By Glenn Ashton · 19 Jun 2014
A remarkable thing is happening in the world of economics. Dissatisfied students from various institutions around the world insist that the dominant economics curriculum must change, as it inadequately reflects, or deals with, our current economic realities. They clearly realise that real change occurs from within.
These students demand changes that not only reflect our post-2008 economic crash world, but further insist that the entire theoretical economics framework and curriculum be fundamentally revised. A deep distrust of the dominant neo-classical economic model has emerged. This has spurred these young economists in training to ask how the subject can become relevant for all, not just the few.
Mainstream economic theory has been under increased scrutiny for quite some time. Alternative economic concepts have been reinforced through the work of more socially oriented economists like Nobel Prize winners Amartya Sen, Elinor Ostrum, Joseph Stiglitz and Paul Krugman. These, amongst others, have led to a marked shift away from the strict current emphasis on neo-classical economics as taught amongst most major educational institutions, towards a more pluralistic perspective.
The New Economics Foundation was founded in the United Kingdom in 1986. It trenchantly criticised the illegitimacy of the dominant economic hegemony. It predicted the inevitable consequences of pursuing neo-classical economics, particularly highlighting its inability to adequately address social inequality and environmental consequences.
Even distinctly counter-cultural economic movements like the Degrowth movement have gained broader consideration. This has accelerated since 2008, when governments indulged in large-scale bailouts of ostensibly free market institutions with tax-payers money.
In 2010 George Soros, the philanthropist entrepreneur who spectacularly demonstrated his grasp of practical economics by gaming the international financial system, founded the Institute for New Economic Thinking. This has served to reinvigorate the debate about broadening economic perspectives, even though it too has come under criticism for its constrained perspective.
The first rumblings of unhappiness around the economics curricula emerged from the US, where a small number of students walked out of a Harvard economics class in 2011 in solidarity with the global “Occupy” protests against growing inequality. This brief dissent failed to translate into substantial changes.
However, in the UK students at the Universities of Glasgow and Manchester formed organisations to directly address concerns with their economics syllabus in 2012. The Glasgow Real World Economics Society and the University of Manchester Post Crash Economics Society were soon joined by students from other august UK institutions, like Oxbridge and the London School of Economics. These, along with dozens of other members have created a formal global alliance known as the International Student Initiative for Pluralism in Economics.
This initiative has managed to penetrate beyond its old world base, notably into Latin America and the Indian subcontinent, along with Australia, Russia and the USA. It has yet to be seen how influential the movement becomes but some progress has emerged in curriculum reform in the UK in particular, despite predictable resistance from mainstream economic thinkers against what is seen as an upstart student-led organisation.
Surprisingly the trend has yet to emerge in Africa, even as economic inequality continues to rack the continent. The only hint at change, The Young Economists for Africa, appears to have been stillborn, becoming moribund soon after its launch in 2012. This is unfortunate, especially given the continental impacts of structural adjustment, coupled to ever-accelerating neo-colonialism.
But exactly what are these students asking for?
Their primary objections revolve around the fundamental reliance on neo-classical economics. This focuses on early economic foundations which solidified in the early 20th century, based largely upon Adam Smith’s 18th century magnum opus, “The Wealth of Nations.” It emphasises the ascendance of a rational market, driven by competition. Our present economic malaise is blamed on this model, propelled by sentiments like “greed is good,” driven by a reductionist, Newtonian perspective.
Yet 17 years before the “Wealth of Nations,” Smith penned a lesser-known treatise, “The Theory of Moral Sentiments.” Instead of emphasising competition and rationality, his theory favoured co-operation rather than competition, reciprocity and fairness instead of the “rational” pursuit of value.
The initiative for economic pluralism insists we should, amongst other things, consider these critical aspects of economics. The University of Manchester Post Crash Institute points out that even mainstream economists like John Maynard Keynes remain marginalised in current university teaching, let alone Marx or Sen, Ostrum and their fellow post-Keynesians.
They insist, in what essentially serves as their manifesto, that higher economics teaching requires urgent reform in order to become relevant. More importantly a good education must produce graduates fit to operate in a far more nuanced and complex world, than one based upon the theory they are currently taught.
They insist that students must be given opportunities to analyse and compare these emerging economic theories. Such comparative analytical opportunities would equip them to discern differences between what constitutes good and bad economic theory and practice.
This leads in turn to the trend amongst higher educational institutions to encourage interdisciplinary research. Universities increasingly encourage broader experiential learning through incorporating inter-, multi- and trans-disciplinary opportunities into their curricula. Economics is by its very nature transdisciplinary, including, inter alia, aspects of sociology, mathematics, science and psychology.
Yet perhaps the very nature of economics (is it a science, art or social study, for instance?), its newness, along with the marked tensions between factions, perhaps all combine to create a degree of internal rigidity and uncertainty? Does this not encourage an internalised rather than outward looking perspective, and the consequent suspicion of multidisciplinarity?
Economics currently attracts students inspired by the questions asked by Occupy protestors, by those espousing degrowth, new economics or even the popularity of “Freakonomics.” They are increasingly savvy as to the underlying nuances of economic thought and while academic rigour is essential, diversity is equally important.
Any education must be integrated in order to equip graduates to participate in the real world. Any academic institution does itself a disservice by diluting its relevance through defensiveness, rather than exposition and interrogation of what actually makes the world of economics real.
If students are to be equipped beyond the cliché of “the dismal science” – and current, mainstream economic theory remains dismally incapable of meeting our needs – then they must receive the most complete training possible. If graduates are to effect change they must be able to deal with, and hopefully solve the dire social and environmental challenges we collectively face. They certainly cannot, and will not, remain confined within stagnant academic backwaters.
Units of currency are supposed to represent the bits of real wealth, i.e. goods and services, that together comprise the real economy. Our money system however allows for any number of fictitious units of currency to be created thus invalidating the accuracy of the model of the economy constructed from how money is distributed. As I understand it modern economics is taught as though this invalidation of the model does not happen no wonder people have lost faith in it.
Precisely. Couldn't have said it any better than you have just put it Rory.
We need more articles like this
This shapes society more than any other influence I can think of. Great Article.