The Sacred and Profane Revised

Faculty & Research Taking Account of Accountability: Academics, Transition Economics, and Russia by Bruce Kogut and Andrew Spicer 2005/62/ST Working Paper Series Taking Account of Accountability: Academics, Transition Economics, and Russia Bruce Kogut* and Andrew Spicer** September 2005 This paper, long in the making, owes debts to many people and institutions, foremost, to the reflective policymakers at the World Bank. We would like to thank participants at seminars held at the Center for European Studies at Harvard University, World Bank, University of California at Irvine, Strasbourg University, INSEAD, University of Pennsylvania, Santa Fe Institute, and the Society for the Advancement of Socio-Economics; for the comments on variations of drafts by Alice Galenson, Ira Lieberman, Gerry McDermott, Brian Uzzi, and Marc Ventresca; and the research assistance of Gokhan Ertug, Kedar Phadke and especially Mark Riddle and Anu Seth. *INSEAD, [email protected] **University of South Carolina, [email protected] ABSTRACT The performativity of ideas implies accountability: to what extent are academics who create ideas responsible for the consequences? We assess academic accountability by analyzing three domains (academics, international financial institutions, and Russian policy makers) in the case of transition economics and Russian mass privatization. Through a citation analysis, we observe a cohesive economics community and an established international policy channel by which ideas are enacted. However, the chronology of events indicates that the academic ideas surrounding Russian mass privatization were strongly shaped by political considerations. A content analysis of World Bank field documents show that pragmatic policies gave away to an endorsement of mass privatization promoted by one set of reformers in Russia. Events legitimatized economics and economists, as much as economics legitimized policy. At the end, legal and political institutions enacted accountability, whereas academic accountability was lacking. We ask why. 2 “Not ideas, but material and ideal interests directly govern men’s conduct. Yet very frequently ‘world images’ that have been created by ideas have, like switchmen, determined the tracks along which action has been pushed by the dynamic of interest”. Max Weber (1946a: 280) “Knowledge can be true or false, while action can only be successful or unsuccessful, right or wrong. It follows that an observing which prepares a contriving must seek knowledge that is not merely true, but also useful as a guide to a practical performance. It must strive for applicable knowledge”. Michael Polanyi (1962: 175) Ideas etch deep traces in the history of human events, and yet their agency remains a controversial province of debate. Weber’s seizure of both horns of the idealist and materialist traditions relied upon the conjunctive argument that ideas can be causal at critical historical breaks. Yet, if ideas are switchmen, is there accountability in the case of a train wreck? Accountability of ideas is highly pertinent to the growing literature that details the many gaps between a policy theory and its failures, such as poverty social science, development economics, privatization, and tax policy.1 Surely, an important origin of this gap is that academic communities evolve by their own logics and incentives, where abstraction is valued over application (Abbott, 2001: 136ff.). There is a difference after all in the codified knowledge to which science aspires, the experiential and tacit knowledge that an academic learns in the practice of his or her craft, and the local and practical knowledge of how things are done “here”, that is, the beliefs situated in the field of practice. It is a distinction that presages a conclusion why good academic knowledge is often not good practice. 1 See O’Connor (2001), Hood (1994), Flyvberg (2001), and especially the incisive study by Scott (1998). For an earlier treatment, see the sagacious book by Lindblom and Cohen (1979: 44) and their distinction of “knowledge and ordinary knowledge”. 3 This putative disjoint reflects a belief in the value of institutional insulation – often called the ‘ivory tower’— and in interest-free intelligentsia whereby academics are academic and by construction, apart from the world of application. The notion of ‘performativity’ proposed by Callon (1998) and developed by MacKenzie and Millo (2003) challenges provocatively this appealing presumption of a disjoint between idea and practice. In paraphrasing Callon, MacKenzie and Millo (2003: 108) write that economics as a body of ideas ‘performs the economy’. As evidence, they demonstrate how Black-Scholes option theory changed trading behaviors. Economics, and economists, are endogenous to the subsequent worldly behaviors under study. The idea of performativity entails logically a corresponding notion of accountability. Whereas economics (and surely science more broadly) enact the economy and society in powerful ways, the question of accountability is nevertheless largely ignored. Accountability can be measured by the impact on clients: the public who consume the reports, the patrons who finance it, the users who apply it. Yet, the primary clients for academic research are other academics; after all, Black and Scholes did not patent their result as a trading algorithm but quickly put their paper into the public domain by publishing it.2 Yet, there is no board of accountability for false results, or malpractice legal suits in social science. It is this accountability gap between what academics praise as good work and what is good for the world that is the topic of the following analysis. The historical events that led to the transformation of dozens of countries from autocratic socialism towards varying degrees of democratic capitalism represent a quasi- natural social science laboratory for the understanding of ideas, their performativity, and their accountability. The constitution of society and polity in the most fundamental sense 2 See Black’s account (1989). Even in financial economics –which arguably is one of the economic sciences closest to markets willing to pay for innovation, Lerner (2002) found that only 4 patents were issued to universities between 1971 – 2000 out of 445 patents in finance; compared to the university share in biotechnology or life sciences, this is a relatively smaller ratio. 4 had been shaken and uncertainty over which tracks to choose following communism was expressed through debate, politics, and events. Elster, Offe, and Preuss (1998) emphasize rightly that the infrequent engagement of military units in this revolution points to the diffusion and dominance of a common ideological belief that change was required. Ideas trumped force. The supply of ideas to those actors implicated in this history did not exist as an abstract schedule of choices, but as instantiated in the fluid context of colliding and overlapping fields and arenas. These fields consisted of the community of academics, of international financial institutions, and of the plurality of emergent interests that contended for power and influence in post-soviet conditions. In this article, we analyze the overlapping jurisdiction of these fields in which academics pursue knowledge and career and in which policy makers formulate ideas and politics. The analyses of these three domains (academics, international financial institutions, and Russian policy makers) permit an individual and collective assessment of the role of a particular class of actors and their ideas, namely academic economists, as “switchmen” and as performative agents. This focus on economics itself requires justification. Why should we not say other social sciences perform the economy? The justification lies, as we show below in the domain of privatization policies, in the competitive expansion of economics within what Abbott (1988) would call a system of academic professions, particularly in the realm of policy. This analysis has an ulterior conclusion that we explore at the end of the paper: given the complex and multi-faceted nature of transition, why did economics and economists dominate the policy discussion? Where were the other social sciences, such as sociology? As a type of counterfactual exploration, we analyze briefly sociology’s positioning in these three domains of academics, financial institutions, and policy makers. If one accepts the importance of feedback on ideas and careers, this consideration raises the speculative 5 question of what the ‘no-show’ of non-economic disciplines meant for the development of ideas in other social sciences and their ‘performativity’. We consider the possibility of a lock-in of the policy void in the social sciences other than economics, as well as to whether there are self-governing mechanisms that correct for bad policy advice. The paper is organized as follows. We first describe the principal ideas in the public debate following the collapse of the Communist system. A subsequent examination of citation patterns in transition economics establishes a principal thesis: there is a prestige structure in economics, hence indicating an internal dynamic that generates hierarchy. We then show that many of the economic elite interacted with local Russian elites. Yet, their impact was to convince international organizations to support an already established mass privatization program that contradicted the pragmatic knowledge of the field officers responsible for the Russian program. Errors and legal violations

Load more