How to win a Nobel Prize in economics

Early October is a good time to root for your favorite economist to win a Nobel Prize. Mine this year was Thomas Paley, an economist with broad and long experience in think tanks, the labor movement, and governmental agencies. Unfortunately, he didn’t make it. Instead, two other American scholars were awakened by early morning phone calls from Stockholm October 12 notifying them they had won the 2009 Noble prize in economics.

The Swedish Royal Academy of Sciences cited both of them, Elinor Ostrom, a professor of political economy at Indiana University, and Oliver Williamson, an economist at the University of California at Berkley, for their “analysis of economic governance,” particularly for contributing to the understanding of how institutions act in situations not covered by detailed contracts or law.

“Whereas economic theory has comprehensively illuminated the virtues and limitations of markets, it has traditionally paid less attention to other institutional arrangements,” the Nobel press release explains. Attachments to the release describe how Ostrom and Williamson have contributed to filling that void – theoretical and actual -- in economic governance.

Thereby, the Nobel committee passed over economists who have done ground-breaking research to fill another gap – theoretical and actual: the gap in global economic governance, which today has gained an immediacy from the economic crisis gripping much of the world. Among the scholars who have focused on this area are Thomas Paley and Dani Rodrik, professor of international political economy at Harvard’s Kennedy School of Government.

My own decades-long personal exploration of the global economy, as described in my book, “Justice at Work: Globalization and the Human Rights for Workers,” and on this Weblog, has convinced me

-- that the global economy undervalues work, workers, and worker organizations and
-- that economists traditionally also undervalue work, workers, and worker organizations.

The economist who, in my limited view, departs most sharply from that tradition is Thomas Palley, author two books, dozens of articles in academic journals, and numerous policy papers. His most recent work is a timely policy paper for the New Century Foundation titled “America’s Exhausted Paradigm: Macroeconomic Causes of the Financial Crisis and Great Recession.” I summarized the main points of that paper in my August 25, 2009, posting on this Blog under the heading: “Rx: a new economic model that would value work and workers.”

Let me try summarizing that summary.

Palley’s key point, as I saw it, was that the “neo-liberal” policies adopted after 1980 under Ronald Reagan put workers in a box, figuratively and literally. The box’s anti-worker policy pressures come from four sides:

--globalization (chiefly free trade and unfettered movement of capital),
-- a retreat from full employment,
-- labor market flexibility (i.e., to fight unions, minimum wages, unemployment benefits, and other worker rights), and
-- “small government” (deregulation, privatization, and outsourcing, all to the disadvantage of workers).

In commending Professors Williamson and Ostrom, the Nobel panel noted that both scholars were “instrumental in establishing economic governance as a field of research.” Indeed, the selection itself adds to that legitimacy.

Were someone like Tom Palley similarly rewarded, the selection would also serve to stimulate research in global economic governance, where the role of workers and their organizations suffers from wholesale neglect.

“What Do Unions Do?” by two Harvard economists, Richard B. Freeman and James L. Medoff, published in 1984, was an economic assessment of American unionism of that era. It badly needs updating. More accurately, a new book is needed to reveal a new paradigm – how workers and their unions are involved in 21st century global economic governance.

One chapter, or more, could be devoted to an empirical study of the trade union movement in Malaysia and its historic campaigns for Malaysian workers and often against the Malaysian government and the foreign multinationals that profited from “labor market flexibility.” In defiance of the government, for example, the Malaysian Trades Union Confederation has long publicly supported adding requirements for enforceable labor standards to international trade agreements.

Many other countries have a wealth of labor material ready to be mined by researchers in the 21st century model of global economic governance. The research is worth doing for its own sake, and – who knows? – could even lead to a pre-dawn phone call from Stockholm.

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