Electorates seem recently to have lost faith in expertise. British politician and Brexit campaigner Michael Gove expressed this feeling when he said that “the people of this country have had enough of experts” (Sky News interview, 3 June 2016). Across the Atlantic, Donald Trump was elected into office despite a warning by 370 academic economists that he “promotes magical thinking … over sober assessments of feasible economic policy options” (Wall Street Journal, 1 November 2016). The recent backlash against experts may be perceived as excessive. This does not mean, however, that the public’s distrust is entirely unfounded. At least, it seems reasonable to ask whether experts’ motivations are aligned with those of ordinary citizens.
The problem of utilizing expert knowledge to pursue group goals is the subject of a fascinating new book by David M. Levy and Sandra J. Peart. It explores how policy—more specifically, economic policy—emerges from the interplay between experts and the general public. It also cautions that deference to experts, while sometimes regarded as an “escape from the messiness of democracy” (p. 11), can be associated with considerable dangers.
The book is divided into six parts. As explained in the introductory part, the authors’ starting point for understanding the role of experts is what they refer to as “analytical egalitarianism,” the assumption that “all experts have at least some private (as opposed to purely public) motivations” (p. 6). It is well known that public choice theory applied the economic model of behavior to policymakers. Levy and Peart emphasize that this model should also be extended to economists. As a result, the public needs to be aware of the specific incentives of economic experts, financial and otherwise. Certainly it would be inconsistent to assume that economists strive for the common good, while other economic agents or politicians are guided by self-interest (Kirchgässner Reference Kirchgässner2014; for empirical evidence, see Necker Reference Necker2014).
Part II describes the “discussion tradition” in economics. This tradition is characterized by the idea that the aims of economic policy emerge and continue to evolve in a process of discussion. While the discussion tradition can be traced back to Adam Smith, the authors identify Chicago economist Frank Knight as its foremost exponent. Knight argues that economic experts should be constrained by democratic consensus at all times. As described by Levy and Peart, the discussion tradition was eventually replaced by the New Welfare economics, which treats policy goals as exogenously determined. The implementation of policy, then, becomes a mere question of engineering.
The orthodox view of economic policy advice presupposes that society articulates certain goals and that experts choose the appropriate means of implementing them (see Tinbergen Reference Tinbergen1956). The authors refer to the orthodox view as the “linear” model of policymaking. A “cyclical” model, on the other hand, would recognize that the goals as well as the means of economic policy should be subject to continued public scrutiny. Part III criticizes the linear model by showing that social scientists have sometimes pursued the (supposed) goals of society by horrible means. This is illustrated by two examples: the eugenics movement and central economic planning. In both cases, scientists tried to cure some perceived ill of society in ways that negatively affected the well-being of the people.
The use of case studies continues in part IV, where the authors argue that democratic discussion may be actively suppressed by experts who disguise their methods. The first example is John Law, whose (disastrous) monetary reform was perceived as a kind of “financial alchemy” by his eighteenth-century contemporaries. The second example concerns the regulatory use of security ratings and describes the concealment of information by members of the NBER Corporate Bond Project. According to Levy and Peart, when experts’ work is shrouded in secrecy, discussion becomes stifled and biased judgment may prevail.
Given these problems, how can we obtain the best advice from experts? This question is addressed in part V. First, the authors discuss the possibility of a professional code of ethics for economists. Such a code, while a second-best solution, would make the “nontransparency [of experts’ motivations] itself transparent” (p. 184). Then, in a similar vein, it is argued that awareness of the factional nature of economics—as observed by Gordon Tullock (Reference Tullock2005)—helps to mitigate the negative effects of this structure. Finally, the authors maintain that transparency can be induced by improving the institutional set-up. This is demonstrated by a rule that would help to evaluate competing estimates of expert witnesses in the US judicial system. Part VI concludes with a summary and a brief sketch of the—rather interesting—idea that regulatory decisions could be made by citizen juries.
Escape from Democracy is concerned with the problem of utilizing expert knowledge to further the goals of society. Levy and Peart approach this topic by providing a rich tapestry of examples from intellectual history that are both specific and engaging. Their willingness to deal with the more eccentric aspects of their case studies—such as the subtle allusions to alchemy contained in the historical sources on John Law—adds to the unique character of the book.
Despite some of the subject matter, the most important contribution of this highly recommendable volume is not to provide cautionary tales of expertise gone awry. Rather, it’s the argument in favor of policymaking that is transparent, accountable, and responsive to citizens’ actual wishes. At the present moment, economists could do a better job of informing the general public of the possibilities as well as the limitations of their policy advice. This book provides a starting point for introspection.
