PRESIDENTIAL ADDRESSPRESIDENTIAL ADDRESSApril, 2004April, 2004

HOW DOES ECONOMICS FIT HOW DOES ECONOMICS FIT THE SOCIAL WORLD?THE SOCIAL WORLD?

David R. Harvey, David R. Harvey, School of Agriculture, School of Agriculture, Food & Rural DevelopmentFood & Rural DevelopmentUniversity of Newcastle upon TyneUniversity of Newcastle upon Tyne

OUTLINE

What’s the Problem?

What does Economics do?

So, how should we do Social Science?

Reconsidering Government & Governance

Illustrations from RELU

– The food chain

– Multifunctional agriculture.

Conclusions.

THE PROBLEM (1)The decline & fall of economics

Falling student numbers & courses Falling numbers of post-graduate students Applied research opportunities either too pedestrian

or too complex for rigour (& publications) Rigour ≠ Relevance Management = the future? But the science?

ECONOMICS RULES OK?

OR ECONOMICS IS MARGINAL?

THE PROBLEM (2): What’s the use of Economics?

“When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals. …. All kinds of social customs and economic practices, … which we now maintain at all costs however distasteful and unjust they may be in themselves, because they are tremendously useful in promoting accumulation of capital, we shall be free, at last to discard.”

(Keynes, 1947)

-> As people become richer, so the intellectual and phenomenal appeal of simple economics will diminish.

Economics is marginalised,

ironic for a subject which relies on marginal conditions

WHAT DOES ECONOMICS DO?

WHAT DOES ECONOMICS DO?

WHAT DOES ECONOMICS DO?

WHAT DOES ECONOMICS DO?

WHAT DOES ECONOMICS DO?

WHAT DOES ECONOMICS DO?

HOW TO DO SOCIAL SCIENCE? “Postmodernism is the antithesis of the Anglo-American

analytical thesis. Out of the resulting dialectical synthesis, however, an enriched new philosophy of science could emerge” (Tweeten & Zulaf, 1999)

“There remains a common theme for a science of human society, and that while much progress has been made in developing its various facets and aspects, it is still important to try and tie the parts together - not in search of a ‘world formula’ but to make sense of the social habitat in which we live, have lived and are likely to live”. Dahrendof, 1995

Social Science must believe there to be underlying patterns to social behaviour -

so what might the synthesis or common theme look like?

NATURE OF SOCIAL TRUTH?Philosophers have four major definitions & associated

criteria: VERACITY - confirmed by facts/experiment -

CORRESPONDENCE (CONSISTENCY) VALIDITY - confirmed by rules of logic - COHERENCE VALUE - confirmed by faith - PERFORMATIVE/PRAGMATIC

as good or bad VERNACULAR - confirmed by habit & experience -

EXPEDIENT, as right or wrong (in current contexts)

Social Science Methodological Quarrels are essentially between these four dimensions of “truth”:

Positivists (Quantitative) concerned with Veracity and Validity - CLASSICAL SCIENCE - epistemology & ontology

Relativists (Qualitative) concerned with Values and Vernaculars - POSTMODERN SCIENCE - ethics & morals

THE REAL WORLD? WHERE DOES OUR DATA COME FROM?WHERE DOES OUR DATA COME FROM?

We generate it through our behavioursWe generate it through our behaviours Which are ultimately founded on:Which are ultimately founded on:

– RulesRules (our given outside determinants (g.o.ds)) - as (our given outside determinants (g.o.ds)) - as consistent with our societies (validity)consistent with our societies (validity)

– ReasonReason - as intelligibly coherent (veracity) - as intelligibly coherent (veracity)– FaithFaith (our personal beliefs and values)- as worthwhile (our personal beliefs and values)- as worthwhile

(value)(value) Or are essentiallyOr are essentially Habitual Habitual - vernacular (to be ultimately - vernacular (to be ultimately

discarded or adapted if fundamentally at odds with discarded or adapted if fundamentally at odds with rulesrules, , reasonreason or or faithfaith))

How do we behave (1)?We communicate and We communicate and

interact as social animals interact as social animals on the basis of our hearts on the basis of our hearts and minds and our trust in and minds and our trust in our neighbours & friendsour neighbours & friends

& we generate social & we generate social (informal) contracts, (informal) contracts, networks, shared networks, shared understandings &trust as a understandings &trust as a resultresult

By common CONSENTBy common CONSENT

How do we behave (2)?We club together to agree We club together to agree

social rules and rulers, social rules and rulers, and generate ‘ocracies and generate ‘ocracies (autocracy, plutocracy, (autocracy, plutocracy, bureaucracy, theocracy bureaucracy, theocracy and (finally?) and (finally?) democracy (with faith, democracy (with faith, rules and reason rules and reason adjusted to fit)adjusted to fit)

By (political) By (political) CONVENTIONCONVENTION

How do we behave (3)?We then need the force of We then need the force of

Law, to enforce and Law, to enforce and police at least some of our police at least some of our social contracts and social contracts and behavioursbehaviours

By COERCION (the By COERCION (the fundamental property of fundamental property of the state)the state)

How do we behave (4)?And, of course, we And, of course, we

specialise & trade, and specialise & trade, and practice economicspractice economics

Resulting in a system of Resulting in a system of CONTRACTCONTRACT

SO WHAT?FOUR MAJOR FOUR MAJOR TRANSACTIONS TRANSACTIONS SYSTEMS:SYSTEMS:•CONSENTCONSENT•COERCIONCOERCION•CONVENTIONCONVENTION•CONTRACTCONTRACTInteract to generate Interact to generate our social systems our social systems and phenomenaand phenomena

SO WHAT?FOUR MAJOR FOUR MAJOR TRANSACTIONS TRANSACTIONS SYSTEMS:SYSTEMS:•CONSENTCONSENT•COERCIONCOERCION•CONVENTIONCONVENTION•CONTRACTCONTRACTInteract to generate Interact to generate our social systems our social systems and phenomenaand phenomena

Which is not so Which is not so fantastic: Boulding fantastic: Boulding and others have and others have been here before, been here before, by a different route.by a different route.

SO WHAT?FOUR MAJOR FOUR MAJOR TRANSACTIONS TRANSACTIONS SYSTEMS:SYSTEMS:•CONSENTCONSENT•COERCIONCOERCION•CONVENTIONCONVENTION•CONTRACTCONTRACTInteract to generate Interact to generate our social systems our social systems and phenomenaand phenomena

Which generates our Which generates our socially constructed socially constructed truths - our observable truths - our observable social worlds - OUR social worlds - OUR GROUND TRUTHSGROUND TRUTHS

SO WHAT?Our Ground Truths Our Ground Truths are socially are socially constructed.constructed.

•EXCEPT:EXCEPT: •Here is a structure, a metaphysic, to ‘explain’ the conditionHere is a structure, a metaphysic, to ‘explain’ the condition

Re-orient, if faith is Re-orient, if faith is not your apex.not your apex.It all depends on It all depends on circumstance, circumstance, context, character and context, character and culture.culture.Give them any spin Give them any spin you like, if you can you like, if you can get away with it.get away with it.Just what the post-Just what the post-modern story says.modern story says.

HOW DOES THIS HELP?Social Behaviour needs to reconcile privateSocial Behaviour needs to reconcile private

HOW DOES THIS HELP?Social Behaviour needs to reconcile privateSocial Behaviour needs to reconcile private and public livesand public lives

HOW DOES THIS HELP?Social Behaviour needs to reconcile private and public lives:Social Behaviour needs to reconcile private and public lives:With Economics being very distinctly limited in its scope.With Economics being very distinctly limited in its scope.

HOW DOES THIS HELP?Social Behaviour needs to reconcile private and public lives:Social Behaviour needs to reconcile private and public lives:With Economics being very distinctly limited in its scope.With Economics being very distinctly limited in its scope.

HOW DOES THIS HELP?Social Behaviour needs to reconcile private and public lives:Social Behaviour needs to reconcile private and public lives:With Economics being very distinctly limited in its scope.With Economics being very distinctly limited in its scope.

HOW DOES THIS HELP?Social Behaviour needs to reconcile private and public lives:Social Behaviour needs to reconcile private and public lives:With Economics being very distinctly limited in its scope.With Economics being very distinctly limited in its scope.

HOW DOES THIS HELP?Social Behaviour needs to reconcile private and public lives:Social Behaviour needs to reconcile private and public lives:BUT some major institutions are MISSING:BUT some major institutions are MISSING:

E.g. Management & MarketingKay’s Kay’s Corporate SuccessCorporate Success depends on: depends on:

• Competitive Advantage of products: Competitive Advantage of products: rare, inimitable, non-substitutable, valuable

• Distinctive Capabilities of supply chainDistinctive Capabilities of supply chain• Strategic assets (patents, raw materials etc.)Strategic assets (patents, raw materials etc.)• Architecture - Charity?Architecture - Charity?• Reputation - Commitment & Care?Reputation - Commitment & Care?• Innovative Capacity - Curiosity?Innovative Capacity - Curiosity?• Corporate Success depends on harnessing these Corporate Success depends on harnessing these

elements into coherent and sustainable whole.elements into coherent and sustainable whole.

e.g. - the food chain (1)• Producers Strategic Asset: Location = OriginalityProducers Strategic Asset: Location = Originality• But requires: Innovation; Architecture; ReputationBut requires: Innovation; Architecture; Reputation

e.g. - the food chain (2)• But, what about the power of the supermarkets, But, what about the power of the supermarkets,

especially under free-trade?especially under free-trade?• Differentiation in food sector = speciality & Differentiation in food sector = speciality &

bespoke service - not a supermarketbespoke service - not a supermarket• But a Super Market - franchised store space to craft But a Super Market - franchised store space to craft

local/specialist producer-retailer chains, with home local/specialist producer-retailer chains, with home cooking services?cooking services?

• Using the surviving distinctive capabilities of the Using the surviving distinctive capabilities of the supermarket - logistics, data accumulation & supermarket - logistics, data accumulation & management, billing & inventory control?management, billing & inventory control?

• Why not?Why not?

e.g. - CARE and Multi-functionality• [CARE - Conservation,Amenity, Recreation, Environment]

• Care markets incomplete• Care products & services originally specific• Care markets do NOT fail - they work• Problem is organisation & exchange of information

between providers and users/enjoyers• Can bureaucracy & central control solve these

problems?• Only if you believe in central planning• Why not use Charitable Trusts?

CONCLUSIONS Economics is important, Economics is important, But primitive - survival of the fittest - and we don’t tell it well.But primitive - survival of the fittest - and we don’t tell it well. And we decide, through our remaining transaction systems, And we decide, through our remaining transaction systems,

what counts as socially responsible rather than simply what counts as socially responsible rather than simply commercially viable.commercially viable.

We need an integrating framework (Dahrendorf’s more We need an integrating framework (Dahrendorf’s more common story) for our social sciences.common story) for our social sciences.

This is mine. This is mine.

WE SHOULD DROP THE AGRI FROM OUR TITLEWE SHOULD DROP THE AGRI FROM OUR TITLE

AND PRACTICE CULTURAL ECONOMYAND PRACTICE CULTURAL ECONOMY If you have a better story or framework, please tell me.If you have a better story or framework, please tell me.

OVER TO YOUOVER TO YOU