Keith Rankin: "Intellectuals" as an Academic Sub-Species

On the 3rd of February this year, Chris Barton of the New Zealand Herald published an article called "Who is speaking out on today's big issues?" He included a non-exhaustive list of New Zealanders, who by virtue of their expertise and willingness to engage on public issues, might qualify for the rubric 'public intellectual'. He was kind enough to place my name on the list.

Barton writes of a "rare, routinely derided breed – the public intellectual or expert analyst applying their skills more widely [than their academic specialties]". Indeed New Zealand is commonly criticised for its anti-intellectualism, and there's no doubt that it's particularly hard to induce a public debate in New Zealand about underlying philosophical principles relating to economic and financial issues such as taxation, equity, employment, enjoyment, credit, investment, productivity, sustainability, inflation, money and others. In the main, these are seen as technical issues of dry scholarship; issues for geeky experts who should be neither seen nor heard by the public at large.

Indeed New Zealand government policy has been, for a quarter-century or more, to build academic institutions that increasingly promote narrow scholarship at the expense of the intellectualism that Barton writes about.

The crafts of the scholar and the intellectual are not mutually exclusive; far from it. An intellectual should never be unscholarly, should not have an agenda (but may have a passion or two), and should respect the scientific principle of falsification through observation. [The principle of falsification is most associated with Karl Popper, an intellectual of global significance, who wrote some of his philosophical works in Christchurch.]

Nevertheless, most scholars are not intellectuals, and some intellectuals would not describe themselves as scholars. Intellectuals need not be from an academic background, although almost all will have been exposed to academia. Paul Krugman, the renowned American economist, was a scholar who became an intellectual. He no longer does the career-building 'hard yards' of an academic researcher. Rather he engages his profession and the wider public in ways - through popular books, his New York Times column, and literary reviews – that are discomforting to many.

Intellectuals are consumers of information – scholarly and otherwise. Intellectuals present, unpack and criticise arguments; they tell stories, often speculative stories; they ask questions, different questions; they address issues, including contentious issues that scholars and policymakers may avoid; they make lateral connections between different bodies of knowledge; they converse with 'the public', not just their peers. They trade in ideas. An intellectual, in engaging a wider audience, supplies broader but less footnoted outputs than a scholar; lucid essays rather than academic prose. The best intellectuals suggest solutions to the problems they address.

Intellectuals have historical awareness; they can relate contemporary concerns to events and concerns of the past. And they can see some areas – some, not all – in which the future cannot be like the past. For example, intellectuals interested in the post-2008 economic crisis will look to earlier crises, our responses to them, and their eventual resolutions – crises such as the depression of the 1930s and the panic of 1907 – looking for points of similarity and points of difference. And they would look to differences in future circumstances – eg environmental constraints – which might require different resolutions to the types of problem that have occurred in the past.

Economics

In economics, there is a 'paradigm' that most career economists follow. It is called neoclassical economics. It is based on the idea that, if everything is priced correctly, relative to everything else, there will be a general equilibrium outcome that represents the best of all possible worlds; or, in Platonic terms, an ideal state that may not be achievable but which we can always get closer to. In this ideal market state, there is no unemployment, no inflation; there are no perpetuating financial imbalances. Further this state is most closely achieved through minimal government. Thus most problems end up being blamed on policy mistakes by governments, or quasi-government authorities such as central banks

Keynes, in his General Theory published in 1936, observed that neoclassical economic theory had an elegant superstructure but poor foundations. Economists – scholars, policy analysts and bank economists – continue to work largely within this paradigm. Scholars add to the superstructure, exponentially as their careers depend on the 'publish or perish' imperative. Intellectuals, better equipped to address the foundational premises of the discipline, are crowded out by the publication sausage machine.

Whenever there is a real-world economic problem, the neoclassical paradigm leads economists to the conclusion that there must be distortions within the price system. Thus unemployment, according to the paradigm, is caused by wages (the price of labour) being too high. Scholarly debates within the broad neoclassical paradigm are more likely to be about why wages are too high in a recession, not whether they are too high.

It is intellectuals, with cross-discipline and cross-paradigm vision, who can offer alternative explanations and solutions. Intellectuals, much more than scholars with their narrow fields of vision, can help us to break the impasses that prevent us from asking the right questions, let alone finding answers to the seemingly intractable socio-economic problems that we face.

Darwinian selection and economic truth

The most important scientific principle of modernity is that of Darwinian natural selection, commonly known as 'the survival of the fittest', but better understood as 'the non-selection of those who or which do not meet some survival criteria'. The principle is essentially a tautology: 'what survives, survives'. Scholarly paradigms such as neoclassical economics survive brilliantly in Darwinian terms.

When it comes to natural science, the criterion of unfitness is falsification. Hypotheses that are shown by factual evidence to be false – through observations inconsistent with the hypothesis, or consistently useless predictions – are discarded, and other hypotheses are formulated.

In human society, however, there are at least two other Darwinian survival criteria: the criterion of profit and the criterion of career. According to the criterion of profit, an item (including an idea) is rejected if too few people buy it, and is successful if people with purchasing power do buy it. (Under the principle of consumer sovereignty, the consumers, whether of goods or ideas, are always correct. Survival is determined by sales.) Market selection is determined by perceived self-interest; falsification is equivalent to the absence of profit. If the principle that unemployment is caused by excessive wages is bought by the people in society with the most buying power, then that principle survives and becomes an accepted truth.

Related to the criterion of profit is the criterion of career. If one possible truth leads a scholar or analyst into a more clearly defined career path – in economics the opportunity to do policy analysis and consultancy work is important – then that 'orthodox' truth is selected over alternative 'heterodox' truths, regardless of how well the competing truths explain or predict real-world events.

In economics, it's the wealthiest five percent (or thereabouts) who are the principal buyers of economic truth. According to the neoclassical paradigm, a rise in the money supply will reduce interest rates, and lower interest rates are widely seen to be growth-promoting. However, because low interest rates are not generally favoured by the principal buyers of economic truth, a feedback theory of inflation expectations was developed (and bought). This theory tells us that induced changes in the demand for money will mean that an increased money supply leads to inflation expectations and therefore higher (rather than lower) interest rates, and may therefore be growth-inhibiting. Thus, the buyers of economic truth tend to favour restrictive monetary policies.

On another matter, a more obvious feedback mechanism is not bought by the most influential buyers in the marketplace for truth. If wages are reduced in a period of high unemployment, the feedback effect is a reduction in the purchases of goods and services, and even higher unemployment. (We see this clearly in southern Europe at present.) However, those whose purchases of ideas determine which ideas should be regarded as true believe in lower wages (lower costs to their businesses) as well as higher interest rates (higher 'investment' income to them).

So one mechanism which 'supply' conditions induce 'demand' changes is rejected (relating to wages), while another (relating to money) is accepted. This selection process takes place not only on the basis of factual evidence, but also in accordance with the preferences of our most influential buyers of truths.

Conclusion

Scholars are miners – suppliers – of truths. But they supply truths to the market. Thus they mine some seams very intensively, while neglecting other seams; choosing which seams to mine in accordance with Darwin's principle of selection. Thus scholars will tend to favour the seams that yield the greatest career rewards, which tend to be the seams least threatening to the purchasers of truths. It is the role of intellectuals, most of whom are also practising scholars, to shine some light on those less-mined truths; truths that may be inconvenient for some.

Keith Rankin teaches economics at Unitec

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