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Review of Social Economy
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Thinking Like an Economist:
The Neoliberal Politics of the
Economics Textbook
Peter-Wim Zuidhofa a
Department of European Studies, University of Amsterdam, Spuistraat 134, 1012 VB, Amsterdam, The Netherlands
Published online: 10 Jan 2014.
To cite this article: Peter-Wim Zuidhof (2014) Thinking Like an Economist: The
Neoliberal Politics of the Economics Textbook, Review of Social Economy, 72:2, 157-185,
DOI: 10.1080/00346764.2013.872952
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Thinking Like an Economist: The Neoliberal
Politics of the Economics Textbook
Peter-Wim Zuidhof
Department of European Studies, University of Amsterdam,
Spuistraat 134, 1012 VB Amsterdam, The Netherlands
Abstract This article surveys 10 introductory economics textbooks to examine whether and how economics contributed to the rise of neoliberalism. It defines neoliberalism as a political rationality characterized by market constructivism. In contrast with conventional liberal approaches that view limited government as legitimized by the failure of naturalist markets, neoliberalism constructs the market as norm and means of government. Economics textbooks overall have a liberal outlook, as exemplified by Samuelson’s classic, however, with three liberal subgenres: the imperfect market view, the free market view, and an institutionalist view. While the introductory textbook cannot be construed as an instruction manual for neoliberalism, the article nevertheless identifies two important neoliberal moments: the discussion of market-based forms of government and the rise of a new genre of principles textbook that urges students to “think like an economist.” The article concludes with novel insights on how economics may have contributed to the spread of neoliberalism.
Keywords: introductory economics textbook, neoliberalism, liberalism, market-based government, thinking like an economist
JEL Classification: A11, A13, A22, B20
INTRODUCTION
About being a textbook author, Paul Samuelson once famously remarked: “I don’t care who writes a nation’s laws—or crafts its advanced treaties—if I can write its economic textbooks” (1990: ix).1 The question of the political power of
q2014 The Association for Social Economics
1 The full quote runs: “Some sage, it may have been I, declared in similar vein: ‘I don’t care who writes a nation’s laws – or crafts its advanced treaties – if I can write its economic textbooks’” (Samuelson1990: ix). As Colander and Landreth (1996: 28, n. 41) noted, Samuelson was most likely quoting himself, since in 1986 he stated: “Let those who will write the nation’s laws if I can write its textbooks” (Samuelson quoted in Breit and Spencer1986: 68). Samuelson’s statement has been cited widely, also by Mankiw (1997) in the preface to his textbook, by Sylvia Nasar (1995) in aNew York Times article on economics textbooks, and resurfaced in many obituaries after Samuelson passed away.
Vol. 72, No. 2, 157–185,http://dx.doi.org/10.1080/00346764.2013.872952
economics and its textbooks is generally approached either in terms of the supposed ideological biases of economics textbooks (Cherry1985; Feiner1993; Heath 1994; Watts 1987) or how economics affects the views of its students (Allgoodet al.2012; Franket al.1996; O’Roark2012; Walstad1997). Samuelson may have sensed, however, that economics textbooks have a subtler political purchase because they teach a distinct way of thinking about political problems. Rather than offering more or less overt political claims or politically motivated policy advice, already the textbook’s scientific account of the economy transmits a distinct political rationality, that is, a certain way of reasoning about and legitimizing political action. The purpose of this article is to examine what political rationality economics textbooks impress on their students.
In studying the political rationality conveyed by the economics textbook, this article seeks to answer a specific question, however. It is frequently suggested that the discipline of economics has been important for the proliferation of neoliberalism and a neoliberal political rationality (Harvey2005: 20; Lapavitsas
2005: 30; Mosini 2012: 1; Steger and Roy 2010: 2). Fullbrook (2007), for instance, directly relates the dominance of neoclassical economics to the ascendance of neoliberalism. While there are important theoretical and historical arguments to complicate such wholesale claims (viz. Backhouse2009; Bockman
2011; Mirowski 2013; Mirowski and Plehwe2009; Peck2010), in the popular imagination economics continues to be viewed as the science of neoliberalism. This article therefore sets out to study whether and how economics, by way of its textbooks, may have contributed to the popularization of neoliberalism.
Neoliberalism is, however, a notoriously elusive label. First, neoliberalism is used to refer to a disparate set of policy ideas. It acts as a container term that alternately refers to the replacement of Keynesianism by an amalgam of monetarist, supply-side, or free market economics; the so-called Washington Consensus; liberalization, deregulation, and privatization policies; the rollback of the welfare state; and the rollout of a variety of market-based policies. It remains unclear what unites this disparate set of policies, other than a general appeal to the slogan, more markets, less state. Second, it is difficult to see how neoliberal calls for more markets and less state are different from traditional liberal perspectives such as economic liberalism, classical liberalism, and libertarianism. Before we can assess its prevalence in the textbook, we need a more precise account of what is meant by neoliberalism, and especially its differences with traditional liberal views. In the next section I offer an account of what distinguishes the political rationality of neoliberalism, making use of Foucault’s work on neoliberalism and liberalism. This way, studying neoliberalism in the economics textbook contributes to a better understanding of this elusive political program.
The reason to turn to the economics textbook to study economics’ contribution to neoliberalism is twofold and derives from the peculiar function of the textbook. First, the textbook is an important device for making economic knowledge public. It is estimated that in the USA alone, each year between 1 and 1.5 million undergraduate students take an introductory course in economics and that about 750,000 new textbooks are sold annually (Maier 2003). While one need not have any illusions about how much students actually retain from their introductory course, textbook accounts are also what journalists, commentators, policy advisors, economists, and noneconomists alike tend to draw on when having to explain economics in public (Gordon 1994). The textbook may hence offer a proxy for assessing the impact of economics on the public mind. Second, the textbook is a relevant source because of how it presents economics. It is often argued that the textbook maintains a somewhat troubled relationship with economics (Colander 2005) because it simplifies or sanitizes economics, and is often accused of misrepresenting it (Colander1995; Ferguson2011; Hill and Myatt2007; Mrozek1999). It may instead be helpful to think of the textbook not as a literal representation of the discipline but as an idealized self-image or self-portrait.2Considering that textbooks are authored by economists and assigned by their peers, the textbook is how economics self-consciously introduces itself. As a public self-image of the discipline then, the textbook presents a fruitful site for studying what type of political rationality economics helps advance.
This article reviews 10 introductory economics textbooks. Besides the classic text by Samuelson (now together with Nordhaus) and the contemporary market leading text by Mankiw, a selection has been made of textbooks with a view of both representativeness and political diversity.3 A full list is printed with the references. Mankiw, when asked about his motivation to enter the business of textbook writing, somewhat jokingly suggested besides it being lucrative—he got a $1.4 million advance—that “economists are proselytizers” (quoted in Nasar
1995). Our question is then: could economics textbooks have been making any converts for neoliberalism, and if so, how?
2 This characterization was suggested by Arjo Klamer as reported by Seiz (1990).
3 It is notoriously difficult to obtain exact sales figures for textbooks. Mankiw is the market leader, who together
with McConnell, Brue, and Flynn serves 40% of the market (Lopus and Paringer2012). Although far from
representative, a quick scan of sales rankings on amazon.com (last accessed on May 28, 2012) confirms that Mankiw (2008, rank #8,433) can be considered the market leader, followed by McConnell, Brue, and Flynn (2011, #11,155), who advertise their text as “the world’s best-selling college economics textbook.” A relatively new text by Krugman and Wells (2009, #32,895) ranks third, followed by Baumol and Blinder (2008, #89,952), Heyne, Boettke, and Prychitko (2009, #121,745), Gwartney, Stroup, MacPherson, and Sobel (2010, #126,534), Frank and Bernanke (2012, #135,836), Samuelson and Nordhaus (2009, #177,435), Colander (2009, #258,365), and Stiglitz and Walsh (2006, #587,325).
THE POLITICAL RATIONALITY OF NEOLIBERALISM
Neoliberalism has been a confusing label. Despite a growing literature on the history, policies, and ideological underpinnings of neoliberalism (Burgin 2012; Jones 2012; Mirowski 2009; Mirowski2013; Mudge 2008; Peck 2010; Turner
2008), it is difficult to come by a convincing definition. Most settle on an account of neoliberalism as advocating some radical version of more markets, and less state, referring to deregulation, liberalization, and the retreat of the state for instance (e.g., Harvey2005: 2). The central problem of such accounts, however, is that it is impossible to see how neoliberalism is different from traditional accounts of economic or classical liberalism that also view the market as ideal of liberty and advocate a limited role for government (Mack and Gaus2004; Ryan1993). What makes neoliberalism in any way new or different that it deserves a new label?
Given these strictures, I venture an alternative interpretation of neoliberalism, proposing that it amounts to a distinct political rationality (cf. Brown2003). In my view, neoliberalism is a useful term to describe a novel kind of market politics that departs from how the political standing of markets has traditionally been conceived. The more market, less state definitions often overlook how today markets are sometimes used in ways that extend beyond conventional approaches toward the politics of markets. Where traditionally political questions focus on whether or not to limit existing markets, one increasingly encounters situations in which markets and market-like solutions are applied to areas that were previously not governed by markets. Earlier the politics of markets was discussed in terms of questions about whether markets for goods, labor, and capital lead to efficient and just outcomes and to what extent limits should be put, for instance, on markets for the provision of housing, health care, public utilities, or financial services. Now, however, a new set of questions has emerged asking whether and how market solutions and market-based government may be applied to novel policy areas ranging from health care, environmental policy, to housing and unemployment policy. Other than well-known policy measures such as privatization and liberalization, one could think of the contracting out of government services, the introduction of school vouchers or tradable emission permits, various sorts of incentive schemes for regulation, policy methods associated with public choice and new public management for instance, and even the institution of terrorism futures markets, or using the image of a marketplace of ideas for describing the free exchange of ideas. These examples are no longer just about politically limiting or delimiting existing markets, but have in common that they amount to the active construction of markets, both real and imagined, as a means of governing social affairs. And it is these constructivist uses of the market, sometimes referred to as market or economic imperialism, that I would argue set
neoliberalism apart from traditional liberal approaches to the market. At stake is a different political role of markets in the legitimization of government, where markets move from being objects of regulation, into models of government. Using liberalism then to denote the traditional political rationale of government as (de-)limiting existing markets, I propose to reserve the term neoliberalism to refer to a political logic that governs by constructing markets in domains hitherto not governed by market norms.
This interpretation of neoliberalism is inspired by Foucault’s (2007, 2008) lectures at the Colle`ge de France in 1978 and 1979, which present neoliberalism as agovernmentalitythat departs from earlier, liberal modes of thinking about and practicing government (for useful introductions see Brown2003; Lemke 2001; Tribe2009). A liberal governmentality broadly stands for a way of thinking about the rationale of government that respects the autonomy of markets and consequently advocates forms of limited government. Mostly drawing on readings from the history of economics, Foucault traces how modern notions of the market inspired a decisively liberal rationality of government. This liberal rationality of government can be summarized using three characteristics. First of all, it is defined by anaturalist viewof the market. It stands for the idea that the market has a nature of its own, has its own laws and mechanisms, and constitutes an autonomous reality which left to its own has the capability to provide for the well-being of its people. Because of its very nature, the market functions as a standard of truth for the practices of liberal government. The naturalist market reveals when one governs too much, and when too little. Second, liberalism views government in terms of the joint principles oflaissez-faireandlimited government. While not per se new, Foucault shows that the liberal principles of laissez-faire and limited government are a corollary of the naturalism of the market. The liberal rationality of government is thus predicated on the naturalist market, which one must respect to provide for the needs of society, and in which one only intervenes when it fails to do so. In the liberal view of government, the naturalist market simultaneously forms the object of government as well as its limit. Third, the naturalist view of the market and the liberal view of government entail a particular view of the role of economics. With the market as a standard of truth for liberal government, economics can be conceived as studying and criticizing the practices of government. Economics hence functions as a permanentcritique of governmental reason.
Foucault next shows how in the twentieth century, the liberal governmentality and its naturalist view of the market appears to have undergone radical transformation, giving rise to neoliberal rationalities of government. Foucault discusses German ordoliberalism and some work of members of the Chicago School to show how in either tradition the political rationality of liberalism is
subverted and gives way to a neoliberal perspective on government.4The central claim of ordoliberalism is that markets, in order to be competitive and have the beneficial outcomes that we know from economic theory, require active ordering by the state. Ordoliberalism is skeptical about the spontaneous natural order of the market, and is rather marked by an antinaturalist and constructivist view of markets (Lemke 2001: 196). By emphasizing Ordnungspolitik (order-based policy) and economic constitutionalism for instance, ordoliberals ascribe a fundamental role to government for ordering markets and competition (Gerber
1994). This antinaturalist and constructivist view puts the liberal rationality of government on its head. Instead of governing markets because they are perceived to fail, ordoliberals govern to construct and order markets. With government made subservient to the market, ordoliberalism hence offers a different, neoliberal way of legitimizing government: one in which the market is no longer the object and limit of government, but is raised into a norm for government.5
An even more radical type of neoliberal reasoning Foucault finds with Chicago economists and is illustrated by Schultz’ and Becker’s theories of human capital and the latter’s theory of crime. The defining characteristic of American neoliberalism, as Foucault calls it, is its universal extension or generalization of the market model to practically all domains of social life. By conceiving of labor and crime in economic terms, nonnaturalist markets are constructed—at least imaginarily—that were previously not perceived as such. Conceiving of crime as an economic phenomenon, for instance, is not merely an academic exercise, but implies different, market-like ways of governing it. In Foucault’s reading, American neoliberals have turned the market into a universal “principle of intelligibility” (2008: 243), making it a universal touchstone for governmental action. Unlike liberalism then, where the market functions as a natural limit and critique of governmental practice, American neoliberalism also turns the market into a norm for government action, dictating market-like forms of government.
In contrast to liberal rationalities of government, neoliberalism can be summarized using the following three characteristics. First, in neoliberalism the naturalist view of the market is replaced with a constructivist viewof markets. Although very different in their reasoning and political orientation, German and American neoliberalism both depart from the naturalist conception of liberalism
4 For an excellent account of Foucault’s sources for his claims about German and American neoliberalism, see Tribe (2009).
5 In postwar Germany according to Foucault, the inverted neoliberal governmental logic of ordoliberalism provided an expedient answer to the reigning skepticism of the state after Nazism, as it offered a neutral way of legitimizing the state. Foucault refers to a speech by Ludwig Erhard, Director of the Bi-zonal Economic Council who had close affinities with the ordoliberals in 1948: “We must free the economy from state controls . . . only a state that establishes both the freedom and responsibility of the citizens can legitimately speak in the name of the people” (quoted in Foucault2008: 80 – 81).
and share a constructivist view of the market. The market constructivism of German neoliberalism creates a vertical reversal of the hierarchy between market and government, while in American neoliberalism it results in a horizontal extension of market-like government. Second, as a consequence of the constructivist view, the market is raised into both anorm and means of government. The principle idea of neoliberal government is that social problems are best governed by creating markets or market-like institutions. Unlike in liberalism where the potential failure of markets provides the rationale of government, in neoliberalism the market becomes the rationale itself of government with markets being both norm for and preferred mode of government. Third, as the examples of ordoliberalism and Chicago economics illustrate, economics continues to function as a critique of governmental reason. However, instead of using its knowledge of the naturalist market for pointing at the limits of governmental practice, in neoliberalism, economic knowledge increasingly servesas counsel to governmental reasonby thinking up ways in which markets may be used as norms for and means of government. It shifts the task of economics to demonstrating how governmental practice could benefit from enlisting the market for achieving its goals.
The lesson that can be learned from this cursory encounter with Foucault is that neoliberalism when viewed as governmentality amounts to a way of thinking about the rationale of government that is distinct from its liberal precursors. The key then to differentiating between liberal and neoliberal rationalities of government, I have been arguing, is whether a naturalist versus a constructivist view of markets is adopted and whether markets are put forward as either natural limits for government or as normative constructs. One of the reasons why neoliberalism has remained a fairly elusive label is that its constructivist approach to markets has hardly been acknowledged. With this distinction in hand, we can turn to the economics textbook and ask whether it is transmitting liberal or neoliberal rationalities of government. In the context of this article, the terms liberalism and neoliberalism are used in a very broad sense to denote two contrasting ways of explaining the rationale of government. As such they do not refer to specific political ideologies or doctrines, such as classical liberalism, or what “liberalism” means in the USA today. Rather as governmentalities and generic ways of understanding the rationality of government, the analysis below will make clear that as governmenalities they in fact encompass a variety of forms of liberalism and neoliberalism.
THE SAMUELSONIAN TEXTBOOK: A CLASSIC TEXT OF A LIBERAL GOVERNMENTALITY
Any assessment of the political nature of the economic textbook has to begin with Samuelson’s Economics. First published in 1948, Samuelson’s textbook is
universally believed to have set the standard for the genre (Elzinga 1992; Gottesmanet al.2005; Skousen1997). Translated into more than 40 languages, it was coauthored by William Nordhaus from the 12th edition in 1985 until the last edition (19th), which was published just before Samuelson passed away. Samuelson’s had been the best-selling title on the market until 1975, when it lost the lead to McConnell (Elzinga1992) and later Mankiw (Maier2003). While the importance of Samuelson’s textbook, together with its success, is often attributed to its contribution to popularizing and homogenizing a Keynesian version of economics (Skousen1997), or for shoring up the scientific standing of economics (Klamer 1990), I would argue it has been equally important for inserting a characteristically liberal political rationality.
When considering the political rationality of Samuelson’s textbook, one is immediately struck by its governmental orientation. It can be gleaned from the introductory chapters that precede the parts on micro- and macroeconomics, which are typically used to frame the discipline. While Samuelson devotes some attention to methodological issues that help to define economics as a scientific discipline (e.g., the distinction between positive and normative statements), the introductory chapters primarily frame economics as concerned with the issue of how to govern society. The first chapter opens in a clear governmental vain by stating that “economics is the study of how societies use scarce resources to produce valuable commodities and distribute them among different people” (SN: 4) and that “the ultimate goal of economic science is to improve the living conditions of people in their everyday lives” (SN: 6). Economics is essentially interested in governmental questions about managing the well-being of a population:
Society must find the right balance between the discipline of the market and the compassion of government social programs. By using cool heads to inform our warm hearts, economic science can do its part in ensuring a prosperous and just society. (SN: 7)
This framing of economics as not, in the first place, a hard social science but as a science of government is one of the lasting impacts of the Samuelsonian textbook. Samuelson’s is also the classic example of a textbook that imparts a liberal governmentality. The three general features of the liberal rationality of government outlined above are written all over it. First, of all textbooks surveyed, Samuelson most prominently conveys the naturalist view of the market. The chapters on the market are steeped in naturalist language and are rife with mechanical metaphors. So the market is described as a “mechanism,” that is governed by “laws” and consists of “forces” through which the “movement” of prices reaches a “balance” or “equilibrium”: “the market price is determined
where the forces of demand and supply are just in balance. It is the movement of prices—the price mechanism—which brings supply and demand into balance or equilibrium” (SN: 45 – 46). Underlining their naturalist view of the market, Samuelson and Nordhaus indicate that it is directly inspired by the natural sciences:
Adam Smith . . . glimpsed for the social world of economics what Isaac Newton recognized for the physical world of the heavens . . . he explained the self-regulating natural order by which the oil of self-interest lubricates the economic machinery in an almost miraculous fashion. (SN: 30).
Second, in the Samuelsonian text the naturalist market clearly features as part of a liberal account of laissez-faire and limited government. The following shows how the naturalist market functions both as limit and object of government:
An ideal market economy . . . squeezes the maximum benefits out of a society’s available resources without government intervention. In the real world . . . every market economy suffers from imperfections which lead to such ills as excessive pollution, unemployment, and extremes of wealth and poverty. For that reason, no government anywhere in the world, no matter how conservative, keeps its hands off the economy. In modern economies governments take on many tasks in response to the flaws in the market mechanism. (SN: 35)
Reiterating that the naturalist market limits government, it states that laissez-faire is the ideal method for taking care of the needs of society. At the same time, however, it claims that when markets fail, this constitutes a legitimate need for government intervention. As such, it is illustrative of the pivotal position of the naturalist market within liberal government, where the market is at once suggested as a limit to government, while at the same time offering a rationale for government intervention. Here one will immediately recognize thelogic of market failure, which is in fact the quintessence of a liberal governmental rationality. It presents the naturalist market as a litmus test for liberal government. While on the one hand markets are the natural limit of government, when breaking down however, they constitute a genuine rationale for government action.
Third, it is also clear that Samuelson’s textbook portrays economics as a critique of governmental reason. As the framing of the textbook already showed, the primary task of economics is to offer an economic critique of government. Regarding political questions, it is claimed that these are normative questions about which economics has no say, except that “economics can offer some insights into the efficiency of different government policies that affect the distribution of income and consumption” (SN: 162). It thus confirms that
economics is lateral to politics. Rather than directly hawking political or policy advice, the political function of economics is to offer a scientific critique of government.
To conclude, Samuelson and Nordhaus’ textbook can be construed as a classic expression of a liberal governmentality. As the quote from the introduction attests, Samuelson indeed saw the political purpose of the economics textbook to teach students how to think about government. From page one, the student is put in a governmental seat, and through its naturalist account of the market is familiarized with an archetypally liberal, rationality of government. A hallmark of the classic liberal orientation then, the Samuelsonian textbook has as such left an indelible political mark on the textbook genre.
VARIETIES OF THE LIBERAL TEXTBOOK
The other textbooks surveyed evidently carry the marks of the liberal orientation found with Samuelson. One invariably encounters naturalistic accounts of the market and comparable liberal explanations of the role of government. While this is a sign of a universal liberal outlook, it is also instructive to record how other textbooks diverge from the classic Samuelsonian version of liberal government. As it turns out, by slightly modifying the naturalist market, they articulate interesting variations on the classic liberal textbook. If we zoom in on how the various textbooks construe the logic of market failure, three distinct varieties of the liberal governmentality come into view.
The Imperfect Markets Governmentality
The first notable deviation from the classic naturalist market view of Samuelson is found in textbooks that emphasize the imperfect nature of markets. Notable examples of theimperfect market vieware textbooks such as those by Stiglitz and Walsh (2006) or Frank and Bernanke (2004) that present an interesting twist to the archetypal liberal rationality of government. This subgenre is defined by a departure from the ideal of perfectly competitive markets, as Frank and Bernanke, for instance, state: “We now abandon Adam Smith’s frictionless world to investigate what happens when people and firms interact in markets plagued by a variety of imperfections” (FB: 219). Likewise, Stiglitz and Walsh claim that the basic competitive model does not provide an accurate account of markets: “Virtually all economists agree that the competitive model is not a perfect
representation of actual economies” (SW: 28) and promise to “show how this model can be extended to offer new insights into markets and situations that the basic competitive model cannot fully address” (SW: 28 – 29).
The imperfect market view relies on a naturalist view of the market, yet with a twist. When explaining the model of the competitive market, it is still done in naturalistic terms: “a major objective of economists is to understand the forces that determine prices” (SW: 53) and “when the market is out of equilibrium, there are predictable forces for change” (SW: 68). The innovation of the imperfect market view is that real-world markets hardly conform to the idealized natural market. This need not mean that the main insights of economics no longer apply: “the basic concepts of economics apply beyond the basic competitive model” (SW: 240). Explaining outcomes of real-world markets, however, requires that one accounts for the ubiquity of imperfections: “adding the complications of imperfect competition, imperfect information, externalities, and public goods to the basic model increases the ability to explain our economy” (SW: 242). The twist is that imperfections are just as much part of the market’s nature.
The imperfect market view has significant consequences for the liberal logic of market failure. First, the notion of imperfect markets practically displaces the idea of market failure. Frank and Bernanke, for instance, altogether avoid the language of market failure in favor of market imperfections. Subsumed by the more general idea of imperfect markets, the language of market failure appears redundant. As a consequence, market failure is no longer construed as a “failure” of perfect markets, but rather is considered an integral feature of real, imperfect markets. Market failure is less an anomaly but a normal state of affairs. Second, the “normalization” of market failure not just represents a semantic shift from market failure to market imperfections but alters the view of government too:
Before we can understand the role of government in the economy, we need to understand how the differences between modern economies and the world envisioned in our basic competitive model affect the ways markets work . . . These differences can help account for the important role that government plays in our economy. (SW: 239)
When imperfect rather than perfect markets are the norm, there is a natural place for government in the economy. In a world of imperfect markets, government intervention is no longer treated as a foreign or external intervention as was the case with market failure, but rather is seen as an integral part of the economy. Abandoning the language of “failure” moreover tones down its negative connotations. With less stress on repairing the market’s failings, in the imperfect market view government action is a natural corollary of imperfect markets. Since markets are by nature imperfect, the legitimacy of government involvement in the economy is therefore more natural too.
The import of the imperfect market view is hence not just its conception of markets, but especially its consequences for the role of government. With a
slightly altered view of the relation between markets and government then, the imperfect market view results in a modified version of the liberal governmentality. It represents the economy as an independent but imperfect zone of economic conduct that legitimizes permanent governmental involvement. There is a natural demand for any form of government involvement to restore efficient outcomes for society. While an important variation, the imperfect market view remains firmly rooted within a broader modern liberal governmentality and its naturalist market. Compared to the classic liberal outlook however, markets are met with less reverence and government with less suspicion, while one still perceives a liberal balancing act between the two. This way the imperfect market view illustrates that by employing alternative conceptions of the market, textbooks produce variations in political rationality, which nonetheless remain unmistakably liberal in kind. It furthermore indicates that political differences among textbooks do not come out in overt political or policy statements but derive in the first place from subtle differences in how they represent markets.
The Free Market Governmentality
A second group of textbooks stands out because of its free market inflection of the liberal governmentality and can be found with the public choice perspective of Ruffin and Gregory (2001), the Austrian orientation of Heyneet al.(2006), but also with Baumol and Blinder (2006). The defining feature of thefree market view
is an emphasis on noninterference with the market or letting the market “free.” It springs from a strong commitment to the naturalism of the market that is used as an argument for not interfering with it. Compared to other textbooks for instance, Baumol and Blinder, who are otherwise not known as free marketeers, are surprisingly abundant in portraying the market as a natural mechanism. A first effect of stressing the naturalism of the market is that it creates a binary opposition between the natural course of the market and the unnaturalness of interferences: “It is as if natural economic forces place a magnet at point E that attracts the market, just as gravity attracts a pendulum . . . if nothing interferes with them, experience shows that they normally move toward equilibrium” (BB: 63). The free market view thus creates a stark contrast between an “unfettered” (BB: 265) or “free market” (BB: 27) on the one hand, and artificial “interferences” (BB: 431) or “interventions” on the other. It is furthermore rife with a range of meddlesome terms, such as “tampering” (BB: 69), “restraining” (BB: 75) or “impede” (BB: 278). In stressing the market’s naturalism, intervention is made to look futile:
. . . attempts to repeal the laws of supply and demand usually backfire and sometimes
produce results virtually the opposite of those intended . . . such consequences of
interference with the price mechanism are no accident. They follow inevitably from the way in which free markets work. (BB: 5)
Using combat language moreover such as “battling the invisible hand: markets fight back” (BB: 75), a strong case is made that the naturalism of the market will defy any attempt at meddling with it.
The free market view’s forceful commitment to the naturalism of the market serves to articulate a strong version of a liberal governmental outlook that is more skeptical of government intervention. It therefore appears reluctant to embrace the logic of market failure. Baumol and Blinder shun the term market failure and prefer to speak of “the shortcomings of free markets” (BB: 307). A reason for this reluctance may be to forestall the liberal logic of market failure from automatically legitimizing government involvement. Ruffin and Gregory, for instance, are openly skeptical of the liberal logic of market failure—“market failures raise the question of whether government action is required to correct the failure of the market economy” (RG: 368)—as are Heyneet al.(HBP: 317). Its reluctance about the logic of market failure is further reinforced by voicing the alternative of Coasean private solutions (e.g., RG: 369 – 371; HBP: 293). In addition, the free market view flexes the logic of market failure back on government itself, by introducing the idea of government failure. Heyne et al.
raise the market’s naturalism to point out that well-meaning government action is plagued by similar limitations:
Good-intentioned people (including economists) oftenassumethat government officials will have the informationandthe incentive to improve real-world economic coordination problems. But there is the possibility that government policy might make matters worse. (HBP: 317)
In the free market view then, the naturalism of the market in fact performs a double role in limiting government: first to show that one should not tamper with the market, and second that, in case markets fail, governments may fail for the same reasons.
With its forceful application of the naturalism of the market, the free market version is arguably the starkest expression of a liberal governmentality. In contrast to the classic logic where government is seen as a remedy for market failure, and the imperfect market view where government is a natural accompaniment of imperfect markets, the free market view conceives of government first and foremost as a type of interference with the natural course of the market that is not just unwarranted, but also likely to be ineffective. By pushing the liberal idea to its limits, the free market view renders government
virtually futile and sees only a minimal role for government in setting the legal framework, regulation, provision of certain goods, levying taxes, and income redistribution (e.g.,BB: 32). Thus, exceptionally liberal in nature, the free market textbooks flex the naturalist market to impart a decidedly different political rationality.6
The Institutionalist Market Governmentality
A third variation on the Samuelsonian textbook offers in contrast a starker “liberal” twist of the liberal governmentality. Compared to Samuelson’s liberalism, where market failure is the primary rationale for government, these texts present the market as a historical institution alongside government. Starting from aninstitutionalist view of the market, it emphasizes that the market emerged as distinct historical form of governing society. An example of this genre is found in Colander’sEconomics(2008). Even though not overtly heterodox, Colander, unlike any of the other texts, introduces Austrian, institutionalist, radical, feminist, theological, and post-Keynesian approaches to economics that place a relative emphasis on institutions and history:
Markets are highly developed social constructs that are part of a country’s social and economic institutions. Markets are based on institutions . . . To understand markets you need to understand institutions. (C: 53)
The key twist of Colander’s institutionalist view is to make a distinction between naturalist economic forces on the one hand, and the institutional form given to these forces on the other. Colander for instance, when addressing the classic governmental problem of “how to produce what for whom,” states that scarcity gives rise to “economic forces, the necessary reactions to scarcity” (C: 9, emphasis omitted). These economic forces, however, are distinct from what he calls market forces, and society has a choice about how to channel them. By distinguishing between natural economic forces and the institutionalized forces of the market, Colander separates out the naturalism of economic action from its institutiona-lized form:
A market force is an economic force that is given relatively free rein by society to work through the market . . . Societies can’t choose whether or not to allow economic forces to
6 This point may serve to illustrate the difference between governmentality and ideology. The authors discussed in this section need not necessarily be branded free market ideologues. The point is that by stressing the unrelenting nature of the market, they are articulating a strong version of a liberal governmentality, which may or may not be part of a free market ideology.
operate—economic forces are always operating. However, societies can choose whether to allow market forces to predominate. (C: 9, emphasis omitted)
The separation between economic naturalism and institutional form has important political implications. It implies that societies have a choice whether to allow the market free play or whether to let government step in. And while the market is an obvious institutional candidate for organizing economic life, it is neither self-evident nor the only one: “Is the market a good way to coordinate individual’s activities? Much of this book will be devoted to answering that question” (C: 55). The political import of the institutionalist view is that societies have a political choice between institutions for governing economic life and that “social, cultural, and political forces play a major role in deciding whether to let market forces operate” (C: 9).
With the market constituting one institutional arrangement among others, the institutionalist view opens up a much wider array of options for governmental involvement in the economy. With previous versions, it shares the naturalist view that the economy has its own forces over which one has no control. As institution, the market is, however, just as (un)natural as government, and its place in the economy is just as legitimate: “Government is part of our life . . . Economic theory doesn’t say government should or shouldn’t play any particular role in the economy” (C: 167). Governmental questions therefore do not remain restricted to looking at ways of how to govern markets, but also allow asking whether markets are in any case the right institution. This perspective thus reaches beyond the standard issues of market failure and considers additional reasons for government involvement for addressing what Colander labels “failures of market outcomes” (C: 458) where well-functioning markets may prevent society from achieving its goals. In the institutionalist market governmentality then, government is not seen as exclusively legitimized by market failure, but includes the question whether the market is the appropriate institution for coordinating social and economic life. This makes the institutionalist market view most “liberal” as it legitimizes much more fundamental interventions in the economy.
With the institutionalist governmentality we have identified four varieties of the liberal governmentality that can be encountered in the textbook. Together they are representative of important subgenres of liberal government that are articulated within economics. It demonstrates that textbook discourse is generally liberal in nature. While there are unmistakably political differences between textbooks, these are at best variations within a broader liberal governmentality rather than contesting political rationalities. At the same time, the politics of textbooks and their differences nowhere take the form of manifestly ideological
terms, but rather speak through the objective language of economics and its subtle play on the naturalist view of the market.
NEOLIBERAL MOMENTS IN THE ECONOMICS TEXTBOOK
So far it appears that despite its variations, the textbook is generally conveying a liberal rationality of government. All texts subscribe to the naturalist view of the market and a liberal conception of government, even though they differ to the extent in which the naturalist market is limiting government. To both insider and outsider, it may come as a surprise that economics perceives and presents itself in such liberal terms. It is therefore hard to sustain claims that economics would be outrightly pro-market and antigovernment or that (neoclassical) economics has aided the neoliberal revolution. That being said, in the following, two developments are identified in the economics textbook that break with the liberal mold and constitute marked neoliberal moments in the otherwise liberal textbook of economics.7
Neoliberal Moment I: Market-based Government
The first instance in which the textbook breaks with the liberal idea of naturalist markets and limited government is when it starts conceiving of government itself in market terms. It is most evident in the exposition of market failure, especially in the context of environmental policy. There is a notable trend in today’s textbook to study how market failure can also be addressed by employing the market itself rather than by means of government intervention or voluntary agreements. Using a variety of terms, ranging from “market solution” (RG: 374), “market-like instruments” (BB: 322), “market-oriented systems” (HBP: 307) to “market-based incentives” (SN: 360), it is argued somewhat counterintuitively that market failure is often best treated by means of market-like measures, or as Mankiw and Taylor claim:
When people cannot solve the problem of externalities privately, the government often steps in. Yet, even now, society should not abandon market forces entirely . . . Market forces, properly redirected, are often the best remedy for market failure. (MT: 204)
Baumol and Blinder too make the idea of market solutions into a centerpiece of their treatment of market failure, declaring it one of the central “Ideas for Beyond
7 The notion of a ‘moment’ as a disruption or even deconstruction derives from Ruccio and Amariglio (2003). It serves to express that the overall liberal way of reasoning about government that runs through the textbooks is at moments interrupted by the articulation of neoliberal political rationalities.
the Exam,” stating that “economists believe that market methods are often the best way to cure one of the market’s most important shortcomings” (BB: 6).
The standard example for illustrating market-based approaches to market failure is tradable emissions rights. While not every textbook explicitly discusses market-based solutions to market failure, the idea of emissions trading nonetheless appears in all texts surveyed.8Samuelson and Nordhaus emphasize that it represents a novel development: “A new approach that does not require the government to legislate taxes is the use of tradable emissions permits” (SN: 378). Reflecting Baumol’s research in environmental economics (e.g., Baumol and Oates1971), Baumol and Blinder pioneered the treatment of emissions trading in the economics textbook, stating that “a legislated market solution based on pollution charges may often be the best way to protect the environment” (BB: 366).9An important reason for including emissions trading in the textbook is that it could be considered a qualified success of economics influencing policy, as some authors gladly relay (FB: 361;KWG: 477;MT: 202).
Why could the idea of market-based regulation or the institution of emissions trading be considered a specifically neoliberal moment? To many students it will come across as paradoxical to suggest that market failure is often best addressed by “harnessing the power of the market mechanism to remedy its own deficiencies” (BB: 49). And indeed, by turning the market into a tool for government, market-based regulation disrupts the conventional liberal divide between naturalist markets and limited governments. In doing so, it reflects the three characteristics of a neoliberal rationality of government as outlined above. First, market-based regulation is a telling example of a constructivist approach to markets that deviates from the naturalist market. As exemplified by emissions trading, market-based regulation consists of the imagining and construction of markets as a way to solve societal problems: “The effect of a tradable permit system is tocreatea market in rights to pollute” (KWG: 480, emphasis mine). Due to its constructivist nature, market-based regulation is substantially different from conventional approaches such as regulation or taxes that intervene in already existing markets. Underlined by qualifications such as “market solution” or “market-like instruments,” the novel feature of market-based regulation is that it
8 From the textbooks surveyed, 5 out of 10 (BB,C,HBP,LC,RG) explicitly discuss market-based solutions as one of the ways to address market failure. All textbooks, however, contain a brief discussion of the emissions trading, either in text or as a text box. Five texts have a separate chapter on the economics of the environment (BB,FB,RG, SN,SW), in which emissions trading features prominently.
9 Already in their first edition Baumol and Blinder (1979) devoted an entire chapter to the economics of
environmental protection. Well before emissions trading became reality, it mentions emissions permits, but not yet their trading (Baumol and Blinder1979: 683). The first edition also already features 10 ideas for beyond the exam, and Idea 2 is titled “Economic Principles to Protect the Environment,” which in later editions was modified
into “Externalities: A Shortcoming of the Market, Cured by Market Methods” (BB6).
uses the market as an instrument of government while no longer treating it as a natural stratum on which regulation takes effect.
The second indication that market-based forms of government are neoliberal is that it raises the market into both means and norm of government instead of posing it merely as object and limit of government. To begin with, the market constructivism of market-based regulation indeed turns the market into a technique or tool of government. It implies that government action itself should be shaped as a market. The examples, however, also show that the texts tend to introduce the market as the preferred means and thus as norm for government intervention. Baumol and Blinder, for instance, put great emphasis on stating that market solutions should always be considered: “even where government action is appropriate, we must consider market-like instruments as one possible way to correct market mechanism deficiencies” (BB: 322, italics in original). Likewise, other textbooks stress that market-based regulation results in more effective or efficient forms of regulation: “Pollution permits, like Pigovian taxes, are increasingly being viewed as a cost-effective way to keep the environment clean” (MT: 202). By advancing the market as the preferred means and norm for government, market-based regulation is introducing a characteristically neoliberal moment into the reasoning about government intervention.
Third, market-based regulation is also an example of the changed role of economics with respect to government. Where in the liberal model economics took a distanced position by only criticizing government policy through the lens of the naturalist market, in the case of market-based policies it actively points out market solutions to policy problems. The example of cap-and-trade schemes neatly underscores this: “the idea of the government auctioning off the right to pollute may at first sound like a creature of some economist’s imagination. And, in fact, that is how the idea began” (MT: 202). Economics was critical in providing the rationale and main techniques for this policy (Mackenzie2009; Tietenberg
2010) as some textbooks proudly point out (KWG: 477). With its discussion of market-based government, economic analysis is gradually shifting from merely critiquing government policy toward assisting in actively imagining market-based policies. Taken together with its constructivist approach to markets, and its embrace of the market as norm for government then, the topic of market-based government could be read as a first neoliberal moment in the otherwise liberal textbook.
Neoliberal Moment II: Thinking Like an Economist
A second neoliberal moment in the economics textbook is best illustrated using today’s best-selling text on the market, that of Mankiw. It is representative of a
recent trend among textbooks to introduce the field of economics in the first chapters by means of a list of principles. In contrast to the classic Samuelsonian textbook that introduces the subject matter of economics using the governmental question of scarcity (what to produce, how and for whom), modern textbooks like Mankiw’s increasingly resort to a numbered list of general principles. Mankiw introduces 10 catchy principles such as “markets are usually a good way to organize economic activities” or “governments can sometimes improve market outcomes.”10The purpose of the principles is to make students instantly familiar with the discipline: “The ten principles are introduced here just to give you an overview of what economics is all about” (MT: 4). Mankiw was not the first to rely on principles. Baumol and Blinder already began their first edition in 1979 with 10 “ideas for beyond the exam.” Emerging on the textbook market in 1997 however, Mankiw set a new standard, and a growing number of textbooks today adopt a similar approach of listing principles. Of the 10 textbooks reviewed for this article, four other texts open with a principles chapter (BB,SW,FB, andKW) and two more refer to some basic principles (CandHBP).
The new genre of textbooks further stands out because the principles are invariably accompanied by an invitation to students to “think like an economist.” Mankiw’s second chapter is titled “thinking like an economist” and states:
The single most important purpose of this book is to help you learn the economist’s way of thinking . . . Before delving into the substance and details of economics, it is helpful to have an overview of how economists approach the world. . . . What does it mean to think like an economist? (MT: 19)
For similar reasons, Heyneet al.even titled their textbook,The Economic Way of Thinking. Frank and Bernanke, using a striking label, urge their students to become “economic naturalists”: “someone who uses insights from economics to help make sense of observations from everyday life” (FB: 16). Their textbook contains a number economic naturalist cases culled from Frank’s (2007) popular book with the same title. For the economic naturalist, to think like an economist is like a second nature, as one instinctively applies economic principles to understand the world. Principles are clearly an ideal means to teach students how to think like economists.
The rise of the principles textbook and its call to think like an economist, I want to point out, may not just be a new pedagogical trend, but could be read as a sign of a more general shift in economic discourse that signals another neoliberal moment. The principles text first marks a shift away from defining economics in
10 For a great rap on Mankiw’s principles, see stand-up economist Yoram Bauman, who has a hilarious sketch
making fun of the generality of some of his principles:www.standupeconomist.com(accessed December 10,
2012).
terms of itsobjectto a definition in terms of itsapproach.11Where for Samuelson economics was largely defined by its subject matter as studying the economic problem of how societies decide what to produce, how for whom (SN: 7), the principles textbook shifts toward defining economics in terms of how it approaches questions (MT: 19 above). Economics defines itself no longer with reference to naturalist markets but uses markets as an approach to phenomena. This change toward economics as approach also affects the orientation of economics. Backhouse and Medema (2009) traced how Robbins’ definition of economics gradually took hold of the discipline and its textbooks, and argued that it has entailed a complicated shift away from scarcity as the defining feature of economics in favor choice and exchange. In contrast to the Samuelsonian concern with the economic problem of scarcity, the principles texts indeed focus more on choice and exchange. Mankiw, even though he starts off with an object definition that is similar to Samuelson (“economics is the study of how society manages its scarce resources” [MT: 3]), one sentence later switches this into an approach-driven definition based on choice and exchange: “Economists therefore study how people make decisions . . . Economists also study how people interact with one another” (MT: 4).
This shift in orientation of the principles text finally changes the scope of economics. Where the boundaries of economics were initially determined by studying a specific economic problem and demarcated economic domain, the principled approach allows for studying choice and exchange wherever they occur. Encouraging students to think like an economist easily extends into an invitation to explain not only narrowly defined economic action, but also all forms of human behavior. In this respect the principles textbook is obviously in conversation with the popular Freakonomics genre (after Levitt and Dubner
2005), which contains a similar wish to explore the hidden, economic side of everything (Fine and Milonakis2009; Vromen2009).12Colander acknowledges this when he refers to Freakonomics as “a good example of ‘thinking like an economist’ in action” (C: 6), to add, however, that too much thinking like an economist may make one loose one’s friends.
With these changes in terms of approach, orientation, and scope then, the principles textbook is gradually departing from the economic naturalism of the liberal textbook. It gives way to an image of economics that is less concerned with the classic liberal problem of managing society’s resources, but rather with the
11 The distinction between traditional definitions of economics in terms of what it studies (such as those by Marshall, Robbins, and Pigou) and definitions that define economics in terms of its approach was made most forcefully by
Gary Becker inThe Economic Approach to Human Behavior(1976).
12 For more on theFreakonomicsgenre and its meaning and impact, see special issue of theJournal of Economic
Methodology19(3), 2012.
universal application of market principles. In doing so, it could be said to replace the naturalism of the market with a naturalism of economic thought, as Frank and Bernanke’s economic naturalist illustrates.13It signals that the principles textbook is slowly abandoning the naturalist view of the market in favor of a constructivist account of markets. The economic naturalist illustrations in Frank and Bernanke, for instance, extend economic reasoning to address questions that are not directly economic, such as “why do many clients prefer lawyers who wear expensive suits” (FB: 314) or “why do people shout at parties” (FB: 260). By subsequently applying economic principles, these noneconomic phenomena are reconstructed in market terms. Its imagining and constructing markets in domains where there were previously none is a first indication that the principles textbook opens a space for a neoliberal moment in economic thought.
Second, while perhaps not immediately obvious, the principles text and its call to think like an economist also bespeaks a different, potentially neoliberal view of government. When you start applying economic principles to all sorts of social situations, market-based forms of governing tend to replace existing norms of government. When Frank and Bernanke in one of their illustrations ask, for instance, “what is the purpose of free speech laws,” their economic naturalist does not refer to the first Amendment as a codification of fundamental rights but as a prudent legal remedy for market failure (FB: 285). It is an example that the economic naturalist is taught to view governmental norms in economic terms as well. It is also evident from the emphasis on incentives as a favored mode of government. Where textbooks traditionally view government largely through the liberal prism of market failure, the principles textbook shifts emphasis toward using incentives in policy (viz. Sandel 2012: 86 – 88). Mankiw contains a principle about incentives, which somewhat vacantly states that “people respond to incentives.” Mankiw explains this principle by showing how people respond to incentives on markets. This, however, is immediately turned into an important lesson about government: “Public policy makers should never forget about incentives, because many policies change the costs or benefits that people face and, therefore, alter behavior” (MT: 7). It shows that incentives while inspired by the market are presented as a general principle that can be applied to all sorts of policy issues, some of which are not in the first place economic in nature. Incentives have indeed, as popularized by theFreakonomicsgenre and through the growing attention for behavioral and experimental economics, become the staple of a new type of policy ideas in which one governs by nudging rather than
13 Mallin (2010) has a similar argument. Comparing Mankiw’s notion of “thinking like an economist” with Marx’s
idea of commodity fetishism, he argues that Mankiw’s usage fetishizes the market model by obscuring the historical and social conditions it presupposes.
direct regulation (viz. Thaler and Sunstein 2008). With incentives as a generalized form of economic reasoning then, the principles text may be conducive to the articulation of neoliberal rationalities of government by increasing the range of market-like means of government.
Finally, the principles genre with its call to think like an economist is also inclined to transform economics into a counsel of neoliberal government. Where in the liberal mode, economics’ main role is to critique the efficacy of government policy, the principles text instead invites government to think like economists too. This way economics may shift away from merely offering advice on government’s dealings with the naturalist market to become actively involved in imagining government policies based on market principles. Together with a constructivist approach toward markets and an inclination toward governing along market lines then, the recently emerging principles genre and its call to think like an economist can be construed as another neoliberal moment in the economics textbook.
CONCLUSION
Does the economics textbook induce our students to neoliberalism? To answer that question, the article has looked at how textbooks explain the rationale of government. It made a very broad distinction between more traditional, liberal legitimizations of government and more recent neoliberal rationalities of government, the difference essentially being whether one views government as limited by markets or as a form of rule by means of markets. The answer to the question posed is a surprising “No,” yet with an important “But.” The introductory economics textbook can hardly be construed as proselytizing for neoliberalism. On the whole, the textbook offers a very classic, liberal account of the rationale of government. All textbooks reviewed subscribe to some version of a liberal rationality of government that conceives of government as both limited and legitimized by naturalist markets. It is the view that by virtue of their nature, markets on the one hand limit the actions of government, while at the same time through the logic of market failure, for instance, also provide legitimacy to government action. The Samuelsonian textbook represents this liberal orientation in its most classic form, which has been one of its lasting influences on the textbook genre.
This is not to say that there are no political differences between the various texts and that they all convey exactly the same liberal, political outlook. What are the political differences between texts by Samuelson, Mankiw, Frank and Bernanke, Baumol and Blinder, Krugman, Colander, and Ruffin and Gregory, or Heijneet al. for instance? Despite a broadly shared liberal outlook, the various
texts present significant political twists to it. One insight gained is that the politics of the textbook resides not in its ideological messages or proposed policy agenda (which are seemingly absent), but rather speaks from their objective presentation of the market. We saw that the various texts played on the naturalism of the market to formulate alternative views of liberal government. Depending on how “natural” they portrayed the market, variously stressing the imperfections of the market, its unrelenting naturalism, or rather its institutional nature, texts articulated quite different legitimizations of government. It is foremost by how they represent the market’s nature and consequent legitimization of government that textbooks make their political mark.
There is a significant “But” however. The observed liberal orientation should not be taken to mean that economics textbooks have no bearing at all on the popularization of neoliberal ideas of government. At least two moments were identified in which the textbook breaks with its liberal logic and opens the ground for distinctly neoliberal views. The growing attention for market-based solutions for government and the widening call to think like an economist of the principles textbook are two instances where one could witness the advent of a diverging rationale of government, which is neoliberal. The definition of neoliberalism put forward in this article is that of a mode of government that derives its form and legitimacy from constructing markets. The neoliberal view of government no longer merely follows the market’s nature, but through active market constructivism elevates the market into a norm and the preferred means of government. The case of market-based solutions for government quite literally describes the construction of markets as a way to achieve the goals of government. It was also argued that the new genre of principles texts also invites market constructivism in its call to think like an economist and to generally approach social problems in economic terms. It invites the imagining of governmental solutions by thinking in market terms using, for example, incentives. Together these are two moments in the introductory textbook where a novel, neoliberal rationality of government that constructs the market as means and norm of government interrupts the otherwise liberal political rationality of economics.
The above analysis may be somewhat of a disappointment for those who would want to ascribe full responsibility to economics in the rise of neoliberalism. It offers, however, a number of important lessons about the politics of the economics textbook and the nature of neoliberalism more generally. First, textbooks can hardly be construed as ideological blueprints or explicit political agenda’s but rather—as Samuelson intimated—as providing a way of thinking about government. As a consequence, to the extent the textbook teaches neoliberalism therefore, it does so in the same understated way: not by advocating specific
policies or ideologies, but rather by introducing a distinct way of reasoning about political issues. As this article has been arguing, the uniqueness of neoliberal reasoning about government is not always recognized but relies on market constructivism. It teaches one to think of government in market terms, asking it to apply market solutions. Neoliberalism is thus hardly taught directly but rather emerges implicitly (and perhaps even unwittingly) by normalizing and naturalizing an economic frame of mind. The neoliberal influence of economics hence cannot immediately be gaged from it writing a nation’s laws, but rather from teaching how to think about government like an economist.
Second, it is important to recognize that neoliberalism manifests itself as a moment within liberalism. While a distinct rationality of government, neoliberalism is not directly competing with liberal views of government in an either/or fashion nor need it fully replace these. Rather, neoliberalism feeds off liberalism as its market constructivist policies overextend and challenge the traditional liberal perspective. There is hence not always a clear line separating liberalism from neoliberalism, but it requires focusing on those moments where traditional liberal economic thought crosses over into neoliberal politics. The dividing line, it has been argued, is to see where market naturalism mutates into market constructivism. As its own kind of freakonomics then, neoliberalism could be described as the quiet over-extending of the naturalist market of liberalism, reshaping it into a governmental rationale for everything.
The alternative interpretation of neoliberalism put forward in this article finally also implies a different account of the intellectual history of neoliberalism and its relation to economics. Where the intellectual origins of neoliberalism are typically ascribed to Hayek, Friedman, and the Mont Pe`lerin Society, neoliberalism as analyzed here was not viewed as a definite political philosophy but rather as a program revolving around market constructivism. It remains in my view an open question to what extent the alleged arch-fathers of neoliberalism, Hayek and Friedman, for instance, could be read as market constructivists. It therefore invites the writing of alternative histories of neoliberalism in which other Chicago economists such as Becker and Levitt would figure more prominently, for instance, to explore the various ways in which economics inspired market constructivism and calls to think about government like economists. By emphasizing the centrality of market constructivism, this article hopes to have contributed to a less overstated and more accurate account of neoliberalism and the role of economics in its ascendance.
LIST OF TEXTBOOKS SURVEYED
Due to geographical restrictions, research for this article was based on European or International editions of the textbooks. There may be small textual differences and differences in page references with American editions.
NOTE ON THE SELECTION OF TEXTBOOKS
The textbooks have been selected with a view of both representativeness and diversity. Samuelson and Nordhaus (SN) and Mankiw and Taylor (MT) have been selected as representatives of best-selling textbooks on the USA and international markets. For the sake of diversity, a number of other major textbooks have been selected that are important competitors on the textbook market with often reputable authors, such as Baumol and Blinder (BB), Colander (C), Frank and
BB Baumol, W. J. and Blinder, A. S. (2006)Economics: Principles and Policy, 10th
International student ed., Mason, OH: Thomson Learning/South-Western.
C Colander, D. C. (2008)Economics, 7th. International ed., Boston, MA: McGraw-Hill/Irwin.
FB Frank, R. H. and Bernanke, B. (2004)Principles of Economics, 2nd ed., Boston, MA: McGraw-Hill.
HBP Heyne, P. T., Boettke, P. J. and Prychitko, D. L. (2006)The Economic Way of Thinking, 11th ed., Upper Saddle River, NJ: Prentice Hall.
KWG Krugman, P., Wells, R. and Graddy, K. (2008)Economics,1st European ed., New York: Worth.
LC Lipsey, R. G. and Chrystal, K. A. (2007)Principles of Economics, 2nd International ed., Oxford: Oxford University Press.
MT Mankiw, N. G. and Taylor, M. P. (2006)Economics, 1st European ed., London: Thomson.
RG Ruffin, R. J. and Gregory, P. R. (2001)Principles of Economics, 7th ed., Boston, MA: Addison-Wesley.
SN Samuelson, P. A. and Nordhaus, W. D. (2005)Economics, 18th International ed., Boston, MA: McGraw-Hill/Irwin.
SW Stiglitz, J. E. and Walsh, C. W. (2006)Economics, 4th International ed., New York: W.W. Norton.
