We need to go beyond self-interest or we’re doomed: Jean Drèze

Nice interview of Jean Dreze. Kudos to G-Sampath of Hindu for asking pertinent questions.

Here is a sampler:

In general, economists are a part of the problem and not the solution. Would you agree?

Well, economics can be a very useful discipline if studied critically. But if you are not critical, then it can become toxic. If you take economic models at face value, you could end up being in a world of your own.

But even as a discipline, economics seems biased against the poor.

It’s not just economics. In many disciplines, if you look at the history of ideas, it is essentially ideas that are convenient for the privileged and the powerful that tend to flourish; they are the ones that get sponsored, the ones around which conferences are organised, and so on. In contrast, ideas that are deemed threatening to the established order tend to be sidelined.

Can you give an example?

Take the idea that competition is good not only for economic efficiency but also for social welfare. This is questionable even in terms of mainstream economic analysis. But the way it is taught is that, except in cases of asymmetric information or other market failures, there is general compatibility between competition and social welfare. On the other hand, ideas about the value of cooperation, which are equally important, have not been developed much. Another example is the concept of exploitation. We do not learn anything about it, and it is not even a word we use in economics courses. How can you understand the labour market in India, or the Indian economy without thinking about exploitation? Economic ideas like asymmetric information could help, but somehow they tend to be used for other purposes.

Isn’t ‘exploitation’ a ‘Marxist concept? Maybe that’s why it’s not in mainstream economics?

It’s not a Marxist concept, it’s a common sense concept. But it is perhaps seen as something that doesn’t belong in the discipline. We do have a conceptual tool to think about exploitation — the whole literature on asymmetric information. But this is just a big term to describe something as simple as, “I know something that you don’t, and I wont tell you.” In effect, this is just lying, but we don’t call it lying.

So if economics does have a conceptual tool to study exploitation, where is the problem?

The problem is in how it is used. If you look at the literature on asymmetric information, it started focussing very quickly on the concerns of the privileged, primarily the employers, the lenders — what if the labourer does not do the work he is supposed to do, what if the borrower does not repay, and so on. The whole thing started being looked at not from the point of view of the exploited but from the point of view of the exploiter. So, by this process of selection of ideas, we end up losing sight of a lot of things that are extremely important, such as exploitation, cooperation, class, caste. That’s why economists can end up, despite all their skills and brilliance, as not very reliable advisers on matters of social policy.

Much more in the interview..


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