In January 2009, as economists gathered in San Francisco for the annual meetings of the American Economic Association (AEA), the economy was in a shambles as a result of the financial crisis and recession. The crisis took mainstream economists by surprise, perhaps because of the free-market orthodoxy that pervades their discipline. The profession could hardly ignore the crisis; heretofore proponents of laissez-faire policies suddenly embraced fiscal stimulus and other government intervention in the economy. Former chairman of the Federal Reserve, Alan Greenspan, famously told a congressional committee that he was “shocked” that free-market models had turned out to be flawed. “I was wrong,” admitted the “maestro” (as Greenspan was called at the height of his reputation).
But the 2009 meetings of the AEA showed a profession remarkably unperturbed by economic collapse. Patricia Cohen of the New York Times reported that conference attendees and the discipline as a whole appeared “unshaken” by the financial crisis. “Free market theory, mathematical models and hostility to government regulation still reign in most economics departments at colleges and universities around the country.”
What would it take for the profession to change? Cohen quotes David Card, a labor economist at the University of California at Berkeley: “If unemployment is still high three years from now, then you might start to see a paradigm shift, Mr. Card said; economists will ‘have to say that the market isn’t supposed to work this way.’”
Three years hence, with unemployment still high, no paradigm change was in evidence at the 2012 AEA meetings, which were held January 6 through 8 in Chicago, ground zero of Milton Friedman’s Chicago School of free-market economics. But there was one key difference: now there is an Occupy movement.
A coalition of groups including Occupy Chicago, StandUp! Chicago, the Coalition Against Corporate Higher Education (CACHE), Jobs with Justice, the Chicago Political Economy Group (CPEG), and the Union for Radical Political Economists (URPE) staged a series of events and demonstrations targeting the AEA and its role in the economic crisis. From the flyer promoting the actions dubbed “Occupy the AEA”:
“The American Economic Association (AEA) has for years fostered a narrow, free-market orthodoxy in the economics profession. Mainstream economists of both parties move fluidly between academia and government, not only spinning out the most narrow-minded free-market theory, but attempting to construct the economy in the image of this theory. In so doing, they lend a helping hand to the interests of the 1%, providing a scientific aura for deregulation, low tax rates for the wealthy and corporations, slashing necessary programs and privatization.
Tell the AEA: “The show’s over.” The 99% are onto their machinations and manipulations. Call them out! Join labor, community, and ethical economists’ groups in two days of outrage, and challenge the AEA to serve the people, not the rich and powerful.”
An image on the flyer, created by Hope Asya of the Occupy Chicago Arts Committee, depicts Occupy as a hand holding a pin, pricking a bubble surrounding the AEA’s official seal. This image captures not only the role of free-market, deregulatory economics in creating speculative bubbles, but also the way in which mainstream economists operate in a bubble that insulates them from the real-world struggles of the 99%.
One example of that bubble: the AEA and the economics discipline as a whole, unlike most any other discipline, have had no code of ethics. Other professions—from physicians to physicists, from sociologists to statisticians—have codes requiring (among other things) disclosure of potential conflicts of interest. Economists, by contrast,have been free to sit on corporate boards while expounding on policy that affects those corporations. In the wake of the financial crisis, and with public attention directed toward the profession’s shabby ethical practices (most prominently in Charles Ferguson’s Academy Award-winning documentary Inside Job), more than 300 AEA members signed a petition asking the organization to adopt a code of ethics, which it did, finally, on the Thursday before this year’s convention.
Friday’s protest events began with political theater in which the “1% economists” were invited to have lunch with members of the 99%. Occupy activists set up a table and chairs on the corner of Michigan and Wacker Avenues, outside the main conference hotel, the Hyatt Regency, and served “RAHMen noodles,” in mock tribute to Chicago’s new mayor, Rahm Emmanuel. Sitting at the table to represent the 99% were Lourdes Guerrero, a laid-off art teacher, and 85-year-old activist Ruth Long, who spoke about how cuts in education and social services have affected them.
Simultaneously, members of Occupy Chicago dropped a banner from a bridge over the Chicago River with the famed Wrigley Building in the background. The banner depicted an AEA economist, looking like the rich guy from Monopoly, urinating on the 99%, under the title “Trickledown Economics.”
After the luncheon, activists marched down Michigan Avenue by Millennium Park and Grant Park with radical economists from URPE and CPEG, as well as an escort of Chicago Police Department officers riding bicycles. The small band of marchers was undeterred by the arrest of David Orlikoff of Occupy Chicago, one of the main organizers of the protests, whose only offense seems to have been insufficient deference to the police. After spending a few hours in jail, he was cited for “failure to obey an order to disperse,” an order which none of the participants in the march had followed, or even seem to have heard.
There was also “The People’s Economic Conference”—a two-day teach-in at Roosevelt University, led by radical economists including Nancy Folbre of UMass-Amherst, Chris Tilly of UCLA, Stephen Marglin of Harvard, George DeMartino of the University of Denver, and Steve Zarlenga of the American Monetary Institute. “I was excited to learn about URPE and that there are economists who are critical to the failed economic, academic theories of Milton Friedman and Alan Greenspan,” said Marty Donakowski, a graduate student and member of CACHE. “It is inspiring and elating that there are active economic theorists who advocate on behalf of the common good, especially in the face of the current recession.”
On Saturday, CACHE held a mock award ceremony for the economists most responsible for the financial crisis and recession. For the record: the BP Toxic Waste of Space Award went to Larry Summers of Harvard and of the Obama administration; the Martha Stewart Award for Most Conflicted Economist went to Columbia Business School’s R. Glenn Hubbard; while the Glenn Beck Award for Excellence in Indoctrination and Propaganda went Harvard University’s N. Gregory Mankiw. (In early November, 70 of Mankiw’s students—some of them Occupy Harvard activists—protested his teaching in their own way, by staging a walkout from his introductory economics lecture; see “Walking Out On Mainstream Economics,” Boston Occupier Issue 3.)
The CACHE demonstration also focused on problems in economics education. CACHE activist Ben Schacht explained why he joined the protests: “I’m here to protest the way that economics curricula have become just a vehicle for very narrow theories of self-interest and rationality which basically legitimate the system of economic organization that works for very few people, and hurts the vast majority of people—99% of people.”
Though the protests and teach-ins were not large—the largest rally peaked at about a hundred fifty people—they were loud and spirited. They also brought together a wide range of people and groups; in addition to the already-named groups, members of Ocupemos el Barrio, Occupy the South Side, and Iraq Veterans Against the War were in attendance during the events.
“In the actions and especially in the teach-ins, it really felt like activists, citizens, and economists were together taking economics back for the people, for the 99%,” said UCLA economist Chris Tilly, who is director of UCLA’s Institute for Research on Labor and Unemployment. “It was exciting and pre-figurative in some of the same ways that the entire Occupy movement has been.” Now that there’s an Occupy movement, there’s a better chance that mainstream economists will escape their current bubble and generate fewer bubbles in the future. Maybe some of them will even join in the struggle to build an economy that works for the 99%.