the profession with the aim to build a more inclusive, just, and fair society.
For this reason, we have engaged in a bumpy path to look at the history of heterodox economics and these different communities of economists to try and define heterodox economics. In stark contrast with the definition by Robbins mentioned at the beginning of this interview, for us:
heterodox economics is concerned with the study of production and distribution of economic surplus, including the role of power relations in determining economic relationships, the study of economic systems beyond market relations, and the employment of theories focusing on these issues (Kvangraven and Alves 2019)
Jacobsen: Thank you for the opportunity and your time, Dr. Alves.Alves: My pleasure! Thank you very much for inviting me.