One of the books in the
list of “best reads of 2019” was a little one – The Econocracy – the perils of leaving economics to the experts; - which I had, as
I tend to with most economics books, dipped into briefly and returned to intermittently.
But it was worth the wait –
being a
concise and
well-researched critique of modern economics and how it is taught in
universities as well as the broader issue of public engagement with economics
as part of the democratic process.
The authors define the
‘Econocracy’ as
‘a society in which
political goals are defined in terms of their effect on the economy, which is
believed to be a distinct system with its own logic that requires experts to
manage it’.
Since the financial crisis
of 2008, there has been an endless stream of books and articles about
economists’ failure to predict the crisis, and more recently a sense that the
subsequent economic response in the form of austerity policies has done more
harm than good. Is it any wonder then, the book asks, that the public might be
left questioning economic ‘experts’, and economics students their education? In
fact, as I noted
in an earlier post, student reaction to the overly mathematical nature of
economics (and its lack of pluralism) began before the financial crash
The Post-Crash Economics
Society has its origins in this disenchantment, and one of the book’s strongest
contributions is its critique of the highly stylised and homogenised curriculum
that would be familiar to economics students worldwide. The authors contend
that despite attracting capable students who are interested in the world around
them, economics as it is taught at university has little to do with the real
world, uncritically setting out a model based on rational individuals and an
economic system that tends towards equilibrium, while also being insufficiently pluralist, downplaying debate between
different schools of economics or relegating these to the History of Economics.
This argument is supported
by a useful analysis of the final exam questions on core and elective economics
courses at various universities. These
rely heavily on what the authors call ‘operate the model’ problems: asking
students to uncritically apply the taught model to a stylised situation, with
no thought to whether the model, situation or answers are realistic or useful.
Overall this analysis finds that 76 per cent of exam questions required no
‘critical or independent thinking whatsoever’ (51). Even if exams aren’t
perfectly representative of course content, they will very much influence
student efforts, so it is concerning that critical engagement is neither valued
nor rewarded. The authors lament: ‘It is
hardly an exaggeration to say that it is now possible to go through an
economics degree without once having to venture an opinion’ (p51).
This disheartening state
of affairs is blamed on a combination of factors that come under the umbrella
of ‘Econocracy’: the increasing marginalisation of heterodox thought from the
discipline, for example, starting with the kinds of articles that are accepted
into the major journals. This, in turn, influences what research is prioritised
by universities and funding bodies (currently through the Research Excellence
Framework), and inevitably who is hired or promoted (the ‘curse of the top
five’ journals was discussed at this year’s American Economic
Association meeting). This is compounded by the increasing financial
pressures facing the Higher Education sector, with reduced funding per student
leading to ever-larger class sizes and time-poor lecturers and graduate
teaching assistants.
That economics discourages
students from thinking and expressing opinions would have Adam Smith turning in
his grave – he was, after all, a Professor of Moral Philosophy. But is hardly a
new argument - Stefan
Collini, for instance, has long spoken out against the worsening outcomes
not just for students of the modern university, but society more broadly.
It was only last week that
I reminded readers of the 36 types of capitalism one could discern in 12
academic disciplines. And one of the most important parts of the book for me
was therefore the table (at page 61) which identifies 10 different “schools” of
thinking which can be discerned within economics itself…
Pluralism in Economics
Name
of “school”
|
Humans….
|
Humans act within…
|
The economy is…..
|
Old
“neo-classical”
|
Optimise
narrow self-interest
|
A
vacuum
|
Stable
|
New
“neo-classical”
|
Can
optimise a variety of goals
|
A
market context
|
Stable
in the absence of friction
|
Post-Keynes
|
Use
rules of thumb
|
A
macro-economic context
|
Naturally
volatile
|
Classical
|
Act
in their self-interest
|
Their
class interests
|
Generally
stable
|
Marxist
|
Do
not have predetermined patterns
|
Their
class and historical interests
|
Volatile
and exploitative
|
Austrian
|
Subjective
knowledge and preferences
|
A
market context
|
Volatile
– but this is generally sign of health
|
Institutional
|
Have
changeable behaviour
|
Instit
envt that sets rules and social norms
|
Dependent
on legal and social structures
|
Evolutionary
|
Act
“sensibly” but not optimally
|
An
evolving, complex system
|
Both
stable and volatile
|
feminist
|
exhibit
engendered behaviour
|
A
social context
|
Ambiguous
|
ecological
|
Act
ambiguously
|
Social
context
|
Embedded
in the environment
|
This is an excerpt only – the full table is from Ho-Joon Chang’s “Economics – a User’s Guide” but can
be viewed at diagram at p61 of The Econocracy – the perils of leaving
economics to the experts;
Earle, Moran and Ward-Perkins (2017)
The authors note that
economics degrees are seen by many universities as a particularly useful
money-maker (used to cross-subsidise other departments), being most compatible
with large lectures and exams relying on stock answers and multiple-choice
questions. In spite of this, the authors observe that a growing number of
universities are dropping their economics degrees completely, which is a
worrying trend if decreasing public engagement with economics is to be
addressed.
The authors have clearly
dedicated a lot of thought to the question of how to improve university
economics and do offer some concrete suggestions, which mainly revolve around a
more engaged style of pedagogy (for example, peer-to-peer teaching and
alternative forms of assessment). In fact, one of the most interesting
contributions of this book is its account in Chapter Four of the authors’
experience lobbying their own university for reform, making this a valuable
case study in campaigning and network-building for similarly motivated
readers. However, despite their tenacious optimism, even the authors have
to admit that ‘reforming economics
education to better serve its students, the discipline and society will be
extremely difficult without a change of direction in university and government
policy’ (p140). Incremental change at the level of the curriculum can
only do so much, but that doesn’t mean it shouldn’t be attempted (the book
provides a good overview and critique of one such attempt, the CORE project).
But the broader problem of
the ‘Econocracy’ beyond how economics is taught is surely the growing public
disenchantment with the discipline. While much ink is yet to be spilt trying to
explain the rise in populist movements worldwide, public engagement with
economic debate is surely a key issue. The authors argue that while many of the
factors associated with this new wave of anti-globalist sentiment are economic
(including stagnant middle-class wages and the loss of blue-collar jobs), the
rhetoric of these movements is decidedly non-economic, emphasising instead
questions of national security and sovereignty.
This is a crucial insight:
that combatting the appealing messages of populism might not be a case of
simply ‘winning’ the economic debate (the rhetoric around Brexit being a clear
example of this failed strategy), but instead creating a new kind of discourse
that addresses the concerns of a disengaged public and, more importantly,
actively involves this public.
The book concludes with a
rousing call for a new kind of ‘citizen economist’ who can facilitate this
engagement, decoding the ‘econobabble’ of economists and policymakers and
empowering citizens to be part of the debate. Economics has for too long been
seen as a set of tools for use only by the experts. But economics, as
this book argues, is for the public, and they too can pick up these tools and
decide how they want to use them.
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