By Holly A. Bell
When I discuss economic issues people often ask me which “school” of economic thought I subscribe to. This question usually leaves me a bit tongue-tied because my approach to economics doesn’t fit neatly into any specific “school” as they are generally defined. The “Bell School” is firmly grounded in the classic market economics of supply and demand, but tends to be considerably more holistic and interdisciplinary in its approach than many of the schools of economics that are widely discussed.
First, the Bell School is less interested in narrow interpretations of theory and more interested in practical application. It seeks to describe how an economy actually works at any point in time and assumes non-market factors are always causing distortions that draw actual market behavior away from modeled predictions. These distortions come in the form of government regulation, monetary and fiscal policy, globalization, movement of information in an economy, “quasi-rational” behavior by market participants due to complex motivations, information availability, and bounded rationality; cultural and geopolitical factors, psychological and sentiment factors, external micro- and macro-level factors and influences, values and ethics, complex systems, ability of individual actors to influence the system as well as the system to influence the actors, the possibility of the existence of multiple equilibria, a desire for or against cooperation and/or relationships, perceptions of justice, and the knowledge and learning of all levels of decision-makers. As a result, traditional economic models require additional layers of analysis added on top to fully describe and predict economic behavior. The Bell School is a realist approach that seeks to analyze the complexities of the current environment in order to prescribe specific actions that minimize market distortions.
The Bell School draws from the field of business administration to understand and explain economic policy outcomes. It uses stakeholder theory to identify those individuals and groups that will be impacted and seeks to preserve a market-driven capitalist system that allows all people to benefit from a vibrant and diverse business environment. It values micro-level actors as the most important part of an economy. The micro-level must drive macroeconomic results as a macro-driven economy will be inefficient and may create disincentives for micro-level actors to do what is in their long-run best interest.
Also from the field of business administration, the Bell School uses situational leadership to analyze each unique economic issue from a variety of perspectives to determine the merits and weaknesses of each approach as it relates to the complex internal and external factors inherent in each economic issue. It believes all schools of economic thought and multiple disciplines offer valuable analytical tools and perspectives that should be considered in order to find the best solution. This is important if for no other reason than to explain the rejection of a particular perspective’s solution.
It recognizes both the risks and benefits of globalization, but prioritizes the domestic economy. Globalization no longer means that businesses are competing globally for locations, employees, and customers exclusively. Globalization means we have to think about competition in all areas on a global basis including education, immigration policies, tax structures, and legal environments. These areas should be structured in a way that encourages domestic investment.
The Bell School borrows from the fields of physics and psychology to explain the lack of dichotomy between facts and values in economic decision-making and the existence of “relativity” in economic decision-making. Economic decisions are not made in a vacuum and we often compare our decisions and outcomes relative to others or remove certain options based on our values. Our decisions are conditioned by the decisions of others, by experience and learning, values, and by decisions outside the territory under consideration. This ongoing conditioning causes individuals, businesses, and societies to react differently to different economic stimuli even when they have the same information. The mechanism of economic analysis and decisions—while grounded in prices, rationality, and self-interest—is based on a process of continuous learning creating relativity and an ever-changing economic environment (See “Toward a Value Inclusive Theory of Economic Decision-Making: A ‘New Science’ Model” here). These fields also help explain behavioral and other quasi-rational decision-making behaviors as well as the role of social factors–including cooperation, relationships, and social learning–in economic decision-making.
The lack of dichotomy between facts and values in economic decision-making means that facts are influenced by values because values determine what facts are important to measure and report. Values are influenced by facts because experience has shown that certain economic outcomes have detrimental impacts. As a result we develop value statements to express what we consider negative economic environments, outcomes, and solutions. Often value statements are based on perceptions of justice and need to be recognized as driving factors in economic actions by individuals and governments.
The Bell School recognizes the importance of information in efficient markets and the ever-increasing velocity of that information in our high-tech world. Attempts to restrict the movement or speed of information in an economy can cause distortions that may be more damaging than the “noise” increasing amounts of high-velocity information can create.
As the above illustrates, I prefer to think of myself as an interdisciplinary and holistic economic thinker as I think it is a mistake to constrain yourself by limiting your analysis to a narrow economic school. While you may see shades of multiple schools in my discussion, I will leave labeling the school of economic thought I fit into to others.
Dr. Holly A. Bell is a business and economics professor in the University of Alaska system and an author, analyst, manager, and blogger who lives in the Mat-Su Valley of Alaska. You can visit her website at www.professorhollybell.com or follow her on Twitter at @HollyBell8