140a. Political economy pt. I: The Social Order of the Underworld

Please be advised that this episode contains mentions of violence and may be unsuitable for some listeners.

I'd like to flesh out what I've been saying before about the power of economic analysis in explaining people's actions.

Whereas when we normally think about motivation we think in terms of psychology, economists naturally think in terms of incentives. This kind of thinking is generally missing in educational discourse.

There are two books that I found particularly fascinating and instructive on this point: The Social Order of the Underworld: How Prison Gangs Govern the American Penal System by David Skarbek; and The Invisible Hook by Peter Leeson. This recording focuses on the former.

David Skarbek's book is fascinating and rich in both detail and theoretical explanation, so I focus on what I find most compelling and most relevant to transfer over to thinking about other contexts. First of all, he introduces existing criminological theories that aim to account for the rise in prison gangs, namely Deprivation theory and Importation theory. The former suggests that inmate behaviour is a result of the pain of imprisonment, and the latter focuses on pre-prison beliefs and experiences that are brought into prison.

Skarbek departs from both of these theories, grounding his own analysis in political economy. He introduces us to the basic assumptions of economics - that people are self-interested and respond rationally to incentives - and goes on to describe the role of governance in society. His fundamental thesis is that prison gangs provide governance, meaning that they provide a form of public good which enhances personal safety and opportunities for trade (mostly in drugs).

While I'm yet to fully apply the ideas of political economy to education (except for reading about it inThe Beautiful Tree, China's Examination Hell, and Education and the State), I feel that digging in to some examples like this can help us appreciate the reasons why people do things. Crucially, they are not all psychological.

Enjoy the episode.