Pity the poor economists. No one loves them. Most are decent enough as individuals, but their theories are abominable: a mix of naivety and cynicism decked out in algebra. This perversion of thought is tolerated only because of its alleged utility. And after the crisis of 2008, even that excuse has worn thin.
I Spend, Therefore I Am is a splendid denunciation of the dismal science in the grand tradition of Dickens and Carlyle. Not only does economics embody a false image of man, claims Philip Roscoe; it remakes him according to that false image. It “brings into being the agent about whom it theorizes: self-interested, calculative and even dishonest”. It has recast each of us as an “entrepreneur of the self”.
How does an abstruse academic discipline exert such extraordinary transformational powers? Two mechanisms are central to Roscoe’s account. The first is the incentive. Economists treat all human behavior as responsive to monetary costs and benefits. “The typical economist believes the world has not yet invented a problem that he cannot fix if given a free hand to design the proper incentive scheme,” write Steven D Levitt and Stephen J Dubner, authors of the bestselling Freakonomics. Roscoe agrees and argues that incentives have been disastrously influential, not least in justifying bankers’ bonuses. The trouble with monetary incentives is not that they don’t work – often they do, at least in the short term – but that they “crowd out” other, nobler sources of motivation: professional pride, institutional loyalty and public spirit. They bring into being the kind of person they presuppose, shrewd and mercenary. As popular wisdom has always known, if you treat people like knaves they will behave like knaves.
The other villain of Roscoe’s story is measurement. Scoring systems now exist for everything under the sun, including quality of life, intellectual achievement, sex appeal and other such intangibles. Embedded in governmental and corporate software, these systems shape the very conduct they claim to measure. Give academics “citation scores” and sure enough, they will churn out dreary articles for other academics. Rate hospitals on “patient turnover” and lo and behold, they will turn patients over with indecent haste. A measure is a dangerous tool, for it tends to take the place of whatever it measures. The thing itself – talent, health – disappears behind a numerical proxy. This is why Aristotle famously warned his pupils not to seek for more precision in a subject than its nature permits.
I Spend, Therefore I Am is a fine book, on the side of the angels, which makes its occasional lapses all the more frustrating. Roscoe credits “economics” with an extraordinary influence; in places, he seems to use it as a shorthand for everything wrong with the modern world. For instance, he describes Allie, the happy prostitute from SuperFreakonomics, as “thinking like an economist”. Why? Because she raised her prices to deter clients. But that isn’t economics, just elementary business sense. (Besides, it didn’t work – “demand appeared to be price insensitive”.)
One of Roscoe’s main targets is online dating. He paints it as a huge barter market, in which men and women sell themselves like so many second-hand cars. The logic of the search engine reduces concrete human beings to bundles of attributes: tall, dark-haired, Jewish etc. But this dystopic picture is based solely on a survey of the sites themselves, not on the experience of their users. Had Roscoe interviewed some of these, he might have found that they take the mechanics of the business with a pinch of salt. They know that the bundle of attributes conceals a human being. The only statistics quoted by Roscoe suggest that relationships contracted online do slightly better than their offline counterparts. There may be other reasons for this: users of internet dating sites tend to be better educated than average. But it hardly bears out the nightmare vision of “technically mediated, coldhearted rationality” intruding into “the most private, personal spaces of our lives and bodies”.
The commercialization of universities is another of Roscoe’s targets. According to him, today’s students view education as “a set of targets, of boxes to tick”, their task being simply to “consume and regurgitate predigested chunks of knowledge”. No evidence is offered for this standard common-room grumble. It looks like a straight deduction from sociological theory – the same sort of lazy a priori reasoning that Roscoe denounces in economics. My own experience of teaching at a British university is that rising fees have hardly altered student attitudes to education. Most treat it as a pathway to a degree and job. Some fall in love with it. It has always been thus.
Many of the vices that Roscoe lays at the door of economics are simply aspects of the rationalism inherent in modern bureaucracy. Large organisations with tight budget constraints have no choice but to weigh the costs and benefits of alternative courses of action. The NHS, for instance, uses the QALY, or “quality adjusted life year”, to decide which treatments to continue and which to abandon. These are ugly calculations. They offend against the Kantian principle of the absolute dignity of the individual human life. But what choice is there? Were each patient to be treated according to his or her wishes, we would all be bankrupt. Economist Thomas Schelling has urged us to “cut the Kant”. In private we believe in pricelessness, but when it comes to public policy we need to make trade-offs and to make them consistently, not according to the whim of individuals. This has nothing especially to do with economics. It is just the logic of the modern world.
• Edward Skidelsky is the co-author of How Much Is Enough?: Money and the Good Life.
guardian.co.uk © Guardian News & Media Limited 2010