Economic Indeterminacy – the cause of my (relative) silence

03/02/2013 by

Regulars may have noticed that I have gone relative quiet recently. It is true! The reason is that I am struggling to put the finishing touches on an academic book entitled ECONOMIC INDETERMINACY: A personal encounter with the economists’ most peculiar nemesis (to be published by the good people of Routledge). As I have well and truly exhausted my (most-understanding) publisher’s patience, I thought I should leave the Crisis alone for a few weeks and concentrate on finishing the damned book. I think that I can now safely say that it will be dispatched to London before this weekend’s expiry. Meanwhile, in case anyone is interested, here is the table of contents and the (very personal) Preface. 

Table of contents


1. INTRODUCTION: Economic Indeterminacy and The Dance of the Meta-axioms

2. UNITY IS STRENGTH (It is also the cause of indeterminate wage and employment targets)

3. RATIONAL CONFLICT (On the impossibility of a determinate theory of costly disagreement)

4. NO BLUFFS PLEASE, WE ARE ECONOMISTS (Why bluffs and other subversive acts preclude determinate game theoretical analyses)

5. BARGAINING BY RULES OF THUMB (When strategic indeterminacy forces the rational negotiator to fall back on myopic rules of thumb)

6. MARXISTS AND THE SIRENS’ SONG (When disgruntled Marxists reach for game theory’s toolbox they get more than they bargained for)

7. A THEORY OF SOLIDARITY (Why indeterminacy is a prerequisite for genuine solidarity)

8. ON THE POWER OF WHAT OTHERS THINK (How indeterminacy takes over when our preferences are influenced directly by other people’s beliefs)

9. THE SOCIAL FOUNDATIONS OF CORRUPTION (On the indeterminate power of what others think)

10. EVOLVING MORALS IN THE LABORATORY (The roots of distributional justice principles in indeterminacy)

11. EVOLVING DOMINATION IN THE LABORATORY (The spontaneous creation of hierarchies and the patterned beliefs that support them)

12. ON THE DISTINCTION BETWEEN EVOLUTION AND HISTORY (The impossibility of modelling behavioural mutations amongst political animals)

13. CONCLUSION: Dealing with indeterminacy on the stage of social life


This is a book about failure and power.

Most of us were raised to imagine that power stems from success, not failure. It thus seems odd to be focusing on failure and power, especially when suggesting, as this book strongly does, that massive failure has been the cause of spectacular success. Yet, the world we live in has made possible this sad, odd causality which stands Charles Darwin on his head.

The reader is, at this point, excused to think that the alluded power-through-failure phenomenon refers to the post-2008 spectacle of tremendous taxpayer-funded rewards for the deeply insolvent bankers. While this is not my book’s theme, the association is not baseless. For just as the financial sector’s implosion yielded its custodians, the bankers, gargantuan rewards (in terms of bailout funding but also of political influence), so too the theoretical failure of mainstream economics has helped solidify and propagate the dominance of these same economists in academia and in the corridors of power.

In this sense, the theme of the present book is very much in tune with our post-2008 age. Yet its origins go back to the 1980s when, as a young, green-behind-the-ears economist, I attempted to build a research program on several attempts to civilise mainstream economic models that had arrested my attention. It all began at a time when the takeover of economics by a particularly narrow economic method (which I, and many others, refer to as ‘neoclassical’) had been completed. Those of us who were coming through the academic production line in the UK of the early Thatcher years faced a stark choice: Either work within the neoclassical mindset or seek alternative careers. It was that simple.

Determined to master the discipline which in our times represents the highest form of ideology, I was reluctant to abandon economics just because its assumptions and models seemed problematic, if not downright barbaric. In view of the profession’s intolerance of any challenge to its neoclassical method, I decided I would attempt two things: To investigate the logical coherence of the received models (i.e. to see if their results were truly consistent with their own assumptions) and to explore ways and means of ‘civilising’ these models (by relaxing some of their more obnoxious assumptions).

Thus emerged a research project that lasted thirty odd years. Its aim was to add to mainstream models dimensions (in the form of carefully selected equations) that humanise them and, generally, to experiment with their capacity to embrace parts of the social dimension of life that economics had hitherto not even tried to reach. Each of the chapters that follow (after the first, introductory, chapter) revolves around one of these models, telling a story of some attempt to infuse them with a degree of realism, and internal logic, that they lacked.

In retrospect, the research program which I embarked upon in the early 1980s, and whose models populate the rest of this book, resembled… invading Russia: a brisk and enthusiastic start, followed by a slowdown as General Winter mounted his hideous counter-attack, ending up with exhaustion, disappointment and metaphorical blood on the snow. Less allegorically, my initial tampering with my new profession’s models was met with distinct approval, from professors and editors alike, and job offers that allowed me to claim a place on the academic ladder as a bona fide economist. However, from a very early stage, I realised that the profession’s welcoming arms would be quickly withdrawn the moment one’s model-tampering yielded indeterminacy.

Put simply, while the profession was more than happy to allow newcomers to toy with their assumptions (as the method remained fully neoclassical), it was adamant that models should be ‘closed’ come-what-may; that our equations should procure a narrow range of ‘solutions’ even if the only way of achieving such ‘closure’ was to abandon the project of civilising the theory. As far as the economics profession was concerned, logical incoherence and a deep chasm between the models and really-existing capitalism were infinitely preferable to an admission that the models were indeterminate.

At first, my peers’ profoundly anti-scientific attitude disturbed me no end. Until, that is, it all started making sense in a broader political economics context. To begin with, I noticed an interesting paradox develop from the time I was an undergraduate in the late 1970s: the more dominant economics was becoming within academic social science the more students were being turned off economics. Instead of magnetising the young, courtesy of its indubitable discursive success, economics was putting them off.

And it was not just students. Economists of renown were lambasting their discipline’s irrelevance and theoretical feebleness. Nevertheless, and there is the rub, the greater the mainstream economists’ theoretical failure the stronger their dominance everywhere. How come? A major clue to this puzzle came in the form of the observation that these same models, precisely because they turned a blind eye to the indeterminacy that oozed out of them, were also the models underpinning the financial derivatives that the financial sector was beginning to invent at that time (which it soon flooded the world of finance with), as well as the neoliberal doctrines which were used as a pretext for engineering the most regressive income redistribution in the history of capitalism.

Faced with this disturbing, but also deliciously ironic, reality I chose to tread a thorny path: I would continue to tamper with the mainstream models’ assumptions, in a bid to explore their explanatory potential to the full. At the same time, I would expose the logical contradictions of the models that my profession deemed beyond analytical reproach. And, lastly, I would attempt to provide an explanation of the manner in which neoclassical economics was building impressive discursive power on a foundation of large-scale theoretical failures.

Naturally, my project’s failure was predetermined, at least in the sense that it was never going to cause a shift in the attitudes and demeanour of a profession which operates like a priesthood, dedicated solely to the preservation of its dogmas (which I call meta-axioms in Chapter 1) as well as to the recapitulation of its authority within the universities, the financial sector and government. Indeed, at no point did I harbour any significant hope that this priesthood would take kindly to the demons of doubt and indeterminacy which my work was bound to give rise to. But it did not matter, at least not at a personal level. My intimate familiarity with the neoclassical models was sufficient to keep me on the roster of neoclassical economics departments were a capacity to teach these models, and produce academic papers based on them, is all that matters.

Looking back at these long years of tampering with, and delving into, the complex models of the neoclassical tradition, I cannot but interrogate my decision to keep pushing, Sisyphus-like, the theoretical rock up the neoclassical hill. Why did I stick to this task, when I knew it would end up in failure? In retrospect, there were two reasons, neither of which was predicated upon any hope of influencing a profession utterly uninterested in the truth-status of its models. First, I deeply enjoyed toying with these models as an end-in-itself, just as a clockmaker enjoys taking apart and then re-assembling some old clock for the hell of it. Secondly, and more importantly, I felt it necessary and important to make it hard for my colleagues to pretend to themselves that the models they were being forced to work with, by a particularly authoritarian profession, were logically coherent. Bringing them, even fleetingly, to the point when they had to confess to their models’ internal contradictions was, I felt, a victory of sorts; the equivalent of a lone sniper behind enemy lines making life difficult for an army of occupation.

At the end of the day, I now realise that failure is indeed packed with power, not just for bankers and the economics profession but for us mere mortals too. Chapters 2 to 11, in effect, explore theoretical failures. Indeed, while working on these models I often caught myself at the intersection of many failures: mathematical, philosophical, conceptual. However, coming to terms with these failures was essential in understanding the irrationality of the world we live in. For these failures are not the result of substandard skills or erroneous manipulations but, rather, a mere reflection of the dead-end forced upon us by an ideologically driven pseudo-science whose power comes from successfully hiding, as opposed to revealing, the true nature of our social, political and economic relations.


The story of how neoclassical economics profits from its failure to deal with complexity, with radical indeterminacy beckoning at each and every turn, was told fully in a recent book co-authored by myself, Joseph Halevi and Nicholas Theocarakis (Modern Political Economics: Making sense of the post-2008 world, also published by Routledge in 2011). It is, therefore, incumbent upon me to begin by thanking Joseph and Nicholas for having helped in creating the context which the present book builds upon. Indeed, the book you are now holding can be seen as a natural addendum to Modern Political Economics, as the following chapters demonstrate, one by one, the manner in which neoclassical economics turns failure into power once all attempts to civilise its models yield radical, irrepressible indeterminacy (an adage that our joint book foreshadowed; see its Chapters 9 and 10 in particular). Christian Arnsperger, another friend and colleague, has been responsible for the impetus behind Chapter 1, as well as being the co-author of a paper on which Chapter 7 is based. Shaun Hargreaves-Heap played a major part in joint work on which I have based Chapters 8 and 11. Lastly, I must thank the good people at Routledge, Simon Holt and Robert Langham in particular, for bearing with me during long delays in the production of this manuscript, which I blame on the European Crisis that has kept me ‘otherwise engaged’ for too long.

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