Think Thanks. The Good and the Bad Ones

When learned economists err in what they say and write, we can continue the discussion on substantive grounds. However, we have a major problem when they know how the facts stand but nevertheless publicly say and write something different because it serves certain ideas shared by narrow elites, or because they are paid by interest groups to enunciate theories, dressed in pseudo-scientific trappings, that they know to be false. The problem is also an ethical one.

Truth and Lies

Despite the fact that psychology in particular has a great deal to say about the essence of lying, we often cannot tell whether someone is merely consistently mistaken, or whether they are lying outright. Even when we know that someone is simply lying rather than continuing to be wrong, it can be impossible to prove. If they are deliberately lying, we are wasting our time in attempting to persuade them that they are wrong.

It is difficult to find a better recent example than the pseudo-scientific debate about the flat tax, which is all about cutting taxes for a narrow group of beneficiaries and shifting the cost of the operation onto low-income taxpayers (the real aim), while claiming—or, in this case, lying, unless someone is in fact persistently wrong because they cannot understand what is going on—that it is all a matter of creating better conditions for capital formation and investment (the declared aim).

This syndrome explains the impossibility of convincing some adversaries, who otherwise seem to be enlightened economists, of views that are correct and, at times, obvious. They understand that these views are reasonable, but they voice different views. What can be done? At the very least, enough to convince others—listeners, viewers, and above all readers—that our interlocutor is wrong. The audience will have the impression that the opponent is in error, and that is no small accomplishment. In other words, when it is impossible to demonstrate that someone is deliberately misleading others, it is at least worthwhile proving publicly that they are wrong.

There are pseudoscientific debates in which it is impossible to arrive at intellectual agreement because the differences inhere not in the officially expressed views, but rather in the intentions. This occurs more frequently in politics than in science, although we should be under no illusions about the latter field. For understandable reasons (the pressure of conflicting interests), economic science is particularly exposed to this, but the danger exists in other disciplines. Pharmacology, medicine, and ecology—the science of the natural environment of humans—should be mentioned. Disputes about the effectiveness of some drug or the current debate about the causes and effects of global warming are the best examples. For money—for big money in some cases, and for next to nothing in others—it is possible to purchase whole institutes, or think tanks, that will prove whatever the customer wants. Why shouldn’t it be the same in economics? Sometimes, it is.

Pressure Groups and Their Money

Of course, it costs money to hire intellects—often not inconsiderable ones—that are ready to argue in pseudoscientific categories in favor of the viewpoints desired by the sponsors. Aside from hiring politicians, this is a profitable form of investment in a unique form of “human capital.” It is also possible to hire people who simply think usefully and, with the best of intentions and in line with their own convictions, say things that, while untrue, are useful to a given interest group. These people will find sponsors interested in supporting such convenient research and propagating its results.

Following this principle, many departments of economics and social sciences at universities—especially American ones—went over to neoliberal positions in the 1980s and 1990s. With few exceptions, the business schools opened in this period took on a similar coloration. The importance of these changes should not be underestimated. It is worth noting, by the way, that each and every one of the 247 newspapers in Rupert Murdoch’s media empire supported the invasion and occupation of Iraq.

Nor is it strange that neoliberal research centers, analytical organizations, and institutes that support the special interests of big money and its influential leaders are especially active, in view of the financing available. In the U.S., where “liberalism” denotes a socially progressive orientation, they are sometimes referred to as “neoconservative.” They proclaim the apotheosis of the unfettered market and private property, while fighting against the state and demanding the far-reaching curtailment of its economic intervention, budgetary redistribution, and social policy. They use such concepts as freedom and entrepreneurship, or choice and the law, even as they manipulate the meaning of these terms and subordinate the processes associated with them to special interests. Neoliberalism—as opposed to authentic, sincere liberalism, which correctly promotes such values—has nothing to do with genuine democratic politics, economic effectiveness, or social rationality beyond exploiting these beautiful ideas to serve the needs of a narrow elite at the cost of the rest of the population. Unfortunately, it must be admitted that neoliberalism does this skillfully and adroitly.

Neoliberal and Libertarian Think Thanks

Around the world, and especially in the Anglo-Saxon countries, there is no lack of analytical-research centers that make up a well-developed network supporting the neoliberal tendency. Along the way, they also produce many valuable publications. An attractive name is essential for these centers. In Washington, aside from the libertarian Cato Institute (founded in 1977, with an annual budget of over $20 million), we can thus find the influential American Enterprise Institute and the quintessentially neoconservative Heritage Foundation. London has its Institute of Economic Affairs, Sweden its Center for Business and Policy Studies (SNS), and Italy its Instituto Bruno Leoni. The Institute for the Economy in Transition is doing very well in Moscow, along with numerous branches of British and American centers. There are a few in Warsaw, where the Adam Smith Center has a particularly high profile. Naming this extremist neoliberal center after the great figure universally regarded as the creator of classical liberal economics is an intellectual abuse.

After a time, the committed economists and other researchers fall victim to their own zeal, and their work becomes doctrinaire and perfunctory. They start believing the things they say, and the media connected with the same ideologies and interest groups egg them aggressively on. This is more a matter of faith than of knowledge, more ideology than science. From this point, some might even be inclined to carry on the fight for free, for the sake of the ideal. It would be strange if they voluntarily showed as much dedication in the name of the socially excluded poor, unemployed, and homeless, or the struggling labor unions, or simply in the name of the majority of the population and the cause of development—but there are no commissions from such sources. Such research, if done at all, must either be what is known as “private scholarship,” or be state-financed, and the state is neoliberalism’s enemy number one.

In Quest for Fair Public Debate

In the fervor of the unending public debate, big money and its lobby need professional-sounding, persuasive voices to convince wider audiences of the supposed superiority of some solutions (those that favor the minority and special interests) over others (that favor the majority and the general interest). Such voices are especially important in democratic societies, since they must drown out whatever parts of the media remain authentically independent, refusing to be servile and uncritical towards the egoistic interests of big capital—no matter hard it is to resist the lucrative inducements to do so. In the final analysis, big money not only sponsors the market, but also inundates it with a mass of well-paid advertising. Advertising space is either sold or not; everybody needs to make a living, and not necessarily at poverty level.

The media are in an especially comfortable position, since they can always make themselves heard and can outshout everyone else. Paradoxically, although everyone knows who they are, the media enjoy a kind of anonymity. When the media and journalists are criticized in general, it is never clear exactly who is being condemned. This resembles the situation regarding complaints about politics and politicians. The media, as opposed to politicians, can resort to the effective tactic used by thieves who shout “Stop! Thief!” Almost everyone has bitter words to say about the media—almost everyone, because self-critical is the one thing that the media are not.

Professor Kolodko, member of the European Academy of Science, Arts, and Letters, is the author of international bestseller “Truth, Errors, and Lies: Politics and Economics in a Volatile World” (http://cup.columbia.edu/book/978-0-231-15068-2/). He writes a blog at www.volatileworld.net

3 Responses to "Think Thanks. The Good and the Bad Ones"

  1. EzioP1   June 29, 2013 at 9:32 am

    Part 1 of 2 parts
    The other side of the Prof. Kolodko theory._The Prof. Kolodko theory, goes back to the old latin saying of “divide et impera” (devide and rule). The point is who is the devider, is he always the same, is he really a person or in some case are the facts that are happening ? We have in front of us the world wide present situation where there is unemploiment, lack of faith in the future, stall of the economy. And with this also the economy constraints in the developing countries such that their goods demand is flattening. It is difficult in such an environment to identify who is the gainer, if there is one. By certain as the crise arised few years ago the first to get some benefits were the banks, then was the turn of the enterprises, and up to this point the key role was the finance or the virtual economy, not the real economy.

    • Falk   July 2, 2013 at 1:09 pm

      to decipher the devider one needs a decider – could EzioP1 be code for George W?

  2. EzioP1   June 29, 2013 at 9:34 am

    part 2 of 2 parts
    To incentivate this latest we need to sustain the consumers soliciting them to spend, give them faith in the future and in their ability and certainty to make money, the only way so far to increase the demand for goods that in turn will grow the consumption and make the money to flow again in the virtuous real productive cycle. Then if there is somebody who has interest in this why he or it doesn't show up ? It is just a matter for somebody to rule.