Economics Textbooks
from Steve Keen
Thomas Kuhn once famously described textbooks as the vehicle by which students learn how to do “normal science” in an academic discipline. Economic textbooks clearly fulfil this function, but the pity is that what passes for “normal” in economics barely deserves the appellation “science”.
Most introductory economics textbooks present a sanitised, uncritical rendition of conventional economic theory, and the courses in which these textbooks are used do little to counter this mendacious presentation. Students might learn, for example, that “externalities” reduce the efficiency of the market mechanism. However, they will not learn that the “proof” that markets are efficient is itself flawed.
Since this textbook rendition of economics is also profoundly boring, the majority of those exposed to introductory course in economics do no more than this, and instead go on to careers in accountancy, finance or management – in which, nonetheless, many continue to harbour the simplistic notions they were taught many years earlier.
The minority which continues on to further academic training is taught the complicated techniques of economic analysis, with little to no discussion of whether these techniques are actually intellectually valid. The enormous critical literature is simply left out of advanced courses, while glaring logical shortcomings are glossed over with specious assumptions. However, most students accept these assumptions because their training leaves them both insufficiently literate and insufficiently numerate.
Most modern-day economics students are insufficiently literate because economic education eschews the study of the history of economic thought. Even a passing acquaintance with this literature exposes the reader to critical perspectives on conventional economic theory – but students today receive no such exposure.
They are insufficiently numerate because the material which establishes the intellectual weaknesses of economics is complex. Understanding this literature in its raw form requires an appreciation of some quite difficult areas of mathematics-concepts which require up to two years of undergraduate mathematical training to understand.
Curiously, though economists like to intimidate other social scientists with the mathematical rigour of their discipline, most economists do not have this level of mathematical education. Though economics students do attend numerous courses on mathematics, these are normally given by other economists. The argument for this approach – the partially sighted leading the partially sighted – is that generalist mathematics courses don’t teach the concepts needed to understand mathematical economics (or the economic version of statistics, known as econometrics). As any student of econometrics knows, this is quite often true. However, it has the side effect that economics has persevered with mathematical methods which professional mathematicians have long ago transcended. This dated version of mathematics shields students from new developments in mathematics that, incidentally, undermine much of neoclassical economic theory.
“Most modern-day economics students are insufficiently literate because economic education eschews the study of the history of economic thought.”
True. Several years ago an emeritus professor asked me to do an informal survey of economics departments across the United States to ascertain the status of courses similarly named “The History of Economic Thought”. I checked some 3 dozen departments and found the course rarely required (as it was in my undergrad days) and not even offered in many.
I am unable to see how any profession can claim expertise if it doesn’t know its own philosophical history.
My own impression from studying economics, which I came to from a philosophy and public policy background, is that its basic problem is deeper than its reliance on mathematics. When I first studied microeconomics it became clear that many of its fundamental assumptions were wrong. Having thought about it for years now, I have come to think that all of the basic assumptions of economics are incorrect. Given that, it doesn’t really matter how good your mathematics is. While you may find you can prove anything, you will not be able to have confidence in any of your conclusions. As they taught you in Logic 101, you can prove anything from a contradiction.
Yes, John, you are right. The basic problem is deeper than its reliance on mathematics.
Let us argue basic problems. Whether one uses mathematics or not is almost irrelevant to whether a theory is true (or more exactly “truer”) or not. I am opposing Lars Syll when he writes as if mathematics is the very cause of the malaise of present economics. See for example
We must change basic terms, propositions, and structure of the economic theories. Please see for example Chapters 1 and 2 of our book: Microfoundations of Evolutionary Economics. We should fight in substances and not in formalities.
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Mathematics, like computer science, big data science, etc., is GIGO—garbage in garbage out. Modeling assumptions (premises) that do not pass the smell test and are absurdly unrealistic and “basically incorrect” yet there to produce the desired result are the core target of Lars thesis. The misuse of mathematical axiomatic deductive models founded upon such if-pigs-could-fly critical assumptions (premises) are the core target of Lars critique, and those if-pigs-could-fly assumptions (premises) when used in a formalized mathematical model produce garbage.
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Science is not mathematics; mathematics is a tool, a yardstick, a precise formal language used for measuring and thinking about quantitative material reality. The history of science is replete with examples of how economists in their effort to make economics more like physics based on a mistaken view of what physics was, engaged in wholesale mathematization of economics that led to the epistemic quagmire it finds itself in today.
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New and more valid theoretics are all well and good, but what economics really needs is a new philosophy, a new philosophical concept that spots the most operant out factor and then illuminates the new paradigm concept and its aligned policies that changes its entire pattern. As R. Buckminster Fuller said we need to become systems philosophers.
Sear Steve,
Buckminster Fuller died in 1983, about forty years ago. Systems theory and system dynamics seemed hopeful in 1980’s, but disappointment spread after that. To understand how the economy really works, we had to have more concrete systems idea than general systems theory. What is the philosophy that you are expecting from systems theory?
To tell a short story of modern economics, Leon Walras, who was one of, and perhaps the most influential founders of neoclassical economics, was a systems theorist who thought that everything is related to everything and therefore we must analyze the economy as a general equilibrium system. His idea was quite modern as it became the leading idea of mathematical economics (such as Arrow and Debreu 1954), 40 years after his death. Their system (General Equilibrium theory) became the very paradigm of all neoclassical economics. Even the Dynamical Stochastic General Equilibrium, which had been the dominant theory of mainstream macroeconomics from 1980 to 2008, draws on the Arrow and Debreu’s General Equilibrium theory.
I wonder if systems theory was operative in rescuing economics from its fatal disease. Heterodox economists are proposing to change the picture or vision on how the economy works. Instead of seeing that it works by a price mechanism, they claim the modern industrial economy works as a quantity adjustment system. See Morioka’s chapters (3, 4, and 5) in our MIcrofoudnations of Evolutionary Economics. How this new vision works is developed for example in my A new framework for analyzing technological change and The principle of effective demand: a new formulation (open access paper).
Of course, this is not a new idea of ours. For example, in 1985, Nicholas Kaldor stated
in his small book Economics without Equilibrium that
Systems theory (thinking) has moved far beyond the anachronistic just-so story Shiozawa reminisces about (i.e., post-Walrasian economics that include dynamic “part-whole system relationships”). If all you have is a hammer (pet theory) the entire world looks like a nail (quantity adjustment) and like a tautology always circles back to one’s pet theory. Fortunately for us, the many authors on RWER do keep up with the progress in new philosophy that Steve speaks about; it is called systems theory:
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If we are to avoid a complete environmental systems breakdown and all that will entail for humanity we must begin thinking in terms of systems. And that is what RWER’s best are all about:
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As Kate Raworth sums it up, it’s time to “get savvy with systems:
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In conclusion:
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I have a longtime outsider’s interest in econ, and one of my basic conclusions is that Econ 101 may be the most important econ class of all, because it is the most-studied introductory social science class by far, and it introduces students to a simplistic introductory version of economic science which serves, in effect, as indoctrination in a very narrow versi0on of “free market” ideology, especially if they stop there. Over and over again when arguing with a conservative you will hear them regurgitating Econ 101 as if it were the last word. And these are not the dumb students. These are some of the smartest in their cohort, in the top 10%, and some of the ones who often become influential in political decision making or the formation of public opinion.
Dear John Emerson,
you are right. Econ 101 is the most important econ class of all. There two kinds of movements that aim to change the status quo: one from students and one from economists.
Students are conscious that they are confined to a narrow view of mainstream economics and are demanding that more pluralistic economics education should be given. One of the earliest movement was University of Sydney professors and students who published an open letter to the American Economic Review in 1992. In 2000 -2001, French students asked the Minster of National Education to reform the economics education. This became the Post-Autistic Economics Review, which was later reorganized to the actual Real-World Economics Review. Similar movements emerged in many places in the world and they are now networked as Rethinking Economics. Their main aims are three:
(1) Reforming the Economics Curriculum
(2) Building a Global Community of Critical Economists
(3) Diversifying & Decolonising Economics
Another movement but closely related to the first movement is trials of economists to produce alternative economics textbooks. One of them is The Economy by the CORE group. It started in 2014 and have now textbooks not only in English but also in Spanish, French, Italian, Portuguese and Suomi.
Another, more recent, trial is a 2021 book Economy Studies / A Guide to Rethinking Economics Education by Sam de Muijnck and Joris Tieleman, which is rather a pedagogic argument on how to produce alternative textbooks.
Although I do now doubt their good intention, I am not much satisfied by The Economy for example. It is more oriented toward economic history than ordinary textbooks. It is good. But the theoretical contents of the book is not very much detached from the neoclassical economics. The explanations are based on equilibrium framework, marginal analyses and others. French students are not satisfied by the Economy either. See the article in RWER #75.
I believe it is necessary to continue our discussion on these attempts by inviting many other people, economists and non-economists, in this forum.
As far as we talk Economics textbook we cannot ignore The Economy by the CORE (The Curriculum Open-Access Resources in Economics) team.
The first β-version was released in 2017. As of July 2017, the course attracted 3,000 teachers from 87 countries who registered to have access to their supplementary teaching materials. It is told that there are now more than 300 universities worldwide using the Economy by the CORE team. In some sense, this is the most successful textbook Econ 101 now in the world.
Two of promoters of this project Samuel Bowles and Wndy Carlin published an article
What Students Learn in Economics 101: Time for a Change in the Journal of Economic Literature 58(1): 176-214.
It is sure that this textbook was written by a best part of progressive and democracy-oriented economists. But in my opinion, this is also the most subversive textbook for an attempt to build a new economics other than neoclassical economics.
I want various comments, props and cons, on this important issue. Those who believe that neoclassical economics is fundamentally wrong and those who aim to construct a new economics are necessarily required to take part in this subtle question.