Sunday, August 10, 2008

The Irrelevance of Workers In Economic Theory

Many of you know that I am finishing up a book manuscript regarding the exclusion of work, workers and working conditions from economic theory. This part jumps into the middle of a section. The meat of the post is really in the third and fourth paragraphs, where I do a JSTOR survey of the almost total exclusion from economics. Fans of Martin Feldstein may appreciate his contribution.

In short, the exclusion of work, workers, and working conditions was not simply an accidental oversight. First, it served an important purpose in defending the capitalism from the accusation of exploitation. Second, any analysis based on labor would call out for both impossible quantification and more difficult mathematics. Utility, however, seemed to permit economists to avoid the need for quantification, while seeming to simplify mathematical complexities. Finally, utility seemed to be capable of fitting in with the type of models that economists were using in their quest to emulate physics with its mathematics of maximization.

As Phil Mirowski noted, "Production, as conventionally understood, does not "fit" in neoclassical value theory" (Mirowski 1989, p. 284). In short, ideology, mathematical convenience, and scientific ambitions all combined to sweep work, workers, and working conditions under the rug.
The radical shift from labor to extreme subjectivity in which consumer's unmeasurable preferences became the center of economic analysis sealed labor's marginalization in the theoretical world of economic theory. Other fields, such as sociology, industrial relations, or psychology seriously explore questions of work, workers or working conditions, but economics does not.

An August 8, 2008 search of 73 economics journals collected electronically in the JSTOR database revealed how marginal work, workers, and working conditions has become in economic literature. Of the articles published since January 2004, the term "working conditions" appeared in only 12, not counting four more substantial articles in the Review of African Political Economy, a journal rarely cited by mainstream economists. Of the remaining articles, three concerned the problem of retention of teachers. Another had a footnote that observed that people can learn about working conditions from websites. One article noted that faculty members in colleges and universities join unions to improve working conditions. A book review considered whether globalization could improve working conditions. Two articles mentioned legislation that took working conditions into account. One article disputed that child labor abroad experienced hideous working conditions. Another cited a mid-nineteenth century British economist who said that factory working conditions were good.

My favorite entry was from Martin Feldstein, whose contempt for spiteful egalitarian was discussed earlier. This article was one of his many attacks on Social Security that proposed that good working conditions should be treated as taxable income (Feldstein 2005, p. 36). None of the articles offered any evidence of serious engagement with work, workers, or working conditions. In contrast, a search for sociologists' articles with the term "working conditions" that covered ten fewer journals, returned 107 articles.

At the same time as questions of labor were disappearing, economics began to elevate the status of investors' financial claims, insisting that owners of this form of property had rights equal to those of owners of real goods, such as land or factories. Even something as ephemeral as "good will" became recognized as property.


Robert D Feinman said...

I think you would find similar neglect in other areas as well. How many historians teach labor history?

How much time is devoted to the subject in the usual high school and college survey courses?

How many lawyers and law firms work on cases supporting worker's rights?

I claim that this is all an (indirect) result of the drop in union density in the US. Fewer union members, fewer people catering to their concerns.

Notice that there are no substantive discussions of labor issues on the campaign trail either. The card check bill going through congress is being pushed by the unions without the help of any other "liberal" groups concerned with social policy.

It's continually surprising to me that workers don't see the benefits of being organized. It's not like they don't have examples of Europe and earlier US history to draw upon.

Did I just say that after pointing that there is a deliberate effort to keep people in the dark about such matters? Oops!

Peter Dorman said...

Working conditions have a long and sordid history in economic theory, as I tried to detail in my book "Markets and Mortality". If you think Kip Viscusi has the goods on working conditions, you can believe that economics really has this topic covered. Otherwise you may be stuck with me.

Fungus the Photo! said...

I post this ref to the "Thunderer" as Rupert needs the money to buy the WSJ.....
The Bank of England clearly feels that humans including workers, have no place in economics, or perhaps it is merely declaring war on the middle (muddle?) classes? Perhaps by drawing attention to it, this ex {sorry but PROFANITY ALERT!} ...journalist... wants to raise the issue of housing for the slave classes. I suppose he wants them to have gradual inflation in that area as well? So they may avoid seemingly random dislocations that have family destroying effects? What next?

Edward Vielmetti said...

This isn't at all surprising, given that the extremely naive model of homo economicus (let's just start with perfect information and utility maximization) is a rotten model for describing how people look for work or how they behave on the job.

Add to that the toxic relations at the academic level between the economics and the economic sociologists (who occupy the same campus but never speak to each other) and you get a pretty reasonable explanation for all this.

still unlearning most of my undergraduate degree,