Modernism and Economics

To the best of my knowledge, nobody has ever tried to associate modernism with economics. When you talk about modernism, it's usually about architecture and furniture.

Visiting V&A yesterday was not just to see the Jameel Gallery but also not to miss its Modernism exhibition (which ended today - you can download the panel text that succinctly explains the evolution and different aspects of modernism).

It was educational in many ways. I understand why buildings in socialist countries are extremely modernist (ie. made of concrete and purely geometric) - the origin of modernism is intrinsically linked with socialism. I understand what modernism did to Europe is what aid agencies try to do to developing countries today - allowing ordinary people to enjoy hygienic, healthy life. The chair invented by Dutch architect Mart Stam - the two-leg cantilever chair - must have been an inspiration for the iconic Panton Chair, designed by Verner Panton in the late 1960s.

The concept underlying deep in modernism is an extreme distrust in anything human. This is well reflected in Oskar Schlemmer's dance The Triadic Ballet. Dancers in this ballet wear geometrically-shaped costumes (like this) which deprive the wearer's body of freedom to move. Even though this is a ballet, the variety of body movement is severely restricted - one of them simply keeps jumping and that is. This kind of extremism in modernism created a reaction such as Chaplin's Modern Times.

So the exhibition helped me synthesize different bits and bits of my knowledge.

Then I came to think that perhaps the general equilibrium theory (or so-called the Invisible Hand) and macroeconomic theory before the Lucas Critique are a manifestation of modernism in economics. The fundamental idea of the general equilibrium theory is that even if everyone behaves selfishly, the market disseminates information on everyone else's behaviour through change in prices of goods, leading to the efficient allocation of resources. Macroeconomics before the Lucas Critique saw a macroeconomy as a machine - that's why William Phillips created this to demonstrate the circular flow of income in an economy. Yes, it's machine - one of the keywords representing modernism. This view on macroeconomics certainly led to the idea of central planning economy. If it's a machine, the government can run it. (See this article appearing in The Economist a couple of weeks ago for the evolution of macroeconomics during the last century.)

But, as we now all know, this is too simplistic a view on economics. The Lucas Critique along with the rise of game theory in economics has overcome the deficiency of "modernism in economics".

Some people critical of economics still think that economics is a manifestation of modernism. That's no longer the case. Such critics can be said to be part of the anti-modernism camp - which has long been out of date.