Socialism and the Future of Heterodox Economics: In Conversation with Geoffrey Hodgson

The Governance Podcast

Is socialism feasible? What is the future of heterodox economics after the financial crisis? In this episode of the Governance Podcast, Mark Pennington (King's College London) sits down with Geoffrey Hodgson (Loughborough University London) for a wide-ranging conversation on the nature of social democracy, neoliberalism, and new paradigms in economics. Subscribe on iTunes and Spotify

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The Guest Geoffrey Hodgson is a Professor in Management for the Institute for International Management at Loughborough University London. He is a specialist in institutional and evolutionary economics, with a background in economics, philosophy and mathematics. His research has applications to the understanding of organisations, organisational change, innovation, entrepreneurship and economic development. Hodgson is also the Editor in Chief of the Journal of Institutional Economics (ABS rank 3). He has published 18 academic books and over 150 academic articles. He is the winner of the Schumpeter Prize 2014 for his book on "Conceptualizing Capitalism". Skip Ahead

0:55: You've actually got two books out in the last year -- Is Socialism Feasible? and Is there a future for heterodox economics? I wonder if we could start by you talking us through-- first of all, how do you write two books in a year, but also the rationale for these two particular books?

8:44: I'd like to follow up on that last part and link it to the motivation for writing these books-- you're very clear to make a distinction between socialism and social democracy, so you do see yourself as a kind of social democrat who has been influenced by arguments in the liberal tradition. I wonder if you could say something about why you think, following the crash, there's been a movement toward going back to what you describe as 'big state socialism' as opposed to embracing a radical Keynesian view or some kind of interventionist or redistributive politics, which isn't about nationalising or controlling everything from the centre.

14:45: I really enjoyed this section of the book where you're talking about the use of terminology-- how the use of this term 'neoliberal' has meant that you almost can't have a conversation in certain areas because anything turns out to be neoliberal if it isn't full blooded socialism and I think there's a wonderful line in the book where you say that if you follow this kind of reasoning, when Lenin introduced the New Economic Policy to save the Soviet people from starvation, this would have been described as a neoliberal policy by some of the contemporary left.

16:34: Why do you think that label [neoliberalism] has become so ubiquitous?

18:17: You mention some heterodox thinkers using the term, dismissing certain things as being right wing just because of that. Perhaps we can connect to the second book-- could you talk about the rationale for writing it?

26:32: Can we pursue that more, this issue about how effectively methodological questions seem to get confused with policy positions or ideological views in heterodoxy? This is something that's always frustrated me-- I consider myself to be quite heterodox in the sense that I'm very influenced by the Austrian school ideas. There are lots of debates I'd like to engage with people who are post-Keynesians or post-institutionalists or evolutionary thinkers, and I feel that we should have a club identity around those themes. But because we might divide on policy issues that seems to come apart.

29:59: There is so much within neoclassical economics which promotes, if not radical socialism, although you could interpret some general equilibrium theory in that way, but it certainly promotes interventionism -- it assumes away all the problems of tacit knowledge.

30:33: You've given reasons why you think heterodox economics as a set of broad theories is not in as good a shape as you'd like it to be, and that's one of the reasons you've written this book-- I wonder if you could address institutional economics, which on some readings is a kind of subfield within the broad heterodox camp, but arguably with things like new institutional economics there are some overlaps with the mainstream.

34:46: I would have thought there should be more overlap between some of the concerns of institutional economics-- you think about the role that soft institutions or beliefs play, or the way ideas are communicated, with a lot of the work that takes place in cultural studies or communication studies, these kind of areas which often see themselves as being antithetical to economic ways of thinking, but they're actually dealing with questions about how ideas spread, how norms change, and you'd think this is terrain where they should be interested in the kind of insights you'd get from these fields.

39:07: This connects back to our earlier discussion about the socialism book-- within our research centre here we're very much concerned with governance questions. Of course within that area we focused on themes like markets and private property, state ownership. But one of the great contributions I think of institutional economics, certainly of people like Elinor Ostrom, is to point out this whole space that many people have missed, which is between markets and states. And there's even been the argument made that to speak in terms of markets and states is a kind of outdated mode of analysis, that we actually need to be seeing all solutions to social problems in some sense as being some form of hybrid. Do you think that is one of the most important contributions of institutional economics?

41:33: I'm struck by how few politicians are able to articulate that kind of language. You could say that some people used to talk about the third way as something different, but people spoke about a third way or looking for some notion of hybrids.

46:50: Is there a way in policy terms where people can conceive of allowing different institutions to coexist so that we don't see this as being a choice between all markets or all something else; we actually have different kinds of organisation coexisting in a society? If you think about a solution to religious conflict -- it's to tolerate the fact that people have different religions. If we can tolerate the fact that some people prefer different institutional forms, we've got to figure out some way allowing them to coexist rather than seeking victory for one side.

52:09: To reflect a bit on what is happening to economics -- to think about those questions post-crisis-- I remember the financial crash, there was a huge amount of activism by students and people in the profession saying that economics needs to rethink itself. Some of the issues we've talked about get to parts of that, but my understanding is that economics hasn't changed much at all these 15 years. Do you see any signs of change?