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Tuesday, 20 December 2011

Why So Few 'Great' Women Economists?

Women, in general, are not conned by academic Economics and its notion that markets are inherently 'rational'. The reason why women occupy a small percentage of professorial chairs in Economics was perfectly summarised by an intermittently strident feminist politician in the context of the banking crisis of 2008: would the crash have occurred if Lehman Brothers had been Lehman Sisters?

Women are just too damnably sensible, in general, to be deluded over the long term by the normalist  models that form the bedrock of twentieth-century Economics. The sole woman winner of the pseudo-Nobel Prize in Economics, Elinor Ostrom, is a Political Economist: not an expositor of simplistic and unrealistic models. The first woman to receive a Fellowship of the British Academy as an 'Economist', Professor Joan Robinson, set out on her career teaching  mainstream Cambridge Economics: but she evolved into a critic of the content and methodology of the subject in such works as Economics, An Awkward Corner and in her querulous reviews of the history and evolution of Economics. Joan was married to Austin Robinson, a mainstream Cambridge professor of Economics and a contemporary of John Hicks, who was a professor first in Manchester and then in Oxford. Sir John was the first Briton to receive the newly created 'Nobel Prize' on the basis of a huge output of elaborate theory that was published over many decades. His wife Ursula was herself a highly-regarded figure, known as an Economist but actually a practitioner of Political Economy, with her best-regarded publications on the reform of taxation and the processes of economic the real world. Joan Robinson and Ursula Hicks were held in great esteem from the nineteen forties for the next four decades, though Joan Robinson's increasing 'eccentricity ' - signalled by her turning away from 'high theory' - could not be denied. No British woman has been held in similar eminence among academic Economists since them.

Nevertheless, one British woman stands out now as an economic commentator of immense authority. In 2006 Gillian Tett foretold the impending crash in financial markets that materialised the next year and she explained the whole thing in 2009 in Fools Gold, a book that deservedly brought her a sheaf of prizes and awards. She understands the economy and Economists; because she sees them from the perspective of a Ph D in Social Anthropology. Currently she is working for the Financial Times in New York, where she makes shrewd observations on the morass of data, dogma, pragmatism and irrational optimism that keeps the US suspended over the deep black sea of the debt that has been accumulated by Federal, State and municipal governments. Healthy scepticism enabled her to see through the financial phlogiston that had supposedly created a firmament in cyberspace much earlier than most observers. The financial services created increasingly insubstantial 'products' which others bought as 'assets'; and they accumulated invisible intangibles to hold as hedges against the supposedly-exiguous risk that any of the AAA-rated assets could fail.

In a much-misquoted phrase Keynes wrote that people in markets act quite irrationally when they are taken over by 'animal spirits' in a wave of 'irrational psychology'. Tett's background in social anthropology was the perfect base from which to view the most spectacularly successful indulgence in irrationality in modern history: and to analyse exactly what it was. She was not alone in making those observations, but she was bold in asserting where it must end up. No first-class degree-bearing Economist of her age [of either gender] was able to match her prediction; not that many tried: most of them accepted the dogma about 'rational markets' that they had regurgitated to gain their high marks in examinations. Interestingly, however, the majority of the creators of the new immaterial 'products' were graduates in natural sciences [who alone were able to do the necessary Maths] and in History, Languages and even Moral Sciences [who were able to think 'outside the box'], rather than Economists. Economists were not particularly good operators in those markets, unless their Maths was strong enough to cope with the algorithms on which the 'products' were based.

Everybody is said to have a 'female side' and a 'male side' to their personality; with most men having a preponderance of testosterone-influenced masculinity [some much more overtly than others] and most women displaying the characteristics of  practical common sense and the ability to multi-task [which is eclipsed only in love and in the shops]. Some women are reckless gamblers, careless drunks or uncaring parents; but they are clearly in the minority. Some men are steady, sensible and critically analytical at all times; and they are an even smaller minority in their gender. Economics as it has been developed since 1870 is based on irrational 'analysis' of impossible situations which are considered 'normal' for textbook purposes. Many women and men find Economics opaque, often incomprehensible, and they opt not to continue with studying it: they are not thick, but sensible.

Everybody in the 'west' is going to suffer disruption to their economic environment for years to come  due to the collapse of the fantasies that were sanctioned by Economics that was produced by men. A female French lawyer [not an Economist] - Christine Lagarde - has been put into the pivotal position in the global mechanism - the IMF - on which the stabilisation of the system depends. If she bases her work on Keynes's template for the Fund she will have a high probability of success. Keynes's contemporaries emphasised his prominent 'feline' or 'feminine' attributes; in equal measure they envied and lauded his ability to assess changing situations and his apparently-intuitive formulation of relevant theory to underpin emerging policies. Those characteristics were absent from the male 'neokeynesians'  who created the nineteen-seventies inflation which gave Margaret Thatcher her opportunity to find 'alternative' - male - Economists who found new ways accidentally to undermine the economy. A new science of the economy is needed. Traditional Political Economy offers still-effective fundamental Laws but it is not sufficient. New understanding is needed, and a strong element of feminine insight will be indispensable in its formulation.


The lore and legend of Wall Street tells us that one of the most 'toxic' products that emerged from the phoney boom of the cybertrade era, Credit Default Swaps, was invented by a woman in the early 'nineties. That may well be the case, since the product was introduced selectively. The accumulation of a huge concentration of such risk on its balance sheet - via a London subsidiary - was sufficient to ruin the world's greatest insurer, AIG. This was entirely a masculine achievement. No other major insurer was even seriously stressed by the credit crunch, which was a crisis of banking-based financial services, because no insurer [as such] would be such an idiot as to commit his - or her - reserves to such quantities of unquantifiable liability. A minor London market financial organisation, owned by an insurance conglomerate and staffed with  greed and recklessness, was subject to grossly inadequate oversight both by corporate bosses and by regulators; which allowed an 'impossible' situation to be engineered; in a man's world.

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