An excerpt from
Stephen A. Marglin, The Dismal Science: How Thinking Like an Economist Undermines Community (Harvard, 2008).
http://www.hup.harvard.edu/catalog/MARDIS.html
Economics celebrates the self-interested, calculating individual and the market as a means of realizing individual satisfactions, and this celebration is important in overcoming opposition to extending the sway of the market and, by the same token, undermining community. Economics is not only descriptive; it is not only evaluative; it is at the same time constructive—economists seek to fashion a world in the image of economic theory.
The problem with the idea that economics is purely, or even primarily, a descriptive undertaking is that the apparatus of economics has been shaped by an agenda focused on showing that markets are good for people rather than on discovering how markets actually work. And from this normative perspective has come the constructive agenda. If you believe that economics is or should be about describing the world, then it is a case of the tail wagging the dog. If you believe, as I do, that the normative agenda has been central to economics from well before Adam Smith’s time, then it is more understandable why the apparatus of economics is built on foundations that undermine community. Undermining community is the logical and practical consequence of promoting the market system.
This much is certain: if all we economists cared about was describing the world, we could easily forgo much of the framework that I find problematic. Take one of the most basic tools of economic analysis, demand. If we did not care about drawing conclusions about how well markets work, as distinct from how markets actually work, we could start directly from the demand curve rather than basing demand on choices made by rational, calculating, self-interested individuals. We do not take demand as the starting point because it would then be impossible to argue that—subject to some fine and not so fine print—a system of markets maximizes welfare.
In making this argument, economics relies on value judgments implicit in foundational assumptions about the self-interested individual, about rational calculation, about unlimited wants, and about the nation-state, and it is these assumptions that make community invisible. In arguing for the market, economics legitimizes the destruction of community and thus helps to construct a world in which community struggles for survival.
Oh wow, this book just shot up in my reading order. That argument about demand is spot on – and I think one of the central places where sociology can step in and say, “Um, no.” to economics. Economics makes a lot of sense when you assume preferences are exogenous and stable.. but then you are basically giving up on explaining 90% of what’s interesting about the social world (why we want what we want), and the stability of preferences is vastly and problematically overstated (cf. Schelling 1984 “Self-Command in Practice, in Policy, and in a Theory of Rational Choice”).
Economists aren’t nearly so monolithic as this quote supposes. Belief in the value and power of the market isn’t an all-or-nothing proposition. There are plenty of economists (Paul Krugman comes immediately to mind) who aren’t anti-market, but who recognize the huge role that society has to play in directing and attenuating the effects of a free(ish)-market system.
Also, economic theory is undergoing a revolution. Rational choice theory is widely mocked both within and outside of economic circles.