Professor, is economics an exact science?
More than anything else, economics is a relatively young science. As a distinct discipline it only emerged less than three hundred years ago. Compared to other sciences, this is not a long period. The second thing is that it grew out of philosophy and the first economists left a body of work, some of which is strongly economic in character while some is at heart philosophical. Later as the science evolved, as it developed, then numbers did start to grow in significance. Numbers, that is in the sense that we know more about economics from the statistical viewpoint, we see it in the form of a numerical description of phenomena. On the subject of economics, economics is a science about the workings of the economy and talking about the economy without using numbers is impossible. But on the other hand this philosophical thread, this thread of interpreting reality in a certain fashion, is also ever-present in this science. So I would say that from the moment it was born, since it first took root, this numerical element has grown but it has not freed itself completely from the philosophical part. And basically it still has a bearing on the present-day form.
That surprises me, since we’re talking about numbers, that would point to this discipline being one of the exact sciences. On the other hand, we refer to the interpretation of certain human behaviours. Here I understand that this, more than anything else, constitutes the philosophical thread.
Yes, because these numbers are a direct result of human action. Human action is, in turn, conditioned by faith in some, and not other, values and in some, and not other, ways of understanding the reality that surrounds us. And then on one hand, these proposed interpretations of numbers will also depend on this, and on the other, a general view of reality will have an influence on any suggested course of action. And in turn, these will have a numerical effect.
So in principle numbers are a certain kind of description. At the same time, the source lies, as you have said, in faith, and I would maybe add in emotions, and often very collective emotions. I’m thinking of behaviour like at the stock exchange, for example.
Of course. There’s a whole range of so-called behavioural economics, which looks into the reactions of an individual, or of a collective group, under the influence of emotions.
Professor, I’d like to refer to a certain, I might say, quite significant episode in your life. How does one become the main economist of a bank and what are the basic duties?
In my case, it’s connected to a genuinely specific event. There was an academic conference at which I presented one of the tendencies then current in banking. That was almost twenty years ago. The process of internationalising banks, building an international banking structure, was ongoing. I demonstrated how it was working in the Baltic Sea region. It turned out that Maria Wiśniewska, who had just become Managing Director of the Pekao SA bank, was attending the conference. And after the conference she proposed that we talk on the subject of me coming to work at her bank. But the task that was entrusted to me as a result of this conversation, that of a chief economist for the bank, was at the time something relatively new in the banking sector in Poland, and I was one of the first bankers in such a position. All the same, analytical banking units did exist. The essence of my job was to deliberate on what was going on in the economy outside the bank. In this so-called macroeconomic environment, i.e. referring to the functioning of the market in its entirety. My task was to demonstrate how inflation would change, how the situation would change in the job market, how salaries would develop and consequently, how long society would be able to take out loans and make deposits. So, basically, chief economists advise those in the bank who are responsible for business, the shaping of particular products and making contact with or drawing in clients. They try to show their work colleagues how this macroeconomic environment will develop in the near future, a few annual quarters, maybe two or three years.
Professor, isn’t that just like reading tea-leaves?
People say that economists in banks have a crystal ball they look into and then make predictions. I, though, kept getting crystal balls as sarcastic presents from the bank management. But then I’ve got this little poem going around my head, I don’t know if I can repeat it exactly, about who a bank economist is. It goes something like this:
A very serious, cautious man
who invents an extraordinary plan
to explain away
has worked out as he said, although
he predicted it would a year ago.
And economists in banks really do have to explain sometimes why the world didn’t go the way they predicted. It is a job fraught with risks. I would say, and this is how I worked with my team, that it’s all about honing your skills of constantly observing the market, learning what certain figures, or certain indicators, might mean for the future. But of course every prediction carries a high risk of error. The border between prediction and divination, and here I might be getting myself into serious trouble with the experts, is a delicate one although the economic sciences have managed to develop a certain number of mathematical instruments which allow you to translate this data into a numerical image of the future. This type of activity is essential in large financial structures because you can’t take immediate business decisions all the time without an awareness of what will happen in the markets as a whole in the future.
Professor, one more question, what does a professor of economics do after hours?
I don’t know if it’s working after hours. From the beginning of my professional career, I’ve lived a bit in two worlds, because on the one hand the knowledge I gained studying economics brought me to the profession I practise and has been connected to all of my subsequent positions. On the other hand, however, I have been fascinated by literature and using the pen as a creative tool since very early childhood. All my life I have dealt with questions of economy as much as with creating literature. And I still do.
A little more on this. Did you use a pseudonym or your own name?
I’ve always written under my own name. My debut in 1976, Czaszka Olbrzyma, was a collection of fantasy stories. After that I still used my own name as an author, which has unfortunately at times given rise to funny situations. Just this summer I had a signing organised by my publishers. At this meeting with readers, a few people realised with surprise that Dariusz Filar the economist and Dariusz Filar the writer were one and the same person. For many people this was an enormous shock, a specialist on interest rates and a book author? But my life has always followed this twin-track.
So maybe we’ll mention the latest book which is coming out soon.
I’ve had information from the publisher that the printing of the first edition has been completed. It’s a contemporary story called Drugie Wejrzenie, whose action takes place between 2008-2009 in Poland.
Can I count on an autographed copy? Thank you for the conversation, professor.
Thank you very much.
Sopot, 3 December 2015
Interview by Dr Tadeusz Zaleski
Photography: Piotr Pędziszewski