The Seeming Monolith of Economic Theory As Taught at a Typical Economics Department

It is not only the world economy that is in crisis. The teaching of economics is in crisis too, and this crisis has consequences far beyond the university walls.

Thus begins the open letter of the International Student Initiative for Pluralism in Economics. As a former student of economics, I can only subscribe to that statement. Economics as a discipline (seemingly) does not offer much diversity of approaches. But economics curricula at most universities are even worse: they do not display even this bit of diversity that does exist. Indeed, this is one of the reasons why I started writing The Sceptical Economist more than four years ago.

Economic thinking today, both in terms of theory and in terms of resulting policies, is dominated by one particular strand of economic theory. This theory is known under different names, such as neoclassical economics, neoclassical synthesis, Neo-Keynesianism (actually, these three terms can be understood as three different stages in the temporal development of the mainstream theory), and is not completely homogenous. But the fundamentals are clear and more or less uniform: narrowly understood rationality, high levels of mathematisation and abstractness of models, neglect of normative analysis, the growth paradigm etc. Indeed, a major strength of neoclassical economics is its historical ability to incorporate and absorb “rival” approaches without changing its hard core. Developed at the end of 19th and at the beginning of 20th century, it thus absorbed some ideas of Keynes’s (the actual neoclassical synthesis by Paul Samuelson, John Hicks and others), some aspects of institutional economics (New Institutional Economics), Austrian influenced monetarism in macroeconomics, some notions of bounded rationality in Neo-Keynesianism and game theory etc. But it also ignored a lot, both in terms of problems of its own approach and in terms of alternative perspectives.

Bildschirmfoto vom 2014-09-21 20:56:53This near-monolith of neoclassical economic theory appears as a true monolith when learned at universities all around the world. When you look into common textbooks, you’ll find that they are extremely similar–they all cover essentially the same subjects, offer the same perspectives and ignore the same things. Accordingly, you do not learn much about competing schools of thinking or alternative approaches. History of economic thinking, if mentioned at all, is mostly presented in a very narrow, linear manner–from classical economics of Smith, Ricardo and Mill to early neoclassical economics of Marshall and Walras to Keynes (but only through the lens of neoclassical synthesis) to Chicago School to New Institutional Economics and Neo-Keynesianism. But what about the German historical school? Austrian economics (beyond Hayek, who himself is mostly viewed only as part of the Chicago School story)? (Old) institutional economics? Post-Keynesianism? Ecological Economics? Experimental economics? Neuroeconomics? Just to name a few.

Furthermore, standard economics curriculum does not include perspectives from outside economics. But there are other disciplines that economists can learn from a lot: philosophy, sociology, political theory, anthropology, cultural studies, psychology, ecology… While economics has (supposedly) a lot to tell to representatives of these disciplines, as exemplified by the much-criticised (outside of economics, of course) “imperialism” of Gary S. Becker and others, it is very reluctant in allowing any transfer of knowledge in the other direction. If you study economics at a typical economics department of a typical university, but still do want to broaden your perspective on the economy and society, you have to educate yourself on your own. If you, however, assume that there is nothing else to know beyond what you are being taught (as, obviously, your teachers suggest by ignoring alternative perspectives), you will become a parochial “hedgehog economist“. And that is the main product of economics department all over the world.

Another issue: Economics students are seldom explained the philosophical-ethical foundations of their discipline. Even if they hear of utilitarianism, they mostly do not know exactly what it is (beyond its consequences for economic theory) and that there is not one utilitarianism. Not to mention any knowledge of alternative ethical theories, such as deontology or virtue ethics (or even alternative variants of consequentialism, of which utilitarianism is just one, however prominent example). The same is true for epistemological foundations of econometrics–if you don’t have the rare luck, as I did, to attend a one-off course “Philosophy of science and empirical economics”, you will never truly understand what econometrists are doing, why they are doing this and what are the consequences of the particular approaches they choose. This is another thing you either teach yourself or do not learn at all.

I would like to end with a personal note: when I started my bachelor’s studies, I chose economics as my minor subject. This wasn’t because I found it interesting: just the contrary, I found it awful. That was because the little knowledge about economics I had at this time was restricted to a narrow picture of mainstream economics, which I found repellent (I still do, to be honest). My choice of economics as minor was dictated by pure pragmatism–I already had chosen cultural studies as my major subject and economics was the most “practical” minor available. Only some time into my university career, I stumbled upon the work of Amartya Sen, who made me realise that economics can actually be interesting. Still, most of the interesting and important things I’ve learned since then I have not learned at the university. And the few interesting courses I had are not standard curriculum at most universities (not even at mine, as they were one-off courses in most cases).

Economics is a useful discipline. And it can be an interesting and intriguing subject to study. But to realise that, one has to know more than just the monolith of neoclassical theory. Unfortunately, this monolith is dominating both the academic and political discourse. So I cannot but sympathise with the emerging movement that struggles for a more pluralist teaching and, in the end, more pluralist economics.

Ultimately, pluralism in economics education is essential for healthy public debate. It is a matter of democracy.

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