Unorthodox economics

What can we hope for by questioning, and thereby immediately humiliating, the traditional academic economics that gives almost complete primacy to ‘free market’ neo-classical approaches? I believe we can gain a generation of fertile minds, freed to achieve what nef call a ‘transformed economy’. We can start to fight against the complex, but enduring, positions built on sand that defend the entrenched interests across the world. We can start to hope another world is possible rather than the same old stories repeated year after year by those who have too much to defend and not enough humanity to see it.

You don’t have to search very far on Google News to find stories about economics students revolting in Manchester, at the LSE (coincidentally my almae matres) or in, apparently, 19 countries.

And you don’t have to look much more deeply to find that this movement has been going on for a long time. It started long before the ‘post-crash’ and long before I started teaching a course at Paris Sciences-Po in 2005 that promised “a new course developed to examine the differing economic choices that are made when deciding between market solutions and state-led solutions .” In fact the history of heterodox economics goes back before my earliest reference (from the PAE network) of revolt where the ‘Paris students’ demanded change in 2000. It wouldn’t be hard to assume that for as long as there has been an orthodoxy, there has been a heterodoxy.

So why does it seem like a constant struggle to pull politicians, press and, especially, academics away from narrow assumptions, ever harder mathematics and the insane presumption that real-world solutions can be both loosely and precisely drawn from a model that diverges from reality on so many fronts?

Self-interest keeps narrow economics unimaginatively taught by people who enjoy refining equations; often difficult maths becomes an way to prove the value of their work to ‘ordinary’ people. Of course a good number of academic economists escape this trap, including notable Nobel prize winners – who one might hope are as a group more talented and able to engage more widely than others less talented. Let us recognise that when this happens they provide a radical view of our world that no-one else can.

Amongst the academics, therefore, a lot of people who do understand the tricky issues aren’t interested.

Conversely, a lot of people who really are interested in a new economics don’t understand enough economics – or at least so they have been told. I have yet to talk about economics to anyone that cannot grasp all the essential principles. As long as you don’t set out to confuse people you will find that a five year-old can engage.

Sadly the other side of the coin keeps the tired old discipline going by giving it a lot of love. A lot of people who have power and/or money know, just by looking, that the conclusions drawn from the orthodox economics gives them more money, more power and a set of ready-made lies to deliver. All this backed up by impenetrable equations to stop anyone else from disagreeing – or at least to turn that disagreement into an academic exercise and hence largely neutralise it.

So we end up with often repeated ‘facts’ such as the invisible hand, free markets and ‘individual choice’ all leading to ‘optimal solutions’. Such simplistic statements about ‘what works’ are incredibly valuable to politicians and, to be fair, everyone in the world has a susceptibility for clear and compelling solutions that have the backing of an army of experts (especially those that can handle complicated graphs and equations). Whether the ‘facts’ are true or not may not trouble us – we are only human.

The misrepresentations and lies can actually be refuted in very few words, but sadly the few words are much more complicated than the original statement. It is short, but not sweet, to explain that ‘individual choice’ is optimal only under some very strict conditions (such as independence of those choices) and that the ‘optimal’ outcome is one particular kind of optimality (Pareto optimality) that would allow one person in the world to accumulate all future increases in wealth.

To get even very bright economics students to encompass all of this requires basic economics, some strong mathematics, especially logic, philosophy of science and a reasonable dose of political history and even political theory (oh dear).

There are many branches of heterodox economics currently alive and kicking that have rigour and proper support from broad-minded economists and non-economists and, importantly, the public who expect academia to actually progress in pace with the changing world. Most people would not expect economists to freeze their discipline in an apparent attempt to sustain the social status quo. You can see my list of ten important heterodox economics issues in a previous post.

It isn’t just the students that should be demanding better economics teaching – it should be all of us. And then we can demand and expect real economic literacy of people who pronounce on economics and public policy. We should all be making clear our refusal to accept the entrenched, restricted and biased view of the world that we are given by almost anyone who has power and a public voice. We can take away their smokescreens and their excuses. And, along with these students, year after year, make clear our disgust that a restricted view of our world that leads to poor policy decisions is still supported by a lot of people who should know better.

  • Declaration of interest: I have no power and a very quiet public voice.

About stuartastill

Consultant: interested in analysis that impacts politics i.e. everything! Can do difficult equations - but avoids when working with humans
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One Response to Unorthodox economics

  1. stuartastill says:

    If you are interested in this, please look at my proposal for kickstarting a heterodox cafes economiques movement; at thanks Stuart

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