Economics, but Not as We Know It
Coyle, Diane, The Independent (London, England)
Cross a hard-boiled private eye pacing the mean streets of Los Angeles in the 1930s with the inexorable rationality of Mr Spock on the deck of the Starship Enterprise. Picture a world peopled by the joint imaginations of crime writer Walter Moseley and cyber-novelist William Gibson. This weird hybrid will give you an idea of the cultural development of many economists, and, worse, of the intellectual context of much of economic policy.
Economics sometimes seems to dominate modern politics. The Budget is one of the main events in the political calendar. Economists are re-engineering the welfare state. We all bow at the altar of globalisation, at the whim of the gods of the financial markets.
Yet it is a little-known fact that many of the finest minds in the economics profession, those who shape the subject and form the next generation of policy-makers, are hooked on detective novels and science fiction.
These two genres between them capture the two essential aspects of how economists assume people behave, and therefore shape the world view that in turn underlies important public policies. For the towering skyscraper of economic theory rests on twin foundations, the assumption that people act to maximise their economic gains, and the assumption that they act logically.
First of all, people's actions are seen to be fully explained by self- interest. The world of economics is an amoral place. What we spend and save, whether we have a job, where we live, how long we stay at school, even who we marry, economics explains it all in terms of personal financial gain. It is a natural leap for academics whose idea of R and R is reading about the money-driven world of crime, whether seeking the motive in a country house murder or exploring the murky deeds of the mafia.
It would be hard to invent a more upright, presbyterian sort of figure than James Mirrlees, joint winner of last year's Nobel Prize in economics. Yet asked about his interests, in the blizzard of questions he had to brave on the day of the news, he said, without hesitation, that he spent his spare time reading detective novels. Significantly, perhaps, he was awarded the prize for his work on explanations of economic behaviour when there is incomplete information.
Whether it is grainy classics such as the novels of Raymond Chandler, the country house mysteries of Agatha Christie or Margery Allingham, or modern authors like Sara Paretsky, the conventions of detective fiction hold a special charm for economists. For the world portrayed in these novels is, contrary to surface appearances, an extremely orderly one. People's behaviour has explanations - motives. Like homo economicus, the characters in crime novels do not do anything for no good reason. They act in order to further their own interest. The link is clearest in the many novels where the culprit turns out to be the person with the strong financial motive.
Even more important, the fact that crime novels always have a resolution affirms the economist's attachment to the notion of `equilibrium'. This notion underpins the subject's theoretical foundations. If there is no equilibrium, economists cannot predict how economies will behave. It is the idea that the separate decisions made by individuals add up to a coherent whole, that supply and demand will match. The alternative is chaos and unpredictability.
Similarly, classic crime fiction spurns randomness. The denouement is equivalent to an economic equilibrium. Like economics, crime fiction is not so much a mirror of the real world as a very stylised representation of it.
The powerful influence of crime on economic thought reached its apotheosis with the publication a couple of years ago of a textbook on The Economics of Organised Crime. The mafia run a multinational business which differs from others - mainly in having a higher cost base because so many of its activities are illegal. …