Recently, a book by Ivo Bićanić, entitled The Economist Has Two Hands, was posthumously published. It is a set of columns and accessible essays edited by Željko Ivanković, with whom Ivo Bićanić worked closely in recent years on the Internet portal Ideje.hr. As Ivanković announces in a long, detailed and emotional preface, this book could be only the first of several posthumous publications by Bićanić. Let’s hope it will be so.
This book is a collection of informal essays. It is a specific genre that, it must be admitted, Ivo Bićanić handled well. Each essay is stimulating and surprising, and these are not usually the reactions that the reader has when reading local weekly newspapers and websites. All texts are well-argued, supported by data where appropriate and, what is also important, the texts are witty. Of course, in a specifically academic way, in accordance with the profession of the author. This is perhaps the most important value I see in these essays. They demonstrate the importance of one’s profession. It is always interesting to see when people from other professions, whether they are doctors, lawyers, economists or anthropologists, interpret some events. Bićanić gives us the best possible example of how an economist looks at society. These essays are indeed no worse than what Paul Krugman or Dani Rodrik write. I would say they are even better.
Ivo Bićanić had a rare talent to make you think. His conclusions are always provisional and unstable. And often they are not even there. Therefore, if you want to reach a conclusion, you will have to articulate it yourself. He always encourages curiosity and independent thinking in the reader. This can also be a bit frustrating. The indefiniteness of his approach was especially visible in conversations. I can’t say that I spent much time with him, nor did I study economics at the Faculty of Economics in Zagreb, so I base my experience on attendance of several public forums and one long conversation with Bićanić. Either way, the tendency not to put the final dot over the ‘i’ is actually, if you think about it, a good characteristic that any intellectual should have.
With Bićanić, everything is in the profession he comes from. His texts in the public space provide the intervention of an economist. How does someone who was educated in that academic milieu and has adopted theoretical tools and empirical procedures observe everyday phenomena? This is the value of these texts. This is, also, their ultimate reach. Of course, the essays refer to everyday life, so they will soon become outdated. For now, they are still actual, but soon the names of specific ministers will be changed, and in 20 years nobody will care about those names anymore. It would be all the more important to collect Bićanić’s scientific articles in one place.
Bićanić’s way of thinking has another commendable characteristic: he always goes against the grain. If someone says A, he is wondering if B can be said? This is not good if you want to take part in partisan struggles. But if your goal is to shake people out of the comfortable slumber they’ve sunk into because everyone’s chanting the same mantra, then such a method is necessary. The means by which Bićanić tries to do this are theories and concepts that can be found in economic textbooks. None of what is written in the book is a particularly difficult economic analysis. However, it is important for Bićanić to demonstrate that there are useful tools in it. If you start describing a problem to a good doctor, he will quickly start naming the symptoms and prescribing therapy. And if you mention something similar to Ivo Bićanić, he will soon employ the ideas of Hyman Minski or Oliver Williamson.
Such an approach also has its drawbacks. In order to know what an expert should think about a problem, science itself must be highly structured. Economics filters individual old authors and their ideas into textbooks, so this is possible in principle. Economists do not need to read Adam Smith during their education because the invisible hand is explained in all textbooks. They don’t need to read Keynes because IS-LM models are not in his books anyway. So, it’s about filtering ideas into something concise that can be put in textbooks and that can be dealt with quickly. This is not the case in other social sciences, the level of systematization is lower and the textbooks are less uniform. For example, doctoral students of sociology in the US, like it or not, have to read the Weber-Marx-Durkheim triumvirate. Economists, on the other hand, can have a perfectly good academic career without ever opening a Hayek or a Friedman. I would say that something is lost with that filtration. But economists know that time is money, and reading the classics is certainly a waste of time. Opportunity costs, Bićanić would say.
For Bićanić, the consensus created by the filtration of old ideas into modern textbooks is crucial, because this is how the tools of his profession are defined. Thus, for example, he defends David Ricardo’s principle of comparative advantages because it is a commonplace in economic textbooks (pp. 74-75, 247). I guess he himself was aware that Ricardo's principle is a rather fragile thing. Numerical illustrations showing that both sides are better off when they specialize in those goods in which they have comparative advantages and then trade with the other side cannot be taken as solid evidence. And in the real world, saying that all countries are better off if they open up to international trade is also a hard position to defend. The most successful examples of the so-called “modern economic growth” that Bićanić persistently invokes are probably Japan and South Korea, which did not settle for their comparative advantages but created modern societies through protectionism, state leadership and the infamous “picking winners”. Following the consensus that exists in the profession is not always the best way.
But let me list a few positive things that surprised me in this book. First, a critique of the IT sector and the techno-optimism that exists in the general public (pp. 109, 141). According to Bićanić, the IT sector cannot be a locomotive that pulls the rest of the economy. Besides, he doesn’t really like Mate Rimac either (p. 144). Second, there is his passing criticism of the Scandinavian countries which are often uncritically adored in our social sciences (p. 155). Namely, Bićanić claims that Scandinavian countries may have low wage inequality, but they have high wealth inequality. That is indeed capitalism. Also, he does not idealize Slovenia (p. 131), which in Croatia is often taken as an example of everything positive. Third, Bićanić defends the public sector (p. 239). He highly values the high-quality public sector and the autonomous expertise that can arise in it. Fourth, he defends the right to strike and is scandalized by the state’s actions in the case of a strike by Croatia Airlines workers (p. 240). Fifth, he criticizes small entrepreneurs who constantly beseech the state to provide them something (p. 72). In the context of the COVID-19 epidemic, he first of all wanted to see that workers were helped, not employers. In this context, one additional question should be asked – has anyone investigated how this financial aid was spent? How much of the state aid that was intended for workers stuck to the fingers of the their employers? It should be in the interest of the state to have an answer to that question.
This brings us to the question of the political position of these essays. Bićanić avoids that question, which is most likely a conscious decision. When everything written is looked at, it can be said that the content belongs to the Left, but the form does not. Everything is wrapped up in the language of a decent gentleman from Zagreb, admittedly witty and peculiar, but a gentleman all the same. He himself would probably refuse to have his ideas vulgarized by being harnessed to this or that party bandwagon. However, Bićanić is not devoid of political impulses. Sometimes he drops his guard, so you can see that his heart is beating on his left side. However, in order to balance it, he also throws in the opposite accent here and there. For example, he says of the Austrians that they are “not hawkish ideologues” (p. 57), although Hayek and Mises were in some cases exactly that. Or throws in a bit of Robert Lucas, the famous Chicago School economist who provided one of the theoretical foundations for the neoliberalism we currently live in (p. 153). First of all, Bićanić is an eclectic.
In this eclecticism, it is sometimes difficult to find a common denominator. However, if there is a main point, it is that of “political economy”. However, it seems to me that what Bićanić means when he says “political economy” remains a bit undefined. Obviously, this is something systemic and concerns the balance of power that exists between the state and the main economic actors. In the Croatian context, when he says that political economy is important, he usually also says something about “crony capitalism”. With that, he made things a little more concrete. Namely, crony capitalism is a type of capitalism in which the state has the main say, and the other economic actors are then attached to it. There is too little of what Bićanić calls “market arbitration”. Like all the other economists, he prefers the market to political arbitrariness and irrationality. The main economic actors in such capitalism are government cronies. As a diagnosis of the Croatian reality, this is not incorrect. But the question is whether we can be completely satisfied with that answer.
The already mentioned Japan and Korea were also examples of crony capitalism. Only, they were examples of successful crony capitalism. Therefore, Croatia is not necessarily unsuccessful because of its “political economy”, but because crony capitalism is insufficiently successful in our country. Unfortunately, Bićanić also employs examples in which some richer countries are idealized (pp. 220, 242). However, Japan was (and remains) a very corrupt country, but in its own way. China, which is growing the fastest, is probably the most corrupt country on the planet. Rapid growth does not mean the absence of other problems. In fact, where growth is the fastest, it is usually that the most is stolen as well. Our domestic crony entrepreneurs are small fish compared to the Chinese players today. In the end, I would say that it is problematic if (only) crony capitalism is identified as the culprit, because by doing so we fall into the defense of some pure form of capitalism. Bićanić would not say it so vulgarly, it boils down to the claim that we never had capitalism in Croatia. Bićanić would say that we need more “market arbitration”, which sounds more polite, but is the same thing.
In the end, I can’t escape the impression that Bićanić owes us. After this set of essays, I have to say I want more. He owed us at least one book, if not more. The mentioned historical study of the railroad sounds fascinating. To return to the questions of profession, which is so important to Bićanić: maybe my preference for books is something that stems from my professions. Economics writes more articles, while political science and sociology prefer to produce books. But these are the professions in which I am educated, so books are my preference. It remains a pity that more of Bićanić’s books will not be available.