Of course, the bandwagon effect of the esteem economy is not always beneficial. Think of the emergence of a social norm among corporate executives to base their mutual esteem on the large size of their pay and options packages. As in any self-reinforcing process, there are many possible outcomes in the development of such norms. But understanding the nature of the process is essential if we hope to steer the outcomes.
This is very far from the kind of economics so many of us suffered through in Econ 101. As Brennan and Pettit note, until recently the rise of economics as a conventional academic subject meant the eclipse of the traditional concern of political economy. But markets are not abstractions. Economies consist of relationships between people -- usually strangers -- within a framework of specific institutions. The analytical rigor of conventional economics needs to be combined with a rich understanding of the human context. Fortunately, that is what more and more economists, including the authors of these three books, are doing.
Diane Coyle ([email protected]) is an economic consultant, author, and visiting professor at the University of Manchester. Professor Coyle is a former economics editor at the Independent, and has been a commentator on BBC radio. Her latest book is Sex, Drugs & Economics: An Unconventional Introduction to Economics (Texere, 2002).