Before "Larry Summers" became synonymous with expert for hire by Wall Street, he was the Harvard President, who suggested, while claiming that he wished to "provoke," that "there are issues of intrinsic aptitude, and particularly of the variability of aptitude," that might explain the relatively low presence of women "in high-end scientific professions." Summers insisted that his is an "entirely positive" not "normative approach." (Summer 2005; he is deploying a standard distinction among economists.) The lecture set off a furore that contributed to his eventual resignation from Harvard (it surely did not help he was in charge of a nearly US$ 1 Billion loss on speculative investments). But...before his notoriety Summers was one of those economists that effortlessly move between academia and government (while generally serving the interests of the wealthy). Such folk become prominent within public policy economics through highly regarded academic work, which won Summers the John Bates Clark Medal (1993) and which partially accounted for his selection as Chief economist at The World Bank (1991-3). As the politically influential, but nevertheless academic Vice-President of the World Bank, Summers was invited to Pakistan to give The Quaid-i-Azam Lecture in 1992, "Investing in All the People," to the Pakistan Society of Development Economists. The main point of Summers' lecture, which has been cited close to 300 times and is easily found on the internet, is:
Investing in the education of girls may well be the highest return investment available in the developing world. As such, increasing the level of female education is an especially high priority in Pakistan.
So, before Summers became synonymous with sexism in academia he was an advocate of underprivileged women's education. (A topic Summers continues to talk about.) The paper was admiringly profiled in Business Week, and created the meme of Summers as "iconoclastic Liberal." For those that like their irony fully symmetric, I note that the 1992 magazine article treats Summers as an academic "provocateur." Summers' Pakistani hosts asked a mathematical economist hailing from Waziristan, MA Khan (then as now at Johns Hopkins), to offer comments (see here). Rather than dazzle his famous American colleague and "the Pakistani Minister of Defence and Minister of Water and Power" (quoted from Richard H. Sabot's response to Summers) with state of the art mathematical technique, Khan quotes Derrida and Clifford Geertz in the process of calling Summers "reckless."
Part of the problem is that "education" is a vague term and that the content and "primary nature" of education will be very contested. Moreover, through a series of questions, Khan hints at misgivings about the "Chicago-Columbia approach to the economics of the household, and one associated particularly with the names of G. Becker and T. W. Schultz. The basic insight is to regard children, boys and girls, with differing levels of education as different commodities."--Khan develops his criticisms of treating education and human beings as a commodity in the following year during his invited distinguished lecture to the same society. (I return to this lecture in the next few weeks.) What one takes "education" to be or to involve, will presuppose non-trivial commitments about one's aim(s) for it. (It's in this context that Khan refers to Derrida's observations on "how the French language was imposed on what is now France to build what is now the French nation." Some other time I return to Khan's more thoroughgoing engagement with Derrida.)
Another serious problem is that Summers' advocacy of a particular policy cannot be made from within 'positive' economics. Khan puts the point as a "methodological" issue:
[Summers's use of] "best" obviously implies a criterion which is being maximised, and as I understand the new welfare economics, an economist simply spells out to those in charge of policy the various trade-offs involved. It is then left to the executive, elected or appointed or whatever, to take the necessary decisions. (12) But maybe, here I am being influenced too much by old-fashioned constructs such as Arrow's impossibility theorem.
According to Khan, Summers should have explained the trade-offs among different policy options and, if possible, the reasonably foreseeable consequences of these. In the guise of "positive" science, Summers has presupposed non-trivial commitments about ordering relations among such policies; that is, Summers acts as if there are no normative issues here and, in doing so, he has displaced the local political political process. Leaving aside ordinary sensitivity toward Worldbank officials telling locals what to do, Khan is too polite to mention that at the time of Summers' visit, Pakistan had recently returned to democracy from military government. Summers' active "policy interference" in order "to transform society over time" must have been a very sensitive issue to Summers' hosts. So, Summers is just deluded into thinking that he has steered (in Summers' words) "clear of the moral and cultural aspects unavoidably implicated in any gender related question. Partially this reflects my comparative advantage as an economist."
Now, in one sense, Khan is defending the integrity of positive economics against (institutional) imperialist over-reach and to prevent further debasement of what ought to be a vocation. Footnote (12) is a reference to Khan's (1992) very critical discussion of Harberger's views--Harberger is the intellectual mentor of the so-called "Chicago Boys." (See here.) As I have tried to indicate, Harberger is also one of the intellectual Godfathers of what is now known as "neo-liberalism." Khan's engagement with Summers reminds us that neo-Liberalism sometimes also self-consciously promotes genuinely liberal values (i.e., educating women); the sting is that this can be very problematic, too, (see Khan's deconstruction of Peter Singer). While undoubtedly plenty of Pakistan's existing problems are homegrown, Khan was right to call attention to the dangers of expert-social-engineers' failure to provide the local political class a full range of policy options.
So, Khan is an early critic of the Washington Consensus from within the economics profession. While he also develops his arguments within the framework adopted by the Washington insiders (the criticism of Harberger, for example, is essentially that Harberger reaches the policy conclusions he wants rather than based on the model), his more important point is that Summers et. al. are blind to the need to embrace
both the economic and the socio-cultural. Institutions of any complex society are not only linked to each other, but any one of them typically serves more than one end and its unilateral abolition without corresponding modifications of others, however desirable from the point of view of one objective, may be disastrous from the point of view of another.
This is a conception of "equilibrium" that emphasizes not just thick cultural description (hence the reference to Geertz) and the need for taking (non-economic) institutions (and aims) into consideration, but also insists on the recognition of the significant interdependence of society's institutions, which often have multiple ongoing functions. (In context, Khan is resisting a "partial equilibrium" approach; this tends to be associated with Chicago economics.) In part, one can capture this by saying that Khan recognizes that welfare economics cannot avoid being political and cultural economy.
Khan's resistance to externally imposed languages of thought and social engineering, thus, deploys a familiar economic concept, "equilibrium," but (despite the passing references to Arrow and Nash) it is not the one associated with the Arrow–Debreu–McKenzie model (of which Khan himself is one of the acknowledged master-theorists). Khan is hinting here at a very different kind of economic theory: one that incorporates Michael Oakeshott distinction between theorist and theoretician into its own self-understanding. During the next few months I plan to return to these themes in Khan's work and his vision for the role(s) of philosophy in economics.
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