In this edited panel remark, Jean‑Paul Carvalho argues that contemporary economics has become overly reductionist, focusing narrowly on mathematical models while neglecting the social and political contexts that shape market behavior. He traces the discipline’s roots to classical political economy, which treated economics as a study of both wealth and human character, and critiques the turn toward ‘harder’ problems as a series of ‘sins of omission’ that omitted norms, identities, and cultural transmission. Carvalho calls for a reintegration of political economy, emphasizing that economists must understand how economic mechanisms interact with social structures, norms, and identities. To illustrate, he examines the recent rise in ‘deaths of despair’ among middle‑aged, non‑college‑educated whites in the United States, proposing a “sorting‑separation‑externalities” (SSE) mechanism: meritocratic mobility sorts individuals into elite and non‑elite groups, separates them socially, and creates externalities that polarize social outcomes such as health behaviors. He outlines a model (detailed in his forthcoming paper) showing that when social externalities are convex, increased mobility can worsen aggregate welfare, and that intergenerational transmission of non‑cognitive traits can cause a dynamic meritocratic society to evolve into a static, caste‑like structure. The note concludes that a broader political‑economy perspective is essential for addressing contemporary social problems and for enriching economic analysis.
Topics
From Classical Political Economy to Modern Economic Reductionism
Historical overview of how early economics integrated social and political analysis, and how the discipline shifted toward a narrow, mathematically‑driven focus in the late 19th century.
Mathematical Turn as ‘Sins of Omission’ in Economics
Critique of the discipline’s move toward formal, hard‑problem modeling that omitted softer social factors, framed as moral ‘sins of omission’.
Reintegrating Social Norms, Identities, and Cultural Transmission into Economic Analysis
Carvalho’s central thesis that economists need to understand the interaction between narrowly defined economic mechanisms and broader social structures, including norms, culturally transmitted beliefs, and identities.
Sorting‑Separation‑Externalities (SSE) Mechanism Linking Meritocracy to Social Polarization
Presentation of the SSE mechanism: economic mobility sorts individuals into elite and non‑elite groups, socially separates them, and creates externalities that polarize outcomes such as health and substance abuse.
Dynamic Meritocracy and the Emergence of Static Class Structures
Discussion of intergenerational dynamics where meritocratic mobility initially expands but, through cultural transmission of non‑cognitive traits, can lead to a re‑solidification of class divisions resembling caste systems.
Empirical Illustration: Deaths of Despair and the US Meritocratic System
Use of recent US data on rising mortality among non‑college‑educated whites to motivate the need for a political‑economy lens and to exemplify the SSE mechanism.