Ideology and Economic Analysis: Lessons from the History of Modern Economic Thought

Charges of ideological bias are hardly absent from economics, whether it be in the realm of theory, policy, history, or the history of ideas. Most of us are now sufficiently post-modern to understand that, try as we might, we cannot escape the influence of ideology on our thought processes; yet, acknowledgement of the role of ideology in economics generally is rare. Where such acknowledgement exists, it is always with reference to the work of those whose methods or results are opposed to one’s own. The role of ideology goes well beyond the choice of theoretical or empirical tools, the evaluation of the outcomes of empirical analysis, and the application of these to the policy process. It also influences the interpretation, understanding, reception, and transmission of ideas. Here we will explore two sets of interpretive themes that bear witness to the role played by ideology in the transmission of economic theories. The first deals with two positive theoretical constructs that have been interpreted and used as free-market or right-wing ideology: the Coase theorem, and the unanimity rule in constitutional political economy. The second reflects on the ideological content given to so-called pragmatic policy analysis via an examination of the work of W.S. Jevons, J.M. Clark, A.C. Pigou, and Ronald Coase.