Mainstream economists, it seems, have finally discovered the role of narrative in economics. But their work ignores previous research on the topic—and fails to identify the narratives at work in other areas, including academic economic theory itself.
The current head of the American Economic Association, Robert J. Shiller, delivered “Narrative Economics” as his presidential address at the recently concluded Allied Social Association meetings in Chicago. His basic argument was that popular narratives, “the stories and models people are talking about,” play an important role in economic fluctuations.
Thus, for example, here is the narrative-based explanation Shiller offers for the Depression of 1920-21:
substantially a consumer boycott against imagined profiteers, based on narratives that made them villains, abetted by a sense of possible personal opportunity to postpone buying, or sense of revenge against the profiteers by outsmarting them, in the presence of an affect heuristic event driven by other emotion-laden narratives (connected to the World War, the Communist revolution, the influenza epidemic, the race riots, the Big Red Scare, the oil shock).
He offers similar narrative-based explanations for the First Great Depression, the so-called Great Recession, and the remarkable success of Donald Trump during the most recent presidential campaign.
I can only applaud Shiller’s attempt to take narratives economics seriously, even though it “has had a poor reputation.” Maybe other mainstream economists will follow suit.
But first they’re going to have to overcome their own ignorance. Some of us have been doing narrative economics for a long time—which may in part explain the “poor reputation” of the topic, since the participants have been either nonmainstream economists or have used methods that are anathema to mainstream economics.
I’m thinking of the New Economic Criticism of the mid-1990s, which involved economists and literary critics and culminated in a conference volume edited by Mark Osteen and Martha Woodmansee, The New Economic Criticism: Studies at the Interface of Literature and Economics (Routledge, 1999). It represented a meeting of literary scholars who used economic ideas and methods to examine literary texts and economists who borrowed from literary criticism to make sense of economic texts.
The economists who contributed directly to the project included Jack Amariglio, M. Neil Browne, Brian Cooper, Susan Feiner, Douglas Koritz, J. Kevin Quinn, and myself. And we work in a tradition that includes the work of many other economists, from Deirdre McCloskey and Arjo Klamer to Stephen Resnick and Richard Wolff, all of whom have taken seriously the idea that narratives play an important role in economic texts and events. Not one of their names is mentioned in Shiller’s paper.
Since then, the New Economic Criticism movement has flourished—on both sides of the academic divide. Within economics, Amariglio and I teamed up with Stephen Cullenberg to host a conference and edit a subsequent volume, Postmodernism, Economics and Knowledge (Routledge, 2001); the two of us pushed the ideas further in our Postmodern Moments in Modern Economics (Princeton, 2003); and then I expanded on those concerns and edited a volume of related work, Economic Representations: Academic and Everyday (Routledge, 2008). For their part, literary scholars have also continued to examine narrative economies. Just in the past couple of years, related books include Noam Yuran’s What Money Wants (Stanford University Press, 2014), Mike Hill and Warren Montag’s The Other Adam Smith (Stanford University Press, 2015), Joseph Vogl’s The Specter of Capital (Stanford University Press, 2015), and Martijn Konings’s The Emotional Logic of Capitalism (Stanford University Press, 2015). Again, none of these writings is cited by Shiller.
There is a wealth of important theoretical and empirical work on narrative economics that Shiller has simply chosen to ignore.
As I see it, the other major problem in Shiller’s approach is he never attempts to identify and make sense of the narratives that are at play in academic economics. For him, narratives are all “out there,” in the popular imagination. But such a distinction overlooks the extent to which the work of academic economists produces narratives about the economy—and how those academic narratives affect (and, of course, are affected by) nonacademic or everyday narratives.
When, for example, mainstream academic economists write about the economy through such tropes as voluntary exchange, the invisible hand, equilibrium, and so forth, they are creating a narrative according to which everyone gains from trade. No losers, just winners. And the “laws” of the market need to be understood and obeyed.
As we know, that is a powerful narrative, which is produced within academic economics (often via mathematical modeling and statistical estimation) and then disseminated through a wide variety of media (from academic publications and courses to speeches and blogs).
Powerful but not uncontested, since those same narratives have been challenged by nonmainstream academic economists as well as by a whole host of nonacademics, from economic activists to politicians. The Brexit vote and Trump’s victory are just the latest examples.
Narrative economics is thus a contradictory, contested terrain that is defined by both academic and nonacademic stories, which determine (and, in turn, are determined by) the unstable trajectories of capitalism, historically and today.
I don’t know whether, as Shiller maintains, “textual analysis will be a hot field in economics in coming years.” But, if it does, it will need to overcome both its ignorance of prior research and the role narrative plays in academic economics itself.