Dismal Science: How Thinking Like an Economist Undermines Community [Hardcover]

Stephen Marglin, the author of this book, is a trained economist from a few decades back. Presently, he is a member of the Department of Economics at Harvard University. It has taken courage on the part of Marglin to defy conventional economics wisdom among his colleagues and students to write this book.

This is because his book 'Dismal Science' works on a comprehensive and intense critique of the mainstream consensus, among economists, that a system of unfettered markets is good for the people. This, Marglin does, in order to put forth his theory that community-based economics would serve humanity better.

His training as an economist gives Marglin some credibility when he elaborates on why he rejects many of foundational assumptions of economics calling them "cultural myths" as against what conventional economists would term as "universal truths".

One of them is the idea of individualism that, Marglin writes, is be understood as "a collection of autonomous individuals, that groups--with the exception of the nation--have no normative significance as groups, that all behavior, policy, and even ethical judgment should be reduced to their effects on individuals."

Marglin continues articulating, "A second founding myth is the modern ideology of knowledge, an ideology that privileges the algorithmic over the experiential, an ideology that elevates the knowledge that can be logically deduced from what are regarded as self-evident first principles over what is learned from intuition and authority, from touch and feel."

The third assumption, and myth, according to Marglin, is that "the nation... is the only legitimate social grouping," where "it is legitimate to ask whether the nation will be better off by free trade, but it is parochial to ask whether workers, old folks, or farmers will fare better or worse."

The fourth myth is of unlimited human wants that can never be fulfilled and so economics tries to allocate scarce resources towards it. Marglin states that the western economy allows free play to unlimited desires and allows "rivalry--keeping up with the Joneses and the like--to be expressed in the acquisition of display and wealth."

These four foundational assumptions of economics, and other theories associated with any of these, are very craftily argued against in 'The Dismal Science'. One thoroughly enjoys reading the well-articulated and sharp points and elaborations made by Marglin, particularly in the middle half of the book in chapters titled 'From Vice to Virtue in a Century', 'How Do We Know When We Do Not Know?', 'Taking Experience Seriously', 'Why is Enough Never Enough?' and 'The Economics of Tragic Choices'.

The book provides very well-presented thoughts of the author although at times the frequent references to people, events and places from the history of economics get boring and pointless. There have been other critiques of economic theory in the past but Marglin's book is nevertheless a fresh and interesting addition to the list of critiques.

Marglin, however, fails to give justice to the second part of the book title 'How Thinking Like An Economist Undermines Community'. Even though he has one full chapter on 'What is Community? And Is It Worth the Cost?' it does not present a convincing case as to why community-based economics is necessarily free of the myriad problems that bog down market-oriented economics.

It is also to Marglin's credit that he stays fair to the mainstream economists in the sense that when he is stating their positions on economic theories and free markets there is no distortion of any kind. This, then, gives him enough credibility to launch his criticisms.

The second big failing in the book is that Marglin could have hit harder on the problems with foundational assumptions of economics. He could have, if he had put in just a bit more effort, to expose, through real-life examples, of the continuous failure of the fulfilment of the assumptions of economics. The fact that, more often that not, cronyism, unfair tax favours and corruption of government, and not free and fair markets, is how capitalists operate is ignored by Marglin.

The fact that some markets work, and work wonderfully, is despite the capitalists' cronyism and partly, also because, of human nature to adapt as best they can to circumstances forced upon by the policy-makers and industrialists who resort to conventional economics' flawed theories.

Are there alternatives to conventional economic wisdom then? Marglin thinks going back to communities would help. But, in my view, any system that is run by humans will not be free of the negatives of human nature such as manipulativeness, greed, deception and violent, or subtle, exploitation of other living beings and the ecology.

At any rate, 'Dismal Science' is a book worth reading, and I can safely recommend you to go buy a copy.

Written by an economist - albeit a contrarian one - this book underlines the effects of the fundamental assumptions of modern economics on community formation.

Finally Liberals and Conservatives agree on something. Like conservatives George W. Carey and Robert Nisbit, liberal Stephen Marglin sounds the alarm for community and tradition's demise - though they differ on cause. Instead of centralized government and rights invention by the Court, Marglin takes aim at that most sacred of modernity's inventions, our Adam-Smith-originated economic model where the foundational assumptions of economics are those of modernity. Sounding like conservative Allan Bloom ("Shakespeare's Politics"), Marglin laments "the narrowing of economic minds as students set aside larger questions for career advancement". Not so much directed at students but at this civilization's assumptions central to economic theory that made students this way. Point being that both sides (and there are only two in America) - despite evermore dogmatic defiance - are recognizing the machine we made that now makes us in its image. An image lacking community, humane perspectives and human connectedness. Not to confuse community with "association", "special interest", facebook or bowling league, both sides agree "community" is something deeper. A face-to-face arrangement in which people share a common cause and need, as Marglin writes, "creating a common future, recalling a common past". This is decidedly not an adolescent counter-culture Sixties reaction, but a growing clarity of consequences of materialist thinking. Dismal is, however, not exactly a solution either. While we get the problem, how to fix it isn't clear. As Hayek showed in Serfdom, the devil's in the details of practical implementation.

The kernel of Dismal Science is that modern economic models are approximations of reality (as anyone in science knows); that these models consider human aspects of society as perturbations or ignored altogether; that these inaccurate models are then made real through social engineering that force humans to fit as parts in the machine. Community becomes a foreign entity lost to shallows of modernity through the draining assumption that humans are "autonomous, rational, self-interested individuals seeking to maximize utility through efficient markets" and nothing more. To such an extreme that barriers to development like preservation of communities or the natural world are seen as backward hindrance to growth and globalization. Marglin's barn raising provides an example. Property insurance did not exist until the 17th century, but who today would want to be without it? If you pay an annual premium for your barn and your barn burns down, the insurance company pays strangers to rebuild it. While perhaps more efficient (or not) than gathering neighbors for a barn raising, in earlier times this was done. Responding to need, gathering those neighbors and building the barn strengthened interdependence and community. It is only when we focus on barns, says Marglin, rather than the people raising them that insurance appears a more effective means of coping with disaster.

Marglin owes some credit to Karl Polanyi for breaking the ice on this question, but Marglin provides a more complete argument with 70 years of added experience since Karl wrote his socialist manifesto, The Great Transformation. In that book Karl argued that societies are now subservient to economies, not the other way round as they had been. In Dismal, Marglin argues similarly that markets are now superior to communities. Again, in one of those great historical ironies, we hear the echo of Karl's' brother Michael Polanyi (and Frederick Hayek's mentor, author of that great capitalist manifesto, Road To Serfdom) in Marglin's defense of community and tradition as not "anything goes". Occasionally dense with economist lingo (after all, he's also writing to economists), hang in there, the reward is very worth the effort, offering a fresh, experienced perspective to this latest creation of the Anthropocene (and but for human population, probably its most powerful force).