In a recent post, I discussed what is in philosophy termed 'the hard problem'. I did so in the context of recent discussion on ADHD. I do, however, think this idea needs to be considered within political economy because I have no doubt that economics has a hard problem, but it is not the one economists usually discuss.
The idea that there might be a distinction to be made between what have been described as easy and hard problems was created by the philosopher David Chalmers, who distinguished between the “easy problems” and the “hard problem” of consciousness.
The easy problems concern the mechanisms by which the brain processes information, directs attention and produces behaviour. They are not, of course, actually easy. The term is decidedly tongue-in-cheek. They are called easy only because we can imagine how scientific investigation might eventually solve them.
The hard problem asks why those physical processes are accompanied by subjective experience. Hard problems include questions such as why pain hurts, why red looks like red, and why it feels like something to be alive. These are ontological questions.
I think that economics has a broadly equivalent distinction to make, although the question I pose here is derived from the work of David Chalmers, but can be distinguished from it because it is not, as such, ontological, and his question is.
The easy problems of economics concern measurement, valuation, performance standards and the mechanics of economic systems. They include questions about how money is created, how markets operate, how prices are set, how taxation works, how income is distributed and whether GDP is rising or falling.
I stress that none of these questions is necessarily easy. National accounting is complicated, and still in need of much development. Economic measurement is frequently contested. Financial systems are deliberately made difficult to understand: that is what professions do. But all these questions still lend themselves to technical investigation. We can collect data, construct models and describe mechanisms.
The hard problem of economics is different. It asks how the economy is experienced by the people who live within it.
What does economic success feel like?
Suppose GDP is rising. An economist might claim that the economy is doing well. The statistics may support that claim using conventional definitions of economic performance.
But suppose that, at the same time, most people's real wages are stagnant, their housing costs are increasing, public services are deteriorating, their employment is insecure, their working hours are unpredictable, their children cannot afford homes, and their parents cannot obtain the care they need. Those people might reasonably ask what economic growth has done for them.
They are not necessarily disputing the value attributed to GDP. They are disputing its relevance to their lives. The economist is describing the economy from the outside. People living in a country experience it from the inside.
That difference is fundamental, but most economists, almost all politicians, and virtually every economic commentator in the mainstream media seem unaware of it. An economy can be simultaneously growing according to its accounts while failing according to the experience of many of the people within it. Indeed, growth may arise almost directly from greater insecurity, inequality, stress and environmental destruction in the way we measure it at present. The measurement can improve while the experience becomes worse. That is the world we are living in.
The issue is that conventional economics, used by the likes of the Bank of England and the Treasury, which, as a result, frames political and media comment, has remarkably little to say about this. It tends to assume that growth is desirable, that increased consumption indicates greater wellbeing and that market choices reveal what people want. It then treats the resulting numbers as if they provide an adequate account of economic success. My suggestion is quite straightforward: they do not.
A person may spend more because their rent has increased. That raises measured economic activity but does not improve their wellbeing.
They may pay privately for healthcare because the NHS has failed them. GDP rises, but their security declines.
They may commute further to obtain work, spend more on transport and have less time with their family. Once again, GDP records activity while ignoring the loss imposed upon them.
The easy problem counts what happened. The hard problem asks what it means.
The crisis of not asking
This distinction helps explain the political crisis confronting us now. Neoliberal economics has dominated policy for more than 40 years. During that period, economists and politicians have repeatedly told people that markets are efficient, growth is beneficial, and the economy is succeeding.
The reality, however, is that many people do not believe them because that is not what they have experienced. We face a crisis because we have not asked the hard question in economics.
People have experienced the conditions I have described. They do, as a result, feel alienated from the economic system because they, quite reasonably, believe that it has rejected them. Their experience is real, even if the explanations offered to them are sometimes, or even often, false.
The far right exploits this gap. It acknowledges people's anger but directs it towards migrants, minorities, disabled people, neurodivergent people and others who did not create the problem. It provides false explanations for real suffering.
Economics cannot answer this reaction by producing more statistics showing that GDP has risen. Nor can it dismiss those drawn to the far right as simply ignorant, prejudiced or irrational. Prejudice must be opposed, but the alienation on which it feeds must also be understood.
Unless economics engages with people's lived experience, it cannot explain why they reject a system that economists tell them is working.
Thriving is the hard problem
I have argued that the purpose of an economy is to meet the needs of everyone while enabling them to thrive within the environmental limits of our planet. The distinction between the easy and hard problems of economics reinforces that claim.
Growth is an easy problem in the Chalmers sense. We know how to measure it, however imperfectly. We know many of the mechanisms that can produce it. Governments can increase spending, businesses can invest, and banks can create credit. More transactions can be generated, and GDP can rise. But growth tells us almost nothing about whether people thrive.
Thriving is the hard problem because it concerns lived experience. It includes material security, but it cannot be reduced to income. People need food, housing, healthcare, education and sufficient resources to participate in society. They also need time, dignity, meaningful activity, social connection, personal autonomy, safety and hope. No single statistic can capture all of that.
That does not mean thriving cannot be assessed. It means we must stop looking for one supposedly objective number that can replace human judgement. We need a range of measures covering health, housing, income security, inequality, access to public services, working conditions, leisure, democratic participation and environmental sustainability.
Those measures must also show distribution. An average conceals who gains and who loses. A country cannot meaningfully be said to thrive if a small minority accumulates extraordinary wealth while millions live with anxiety and insecurity.
Objective indicators are not enough, either. We must ask people about their lives. Do they feel secure? Do they have control over their time? Can they obtain help when they need it? Do they believe their children have a future? Do they feel respected and included? Do they have the opportunity to contribute? And we must heavily publicise the findings and put them at the epicentre of economic discussion.
This is not an abandonment of economics. It is economics taking its purpose seriously. The goal of economics cannot be to maximise activity regardless of its consequences. Nor can it be to perfect the measurement of a system whose outcomes an increasing number of people experience as hostile.
The goal of economics must be to understand how we can use the resources available to us so that everyone's needs are met, and all have the opportunity to thrive.
Measurement matters. Systems matter. Money, tax, investment and production all matter. I have written about all of them. They matter to me. But they are still means and not ends.
Growth asks how much economic activity we have created, without considering consequences.
Thriving asks what that activity has done for people.
Growth is the easy problem.
Thriving is the hard one.
And unless economics addresses the hard problem, it will keep providing precise answers to questions that increasing numbers of people are no longer asking.
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A neighbour was a vehicle body repairer – mostly crash damage.
To modify that well known saying about GM,* what was good for him & GDP wasnt necessarily good in the broadest sense.
* Whats good for General Motors is good for the country
This post seems redolent of something you introduced me to which was resource accounting.
What is taken in order to produce what we consume is under-accounted for sure in terms of amounts taken and the impact over time. And now look where we are.
For example we’ve been harvesting carbon and developing forever chemicals without acknowledging the true costs of their introduction into our lives – and all for short term profit.
Reserve accounting is where Understanding Economics is going quite soon.
It is fundamental to a new economic framework.
In addition to a differentiation of economics/socio-economics into “soft problem economics”and “hard problem economics”, might it also be valid and democratically helpful to differentiate using “presented economics/socio-economics” and “hidden/obscured economics/socio-economics”?
The hidden stuff of economics is what Alfred Marshall was aiming to illuminate with his concept of utility. That the causes of our prices and quantities are never caused by themselves. The problem is that modern economics falls into the trap of circular reasoning with regards to utility. I buy a good because of utility. My actions are the evidence that the good has utility. To break the trap we would need to say that the good has utility prior to the purchase. As some kind of potential. But know we are no longer talking about utility but something more like purpose and virtue. Virtues are things that we choose.
Let’s be clear: no one calculates utility. It is bunkum to make Marshall’s desire for rational economics work. We are not rational. Therefore, utility is garbage.
Very good post.
“the political crisis confronting us now”… is one where most public institutions, including gov, have lost all legitimacy in the eyes of most (90%?) of the population. This is because the frameworks the institutions use to measure “their system” do not (cannot) produce results relevant to the population. Something, sooner or later will have to give.
Agreed, and thank you
I’d like to think about the “hard problem” as it relates to the UK Industrial Revolution, around early 19th century. I think there is no doubt that a lot of people, mainly poor, were made more miserable because of these changes. Driven off the land by enclosures, they moved to towns and cities where they could at least find subsistence wages. I guess they became less healthy, though the population rose — I’m not sure about dates, but I think mostly later in the 19th century. Does this experience have anything to tell us? There were unused resources, also resources that were created. The UK could grow then, from a low base, in a way that isn’t possible now. All the same, we have a situation where a lot of the population didn’t thrive, but which lead to (we think) better consequences for all alive in the UK 50-100 years later. What does this tell us?
That people matter?
I take it as fundamental that people matter, as you do. It isn’t something which can be proved or disproved; it’s a basic assumption of my approach to the world. Debate is about what this means for real people, real societies. Putting it coarsely, do the positive consequences of the Industrial Revolution outweigh the miseries inflicted at the time? How could a better outcome be achieved? We can’t alter the past, but perhaps we can avoid repeating it.
Are you referring to AI?
The issue being discussed here is at the heart of our political crisis. It is the reason for low turnout at elections, for the massive disconnect between the activist intellectual left and left-behind communities, for the appeal of the far right in my neighbourhood, for the inability of MPs, journalists and pundits to understand their audiences, let alone address their real needs.
To take a non-political example, I’m currently battling with a Customer Relationship Management company, serving the charity sector, who have recently suffered a databreach of their entire client database, to try to get them to examine the breach event from the perspective of the affected data SUBJECTS, rather than their own perspective as data processors or controllers. It’s a steep uphill battle. Having received a sextortion/blackmail scam (wanting $1,300 paid into a Bitcoin account, “or else”) on a dedicated unique disposable address I use for correspndence with one of their client charities, just a day or two after the breach occurred, I am questioning their public statements of a lack of evidence of any misuse of the stolen data, but finding a resistance or even inability to examine the events from the perspective of affected data SUBJECTS (a stance that is reflected all the way to the regulatory ICO level). They ask the wrong questions!
My complaint is being escalated and has reached Chief of Staff level. We’ll see whether I am successful, but it shouldn’t be necessary to have to fight this hard to achieve the ******** obvious.
It’s just the same in politics.
Thank you, and good luck.
I think it’s also worth pointing out the argument that mainstream (neo-classical) economics has actually done a very poor job of addressing the “easy problems” over the last century, when compared to other scientific fields. When, for example, the economy is modelled in terms of a single “representative agent” the so-called “objective” description of the economy is literally blind by assumption to income distributional effects and inequality. It’s no wonder then that it doesn’t align with people’s subjective experience of inequality (a real feature of the economy which these models simply assume away) and a certain amount of gaslighting of people by mainstream economists (and those influenced by them) then occurs. Another example is ignoring the real dynamics of money as a debt-credit relation and thus failing to predict financial crises, which then have to be put into the mainstream models by hand as “exogenous shocks”.
You wrote that “The economist is describing the economy from the outside” but the arguments highlighted in my previous paragraph would contest that they aren’t necessairily doing this. Instead, perhaps, they are attracted early in their careers to a particular utopian vision of rational individuals maximising utility without outside interference leading to optimal social outcomes in the aggregate and then seek to preserve that vision by making a series of modelling assumptions that don’t reflect or describe the empirically real economy. That’s a serious methodological bias that other scientific fields can challenge.
We will have to disagree.
I am not sure you are not just offering very lame excuses.
As well as “easy” and “hard” problems, in the sense you have described, there are also so-called “wicked” problems.
It may not be possible to formulate the problem clearly, and there may be many ways to describe it or view it; the problem is dynamic or stochastic with no obvious stopping point; there are no winners or losers just trade offs; there may be innumerable possible solutions, but you may not be able to tell if an answer is a solution let alone the optimal solution; trial and error may not work; it is a unique problem so hard to draw parallels; and it may be linked to other equally difficult problems.
In many ways, social, political, or economic problems are often “wicked” in this way, at least in the real world. A “solution” may make things worse than the problem was to start with.
So what do you do? The real world is too hard, so you make simplifying assumptions or models and trust they are at least useful even if wrong. You set a target that is a proxy for the result you actually want, but end up optimising for the target and forgetting the real aim. You demand that everyone has to see it your way and adopt your terminology and assumptions and targets, and you reject and stigmatise other viewpoints, treating them as stupid or disruptive or worse. You ignore stochastic processes and trust there is a steady state that can be optimised – even if it is fragile and falls apart at the first bump in the road. You try to “fix” one thing that you can define and measure, and everything else goes to hell in a handcart. You prefer answers that should work in theory, even if they don’t in practice.
We discussed whether to include wicked problems in this piece.
We decided not to. There is a limit to how far a blog post can go.
Thank you for adding it.
Downing St. is sending 100 civil servant out to Regional Mayoralties.
https://www.theguardian.com/politics/2026/aug/21/burnham-to-dispatch-100-whitehall-officials-to-help-regional-mayors
What are their priors?
Is this a devolving of power and resources, or a centralising control operation?
What exactly is this “growth” they will be looking to promote, and how will it be measured?
Is anyone else deeply suspicious like me?
I saw thar and thought it deeply patronising.