Is Brexit the first sign of America's declining intellectual dominance?

For as long as most of us have been living, the United States of America has wielded the greatest world influence, both culturally and politically. But underneath the French fries and implanted democracies is a world economic doctrine that conceals America’s slip from the top.

Norbert Harling and Niall Douglas from the World Economics Association investigate how ideas about economics are propagated and maintained by powerful American institutions till they become the mainstream heterodoxy so as they can benefit the wealthy power elite and the USA as a whole. Particularly, Harling and Douglas express that power has gone from a central, to an almost non-existent consideration in mainstream economics. Surely this version of economics can only serve to protect those with whom power rests. Harling and Douglas argue vividly though anecdotally, in Economists and the Powerful, that American influence goes beyond pushing for free market style economies like in the cold war and takes a deceitful and self-interested stance of obscuring power.

One interesting way this domination takes place is in the academic community, where control is exerted over what research is seen to be reliable and what is seen as a ‘fringe’ or ‘unorthodox’ piece. The editors of the leading economic journals (which are U.S based) choose around 10% of submitted articles to get published, leaving plenty of room for bias. And that bias can be easily realised when one considers that these editors (of the American Economic Review; the Quarterly Journal of Economics; the Journal of Political Economy etc.) are unlikely to publish ‘fringe’ theories that challenge the economics on which they have built their academic careers. It’s much safer to stick with what you know.

But intellectual disposition doesn’t stop there. Economics departments in universities and prestigious economics institutions the world over are jam packed with American educated economists - the International Monetary Fund and World Bank almost see Ivy League economic training as a requirement. The notable exception of the London School of Economics is to be trusted to hold up the power-devoid, free-market mainstream economics, as it is the intellectual home in Europe of economic liberalism and one of it’s saints, Friedrich von Hayek.

An example of what exactly can maintain economic orthodoxy that favours the United States is Gross Domestic Product. GDP, by far the most popular method of measuring an economy, reduces all economic activity in a given territory to money terms, rather than describing the quality or style of work done and whom the work is done by. American style economies in developed nations, which have a high degree of people working in lucrative service industries like finance, seem empirically and entirely superior to other economies because of their higher GDP. Haring and Douglas point out that “if a hedge fund manager makes five billion dollars in a good year… this is just as good in GDP terms as 13.7 million people living on a dollar a day doubling their incomes”. This kind of explicit reduction to money terms is what makes measuring in GDP so controversial in they eyes of more critical economists, as it pushes attention towards relentless growth and away from power structures that benefit from the present system.

Are we doomed to live under lady liberty’s shadow for the foreseeable future? Perhaps. But the crack in the barrel of ‘power ignorance’ in the economy is Brexit. The vote for Britain (and let’s not forget Northern Ireland as the electorate did) to leave the EU completely forsake the wishes of economic elites. The Remain camp, which had the support of every respectable and dominant institution imaginable: the conservative leadership; the labour party; the SNP; the Treasury; the Bank of England; the CBI; the TUC and the US government, failed the wield power for the economic status quo. That’s because the campaign to Leave understood that for Brits, self-determination and national pride are more important than economics, especially the economics of the mouths of foreigners. The referendum wasn’t just about our economy but the kind of country we want it to be. Theresa May understands the vote to be “not just to change Britain’s relationship with the European Union, but to call for a change in the way our country works” she said at her party conference.

Will referendums and the public will be what does the most damage to American sponsored orthodoxy? It’s hard to say, but what the mantra of the Leave camp – ‘take back control’ – tells us is that people will favour some form of interventionism eventually, if they feel the economy is not working for them. Brexit might have been a libertarian’s dream, Daniel Hannen the Tory MEP campaigned on this, but Britain is now firmly in the hands of May’s interventionists.  

Tomás Crowe

An honorary yankee - https://www.ft.com/content/a67937a6-7af9-11e6-ae24-f193b105145e

Bibliography: Economists and the powerful: convenient theories, distorted facts, ample rewards - Norbert Haring, Niall Douglas c2012

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