The Skeptical Economist

by Jonathan Aldred

Economics is unavoidably central to any attempt to improve our quality of life, but most people do not know why, or how to question its underlying assumptions. The Skeptical Economist rejects the story told by other popular economics books. Responding to Western malaise about quality of life, and a growing curiosity about economics and its relevance to these concerns, Jonathan Aldred argues that economics is not an agreed body of knowledge or an objective science. In reality economics is built on ethical foundations - distinctive and controversial views about how we ought to live, what we value and why. This revealing and entertaining book exposes these hidden assumptions, and opens up the black box of modern economics to reveal that conventional wisdom is not what it appears to be. The Skeptical Economist will challenge us all to examine the assumptions behind the economics of our current way of life. It rediscovers the ethics at the heart of economics.

Genres: Economics, Science, Philosophy, Nonfiction

288 pages, Hardcover

First published March 24, 2009

Reviews

[Jack Greenrose · Rating 2 out of 5]

This is one of those books that has been greatly overshadowed by Daniel Kahneman's book Thinking Fast and Slow. Kahneman's insights are one of the main sources Aldred uses to support his points, and had Kahneman not published the aforementioned title, this book would be worth reading. Now it simply is not. The problem is that Aldred is just not that good of a writer. He is very repetitive and fails to adequately support his assertions. When he writes that "economists say this and that," not once I saw any names given or a single example of preposterous claims made by mainstream economists. I have a Master's Degree in Economics and Business Administration and I didn't recognize Aldred's notion of economics resembling anything that I have been taught. Is this book a reactionary pushback against some of the professors in his own university? Maybe Aldred has overheard some of the conversations of undergraduates at the cafeteria and has decided to straighten them out? We will never know. Yet the end result is a poor attempt to advance his own political views and trying to masquerade it as normative economics (I'm not even sure did he even once try to explain the difference between positive economics and normative economics). This is amateur philosophy at best. I was disappointed.

[Tzurky · Rating 4 out of 5]

*looks at reading time* Oh boy. So, let’s get right down to it. It took me ages to get down to finishing this book because it’s a situation where I’m the choir being preached to. So it wasn’t that high on my list of priorities.

I rated it highly not because I’m the choir but in spite of it. This is a fairly short, very accessible book that tackles just about every “economics” sound bite in popular election and political discourse and breaks down why those are nothing more than political soundbites without any solid grounding in science behind them.

The main reasons being brought up are that
1) economics is a social science, premised on human actions and interaction but its model of human behavior bears no resemblance to any real human thinking (and we’re not talking simplifications and abstractions, we’re talking waaaaaaaay out of line). This is evidenced by the existence and prevalence of marketing which of course is based on a very clear understanding that human beings are fundamentally irrational and the specific ways in which that irrationality operates. You don’t have to read Kahnemann to get that either, a basic understanding of self and others that every adult should have suffices to realize the fundamental contradiction.

2) secondly, economics is a political philosophy and that is why it deals in ethical and political questions, but in the modern version these are simply left out of the discussions, being instead implied as foregone conclusions (hidden in complicated calculations and formulas no less which discourages people from going looking - I should know, since this is the effect it has on me). One of the main ones brought up is the question whether growth should be an aim in and of itself - a pertinent one given the environmental impact it has.

You should know going in that the author has an ace to grind but he is very mild nonetheless. His aim is to bring the ethics to the forefront and have an honest discussion about the best policies, which you know is the entire purpose of a democracy - the constituency deciding what policies are being made.

The fact that he cites emissions trading as an effective example of how economics can work to solve complicated issues is due to the age of the book but I also see him as an honest believer in the better angels of his profession.

I think this is an excellent book to crack open if you want to get an appetizer of where the cracks in the popular narratives of market ideologues are. And you know, these people are everywhere. Starting with crypto bros and continuing with your regular internet commenter on almost any video that, say, points out that maybe people working full-time should be able to afford life’s necessities such as housing and food and transportation. More to the point, these are topics that have been rehashed as part of electoral campaigns since forever (I started paying attention to elections about 10 years ago and they’ve been going on about this stuff in exactly the same rehashed phrasing for the whole period).

As a point of interest, what disillusioned me to the Chicago school rhetoric was studying a little economics (outside the American university sphere). Economics 101 included a nice little chapter on market externalities, moral hazard et al and I dunno how to talk to people for whom the knowledge of these terms isn’t enough to have them go “yay! Regulation!” I mean to talk to them productively. I tried once on the internet and got confronted with the sincerely held belief that of course medication should not be regulated. And I do mean “regulated”, not “patented”, as in this person thought any and all pharmaceutical products should be allowed on the market without any restrictions. Yeah.

So if you’re like that person above or self-identify as a libertarian or some such, this book is going to seem very radical. For anybody else for whom the question isn’t “should we regulate?” But “how much and what?” this is going to be either an interesting lecture or (like it was for me) a confirmation and nuancing of certain ideas you had already arrived at. But I will recommend this to people in my personal acquaintance that haven’t given these things much thought yet (because real life doesn’t permit you to consider all aspects of all things).

[Martin · Rating 2 out of 5]

In a flowing style Aldred reviews some of the most important critiques on mainstream economics: a depraved theory of choice, increased income does not buy happiness for ever - questioning the idea of perpetual growth, income taxes are not immoral and are needed to sustain the delivery of public services, it is not easy to measure happiness and some ethical choices are implied, and valuing life, nature and public service provision in monetary terms is problematic.

The book rightly highlights the ethical poverty of mainstream economics, but did not convince me in proposing an alternative. In his ethical thinking Aldred remains firmly rooted in a view on human nature as a source of ethics although broader than the mainstream economic one. He argues that human psychology produces a bounded rationality and altruism, cooperation, trust and public ethos play important roles in choice and behaviour, the quality of growth matters, and democratic processes can help making hard choices.

The reader is left with a vague view on reality as being subjective and more inclusive processes as ways out of the ethical dilemma faced by mainstream economics. Such a position is a choice in itself and would need much more critical philosophical engagement.

[Muhammad al-Khwarizmi · Rating 2 out of 5]

This book is informative for the most part but good Lord is it repetitive. Towards the end I read the section heading "The audit culture: Squeezing out virtue" and knew more or less exactly what the author was going to say. I don't agree with all his conclusions either. I read an essay in another volume about why normative economic methods (i.e. decision theory) are so important for species conservation because they confront the reality that we can't possibly save all endangered species. The author might well tell us that he does not oppose such methods based on what he has said, but it's sort of hard to tell what he thinks at points because his writing is somewhat muddled. At other points, what he says is so obvious, it's clichéd. That doesn't make his ideals any less important but I just don't need to read a long-winded argument about why. As Joni Mitchell put the theme of environmental conservation that appears in the book much more concisely: "Don't it always seem to go, that ain't know what you've got, 'til it's gone; they paved paradise and put up a parking lot."

[Esther · Rating 2 out of 5]

This is a technical discussion of the philosophical - and unspoken - assumptions of the dismal science. The book is quite dry and while its area of discussion is interesting, the treatment is not. Following the author's argument requires a close read of the text.

It is rewarding, however, as so many of the assumptions of economists have drifted into everyday parlance and labels like 'rational' and 'efficient' are often treated as value-neutral. In recent years, behavioural economics and the economics of happiness have been seen as greap leaps forward in how economist's handle human motivation, but Aldred shows how these sub-disciplines are not as revolutionary as they are assumed to be. The book is very thought-provoking, but be warned, it is not a light read.

[Adam Kiehl · Rating 5 out of 5]

Excellent breakdown of the limits of consumer sovereignty. The book explores a lot of the implicit ethical judgements in orthodox economics which are passed off as objective and value free. The author rather effectively mocks the notion of the hyper rational consumer and the equation of markets with democracy. His criticism of the damaging effects of policy choices predicated on assumptions about intrinsic human selfishness is probably the best I've read. To an extent this assumption becomes a self fulfilling prophecy and incentive schemes built on this assumption have been shown to make workplaces more stressful and inefficient.

[Shadwa Zaher · Rating 5 out of 5]

It gives you a whole new edge in economic thinking