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The impostors of the economy

Whereas an unprecedented economic crisis has been shaking the world since 2007, the role of economists in this debacle and their inability to anticipate events has never been put into question with this being especially true in France. This is what Laurent Maduit believes in his new book called “The impostors of the economy” which caused some controversy.

Article also available in : English EN | français FR

The thesis that acts a common thread in this book is quite interesting. It states that most of the media exposed French economists are perpetually facing a conflict of interest. Between the professors who are employed on the boards of directors of banks, the researchers who serve dictatorial governments or universities which are financed according to their ideological obedience by private chairs, it happens that most of the well known economists in France are neither independent nor at service of collective intelligence. According to the author, this collaboration between the private and public sphere has finally created (beyond personal individual gain for some and ideological preferences) a single way of thinking in terms of economics which favours neoliberalism and leaves a lot less space for alternative thinking. The portrait as painted by Laurent Mauduit is extremely worrying and this is what he wants to show throughout the 10 chapters of his book.

Blaming Marc Fiorentino to lack legitimacy to talk about the economy all day long in the media, he tries to show that he is the very example of the prototype facing conflicts of interest and displays three sanctions applied by the AMF against the security firm he heads…

In the first two chapters called “Marc Fiorentino’s martingale” and “Doctor Olivier and Mister Pastré”, Laurent Mauduit visibly settles scores by focusing on two personalities which he believes are examples of the collaboration between economists and capitalism. Blaming Marc Fiorentino to lack legitimacy to talk about the economy all day long in the media, he tries to show that he is the very example of the prototype facing conflicts of interest – the one who takes positions by being judge and jury - and displays three sanctions applied by the AMF against the security firm he heads. Regarding Olivier Pastré, who somehow manages to be pardoned by Laurent Mauduit for his academic skills, the author shows that the same conflict of interest is present considering the fact that the economist works for the AMF (Autorité des Marché Financiers, the French regulatory body in charge of overseeing the French financial services industry) and for a investment firm that has violated the rules of the AMF itself. “How is it possible that he can be a member of the AMF board and at the same time be on the board of directors of an investment firm that has been sanctioned by the AMF?” asks the author on Pastré.

“How is it possible that he can be a member of the AMF board and at the same time be on the board of directors of an investment firm that has been sanctioned by the AMF?” asks the author on Pastré

In the next three chapters called “The dangerous liaisons”, “The banksters” and “The VIP travelling salesmen”, Laurent Mauduit continues to list the “problem economists”. According to him, they are those who are stuck in what he considers to be a small circle of Parisian capitalists that has very strong links with industrial and financial groups. Daniel Cohen, Patrick Artus, Elie Cohen, Pierre Richard, Jean Hervé Lorenzi, Christian de Boissieu, Jean Pisani Ferry…everyone of the mis cconcerned. And the conclusion of the author is brutal: “Finance has launched an IPO on the Conseil d’Analyse Economique, the French body in charge of providing major economic insights”

And the conclusion of the author is brutal: “Finance has launched an IPO on the Conseil d’Analyse Economique, the French body in charge of providing major economic insights”»

The book continues with what seems to be one of the most significant chapters. Entitled “IPO on the university”, Laurent Mauduit shows that the two main French economic bodies, the Paris School of Economics and the Toulouse School of Economics have somehow been privatized but at different degrees according to the ideological profiles of both schools. According to the author, in 2010, the TSE was financed by the private sector by approximately 6.825 million euros and 7.5 million euros were contributed by the state. This brings him to this conclusion: “Many of the managers in top French economic research are private companies and most notably banks. In brief, it is a bomb that has been set within French universities”.

The author continues to illustrate the flaws of this “privatisation of the French university” as far as economics are concerned by suggesting that it influences the recruitment of researchers and economists. Regarding the latter, those who are not so much in favour of neoliberal themes but more likely to work on social exclusion and inequalities are not always welcome. Unfortunately, Laurent Mauduit only provides a single example of this suggestion: The recruitment of Augustin Landier by the TSE from the IMF. Mr Landier is a liberal French economist whose crime according to Mr Mauduit has been to write an essay on the glory of financial markets. This does not prevent Laurent Mauduit from clamouring:”It is the mad world of finance, the very one that has pushed the world over the edge, which decides more and more of the content of study. If his embezzlement activities had not been discovered, would Bernard Madoff not have been invited one day at Dauphine with honours to provide a course on financial creativity?”

Another subject highlighted by the author and which can legitimately raise questions is the financing gap between the TSE and the PSE. While the financing level projected for the TSE between 2007 and 2012 was expected to be around 33.4 million euros, the PSE only obtained 2.375 euros from private contributions. Laurent Mauduit believes that it is the result of ideological differences between the researchers. The ones at the PSE happen to be less liberal that those of the TSE. If the argument itself is interesting and can lead to the conclusion that the choice of large private companies is biased on the basis of the previous fact, the figures produced by Mauduit can raise some questions. For the TSE, he talks about expected financial contributions over a given period (2007 – 2012) while for the PSE, he talks about effective contributions obtained in 2007. How can we therefore reach reliable conclusions?

The following two chapters “The great prize of the unique thought” and “The hyper Attali Company” are also parts of the cook where the author can be criticized for pursuing the sole purpose of shooting personalities as he already does at the beginning of the book. In this case, he attacks Alain Minc and Jacques Attali. Mauduit works on deconstructing their respective empires. He swerves among copyright condemnations (for books that have nothing to do with the economy and for which we wonder why they are mentioned in the first place), diverse professional failures and extremely unhealthy relationships with power circles.

Alain Minc and Jacques Attali are for Mauduit the incarnation of the unique neoliberal thought in France that they try to impose everywhere they can…

These two personalities are for Mauduit the incarnation of the unique neoliberal thought in France that they try to impose everywhere they can. But if there are certainly things to be said on Attali and especially on Minc with his many careless and false prophecies as very well highlighted by the author (one example being when Alain Minc says that the crisis is psychological), it appears that it is the role of the media to do so. It is the latter which should demonstrate how this type intellectual invades public space without bring any positive contribution other than serving his own purpose.

And it is on the media that Mauduit questions himself on the next chapter entitled “The Mougeotte Syndrome”. He tries to demonstrate that the same links exist between the the media and star economists as those already in place between these economists and power spheres. This is due to the fact that the media is itself heavily linked to those circles with many newspapers belonging to large industrial groups. The media cannot therefore claim to be independent. For Mauduit, this mix reveals a strange ballet in a small world where all frontiers have been abolished. It is world where nothing separates journalists from the editors. It is a tiny universe where the same convictions are shared, the unique thought which holds sway over everything else.”

The author goes on in his book with a last chapter called “The double agents of the unique thought” where he reveals some interesting inconsistencies. He talks about the double play of some economists who, depending on the political majority of the moment in France, shift to the right or to the left and strangely defend exactly the same type of ideas. He mentions Jean Hervé Lorenzi, the president of the Cercle des Economistes or even Glibert Cette, an economist at the Bank of France. Both of them were present at the meeting of François Hollande but were part of the secret team in charge of proposing reforms for Nicolas Sarkozy’s presidency. They defended the same liberal ideas according to Mauduit. This translates into a dangerous form of conservatism for Democracy since “public opinion has the legitimate feeling that beyond these shifts and beyond the will of the people, the same economic policy is invariably applied.”

Laurent Mauduit concludes his book by a positive note in favour of heterodox economists who, according to him, manage to extract themselves from the “crazy world of finance” and propose alternative programmes: “If a new alliance forms itself between journalists attached to their independence and economists willing to defend theirs, the economic debate will at least move away from ordinary paths, those laid by the circle of reason”.

It is a beautiful conclusion for book which is not always convincing. This is not due to the depth of the questions asked (they are quite significant) but happens because of the credibility problem of the demonstrations regarding the impact of private financing on study programs in university and on the bias held by economists in terms of liberal ideologies resulting from the privatisation of universities. This would have required more figures and more elements.

To conclude, a major flaw in the book of Laurent Mauduit, (beyond the score settling with the economists that takes place throughout the book and which can blur the message) is the rather systematic anti liberal populism. This rather Manichean vision that wants banks and finance to be the bad guys who damaged the world economy and views anti capitalists as examples of virtue is very present. There has to be an adequate balance. We can however congratulate Mauduit for having raised the debate on the independence of economists in France and on the role of the media in marginalising some opinions which are more or less heterodox on the subject and which are rarely heard. May this subject prosper.

Yann Olivier , April 2012

Article also available in : English EN | français FR

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