How captured economics stole our climate — and what we can do about it (Part 1/4)

PART 1: What (almost) failing to become an economist taught me about economics

We often hear how crises such as climate change, inequality and even the rise of far-right populism are really crises of our economic system — but what role have economists played?

Economics likes to present itself as an objective science offering impartial advice, but a look at the history of the discipline, especially in the last half century or so, tells a different story. Yet despite a growing movement challenging economic orthodoxy—especially its fixation with economic growth — it has so far proved reluctant to reform.

In the first of a series of t̶h̶r̶e̶e̶ four essays, which I started on International Women’s Day, I share reflections on trying to make a career in this most male-dominated of disciplines— and what it says about the so-called “queen” of social sciences.

In the next two essays I will outline why I believe economics has failed us: how its capture by a market-fundamentalist ideology has led to decades of delay in tackling climate change — often, even leading us in precisely the wrong direction.

Then I‘ll look at the many alternative approaches that offer new and exciting ways to solve our crises beyond markets and growth.

Yet presenting alternatives is not enough. Scientists have been warning for over 50 years of planetary limits, but the economic orthodoxy has proved reluctant to acknowledge them. Most heterodox research is under-resourced, under-funded and continues to be rejected by the mainstream.

So I’ll also be exploring what is upholding the status quo — and what we can do to reclaim economics to make it work for people and planet.

These essays are an attempt to structure my thoughts for an upcoming podcast series, which follows on from Tipping Point: The True Story of the Limits to Growth, about the seminal 1972 MIT study, published in 2023. That three-part series has reached over 100,000 listeners. If you’re not yet one of them, I hope you will give it a listen. I believe it offers important lessons for the predicament we find ourselves in today.

If this essay raises any questions, if you wish to share any of your own experiences in economics (or outside of it) do please leave a comment. If you find it useful, please clap, share and follow me to receive a note about my next release. If you wish to support my work, go → here.

Now, back to the story…

I didn’t intend to study economics. I initially took it as part of a degree in international business. To be honest, I didn’t really intend to study business, either. I just wanted to leave home and travel and it seemed like a way to do that while also graduating in something that might make me employable.

In the first year, we took a range of subjects, from which were then to pick one to specialise in from year two. But after finance, accounting and marketing I was starting to feel business really wasn’t for me. Then came economics and suddenly I was taken — here was a subject that seemed to tackle big, systemic issues.

I was one of only a handful of women to choose the economics track. All my professors and tutors were men.

It started out well enough. By way of lots of neat little charts I learned about supply and demand, theories of employment, inflation, trade, investment and what not. But into my second and third year, it became more and more abstract. Even though economics touches all of our lives on a daily basis, we rarely talked about what was happening in the real world. In lectures, I often found myself zoning out.

On one occasion, I remember my professor talking about theories of economic growth— and in particular, the importance of innovation in wealth creation. Where did all this wealth come from in the first place, though, I wondered? Why were some countries richer than others? Certain I must have missed something, I didn’t dare ask.

In my final year we had the option to choose electives. The more technical subjects like econometrics or financial modelling didn’t interest me, so I picked development economics, a subject offered outside of the business school.

It was the first time I encountered a critique of mainstream economics. Though in retrospect it was still a fairly western view (I don’t recall much mention of colonialism), it did probe some of the underlying assumptions of mainstream theory — in particular, that of comparative advantage.

First put forward by Enlightenment thinker David Ricardo, comparative advantage states trade should always be win-win, provided each partner plays to their unique advantage — what they can produce most of, most cheaply. It’s a simple but powerful idea, used to advocate for the many free trade agreements emerging out of the post-Soviet era 1990s, including the creation, in 1995, of the World Trade Organisation (WTO).

A common textbook example goes like this: there are two countries, Portugal and Britain. Sunny Portugal has the ideal conditions for producing lots of wine, while cooler Britain is more suited to making textiles. However, Portugal can produce both wine and clothing more cheaply than Britain, say, thanks to abundant labour: it doesn’t necessarily need Britain’s imports. But Portugal can earn even more, per worker, for wine than it can for clothing. That is, it has a comparative advantage in wine. Thus, Portugal ought to become a global exporter in wine, and import textiles, because it will be better off, overall. It can then use the foreign exchange earned from wine to import clothes and anything else it needs.

The lesson of this (clearly very simplistic) example is that all countries can benefit from trade by focusing on the activities in which they have a comparative advantage.

But my development economics textbooks were telling me that what you produce matters. Stick with wine (or bananas, or cocoa), and you miss out on the chance to industrialise your economy. Specialise too narrowly, and your entire economy becomes subject to the fickle whims of global commodity markets. Starting conditions matter, too. A small, poor country is in a very different bargaining position than a larger rich one. The prices one can command, the investments one can attract don’t necessarily reflect the value of local resources. They also reflect power.

In retrospect, this challenge to the theories I’d been taught, coming only at the very end of my degree (and in an elective subject at that) ought to have caused me to question my economics education more broadly. Only a few years earlier, protesters in Seattle had disrupted major WTO negotiations, claiming they put poor countries at an unfair disadvantage, and would harm local communities, workers and the environment.

Yet my international economics classes more or less brushed such problems aside. Our core text was by Princeton economist Paul Krugman, who later won the Nobel memorial prize in economics for his theories on trade. A major defender of the WTO, his view in this 1999 article sums up the overall tone: all those anti-capitalists, those environmentalists — they just don’t understand economics.

Krugman, and my professors, saw economics was an objective science. Essentially, value-free. Unlike the ideological environmentalists who wanted to impose their values — top-down — on the rest of us, economics was about letting the market make the best choice, guided by individuals (i.e. consumers) who would be free to choose, through their purchases, whether they wanted clean air, or safe working conditions — or not.

Since they saw trade as win-win, giving poor countries access to global markets was also about lifting people out of poverty (though why they were poor was not something my classes addressed). The message to the anti-WTO protesters was: curb free trade and you will only harm the poor countries you profess to care about.

I have no doubt that economists like Krugman and my professors believed what they were proposing would leave humanity better off. Krugman was a New York Times columnist, a progressive liberal in the US sense of the word. My professors, too, certainly seemed to care about problems like poverty and pollution.

And they didn’t outright deny the potential for any downsides — externalities, in economic parlance. While they accepted that markets may not always work as they should — for example, in providing consumers with the information they needed to make choices aligned with their values — these were generally seen as exceptions to the norm. They were market failures, a term that implied that, most of the time (even as new trade rules were about to massively increase global corporate and financial power) — markets worked just fine. And were they to fail, economists preferred hands-off measures, like pollution taxes, to guide consumers towards more sustainable choices without dictating what should — and should not — be produced.

More importantly, any regulations should not undermine growth. Because if there was one thing on which my economics teaching seemed resolute: we would never solve our problems by making ourselves poorer. Even in the rich world — since we were the ones that would buy from the poor countries, and invest in their fledgling industries.

It was a view I had internalised by the time it came to my final exams. Though development economics had added some caveats, I remained convinced that growth was necessary to solve problems like poverty and global warming (which, incidentally, was barely mentioned during my degree). I believed that countries, as they grew richer, would develop the capacities to clean up their environments, and that voters — as emancipated, well-educated members of a thriving middle class — would eventually demand cleaner, safer and fairer products both at the check out and the ballot box. And I believed that global corporations and banks would help them on their way, by providing the know-how and the financing they lacked.

An essay I wrote on trade and development earned me the award for economics student of the year. I graduated with honours and applied for the Government Economics Service.

Though I didn’t realise it at the time, it was a first insight into the problems that lie at the heart of a discipline that calls itself the “queen” of social sciences.

I entered the grand home of the UK Treasury in Whitehall, central London, one summer morning in 2003. I was used to being the only woman in economics, but from the manner in which they spoke and acted, I appeared to be surrounded not only by men, but privately schooled ones at that. They were loud, confident — and intimidating. And I had the pleasure of being placed in a group of them for the duration of the assessment.

For our first task, we were each given a policy proposal to study, and then make a case to others in the group as to why ours should receive funding. But as I politely tried to make my pitch, the posh boys continually talked me down, ensuring their projects got picked over mine.

The next exercise was only marginally better: a technical interview, with an all-male panel which seemed like they could have been the fathers of my fellow candidates. I managed fine with the theory questions, but then stumbled on a maths one. I’d chosen development over econometrics, and was unable to do the calculation they were asking of me. One interviewer seemed to feel this was a poor excuse, and insisted I make an attempt anyway. I did — and failed miserably.

The final interview was a personal one, to explain our suitability for the role. But the interviewer (another man) seemed less interested in my motivations, and more in my management experience (recall, this was for a graduate position). I told him about my various part-time jobs — I’d worked since the age of 15 and had left home at 18, supporting myself financially ever since. In short, I had a tonne of real-world economic experience, but no real management experience. But, for whatever reason, management was what he was looking for.

Later, on speaking with the other candidates, I realised that, while I had to work through university to pay my rent, they had been funded by their parents, who also organised their summer internships, ensuring they were “management material” well before getting a real job.

Needless to say, I did not get the job.

I know my interview performance wasn’t perfect, but I do wonder if I had seen at least one interviewer, or a few more candidates who looked or sounded like me, if I might have fared better.

As I was one of very few women at the interview, I can only imagine even fewer women joined the service that year.

Did it matter that so few women were becoming economists? That the people who were going to be working on policy recommendations concerning decisions such as how much to allocate to education, housing or healthcare; or what to do about problems such as unemployment, homelessness, or inequality— were mainly privileged white men?

In the more than two decades since I applied, the UK government has altered its hiring approach to attract more diverse candidates. However, economics academia remains the most male, white and privileged of virtually any other discipline (even above tech).

So is it the maths that explains the lack of diversity? In my business degree, there were plenty of women who had top scores in maths but who chose to specialise in more tangible topics like marketing or human resources. I now believe — and surveys of economics students suggest — the problem is not the maths per se, but models which do not reflect reality. Or, that reflect a particular worldview.

Back in 2003 I had no point of reference to suspect otherwise. But, several years ago, as I was starting to question some of those assumptions, I compared my experience with a friend, who is now a very successful sociologist. While I was starting my business degree in Scotland, she was embarking on one in social sciences in Austria. I think her experience says much about the “science” of economics.

As part of her social science degree, my friend had taken an elective in international economics. She recalls sitting in a lecture hall listening to her professor rhyme off the benefits of globalisation, citing as evidence the theory of comparative advantage.

By then, she had already taken foundational classes in sociology. In her classes she’d been learning how sociologists build their theories via observation. They observe how aspects such as culture, norms, social stature and values intertwine to influence how individuals and groups of people behave in different contexts — and use these to suggest policies for addressing societal problems.

So, she had been amazed in her professor’s high degree of confidence that this rapid trade liberalisation was undoubtedly going to be a good thing, when he didn’t appear to have any evidence. He was not citing any observations from the real world. Indeed, all he had was the same illustrative example from my textbooks, in which Country A trades with Country B for products C and D — and, hey-ho— it’s win-win for all.

It’s just a theory, she realised. And it rests on a whole set of assumptions, which, if they do not stack up, could lead to very different outcomes than this model suggests.

But her professor did not seem open to being challenged. Like Krugman’s article on the anti-WTO protestors, the problem lay not with economics, but with non-economists who “just need to learn to think like economists.”

In the end, my friend did the minimum necessary, dutifully regurgitating the theory in order to pass her exams, before dropping economics in favour of sociology.

Importantly, she didn’t abandon economics because of the maths — sociologists do plenty of statistical work. She left because she wanted to solve real-world problems, and she didn’t like being asked to think a certain way, if there might be other perspectives worth considering. To her, and compared to sociology, economics was unscientific.

Her experience — and to an extent, my own — chimes closely with a survey of economics students taken a few years after the global financial crisis. The researchers found that students enter economics hoping to deal with real-world problems but “end up remarkably disappointed after going through the mathematical and methods-orientated introductory courses.”

The students then develop various “coping strategies”, depending on their motivations. Those who see economics as a route to a job in banking or finance (I suspect, quite a few of the candidates I met in Whitehall) — or like my friend, necessary to earn credits — go through the motions, leaving as soon as possible for a job or choosing another specialisation. A much smaller number — those who genuinely want to change the world with economics — try to change the discipline from within, though typically with limited success. Indeed, for reasons I’ll delve into in my next essays — for a discipline built on the ideals of free and fair competition — economics is remarkably averse to competition within its own ranks.

Missing from the survey are those who do not challenge the orthodoxy— either because they actually believe it, or they feel, as my experience had led me to believe, they just need to do more maths in order to “get it.” Some of these people will go on to do PhDs and post-docs and become professors and publish papers and build elaborate models which, despite often being untethered to the real world, might even win them Nobel prizes (like Krugman’s trade models, or the hugely influential climate-economic models of William Nordhaus, which I’ll come back to shortly).

These ideas will influence the institutions that govern public spending, set interest rates, craft trade deals and determine climate and environmental goals. Decisions that often affect millions, even billions of people —as well the life-giving planet that supports us. But, I’m getting ahead of myself.

Back in 2003, I had few reasons to critic my the theories I had learned, and I still wanted to become an economist. And I did — in a way. Shortly after my government interview, I moved abroad and found a job as a researcher at an international economic think tank. Even though my work was in many ways related to my studies, my experience on the ground was quite different to my textbook examples.

Our office ran a network to help multinational companies expand their businesses in the former Eastern bloc. My job involved providing analysis about the economic and political conditions in the places they were building factories, trading hubs and shopping malls.

I could see there were clearly some benefits to the new liberal world order, especially in the countries that had joined the EU. To ensure a level playing field, access to the European bloc had been contingent on raising standards — such as on environmental protection, labour rights and an independent media — for which the new members had been given ample technical and financial support.

But especially beyond that zone, it was hard to say who the real “winners” from free trade were. My clients mostly wanted to know which locations had the lowest tax rates, the least cumbersome pollution regulations, the weakest trade unions or financial conditions that made it easy to extract profits abroad. It often seemed to be more about creating opportunities for western companies than benefiting local populations (one oft-cited “success” story was by a US food company which had “taught” women in former Soviet countries to stop making homemade soup and buy their canned soup instead).

Aside from feeling uneasy about the nature of some of the work — especially as I started to become more aware of the climate crisis — I still didn’t feel like a “true” economist, and I felt like a fraud for having taken too little maths. So I did a Masters, hoping — in a way I expect Scientologists must when they reach Level Eight — that the theory would finally make sense.

But it didn’t. Even though this time I learned all the maths, and even earned a distinction. Similar to my undergraduate degree, there was very little real-world context to what I was learning. I started my Masters around the financial crisis — but — like my peers — I cannot say I saw it coming. I could do some pretty amazing things with spreadsheets and statistical packages, but I still lacked an over-arching grasp of the dynamics of the global economy. In retrospect, much of what I knew about economics I had learned in spite of my education.

It wasn’t until almost two decades after I’d started my economics studies, in 2017, that I read The Limits to Growth — a study that had been attacked, most aggressively, by economists — that I finally felt I understood how the economy works. And through my research into why that study had been ignored, to realise that I hadn’t “failed” as an economist — but that economics had failed me.

And not just me — but all of us.

If you find this essay useful, you can support my project to turn it into a documentary series → here.

Up next: Part 2: My ah-ha model