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Category : Miscellany


“There is no penumbra of approbation round the theory of equilibrium. Equilibrium is just equilibrium.” Discuss.

Yes, this was a question we had in our Economics paper the year I joined the BA (Hons) Economics course. The answer is clear and simple: it is like saying 2+2=4 whether you like it or not : there is nothing you can do about it.

The quote is from Lionel Robbins’ book based on his lecture “ The Nature and Significance of Economics”. For Robbins, this may have been an esoteric way of bringing home a point to the Cambridge school, that economics is concerned with cause and effect , with actions and outcomes , with scarce resources that have to be deployed to achieve chosen ends ; that it is not the business of economists to give prescriptions. Yet that statement , out of context, sounds mystifying and non-communicative.

A few years later I had the privilege of attending Robbins’ lectures : the great man was anything but jargon: there was a flow that was easy, effortless and enjoyable. I admired the flow of his thoughts in lucid and understandable language- although my views on many of the issues he discussed had already been shaped by the ‘welfare’ economists of a different kind.

Economists themselves have been some of the worst critics of this style of communication.Listen to this, from the great economist Galbraith, “‘Economics is a subject profoundly conducive to cliche, resonant with boredom. On few topics is an American audience so practiced in turning off its ears and minds. And none can say that the response is ill advised.”

James Gingerly once wrote in the Guardian on economic journalism with the following extract from a report the Telegraph describing the Greek financial crisis:

“Late on Wednesday night, the governing council of the ECB decided that it would no longer accept Greek sovereign debt as collateral for its loans. Greece’s junk-rated bonds had been the subject of a “waiver”, where the central bank accepted sovereign and bank debt as security in return for cheap ECB funding.”
Gingerly adds,
“I’m a fairly intelligent man. I am deeply interested in foreign affairs. Yet I have only the vaguest sense of what the above means. Does “sovereign debt” or “junk-rated bonds” or, in this context, “collateral” mean much to the average person? Have any of these phrases truly entered the public consciousness? I would argue not. A recent survey of 1,500 University of Manchester students would agree with me. Only 40% of them could even properly define GDP. “

As a student of economics, I used to wonder why economists made simple things difficult by couching them in a language that most people would not understand. I don’t anymore. I have myself been guilty of that , while teaching management courses, preferring jargon that perhaps stifled more than stimulated thinking. We teachers often become slaves of jargons and cliches, of codes and symbols and fail to share meaning.

I have come across some explanations but none very satisfying: that economists talk largely to economists and when they do talk to others they use the same language: that while talking to politicians and policy makers at the highest level it is prudent to be ambiguous: that they are poor at predicting and excel in rationalising why their predictions did not materialise..

Perhaps teaching economics is very different today. There are even books on Commonsense Economics, But that ‘penumbra of approbation’ does pop up in my mind often, as it did when I first went in to teach managerial economics.