Without a doubt, the COVID-19 pandemic has raised difficult questions about the institutions, principles, and practices that underlie our economic systems. How do we protect essential workers? How do we respond to the threat of regular market failure? What does a more just economic system look like?
For SFI Professor Sam Bowles and External Professor Wendy Carlin, we would do well to respond to these questions by taking a more direct look at how well our current economic models respond to the empirical realities we face.
In a recent op-ed at The Financial Express, excerpted from the International Monetary Fund's Finance and Development newsletter, they argue that many of the solutions we pose for current public policy challenges are conceived solely in terms of state and market power. For instance, in responding to global climate change, we ask, should governments enforce carbon taxes? Or cap carbon and let the market determine how much carbon emissions cost?
Carlin and Bowles argue that by thinking solely on the axis of government and market power, policymakers ignore civil society and the moral norms that underlie it, as a major force for shaping public policy. Where do environmental organizations, and new trends in consumption, for example, fit in the world of cap and trade vs. carbon taxes?
If we begin to take account of the moral norms that underlie civil society, we will begin to develop a kind of economic theory that takes account of our deepest moral norms and makes for better, more transformative, public policy.
Read the article in The Financial Express (March 8, 2021)