“Free Market” Economics
and
Feminist Alternatives
Dr. Julie A. Nelson
Senior Research Associate
Global Development and Environment Institute
Tufts University, Massachusetts
1
Free Market Economics and Feminist Alternatives
Julie A. Nelson
Global Development and Environment Institute, Tufts University, USA
A Tale of Two Countries
Let me start by telling a fable--perhaps a fable you have heard often before, but
then entertaining stories bear repeating.
There once was a country named Portugal. Portugal had labor time, and grape
vines, and sheep. Portugal needed to choose how much wine she wanted to produce, and
how much woolen cloth. To be both well-clothed and well-drunk, she wanted to be able
to consume a hundred bolts of cloth and a hundred barrels of wine. Alas, however, if she
tried to produce a hundred bolts of cloth, she would use up all her resources and be able
to produce no wine at all! And if she produced a hundred barrels of wine, she would only
y
have enough resources left over to produce 50 bolts of cloth. Poor Portugal!
We have a picture of poor Portugal in Figure 1. It was painted by economists,
t
who aren’t very artistic, but it shows Portugal’s important features for this fable. The
Production Possibilities Frontier shows how much wine and cloth Portugal could produce
i
with her resources: she could produce anywhere on the line, or to the southwest of the
t
line. Point A shows what she would have liked to consume. Point A was, alas, out of
reach.
n
Figure 1
a
Portugal
Production
Possibilities
Frontier
u
200
A (desired
consumption)
Q
100
0
50
100
Quantity of Cloth
1
There also was once a country--a bit bigger country--named England. England
also had labor time, and grape vines, and sheep. Due to a cool climate, England’s sheep
were nice and wooly. His grape vines, howe ver, were not as vigorous as Portugal’s. (It’s
important for the story that Portugal and England be a little bit different.) To be both
well-clothed and well-drunk, England wanted to be able to consume 300 bolts of cloth
and a hundred barrels of wine. Alas, however, if he tried to produce 300 bolts of cloth, he
would not have enough resources to produce the amount of wine that he wanted. If he
tried to produce a hundred barrels of wine, he wouldn’t have enough resources to produce
e
the desired amount of cloth. Poor England!
We have a picture of England, too (Figure 2). England found Point B out of
n
reach.
i
Figure 2
W
200
England
B
100
0
100
200
300
400
Cloth
But wait, there is hope for our story’s protagonists yet!
A wizard with the wisdom of Solomon entered the scene. “Portugal,” he said,
“Yo u specialize in producing wine. England, you specialize in producing cloth.”
The countries, desperate to achieve their desired bundles of cloth and wine,
complied with the wizard’s advice. Portugal produced 200 barrels of wine and England
produced 400 bolts of cloth.
“But I’m cold!” said Portugal.
“And I’m thirsty!” said England.
The wizard replied, “Now, Portugal, you give a hundred barrels of wine to
England, and England, you give Portugal a hundred bolts of cloth in return.” (Illustrated
in Table 1.)
Table 1
2
Specialization
Portugal produces 200 wine, no cloth.
England produces 400 cloth, no wine.
They trade 100 wine for 100 cloth.
Portugal can consume 100 wine and
100 cloth
England can consume 100 wine and
300 cloth
“Gains from
Trade”
The two countries engaged in trade, and behold! They each magically found
themselves with exactly the combinations of cloth and wine they most wanted. Portugal
now had a hundred barrels of wine she had produced herself, and, from England, a
hundred bolts of cloth. England now had the a hundred barrels of wine he got from
Portugal, and still had 300 bolts of cloth to keep for himself. The two countries were so
happy they threw a big party and danced all night.
The moral of the fable is: everyone can be made better off through specialization
and free trade. 1
The Power of a Fable
And that’s it. That’s the story of how specialization and exchange, through the
use of “free markets” and “free trade” makes production efficient and consumers ha ppy.
The story really hasn’t changed since David Ricardo first articulated it in 1817, though it
has occasionally been dressed up with fancier titles like “the theory of comparative
advantage” and discussion of “opportunity cost,” “gains from trade,” and “economic
integration.” (And the line about dancing all night is usually left out.)
But behind any explanation from an economist that “free trade” is “good for
people” is some elaboration of this old fable. The free market economists
1
This story can be found--perhaps with different examples of trading parties and goods, but logically of the
same structure and with exactly this moral--in almost any Introductory Economics textbook, or textbook on
International Economics.
3
recommendation is not, at its core, based on anything more than the fable--not on fancier
models, not on historical studies, not on empirical studies of contemporary economies.
The belief that free trade is good, always and everywhere, with no need to consult history
or evidence, relies on nothing more than insight about market magic (presumably)
“demonstrated” in the fable of Portugal and England. If you understand this fable, you
understand the heart of neoliberal thinking. If you raise questions about free trade, on the
other hand--perhaps suggesting limits on it--such economists will generally assume that
you did not really understand the fable. They might generously offer to explain it to you
again.
So there is another sort of amazing trick going on here. What is really spectacular
is how this little, simple story has come to be so powerful! The belief that “free trade is
best,” based on this fable, is now guiding IMF policies and affecting the lives of millions
of people around the world. An interesting question is, “Why”?
One reason is that it can serve the interests of those who have the most to gain,
financially, from lowered trade barriers and unrestrained capital flows. Those with
personal business interests in trade, however, and the politicians they influence, seem to
have a rather relaxed attitude about actually applying “free trade” in practice. The
actions of George W. Bush’s administration concerning trade in steel, lumber, orange
juice and many farm products show that the rhetoric of “free trade” in fact tends to be
used when it is convenient and disregarded when it is not, by many in business and
politics.
The most consistent voice, it seems to me, behind this argument seems to come
from academically-trained professional economists, whether working in universities or as
advisors to national or international policy-making organizations. This is a group I know
rather well, and so will be the focus of my talk today.
Is Economics a Science?
Most economists in the mainstream of the discipline like to think of themselves as
scientists, who reveal hard economic “laws” through the application of rigorous scientific
practices. Free trade economists would like to believe that the tale of two countries is not
a literary fable, but rather an illustration of a timeless principle. Some call it “the law of
4
comparative advantage,” in rhetoric reminiscent of Newtonian physics and its “laws of
motion.”2 As in Newtonian physics, the use of mathematics holds a prime spot as a
favored method. The very coolness, sophistication, and detachment from human
concerns and biases of mathematics is presumed to lend economics rigor and objectivity.
Behind this idea that economists are simply the interpreters of the “laws”
underlying economic functioning lies a very important philosophical assumption. It is
very deep, at the level of “ontology” or theories about the very nature of reality. This is
the assumption that the economy is, at heart, a machine. The idea that all of nature could
be thought of as a clockwork mechanism, functioning according to predictable forces, in
principle describable in equations, was important in the rise of early European science in
the period of the Enlightenment. It seems to have held on strongly in economics, in spite
of being meanwhile at least questioned, if not entirely dismissed, within the physical
sciences themselves.
The fact that the clockwork image of the world lends itself to the use of
mathematical equations and graphs serves an important purpose in the maintenance of the
aura of “scientificity” around conclusions such as “free trade is good.” Economists can
claim to have privileged knowledge about the economy really works, and hide behind a
wall of mathematics when challenged. If references to the elegant results of Ricardian
theory (that is, to the fable just discussed) does not supply sufficient intimidation, then
they might pour on “general equilibrium theory,” “Pareto optimality,” “first fundamental
theorem of welfare economics,” and other scientific-sounding jargon, dressed up in
theorems and equations.
Yet there is another, competing image of science that does not assume a
clockwork reality or rely solely on cool methods for objectivity. This is a notion of
science as inquiry, as guided by the desire to make sense of the world we are in, wherever
that may lead in terms of theories. The trademark of such inquiring science--what many
would argue is real science--is an openness of the researcher to having a theory proved
wrong or inadequate by others in the research community. A theory is only scientific in
this sense if it can be readily replaced or revised in the light of a better theory, or by
2
See, for example, William J. Baumol and Alan S. Blinder, Economics: Principles and Policy, 6th Ed.
(NY: The Dryden Press), p. 876.
5
consideration of complications not previously taken into consideration, or by new
evidence.
Openness to being proved wrong is completely lacking in the dogmatic free-trade
view, grounded as it is in the faith that the Tale of Two Countries tells us “all we need to
know.” This “gains from trade” fable is internally logical, it is true. But held to
religiously and exclusively, it is dogma, not science.
Gender and Value
How did mainstream economics come to be so narrow and dogmatic? Many
scholars have raised criticisms against the neoclassical stranglehold on economics-against its narrowness in methodology, and against the simplistic and often welfarereducing policy pronouncements that arise from following a naive belief in the intrinsic
goodness of markets. These include many economists from among the “heterodox”
schools that exist at the margin of academic economics, including institutionalist,
Marxist, socio- or humanistic, post-Keynesian, and ecological approaches. Even within
the mainstream, some economists who accept most of the approach of neoclassical
economics seek to modify it at the edges, with increased attention to (so-called) “market
failures,” “information problems,” and--on occasion--actual empirical and historical
evidence. Yet such critiques face an uphill battle.
I have not yet talked about feminism, but here is where I think feminist economics
has a unique and important contribution to make. Why is it that attempts to make
economics more realistic, more human, to make it a more adequate tool for promoting
human flourishing, run into such trouble? Feminist economists, beginning in the early
1990’s, have pointed out how the value system of academic economics reflects judgments
about value that run throughout dominant Western contemporary social understandings,
and that are intimately linked to notions of gender.
Feminist economists drew on a slightly earlier literature on gender and notions of
scientific practice in general, by authors such as Evelyn Fox Keller (1985) and Sandra
Harding (1986). These had pointed out how objectivity, separation, logical consistency,
and individual accomplishment all have a masculine cultural connotation. Similarly,
mathematics, abstraction, lack of emotion, and science itself have long been culturally
6
associated with rigor, hardness—and masculinity. Meanwhile, subjectivity, connection,
“intuitive” understanding, co-operation, qualitative analysis, concreteness, emotion, and
nature have been associated with weakness, softness—and femininity.
Applied to economics, it is clear that a androcentric gender bias has also been
behind the choice of definition of mainstream economics and its choice of methods. To
see this in a simple way, note the splits in Tables 2 and 3 (from Nelson 1992, 1996):
Table 2
Table 3
The Neoclassical
Definition of Economics
Core
Preferred Methods
Core
Margin
Precise
“Vague”
Mathematical
Verbal
Abstract
Concrete
Margin
Public (market) Private (family)
Wants
Needs
Efficiency
Distribution,
Fairness
Individual
Choice
Social and
Political
Constraints
Gender/Sex Associations
Masculine
Feminine
In mainstream economics, for example the unpaid work of women within households and
communities is marginalized by a focus on markets as the locus of “economic” activity,
as Diane Elson has emphasized. 3
Likewise, the idea that people have real needs, and that poverty prevents people
from living full lives, is neglected. In recent decades a popular definition of economics
has been “the study of how people make choices, given unlimited wants and scarce
resources.” Economists have largely taken issues of choice and efficiency as their focus,
leaving questions of distribution and fairness aside as merely “social” or “political.”
(Economists perceive a clear hierarchy among the social sciences, with economics at the
high, “hard” end, and political science and sociology considered lower and “softer.”) The
3
Diane Elson, “For an Emancipatory Socio-Economics.” Speech given at the UNRISD Conference on The
Need to Rethink Development Economics, Cape Town, South Africa, Sept. 2001.
7
result of defining economics in terms of markets and in terms of rational choice modeling
is a discipline heavy on quantification and precision.
Note that the cultural gender associations, in contemporary Western society, are
predominantly of masculinity and “hardness” for the left- hand column and femininity or
“softness” for the right- hand column. The intellectual standards of the economics
profession appears to reflect the larger cultural biases concerning gender and value-making central what is associated with ideas of masculinity, and marginalizing what is
associated with ideas of femininity.
An alternative definition of economics that I and others have advocated is to think
of the discipline as being about how societies organize themselves to provide for the
provisioning and flourishing of life. This sort of definition encompasses both market and
non- market activity, both acts of choice and economic outcomes resulting from
oppressive power or norms. If such a discipline were also open to using whatever
methodological tools lent insight, then...well, we could finally get somewhere.
To get to such a practice, however, involves really get past long-entrenched
gender biases, and the ways these have distorted our perceptions and language. It
wouldn’t be very effective, for example, to argue against “precision” if the only
perceived alternative is “vagueness.” The definitions and perceptions themselves must
undergo a transformation.
We need to get past the hard- is- good, soft-is-inferior thinking that shapes the
discipline. For this purpose, I’ve invented a little diagram I call the “gend er/value
compass.” That is, to the extent we cognitively associate certain characteristics with
gender, the culturally dominant tendency is to associate masculinity with superiority, and
femininity with inferiority or lack. Perceptions of gender and judgments of value are put
on one, bipolar scale, as illustrated in Figure 3.
8
Figure 3
Masculine
(positive)
Feminine
(negative)
The gender/value compass breaks this up. What if we thought of there being both
positive and negative aspects of characteristics perceived as “masculine,” and similarly
for those perceived as “feminine”? Such possibilities are illustrated in the four-quadrant
diagram shown in Figure 4.
Figure 4
Positive
Feminine
Masculine
Negative
For example, take the idea that economics must be mathematical to be “hard” and
”precise.” If you want a tough scientific discipline, after all, then it would seem that
anything else must be soft, weak, vague and--in a telling choice of words I’ve seen a
number of times--impotent. With the terms of argument defined this way, its hard to
argue for “softness” if it means weakne ss, or less emphasis on precision if the alternative
is simply a descent into “vagueness,” as illustrated in Figure 5.
Figure 5
precise
M+
vague
F–
9
The gender/value compass changes the terms of the argument. Moving beyond the
usual association of masculinity with superiority and femininity with inferiority, it breaks
gender and value associations into separate dimensions. For example, instead of "precise"
vs. "vague," the compass (Figure 6) suggests that a valid attempt to reach precision,
when possible, can be balanced by an equally valid attempt to achieve maximum
richness-- maximum assurance that all important factors are being taken into account,
whether they fit into mathematical notation or not. Both the failings of overlay thin and
narrow analysis, and overly vague analysis, could be avoided.
Figure 6
M+
F+
precise
rich
thin
vague
M–
F–
In practice, this means that the mathematical modeling and simplicity of analysis
preferred by mainstream economists need to be balanced by a willingness to dig deeper
into the richness of qualitative and historical work.
Notice that this analysis is about cultural understanding concerning gender—that
is perceptions of masculinity or femininity—rather than about biological sex. I do not
believe that women have tended to raise these particular questions about the value system
of economics because we "bring something different" (via our genes or brain
functions)—that we are more intuitive, emotional, etc. Rather, I think it is a case of the
masculinist biases being far more obvious to those outside the system. Fish, it is said, do
not notice they are swimming in water.
Emphases and Omissions
The fable of “gains from trade” can be used to illustrate in more detail how the
value biases about “precision” vs. “richness,” “masculine” vs. “feminine,” have
influenced the choices made by mainstream economists. Any creation of a story that
purports to relate to the real world involves assumptions and interpretations, the
highlighting of some parts of reality and the setting aside of others. The way these
10
decisions about what to emphasize and what to hide are made reflects, in turn, the
underlying value system of the discipline.
For example, what is emphasized, and what is left out, in the fable of Portugal,
England, and the Wizard? How do these emphases and omissions reveal, in detail, the
value system of economics?
The Tale of Two Countries emphasizes a few concepts that are held in high
esteem within the profession, as shown in Table 4.
Table 4
The Fable Demonstrates:
• Choice
• Efficiency
• Positive role of markets
(specialization and exchange)
• Precise results from
mathematical modeling
The story is about how each country chooses its production and consumption levels, and
how free markets lead to efficiency in production and consumption. The story can be
illustrated with graphs and mathematics: the result looks clean and elegant. These are
characteristics, as we have discussed, that are highly valued within the profession.
What is left out in the fable? Well, many things, really, but we can name a few
(in Table 5)
Table 5
The Fable Leaves Out:
• History, constraints and
institutions
• Distribution, power, and
fairness
• Interdependence, needs, and
vulnerability
• Actual observation of realworld results over time
Consider some examples of how these could change the nature of the story and its moral.
11
History and Institutions
In real historical time, countries just don’t meet up with a Wizard and solve their
economic problems once and for all by making clever rational choices. Countries enter
into relations with other countries through actual relations of trade--or of conquest, or of
colonization. Colonization, for example, may leave a country with an infrastructure of
roads and ports that give it a created “advantage” in depleting its mineral resources,
whereas a more truly rational approach to creating long-term economic well-being in the
country might point towards different areas of specialization. Looking towards the
future, the fact that technological changes and institutional innovations may affect some
sectors more than others, and may cause unpredictable shifts in future costs and revenues,
can in addition point towards the wisdom of retaining some diversification in production.
Distribution
Distributional issues were finessed in the story by having Wizard determine the
distribution of the gains from trade. In fact, if England is bigger and more powerful
(perhaps militarily) than Portugal, there is no need for it to settle for the division set out
by the Wizard. England could, for example, use its power to demand that Portugal give it
the hundred barrels of wine, but accept only 60 bolts of cloth in return, as shown in
Figure 7. Portugal would still find it in her advantage to accept this offer rather than go it
alone--60 bolts of cloth is better than the 50 she could produce herself, along with the
desired level of wine production. But just because trade is voluntary doesn’t mean that it
is fair.
Figure 7
12
e
n
i
If England has more power…
Portugal
200
Gets 60
Cloth
W
e
A
n
100
i
0
50 100
Cloth
200
W
England
B
100
Gets
340
Cloth
0
100
200
300
Cloth
Distributional issues were also finessed in the story by having Portugal and
England each be an anthropomorphized entity. If the countries were to follow free-trade
policies, the result would include the sudden unemployment of English winemakers and
of Portuguese cloth makers. (Perhaps these unemployed would be primarily of a
disadvantaged gender?) Economists tend to finesse the within-country distributional
issues by asserting that the efficiency gains would be big enough to compensate the losers
for their losses, in principle. Whether the “in principle” would ever become “in
actuality,” however, is considered a political, not an economic, problem.
Interdependence
The implications of interdependence are not investigated in the fable.
Interdependence can have its good side—traders may learn how to get along in a civilized
way since there are mutual gains to be made—but it can also have its bad side. The
weaker a country is relative to its trading partners, and the more important the goods
imported are to the survival of its people, the more vulnerable it is to market swings.
Trading coffee or fiber for food looks good when the terms of trade are favorable, but can
lead to disaster when they are not.
13
Observation
An economist who does seriously look at historical evidence and at the experience
of contemporary economies will notice that, while “gains from trade” do exist, real life is
much more complicated than the fable suggests. Economists Dani Rodrik (of Harvard)
and Alice Amsden (of MIT), for example, are among those who have made empirical
studies of the relation between trade “openness” and economic performance and growth.
They find that the relation between the two is much weaker than the fable would suggest.
Even those countries who have built prosperous economies around an export-orientation
very often made heavy use of tariffs and state planning in the early stages of their
commercial transformation.
Likewise, economists who observe that the real world includes problems of
poverty, gender disparity, inhumane forms of labor, and ecological degradation notice
that the simple fable does not encompass their concerns. Nor does the fable raise any
opportunity for questioning the nature, democratic or otherwise, of the institutions
involved in expanding free trade.
A Note
I called Portugal “her” and England “him” in the Tale of Two Countries because
this makes recycling the fable in another context very easy. University of Chicago
economists Gary Becker used the same fable to “explain” why it is efficient for women to
specialize in unpaid home production, and for men to specialize in market work. “Wife,”
fully using her time, can procure a hundred units of home-produced goods if she works at
home, or a hundred units of market-bought goods if she works in the paid labor market.
“Husband” is relatively more efficient in market work, etc. Substituting “Wife” and
“home production” for “Portugal” and “wine,” and “Husband” and “Market production”
for “England” and “cloth,” the story comes out the same, with the wife specializing in the
home and the husband in the market. The magic of specialization and exchange
14
“demonstrates” that a separate-spheres division of labor makes everybody happy. And
“wife” and “husband” throw a big party and dance all night. 4
I would guess that many in this audience could point to a few issues of
constraints, power, vulnerability and empirical evidence that make this fable, as well,
something less than the whole truth!
Conclusion
The questions of gender and economic integration that form the problematic for
this conference, then, are not just questions that can be answered by the Tale of Two
Countries. To get to the sorts of forms of analysis that are helpful, however, requires a
steady, confident understanding of what real science and real knowledge are about. It
requires a willingness to dig into the messy details, to deal with the complex institutions,
and to face the challenges of power and interdependence.
I would not point to one single heterodox school of economics as the one proper
guide for investigation--though I tend to lean towards what is now often called the “old”
institutionalist school, and I even find some neoclassical tools useful in their proper (and
limited) context. What I think is most important is to shake off the idea that the economy
is an impersonal machine whose rules we must simply learn and submit to, and recognize
that we are bound together in an ever-evolving economy, with institutions that can be
worked on and changed, and on which our well-being--as individuals and as global
society--all depend.
References
Amsden, Alice. 2002. "Ruling Out National Development? States, Markets and
Globalization" Remarks on occasion of her receipt of the Leontief Prize
at Tufts University, on November 21, 2002.
http://ase.tufts.edu/gdae/about_us/amsden_remarks.html, accessed May 2, 2003.
4
I should note that this model of Becker’s in one (perverse) way signaled progress within the economics
profession. It at least recognized that women were producing something at home. Most economists at the
time assumed that what went on within households was only “consumption” and “leisure,” or ignored
families entirely.
15
Baumol, William J. and Alan S. Blinder, Economics: Principles and Policy, 6th Ed. NY:
The Dryden Press.
Elson, Diane. 2001. “For an Emancipatory Socio- Economics.” Speech given at the
UNRISD Conference on The Need to Rethink Development Economics, Cape
Town, South Africa, Sept. 2001.
Harding, Sandra. 1986. The Science Question in Feminism . Ithaca: Cornell University
Press.
Keller, Evelyn Fox. 1985. Reflection on Gender and Science. New Haven, Conn: Yale
University Press.
Nelson, Julie A. “Gender, Metaphor, and the Definition of Economics,” Economics and
Philosophy 8(1), Spring 1992, pp. 103-125.
___. Feminism, Objectivity, and Economics. London: Routledge, 1996.
Rodrik, Dani. 2002. "Ruling Out National Development? States, Markets and
Globalization" Remarks on occasion of his receipt of the Leontief Prize
at Tufts University, on November 21, 2002.
http://ase.tufts.edu/gdae/about_us/rodrik_remarks.html, accessed May 2, 2003.
16