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Transformative economics – calling for a more conscious economics and society relationship between economics and society

Transformative Economics Calling for a more conscious
relationship between economics and society
A comment by Jonathan Barth & Florian Rommel
One cannot make it clearer than (Mackenzie, 2008): economic science has become: “An
engine not a camera”. It means, Economics does not simply depict the driving mechanism of
the economy like the textbook distinction of positive and normative statements implies
(Mankiw, 2014, 17). Instead, the idea of positive statements can prevent economists from
reflecting about their perspective and impact on society.
This is analyzed by scientists on the
issue of the “performativity of economics”. The understanding emerging from this debate,
that economics feeds back onto society in various ways can provide a chance to move towards
a self-reflexive economic science. Such a science would contrast the idea of an engine,
blindly driving a restructuring of institutions.
Especially the Pluralist Economic movement should resolve the above fallacy. The aim
should never be to solely produce better pictures’ but to increase the awareness of dealing
with multiple pictures.
As economics contributes to the world, we need to cultivate a reflexive knowledge culture in
which we are conscious for the perspective utilized (Davis and Klaes, 2003, Mäki 2013). In
addition, Economics should be put back into the responsibility of democracy and enable a
deliberate and participative decision process. We argue that the appeal for economics as a
transformative science is a first step towards a more conscious relationship with society and a
contribution to the public debate that necessitates concrete institutional changes of academic
By making this point we neither want to solely blame economists, as there are plenty who cautiously refrain
from naïve applications of mathematical models. We would rather wish to point at the consequences of the
way of teaching economics by serious omissions to create a reflexive knowledge culture (Graupe, 2012; 2017).
As Rodrik (2015) points out, in a survey for his blog, Mankiw asked whether economists agree with statements
like “Fiscal policy (for example, tax cut and/or government expenditure increase) has a significant stimulative
impact on a less than fully employed economy”. Over 90% of the economists agreed with this statement,
though the assumptions necessary for these statements to be true have not been outlined.
Awakening from the machine dream
The equilibrium concepts of modern textbook economics have their origin in classical
mechanics. They are co-created by the dream to provide accurate descriptions and guidance
for interventions in the social science as physics has provides for engineering (Brodbeck,
1998; Mirowski, 1991, Mankiw, 2006). As a consequence, economics adapted a very specific
scientific attitude towards society starting from the end of the 18th century (Graupe, 2007;
Don Ross, 2010). It has come to define itself by virtue of its method (Mäki, 2009a; Graupe,
2012) and thereby conforms with a mechanistic explanatory model (Hempel-Oppenheim,
1948), that is widely contested for the domain of social science (Hedström et al., 2010). The
aspiration is to isolate mechanisms through positive analysis that are the basis for normative
judgements of political interventions.
A successful isolated mechanism seems to make
methodological reflection obsolete: The moment we had a working description of gravity, we
had a true picture of it. A positive statement about the world implies a safe ground to act
However, this mechanistic abstraction has an endogenous moment, as economics cannot
avoid that with its descriptions and pictures of society, economics adds to society. It adds
knowledge that was not there before and that, can be used as a program for individual action
and institutional pattern. These manifests themselves in formal economic and societal
institutions, as the design of financial markets (MacKenzie, 2008), of accounting standards
(Nölke and Perry, 2006; Rommel, 2015a) or the educational system (Krautz, 2007).
Economics did also set informal institutions as paradigms of thought (Campbell, 2004) for
journalists, teachers, decision- and policy makers (Fischer et al., 2014; Pühringer et al., 2014).
While the former are engraved in laws and regulations, the latter restrict as “cognitive locks”
(Blyth, 2011) the way decision-makers and societal actors perceive their social and economic
Whether these mechanisms are taken to isolate real mechanisms or are just instrumentally working
abstractions remains an issue of debate (Friedman, 1953; Mäki, 2009b).
reality and affect what these actors interpret as an appropriate solution (Block, 1990; Block
and Heilbroner, 1996). The methodological basis of current economics entails an epistemic
norm, which leads to serious distortions of these pictures (Cartwright, 1999; Alexandrova
2006; Grüne-Yanhoff, 2011). In mechanically applying this epistemic norm on various
societal contexts, economics become an engine powering a specific type of transformation,
called economization (Çalışkan and Callon, 2009; 2010).
Thereby current Economics often lacks the moment to reflect upon the desirability of the
direction of the transformation it is contributing to.
Imagining conscious transformative economics
Many heterodox positions that indeed contribute important perspectives on society and the
economy should not commit the fallacy of solely offering better pictures. Consequently
reflections of pluralism should not just praise pluralism for is superior explanatory potentials
(Bigo et al., 2008; Dobusch and Kapeller, 2012) but must also address the normative
dimension of pluralism (Dow, 2004; Rommel, 2015b).
Up to now the calls and claims for pluralism, have covered the need for alternative views and
the reflection on perspectives in economic research. The appeal for transformative
economics (Schneidewind and Pfriem et al., 2016; Schneidewind et al., 2016) adds the
reflection of the performative dimension of economics. Thereby it opens the horizon for a
different mode of science by raising a central question: what an economic science would look
like that is conscious about its performative impact and how it could increase the societal
capacity for self-reflection. At the current stage, we can only suggest some criteria of a more
conscious way of conducting economics and point out some institutional changes we regard
The economist Edward Lazear (2000) is a noteworthy exception. He reflects the impacts of economics and
thereby provides a good overview. But instead of reflecting economics preconditions he provides a good
example for how a normative judgement can become a measuring rood for scientific progress.
important. Both should just provide a basis for discussion and shall not overlay the openness
and importance of the question raised here.
Motivated by the ever-increasing challenges faced by today’s society regarding ecological
depletion and increasing social inequality and recognizing the particular role of economics
in this regard the call for “Transformative economics” presents five criteria for transformative
economic science: Firstly, economist must be transparent on normative assumptions and
methodological approaches to foster awareness of the strength and weaknesses of different
research approaches. Secondly, economic research must reflect the performative potential of
economic research and the contextuality of knowledge production within time dependent
value frames to avoid propagating unfeasible one-fits all solutions. Thirdly, scientists must be
conscious on their values that might guide economic research to provide feasible solutions for
today’s challenges complementing the pursue for exhaustive explanations of economic
phenomena, as economics is not an end in itself. Fourthly, participation of non-scientific
actors is required to obtain socially important questions and societal values, spread economic
knowledge and include other forms of economic knowledge.
The above encloses the request for a plurality of theories and methods to foster the creation of
new innovative ideas and reflect on the shortcomings and potentials of different approaches.
In addition, it takes the performative potential of economics as given. Consequently,
economics is not only perceived as a discipline that provides positive explanations, which
narrows down the possibilities decision makers can act upon and thereby enacts an
undemocratic societal transformation, as captured by the metaphor of the “engine”. - Instead
economics may be thought of as a producer of ideas for societal orientation that is fueling
democratic debates and itself reflects societal problems and a democratic will in the way it
proceeds. Conducting “transformative economic research” is about elaborating a colorful
bouquet of courses for political and societal action, which reflect societal needs such as the
distributive and ecological effects of economic policy measures.
We argue that this understanding of an integral reflexive epistemic plurality combined with
the mission to elaborate solutions for the challenges society is tackling today, is crucial in
addition to the pluralistic aim for more perspectives and better pictures. However, its
realization will necessitate a dramatic alteration of the institutional setting of today’s
Promoting change in economics
We have pointed out elsewhere (Barth et al., 2017; see also Dobusch et al., 2009) that
economics as a discipline itself is locked in in an institutional vicious cycle. Scientific self-
reproduction in economics stabilizes itself by multiple institutions: The standardization of
teaching materials limits both the way young economists think and what they perceive as
interesting research questions. Evaluation criteria, such as impact factors, restrict access to the
scientific arena. Social norms define what is accepted as sound economic research” and the
availability of resources supports certain research approaches and career tracks only. To break
this circle, it seems reasonable to focus on two kinds of strategies, one targeting change from
within science and the other aiming at gathering support from outside the discipline.
As resources and power are unequally distributed within economics (Heise, 2017), the most
promising way of changing economics from within is by complementing existing scientific
institutions with new ones instead of aiming at their complete substitution in the short run.
Regarding teaching it might be an important first step to create new teaching materials and
textbooks, which provide an easy opportunity for critical researchers to teach students
different perspectives on the economy and different goals of economics in general.
Additionally, new forms of knowledge transfer are needed to reach out to students solely
confronted with mainstream thinking
. These offer an important opportunity for the
acquisition of critical economic knowledge independently of teaching programs at
universities. Regarding research, heterodox economists should finally overcome their internal
(mostly content related) battles and concentrate on a constructive collaboration and mutual
learning. New networks are needed that not only provide a save space for economic debates
besides the mainstream, but also strategically concentrate actions targeting change in
economics. These networks may serve as fruitful ground for the establishment of institutional
entrepreneurs, which contribute to a further institutionalization of a “transformative”
approach of economics. These pioneers have the potential to motivate young scholars to
choose different research tracks and commit themselves to pluralist and transformative
Concentrated actions of institutional entrepreneurs and networks could successfully
advocate new economic thinking and communicate the issue beyond the borders of science.
Exactly this public communication will be important, as pioneers of change within the system,
heavily depend on the support of actors outside the economic discipline (Heise, 2017).
Consequently, initiatives promoting change in economics must inform nonscientific actors
about the current state of economics to create public pressure for an alteration of existing
institutions and release resources that support these actions
. We need a democratic debate
about what is the aim of economic research, which seems to prove itself as the politically
most powerful social science. As citizens and societal subjects, we have to ask ourselves,
whether we want economics to be this powerful and if so, whether there is a particular
responsibility arising from it. And what does it need to fulfill it. Do we agree that economics
should not solely understand itself as a descriptive science responsible for providing better
One good example in this regard is the publicly available open-access online platform “Exploring Economics”
The Master Program “Plurale Ökonomik” in Siegen and the “Cusanus Hochschule” with its alternative and
transformative Bachelor and Master Programs in Economics need to be mentioned here as existing pioneers.
The efforts of Kate Raworth (2017) provide and promising example here. With her book and campaign, which
outline the shortcomings and political implication of the current state of economics for the “interested citizen”,
she successfully increased awareness on the topic.
“pictures” of the economy? Should economists also act as producers and reflectors of societal
solutions that are fueling public debates on possible courses for political action? The
narrowness of economics today is not only limiting science in the pursue for better
explanations. In the definition of what is a better picture and what pictures we want to
produce and consequently act upon; value judgements are contained. The judgements
contained in economic models as a norm for transforming our societies deserve public
attention. Science can deal with epistemic pluralism but value pluralism need a democratic
process and a conscious relation among science and society.
For sure, there are other and complementary strategies at hand. Nonetheless the proposed
measures might be a starting point to discuss what is needed to put the concept of
“transformative economics” into practice. By acting on distinct levels, change might come
into reach. To bridge the existing gap between science and society, we propose that
economics not only understands itself as positive but also as transformative science. Claims
for pluralism often fall short of the impact economics has always had on society. Instead of
solely offering a better engine that unconscious transforms society, economics must reflect its
societal impact and offer multiple competing solutions for dealing with the challenges of the
21st century. Only the availability of several alternatives can facilitate a democratic debate and
public discourse about the appropriate path for the future development of our societies.
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... Apart from the scientific contributions that barefoot economics can make to poverty research, the second scientific study of this treatise revealed that barefoot economics is capable of alleviating poverty in the course of its research practice. In terms of its performative impact on society, barefoot economics responds to the plea of sustainability researchers for 'transformative economics' (Schneidewind et al. 2016a(Schneidewind et al. , 2016bBarth & Rommel 2020) "that does not only observe and describe societal transformation processes, but rather initiates and catalyzes them" (Schneidewind et al. 2016a: 6). An essential feature of transformative economics is also the "participation of non-scientific actors" (Barth & Rommel 2020: 300). ...
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"... the practice of barefoot economics requires more than simply the lived experience of poverty-related phenomena. In contrast to the prevailing positivist paradigm within the scientific discipline of economics that tends to cultivate particular ways of economic thinking by taking their linguistic presuppositions for granted, barefoot economics involves challenging one's own horizon of possibility for economic thought by putting commonly accepted academic jargon in abeyance."
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Economics as a science not only investigates what is (as a positive science) and what should be (as a normative science), but influences, through its fundamental ideas, what facts and norms are recognized as such in society. This holds especially true for economic education. My article explains this thesis and elaborates, in particular, how this form of education stipulates a particular vision of human beings worldwide. First, I show how economics actively seeks to influence the inscription of the commonplace image of the human through economics education. Second, I discuss economics as a textbook science in Thomas Kuhn’s sense: as a science incapable of giving the students any plural or critical understanding of their self and the world. In the third step, I identify the essential features of the human image lying at the base of the economic curriculum; an image (so I argue), which splits society into mere cogs in the machine of the economy on the one side and omnipotent social engineers on the other side.
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List of Figures ix List of Tables xi Preface xiii CHAPTER ONE Problems of Institutional Analysis 1 CHAPTER TWO The Problem of Change 31 CHAPTER THREE The Problem of Mechanisms 62 CHAPTER FOUR The Problem of Ideas 90 CHAPTER FIVE The Problem of Globalization 124 CHAPTER SIX Where Do W Go from Here? 172 APPENDIX Analysis of Tax Levels and Structures for Country Subgroups 191 References 205 Index 239
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Pluralism is a key term in the current discourse in heterodox economics, emphasizing the need for greater theoretical integration and institutional cooperation of different economic traditions. However, both the nature of pluralism and the concrete role ascribed to pluralist thinking for the development of economics have been somewhat contested, pointing to a lack of (widely agreed) conceptual foundations. This paper addresses this conceptual gap by proposing a framework for interested pluralism as a guideline for organizing heterodox economic research, in particular, as well as economic debates, in general. In essence, interested pluralism suggests replacing the traditionally invoked demarcation criteria between different economic traditions by a set of rather ecumenical pluralist principles, whose concrete implications for economic research we discuss.
In the parlance of modern Japanese philosophy, the term Basho denotes a field of experience underlying all conceptions of reality, while remaining itself conceptually ungraspable. The Basho of Economics, then, refers to the economy's hidden experiential ground, which has never been explicitly scrutinized, as such, by mainstream economics. We uncover this ground by discerning the tacit presuppositions of classical and neo-classical theories from the perspective of modern Japanese philosophy. In particular, we draw attention to the traditional atomist assumptions implicit in their equilibrium-centered models. By breaking through these assumptions, we reconstruct the economy as a functional and relational world of habitual and creative activity outside of the scope of mechanical laws.
The article written by a prominent American expert analyzes the development of macroeconomic ideas. The author considers the history of macroeconomics as an interaction between applied ("engineer") and theoretical traditions. Although modern theoretical approaches, as he argues, didnt have a serious impact on economic policy, their emergence helped creating rigorous analytical tools used to develop a new generation of models ("New Neoclassical Synthesis"). The latter are to form the basis of new macroeconometric approaches and new macroeconomic engineering.
THE SUNDAY TIMES BESTSELLER'I see [Raworth] as the John Maynard Keynes of the 21st Century: by reframing the economy, she allows us to change our view of who we are, where we stand, and what we want to be.' George Monbiot, Guardian'This is sharp, significant scholarship . . . Thrilling.' Times Higher Education'[A] really important economic and political thinker.' Andrew MarrEconomics is broken. It has failed to predict, let alone prevent, financial crises that have shaken the foundations of our societies. Its outdated theories have permitted a world in which extreme poverty persists while the wealth of the super-rich grows year on year. And its blind spots have led to policies that are degrading the living world on a scale that threatens all of our futures.Can it be fixed? In Doughnut Economics, Oxford academic Kate Raworth identifies seven critical ways in which mainstream economics has led us astray, and sets out a roadmap for bringing humanity into a sweet spot that meets the needs of all within the means of the planet. En route, she deconstructs the character of ‘rational economic man’ and explains what really makes us tick. She reveals how an obsession with equilibrium has left economists helpless when facing the boom and bust of the real-world economy. She highlights the dangers of ignoring the role of energy and nature’s resources – and the far-reaching implications for economic growth when we take them into account. And in the process, she creates a new, cutting-edge economic model that is fit for the 21st century – one in which a doughnut-shaped compass points the way to human progress.Ambitious, radical and rigorously argued, Doughnut Economics promises to reframe and redraw the future of economics for a new generation.'An innovative vision about how we could refocus away from growth to thriving.' Daily Mail'Doughnut Economics shows how to ensure dignity and prosperity for all people.' Huffington Post
The new economic sociology claims to have adopted the notion of performativity from J.L Austin, has put it in new uses, and has given it new meanings. This is now spreading and has created another vogue term in the social and human sciences. The term is taken to cover all sorts of aspects in the ways in which the use of social scientific theories have consequences for the social world. The paper argues that the expansive use of ‘performativity’ obscures the Austinian idea and thereby impoverishes the conceptual resources available for analyzing the nuances in the complex theory/world connections. Importantly, it blurs the difference between constitutive and causal relationships, both of which actually are involved. Instead of economics performs the economy as the sociologists say, it would make more sense to say, the economy performs economics – but even this would be undermotivated.