Resisting Conventional Economic Wisdom: A Call for Inclusive Prosperity and Professional Reform

This episode features Dani Rodrik, Ford Foundation Professor of International Political Economy at Harvard, discussing the founding of "Economists for Inclusive Prosperity" (EfIP). The initiative stems from a belief that economists must be part of the solution, not the problem, by challenging the prevailing perception that the economics profession solely champions efficiency and growth. Rodrik argues that crucial values like inclusion, equity, and opportunity for all have been sidelined, and EfIP aims to integrate these into mainstream economic discourse, recognizing the significant societal and political challenges facing modern societies.

EfIP seeks to highlight the substantial, policy-oriented work already being conducted within the economics profession, particularly by younger economists across diverse sub-disciplines such as public finance, labor economics, and environmental economics. This work often delves into the underlying rules of markets and the distributional incidence of policies, moving beyond mere aggregate performance. A key objective is to transform professional norms and expectations, encouraging assistant professors and graduate students to engage publicly on pressing policy issues without fear of compromising their scholarly careers. This effort aims to counteract the historical monopolization of the public voice of economics by a narrow segment of senior scholars, thereby showcasing the profession's inherent diversity of views.

The conversation critically examines how introductory economics textbooks often lag behind the discipline's evolution, presenting an oversimplified view that excessively praises markets and rational, selfish behavior. This pedagogical approach risks indoctrinating students and future voters into a narrow understanding of economic principles, rather than equipping them with a nuanced perspective. Rodrik advocates for teaching economics as a framework for understanding coordination and cooperation challenges, positioning markets as one powerful, but not exclusive, solution. The goal is to illuminate the strengths and limitations of market mechanisms, fostering a more sophisticated economic literacy that avoids a "one-size-fits-all" universal model.

Finally, the discussion touches upon the historical tendency to deify dominant institutions—from the church to scientific technocracy and then the market—and stresses the importance of achieving a balance between decentralized market mechanisms and centralized coordination. Rodrik emphasizes that economic frameworks must ultimately serve broader societal purposes and values, which extend beyond the purview of economists alone. His own intellectual journey, rooted in comparative politics and history, has instilled in him a deep-seated resistance to conventional wisdom and an appreciation for the role of political institutions, power, and distribution in shaping market rules.

sometimes I say that by the time an idea becomes conventional wisdom that it's it's you know it's it's definitely wrong because to state it as a conventional wisdom it has to be stated without all the qualifiers and the caveats and the ifs and the buds and at you know in that form it's sure to be wrong

we felt that you know economists had to be part of the solution and not the problem

there is a perception out there that economists and economics are is sort of the high priest of efficiency and growth and that's all the only thing that they care about and all the other important values of inclusion equity opportunity for for all is our things that should be left to others

we wanted to change professional norms and expectations and the sociology of the profession that it's that that it's actually okay to do policy related work it's okay to speak about the big issues of the day while you are still an assistant professor

our public voice has been monopolized by a rather narrow segment of senior scholars

our textbooks reflect too much of that simplicity and not enough of what scholars know and understand to be which am I called the dilemmas or Union yank of these years

we are too keen to sing the praises of markets and and and and rational selfish behavior and I think we don't really present the best of the economics profession to those who give a little credence to the author of a textbook

thinking the thing of the economy more as a challenge of coordination and cooperation rather than simply as decentralized markets

none of that really necessarily tells us anything about purpose about what are the purposes that we ought to serve and and those have to do with values and with our what our fundamental believes about what kind of society we want to live in