Can you be wrong a thousand times? You can, if your reasoning is based on media concoctions, wherein some events receive excessive and biased coverage and other, less sensational events are ignored, according to the whims of advertising contracts. What sells is the information “commodity” supposedly expected by the undiscerning public: sensations interlaced with commercials. No wonder we have the impression that accidental deaths far outnumber deaths from diabetes, when in fact accidental deaths are four times less likely.
Driven by the media, these kinds of biases also occur within economics, and can be particularly costly. The biggest issue is that not everybody has access to the full suite of data, nor the relevant economic knowledge necessary to correctly interpret economic phenomena and processes. Only large and affluent organizations can afford high-level analysis. That’s why professional economists are needed. But we should watch their prognostications, which have the power to influence decision-making by discerning people, from individuals, to a president of a concern, to a government minister to a social organization activist. We need good economics to help support decision-making by these stakeholders that benefits the economy. We need honest economics.
And what is honest economics? Can economics, a science, after all, be dishonest? Well, as long as it’s a science, economics, wherein its essence is to explain objective regularities governing social-economic processes, is honest. The problem is that, all too often, it is not a science. It becomes an ideology, embroiled in political emotions and dogmatism. It is, at times, a self-serving instrument of political strife and social manipulation. In recent years, it has been a tool for coaxing people into taking potentially irrational actions. It’s a fashion shaped by waves of popular doctrines and pseudoscientific views promoted with ulterior motives. Economic thought often follows fads, “schools” that are trendy at a given time, or plain dogmas. How many economists, instead of knowing, only believe the thing they are advocating. Honest economics is a matter of knowledge, not belief.
But then things get complicated again as a fundamental question presents itself: What is the purpose of economics? What is the purpose of economic activity of human beings and of society? Views diverge on that matter; and they always have, but a satisfactory answer is that the purpose of economic activity is to satisfy needs. Such a common sense approach can be found thousands of kilometers away from the intellectual centers of the world, and era behind developed economies, when asking the same question of an illiterate peasant cultivating a plot of land on the Andean plateau or grazing his goats on the sands of Sahel. He knows why he toils and makes something for himself or to trade with others for something he needs. But the present-day developed economy compares to the simplest one like a supercomputer compares to a hoe; new needs are followed by more complex questions and ever-changing ways to satisfy them.
Professor Kolodko, a key architect of Polish reforms, is the author of international bestseller “Truth, Errors, and Lies: Politics and Economics in a Volatile World” . Currently he teaches political economy of globalization at the Warsaw’s Kozminski University, and writes a blog www.volatileworld.net.