An economics reformation?

By Sally Svenlén

On Wednesday morning, the London School of Economics woke up to a massive sheet hanging on their main entrance, with a headline stating “33 THESES FOR AN ECONOMICS REFORMATION”. Its authors; students, some of the UK’s most discussed economists (Mariana Mazzucato, Kate Raworth, Steve Keen) and people from key organizations, had joined together in a packed room at University College London the night before to discuss in which ways the Economics discipline was in need of a change.

The 33 Theses document can be seen as a result of the movement which has grown the last decade, ignited by the financial crisis, where economic students and academics have been questioning their own disciplines ability to explain and deal with the economic issues the world currently faces.

One of the participants in the panel, Victoria Chick, an 81-year old Emeritus Economics Professor at UCL (who will be holding a talk in Durham this February), has however been questioning the mainstream economic doctrine for decades. During the panel she explained that, “when I was doing my economics degree, it was not the case that you were taught just one way of thinking about economics and that was it. People read a bit of everything, and there was discussion between what economic schools and theories they thought was better.”

Exactly 500 years ago, Martin Luther nailed his 95 Theses to the doors of the catholic establishment. Just as Victoria argues that the discipline should be open to different ways of thinking, Luther claimed that the content of the bible was not supposed to be dictated to the people by the priest, but that each individual was supposed to read the bible themselves and then make up their own mind about things.

Whilst the LSE is one of the world’s leading institutions in mainstream economic research and teaching, economics curriculums all around the country are being criticized for not teaching their students the right things. Including the economics degree at Durham, this was the reason why the Durham Society for Economic Pluralism (DSEP) was founded in February 2017.

So, what do students actually claim is wrong with their curriculum? Many argue that there is a problem with the dominance of neoclassical theories and methodology, which strives to make models as constant and rigorous as possible. Economists study is an incredibly complex system made up by human behavior, interlinked with many other parts of our society and natural environment, thus it is claimed that the school is not sufficient to provide us with a proper understanding of the economy.

Another is that too much emphasis is put on mathematical abilities, rather than nurturing skills such as critical thinking, asking the why’s and the more normative aspects of the subject. What is often heard is that students feel their economics education is not living up to the reasons which made them choose to study it in the first place; that there is a certain detachment, or gap, between the theories they are taught and the real world they are going to have to deal with.

Therefore, the Theses proposes five main points to how the curriculum could be improved. For example, analysing issues using a plurality of perspectives and introducing theories with their historical, philosophical and ethical backgrounds. Some universities have modules which do introduce these aspects, but they are often optional and only a small amount of the students actually take them. Another point is that economics should be taught with a more interdisciplinary approach. Looking back at some of the biggest economists through time; Adam Smith, John Maynard Keynes, Friedrich Hayek, Karl Marx, Joseph Schumpeter – none of them were just economists. They all understood the vast amount of insights other social science disciplines could give them in understanding the economy.

A common claim, however, is that economic models become more complex and realistic the higher up the degree level you come, moving in to masters and PhD degrees. But, independent of what one might think of this, economists influence our society in other ways than through academia. It’s not just about what is done in research at the highest levels. Of the 40,000 students in the UK studying for a bachelor’s degree in Economics, the vast majority of them will leave academia after these three years. Many of these will move on and obtain positions at different political, financial and academic institutions, where they will apply the knowledge from their degrees, and make decisions which, in one way or another, will shape our society. This is why Paul Samuelson, Economics Nobel Laureate and leading economic textbook author, famously said that he didn’t care about who ruled the country. As long as he could write its economics textbooks.

One of the main concerns to the suggestions put forward is the question whether economic graduates still will be as “employable”. Will economists be able to give policy-makers the definite and rigorous answers they want, if they are learning such a broad range of perspectives and methods? One could argue, however, that this concern reflects the still large presence of the “physics envy” in Economics. The use of mathematics was introduced in economics because it is a useful tool to measure, calculate and analyze economic phenomena. The strive to become as mathematically precise as physics to legitimize Economics as a “science”, however, is a pointless ambition. Compared to physical matter and forces, society is a constantly changing, irregular matter, which is not all quantifiable. Perhaps there is an unrealistic idea in society of what type of answers we should expect to get from economists.

At the end of the panel, the audience got to vote on which section of the Theses they thought was most important. The one which got the most votes was the purpose of economics. This makes a lot of sense since this point has a presence in all other sections of the Theses, including that of the teaching of economics. Many economic students will (hopefully), when they graduate, be able to undertake rigorous regression analysis, mathematically derive what the optimal interest rate should be to obtain the inflation target and calculate how many workers relative to machines a company should employ to maximise their profit. The question is if they are equally capable of answering why they are doing it.

The event at UCL on the 12th of December was organised by Rethinking Economics, the New Weather Institute, the UCL Economist’s Society and the Institute for Innovation and Public Policy. 

Photograph: J^^J via Flickr

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