The Trouble with Economics: William Nordhaus and Pope Francis

Economics is perhaps the one social science “profession” that is most entrenched in the political economy of contemporary nations. Little economic thought escapes the halls of academia without the neoliberal stamp of theoretical approval. The trouble with most of the social sciences is that it is very difficult for them to actually be scientific. In the first place, complexity is amplified exponentially by the fact that human behavior is mediated by language. Moreover, the language of human affairs is saturated with concepts and terms that have implicit political content.

Economics, like sociology, political science, and psychology, is a “discipline” that is disciplined by ideology. In particular, in its contemporary form economics is a powerful influence over national and international political policies, especially as applied to economic forces in society. Economics is in turn powerfully influenced by the most prevailing societal forces in the world today – the machinations of financial elites. Academic economics is dominated by the so-called “free market” theories for which Milton Friedman is most famous. From his intellectual throne at the University of Chicago, Friedman and his minions have dominated the economic framework of U.S. international as well as domestic policies for decades. Of course, there is little human freedom in the corporate-controlled “free markets.” Many of these policies have been at the heart of U.S. imperial strategies of foreign domination in the later twentieth century right up to today. U.S. geopolitical strategies have been driven largely by attempts to control world fossil-fuel markets.

Empire of Emissions

Anyone so naïve as to believe that U.S. foreign policy is meant to “bring democracy” to other nations must read Confessions of an Economic Hit man, by John Perkins (2004). As an “economic hit man,” it was Perkins’ job to persuade leaders of developing nations to accept huge loans to build massive infrastructure projects that did little to aid the development of those nations. Instead, they were designed and structured to bring poor countries with rich resources into submission to U.S. corporations and indebtedness to the U.S. government and the Big Banks. The deals required the money from the loans to be spent with U.S. construction companies on projects that would never generate enough income to pay off the loans. Pressure was then brought to bear on such nations to comply with U.S. political demands for resource exploitation and political subservience. Perkins’ book is a fascinating on-the-ground account of the workings of the expansive imperial structure, the larger picture that Naomi Klein characterizes as “disaster capitalism” in her book, The Shock Doctrine: The Rise of Disaster Capitalism (2007).

Despite the exposure of the massive economic and social failings of the growth-at-any-cost form of predatory extractive capitalism that is ideologically propped up by the neoliberal economic theorists, not much has changed in “modern economics.” This is also true of the specialty of “environmental economics.” The latest effort to stand firm supporting “market mechanisms” as the means to solve all problems in the world, is made by William Nordhaus. His essay in the New York Review of Books, October 8, 2015, tries to destroy the economic credibility of Pope Francis’ recent encyclical, Laudato Si’: On Care for Our Common Home (Vatican Press, 2015. Available at w2.vatican.va).

Nordhaus is Sterling Professor of Economics at Yale University and a well established environmental economist. His attack on Pope Francis’ encyclical pretends to be grounded in supposed rock-solid economic facts of “effective” market approaches to restraining carbon emissions. He entirely ignores the strong evidence that carbon trading in Europe has been a dismal failure. Rather than having a basis in scientific findings, his analysis is actually grounded only in neoliberal economic ideology. It ignores both the severity of the economic and ecological facts of our destabilizing world and the moral questions raised by Pope Francis’ argument.

At least ecological economists examine economic systems as operating within the living earth systems that sustain all life, including economists and other humans. Norhaus’ failure – and that of economics in general – is that he treats earth systems as mere economic factors to be incorporated in the economists’ models of market forces. In fact, economies are human systems operating within and now seriously disrupting the earth systems upon which they rely. This is a direct result of the propagandistic role of economics in the political culture of the U.S. and most of the other industrially overdeveloped nations.

Immoral Economics

Nordhaus wants to protect the failed economic system by tweaking its damaging impacts. However, living earth systems are being so severely destabilized by the fundamental ways that system operates, that only a massive reorganization of human economic life will be sufficient to allow those systems to re-stabilize.

Nordhaus concludes his essay by chiding the pope for not endorsing a “market-based solution” such as carbon pricing (and the disaster that is carbon trading) as “the only practical policy tool we have” to turn back the dangerous trends of climate change. Certainly, such “solutions” would constitute the limit of action if we had to accept the corporate free market ideology. But Pope Francis has other ideas. He asserts the social immorality of a system that destroys climate stability and all that depend on it while creating more plutocracy and poverty. Pope Francis calls upon the people to turn away from compulsive consumerism. He calls upon world leaders to abandon the “magical conception of the market” and to turn away from the failed economic system they have allowed to rule us and severely damage the planet.

Nordhaus will have none of it. He dismisses economists like Anthony Atkinson, Thomas Piketty, and Joseph Stiglitz, who recognize in different ways the relationship between capital gone wild and increasing inequality. By attacking the idea that climate disruption causes poverty, Nordhaus attempts to deflect attention from the fact that unrestrained predatory global capital causes both. He optimistically asserts that utilizing assumed magical qualities of market mechanisms can somehow undo the damage that unbridled global capital markets have wrought. That is the trouble with economics.

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