Home > Uncategorized > “the economics profession is under profound pressure” (Financial Times)

“the economics profession is under profound pressure” (Financial Times)

For a group that has helped change the way economics is taught at universities up and down Britain, the Post-Crash Economics Society had a less than momentous start. It was November 2012 when seven undergraduates met in a cramped room on the top floor of Manchester university’s student union. Chairs drawn into a semi-circle, they listened as the two founding members went through a brief PowerPoint presentation explaining what they thought was wrong with the economics curriculum. A polite discussion followed before everyone shuffled off for the Christmas holidays. It wasn’t exactly Paris 1968.

The students had gathered in response to an email with the subject line: “CALL OUT TO ALL THE ECONOSCEPTICS OUT THERE”. “In the middle of the biggest global recession for 80 years,” the email read, “students across the world are questioning the very foundations of our discipline.”

It asked whether the economics they were learning, dominated by mathematical formula and abstract models, was relevant to the real world. “How far can economics be called a real science?” it prodded, an allusion to academic economists’ tendency to present their equations and mathematical identities as iron laws rather than imperfect attempts to model unpredictable human interactions. Isn’t economics, they suggested, really more like politics than physics?

The Post-Crash Economics Society was not alone in feeling this way. Ha-Joon Chang, a developmental economist who teaches at Cambridge, remembers “students banging on my door, saying, ‘There’s the biggest financial crisis since 1929 going on around us and our professors teach as if nothing has happened.’ ”

In 2011, students at the university set up the Cambridge Society for Economic Pluralism, galvanised by attending a corporate-sponsored, casino-themed ball run by the Marshall Society, the official Cambridge economics society, at which attendees sipped champagne and talked about jobs in the City. It was, says PhD student and co-founder Rafe Martyn, aimed at those “who learn economics to make the world a better place rather than just improve their private-sector employability”. Similar societies began to take root on other campuses.

It is hardly surprising that after the sharpest economic crisis since the Wall Street crash and an even more prolonged sense of malaise, which has provoked political upheavals across Europe and the US, the economics profession is under profound pressure.

The economic “experts” who told us we had solved once and for all the problems of boom and bust and who ignored — even celebrated — widening inequality in most advanced countries have proved wantonly lacking in their powers of prediction and remedy. What is perhaps more striking is the determination of many in the economic establishment to defend their turf. Chang laments that economics, like other disciplines defended by tenured academics, progresses one funeral at a time.

Even so, against the odds, the students’ protests have gained momentum and are nudging change. As the new academic year starts, several universities in Britain are offering courses that approach economics with a wider perspective. Second-year students at Cambridge, for example, will be able to take a 30-lecture course on the History and Philosophy of Economics, in what, says course co-ordinator Chang, will be the first such programme at a major English-speaking university in a generation.

In London, both Goldsmiths College and the University of Greenwich are offering courses with a pluralist bent. University College London is already teaching from the open-source “core” programme, which seeks to make economics more relevant to the real world. At Manchester, too, broader-based modules are being introduced, too late and still too narrow for the students who pushed for change back in 2012, but a breakthrough nonetheless. Post-Crash Economics itself has folded into Rethinking Economics, a registered charity that links more than 40 student groups pressing for curriculum changes in campuses from Italy to Canada and from China to Brazil.

“It’s all happening now,” says Diane Coyle, professor of economics at Manchester university. “Almost anybody teaching economics accepts that, post-crash, the curriculum needed reforming, though I understand why for students this is all impossibly slow.”

The revolt over the curriculum has implications far beyond academia. Today’s students are, after all, tomorrow’s trained economists, who will be running our economies from their desks in government, banks, multilateral institutions and think tanks. What students learn about how economies work and how governments can influence outcomes will have a profound impact on future policies covering everything from tax and spending to interest rates, minimum wages, greenhouse gas emissions and trade.

Yet students complain that, as things stand, they continue to be indoctrinated in the methodology of a pseudoscience built on the so-called neoclassical framework. The Econocracy, a book that comes out in November and which was co-authored by Joe Earle, a founder of Post-Crash Economics, presents a picture of mainstream economists as true-believers in a largely discredited set of assumptions, who have invented a parallel universe with “well-defined mechanical relationships between different moving parts, connected by metaphorical pipes, cogs and levers: interest rates go down, bank lending goes up; taxes go down, investment goes up.”

The most glaring failure of mainstream economics, the students argue, is its failure to explain, much less foresee, the financial crash of 2008.

Read more at https://www.ft.com/content/0dc9b416-8573-11e6-8897-2359a58ac7a5


  1. October 3, 2016 at 9:33 pm

    It gets worse.

    A lot worse.

    Read my letter to Paul Krugman BLOG # 12


  2. October 5, 2016 at 7:15 am

    The founders of the various schools and theories that supposedly describe the parts of the world called economics were and are naive and still blinded by the desire to be identified as scientists and indispensable wells of knowledge without which humanity will sink into the abyss of ignorance and poverty of resources. They got what they wanted, in bits and pieces, until finally today one economic theory rules the world (mostly). This is the problem, however! This theory doesn’t work. It’s makes a few wealthy and powerful, but leaves many powerless and without hope. It destroys civility, value beyond price, and reduces morality to a business transaction. It leads to over use of resources, devastates the physical environment, and undermines democracy. Why would any sane person support such a theory? After the crisis of 2007-2009 many “insiders” attacked what they called the “mistakes” economists had made but insisted that the basics still held true. Economics remains, they say a prism, a series of guideposts that lead us to the better life only economics can provide. And while some mistakes were made, a few problems with market design and operation does not translate to rejection of neoliberal, free-market foundations for economic life. This means economists are either fully indoctrinated and cannot see the damage being done daily by the economic theory they “love,” so stupid they cannot perceive the failures of this theory, or simply selfish bastards who are quite willing for others to suffer if that leads to more wealth, power, and/or prestige for themselves. Which is it?

    I recognize that some economists (a minority) are not indoctrinated, are not stupid, and are not selfish bastards. But so far they’ve not done much to save us.

    • robert locke
      October 5, 2016 at 12:48 pm

      I can only, as an historian outsider invited by Fullbrook into the rwer blog, only agreed with Ken’s observation. There are two ways off looking at the triumph of neoclassical economics in postwar economics, political and intellectual; the economists generally think that neoclassical economics drove the other views out of the discipline because of their intellectual prowess, historians, who actually study the process, know that this view is naïve and counter-factual.

      I joined this blog because I thought the world had changed enough for people in economics actually to look at historical-political explanations for why we believe what we do in economics. They respond to such an approach by not responding and continuing to cling to the economics that historical process brought to power in the postwar world. Who wins wars determines what ideas prevail, but victory is a temporary condition. Nobody with any sense would believe that the power relations that emerged in 1945 are still valid, and they should not, therefore, persist in believing that the economics that ensconced itself post 1945 is valid today.

      • October 7, 2016 at 5:44 am

        Robert is as usual very perceptive. But then most historians are perceptive. History allows us to see how the great becomes small, the small great, the smartest the dumbest, etc. That’s difficult to see if you live in just one moment of time. As most economists do. Even sociologists and psychologists recognize that time does indeed change everything. This wasn’t always the case. When social scientists created themselves one thing they set up is the notion of scientific laws (like Newton and Galileo) for their disciplines. They couldn’t figure out how to incorporate history into these laws so they just left it out. Only later when the “laws” of evolution were created and accepted did social scientists see their error. Economists didn’t get the message, however. Their work and theories remain to this day mostly ahistorical, and thus generally flat, linear, and trapped in the same answers to the same questions. Economics has not evolved while the events and actors it purports to study have. Connecting events and actors with explanations is complex and tenuous, and always evolving. There is no wrong answer except to always explain everything the same way. And this is the answer economists give. Over and over.

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