Creating New Economists

I had a very interesting experience over the weekend while attending university open days. I was enquiring from a young woman encouraging people to take economics how pluralist her course was. She really seemed unable to understand my question. She responded that they taught 'normal' economics. I asked her if this meant neoclassical or whether they also had space for classical or Marxist varieties. She was simply unable to answer.

This is the problem the discipline faces: really nice, well-motivated people who have no conception that there might be other ways of thinking about economics than in terms of supply and demand curves and the marginal analysis. To address this problem the Association of Heterodox Economics is running training in alternative methods for economics, beginning with a course of training for researchers.

The postgraduate workshop on research methods will take place at London Metropolitan University on 10th and 11th February next year. It is funded so places are available free for students. Workshop topics will include:

· Reorienting economics to match method with social material

· Open system methodology in Economics

· Grounded theory in Economics

· Mixing quantitative and qualitative data

· Qualitative data analysis

To book a place you need to contact Andrew Mearman: Andrew.Mearman@uwe.ac.uk.
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Dissident Economists on the Warpath

As an academic economist I find I am living in interesting times. Yes, really. The profession is in crisis, and much blame is being laid at the door of those who teach politicians how the economy works, and who engage in research to support this teaching. The fact that the financial crisis was predicted only by dissident economists, and the lamentable failure of mainstream economists to explain what has happened, much less provide solutions, has led to severe criticism.

Now we have a box-office documentary, Inside Job, which provides a comprehensible analysis of how the financial crisis happened, and fully implicates the academic economists who were complicit in the bankster capitalism that lay at its heart. Apparently they were asked for interviews to consult their expertise, and then ambushed. According to a review of the film by the Guardian:

'When Glenn Hubbard, George Bush's chief economic adviser and dean of Columbia Business School, is shown as a partisan advocate of deregulation, we have one of the movie's punch-the-air moments. During the interview, Hubbard, who denies he was corrupted by his paid-for relationships with government, angrily barks: "You've got five minutes, mister. Give it your best shot."'

A letter in response also implicates the 'self-referential circulation of authority' found in the peer-review publication system. This gives access to promotion, fame and respect within the academic establishment and is a key part of the Research Excellence Framework, here retitled the 'Research Exalting Finance'. Those wishing to find other ways of measuring the contribution of economic research might consider submitting a proposal to a special issue on 'dissident scholarship' in the American Journal of Economics and Sociology. The dissidents, it would appear, are getting themselves organised.

Another practical step towards the radical restructuring of economics would be to support a new generation of heterodox economists. It is therefore very cheering to see a post advertised that specifically excludes neoclassical economists. The Joan Robinson Research Fellowship in Heterodox Economics is named in honour of our own Sister Joan, disciple of Keynes, and a scholar cheated of her Nobel Prize merely for having the wrong genital design. Girton College Cambridge should be congratulated for funding the post, and for paying tribute to their illustrious alumna.

The existence of the concept of heterodox economics implies that the nature of economics as studied and taught is more religion than science. Perhaps we should rather be arguing for pluralism: for economics to accept the sort of lively debate that is common in all other disciplines. Let us hope that the researcher at Girton will be a key player in these debates, and will be followed by many more.
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Topsy-Turvy: Turning that Well-Worn Graph on its Head

Here is one for the theorists amongst you - a longer and deliciously academic paper available on request. But for now just enjoy the sense of complete upset that could be caused to a neoclassical economist by the thought that, not only is there supply and demand model (see the figure) ridiculously simplistic, but both lines might actually be oriented in the opposite direction from those conventionally illustrated.



Such is the hypothesis of the German-New Zealand economist Stefan Arne Kesting, who argues that, not only might the directions of the two curves be reversed, but it might actually be possible to posit that an equilibrium is reached.

Conventionally (see the diagram) the supply curve is illustrated as upward sloping, since as the price of a good increases the producer is willing to supply more. However, Kesting points out that, 'Based on arguments of economies of scale and increasing returns by Alfred Marshall. . . marginal and average costs of production and prices are shown to decrease in some instances when output is extended.' This might suggest a supply curve that slopes downwards for a certain range of prices.

In the case of the demand curve, Kesting argues that Veblen's ideas about conspicuous consumption might cause this to be upward sloping. The conventionally downward sloping curve is based on the assumption that as goods increase in price people buy less of them. But if those goods are status goods, the higher price might increase demand (superior branded clothes might be an example).

Kesting argues that the two curves might again meet at an equilibrium point, although each is the mirror image of that suggested by orthodox economic theory.

The easy way in which the most basic apparently scientific formulation of neoclassical economy theory can be turned on its head in this way indicates clearly the vulnerability of the whole house of cards by which our complex global economy is justified. Tweet

Anti-Textbooks, not Anti-Economics

For those who teach economics life can feel fairly limited. The most popular textbook in the Anglo-American world is Principles of Economics by Gregory Mankiw, now in its 5th edition. This was the book I was given to teach from when I first taught economics some ten years ago. It is still the most popular textbook today. An incalculable amount of damage must have been done in that intervening decade through the distorted perceptions of reality that cohorots of economists students have been left with. Probably not as damaging, though, as Mankiw's spell as President of Bush’s Council of Economic Advisors from 2003 to 2005. In this case we really could have hoped that the voodoo economist had failed to practice what he preached.

But the days of presenting the holy writ and then sharing one's misgivings with students who have seen through its other-worldly inanities are over, because Zed have produced The Economics Anti-Textbook. As the authors say, 'This book is not "anti" economics or even "anti" mainstream economics. It is "anti" mainstream textbook economics' with their 'narrow range of world-views'. This is immensely refreshing. I particularly enjoyed the boxes containing 'Questions to your professor', which the authors claim to have included 'to stoke the fires of revolution'. This book seems yet more evidence that such a revolution against orthodox economics theory is building.

You may be surprised to learn that reading this book is actually fun. It addresses a series of issues that make anybody teaching economics uncomfortable because they are clearly not an honest portrayal of reality. Beginning with the theory of perfect markets; then moving on to efficiency; externalities (the costs of economic activity that are not included in the firm's accounts and are therefore routinely ignored, pollution being the primary and most threatening example); the absence of power from the conventional account; and ending with a critique of the assumption that material stuff is a cause of well-being and that people are 'rational calculators'. In a concluding tour-de-force, the authors explain the 2008 financial crisis in terms of all of these factors that are absent from the orthodox economics textbook.

If you are not already au fait with standard economic theory but would like to understand what TV pundits are on about, this book could be a good place to start. Tweet