As emphasized in the previous posts by Mady, one of the key problems with current economics (both theory & practice) is the lack of ethical bases. I believe there is no solution except by re-introducing ethics into the study of economics. Justice and equity are crucial to any study of economic systems. In contrast, the unfettered pursuit of profits lies at the heart of capitalism, as Max Weber clarified.
The goal of this blog is the same as the demand of the Manchester students: radical reforms in conventional economic syllabi. Since the dissent to orthodoxy remains a minority position, spreading the message requires development of self-contained texts/lectures. Here the emergence of MOOC’s provides a useful lead — Designing self-contained teaching modules to support courses which challenge orthodoxy, could be an essential and central component of any strategy for radical curriculum revision. To this end, I have started creating lectures and modules which could be used as components of heterodox courses.
One recent lecture of this type is called “Current Crisis in Capitalism: Causes and Consequences“. This was a talk delivered at conferences in Turkey and Indonesia, addressed to a Muslim audience. It traces the root of the current crisis in Capitalism to the promotion of greed as a virtue over the past century or longer. It also suggests that responses & remedies to the crisis must have a firm ethical basis, which Islam provides.
More generally it should be possible to get widespread agreement on some core ethical principles, and use them as a basis for creating an alternative economics for the twenty first century. This should be a high priority item to build a “rainbow coalition” necessary to fight against current un-ethical economic systems. Also, the construction of MOOC style lectures and modules would be extremely useful for teachers struggling to create coherent alternatives to conventional economics.
A really nice article on the systemic failure of economic theory, and its implications and consequences.
Kiel Working Paper 1489 | February 2009
David Colander, Hans Föllmer, Armin Haas, Michael Goldberg, Katarina Juselius,
Alan Kirman, Thomas Lux, and Brigitte Sloth
The economics profession appears to have been unaware of the long build-up to the current worldwide financial crisis and to have significantly underestimated its dimensions once it started to unfold. In our view, this lack of understanding is due to a misallocation of research efforts in economics. We trace the deeper roots of this failure to the profession’s insistence on constructing models that, by design, disregard the key elements driving outcomes in real-world markets. The economics profession has failed in communicating the limitations, weaknesses, and even dangers of its preferred models to the public. This state of affairs makes clear the need for a major reorientation of focus in the research economists undertake, as well as for the establishment of an ethical code that would ask economists to understand and communicate the limitations and potential misuses of their models.
Keywords: financial crisis, academic moral hazard, ethic responsibility of researchers
JEL classification: A11, B40, G01
There are many ways in which the global financial crisis of 2007-8 showed up the defects of conventional economics. One of the central claims of economic textbooks is that market prices decentralize production decisions efficiently. Since stock prices declined by 50% over the period of an year, it is immediately obvious that pre and post crash could not both have been efficient.
In order to create room for alternative pedagogical approaches, it is necessary the challenge the blind faith in conventional economic theory that seems to be widespread both among economists and also among the general public. To criticise some public policy proposal, it is enough to say that this is socialist — that means that thinking further about it, rational discussion of pros and cons, all this is no longer permissible. Even though socialized medicine as practised in Canada and UK produces far better results at far lower costs, it simply is not viable option in USA because allergy has been induced to the name “socialized medicine” by extremely clever propaganda.
While the same propaganda exists in Pakistan, it is much less pervasive and weaker, I try to write about economic issues in local Newspapers, so as to counter the faith in free markets, as a first step to introducing genuine alternatives. My article on The Crisis in Economic Theory was published in the News, one of the bigger English language papers in Pakistan, a few weeks ago. The title was changed to “Waiting for Keynes“. Readers are invited to read it and also to make comments on it on the newspaper website. More importantly, we need to spread the word, by writing and publicising similar works which debunk conventional economic theories, and counter pro-capitalist prejudice. This is not too hard to do in wake of the numerous failures of capitalism and the Occupy Wall St. movement. What we need to realize is that major media is under capitalist control so the only way to counter is by working with local media, minor outlets etc. Every little bit counts.
There is a very nice (longish) article in counterpunch on the importance of pedagogy. For the full article see Giroux Interview. Below I present a few key excerpts. The second paragraph talks about the need for both a language of critique and language of hope. I believe that there is now sufficient critique available, and what we need is the language of hope — well articulated dreams of a visionary future with the power to inspire and motivate.
The greatest battle that we’re facing in the U.S. today is around the question of consciousness. If people don’t have an understanding of the nature of the problems they face they’re going to succumb to the right-wing educational populist machine. This is a challenge that the Left has never taken seriously because it really doesn’t understand that at the center of politics is the question of pedagogy. Pedagogy is not marginal, it is not something that can be reduced to a method, limited to what happens in high schools, or to what college professors say in their classes. Pedagogy is fundamental not only to the struggle over culture but also, if not more importantly, the struggle over meaning and identity. It’s a struggle for consciousness, a struggle over the gist of agency, if not the future itself – a struggle to convince people that society is more than what it is, that the future doesn’t simply have to mimic the present.
SK: Henry, we’ve covered a lot of territory. Is there anything we haven’t addressed that you would like to bring up before closing?
HG: We need both a language of critique and a language of hope. Critique is essential to what we do but it can never become so overwhelming that all we become are critics and nothing else. It is counterproductive for the left to engage in declarations of powerlessness, without creating as Jacques Rancière argues “new objects, forms, and spaces that thwart official expectations.” What we need to do is theorize, understand and fight for a society that is very different from the one in which we now live. That means taking seriously the question of pedagogy as central to any notion of viable progressive politics; it means working collectively with others to build social movements that address a broader language of our society – questions of inequality and power (basically the two most important issues we can talk about now.) And I think that we need to find ways to support young people because the most damage that’s going to be done is going to be heaped upon the next generations. So what we’re really fighting for is not just democracy; we’re fighting for the future. And so critique is not enough; we need a language of critique and we need a language of possibility to be able to go forward with this.
Capitalism is a system which generates extreme inequalities in wealth, and repeated economic crises which cause misery for millions but leave the top echelon unaffected. One of the arguments of Polanyi — summarized in my previous post – suggests that capitalism cannot survive without a massive propaganda effort to make it appear good, and to hide its defects. This propaganda is amazingly powerful and effective. Even the unemployed and the ones hurt by capitalist medical industry have an unthinking allergy to the idea of socialized medicine and government provision of a living wage for everyone. It is a wonder how propaganda trumps even self-interest,
In this context, introducing alternative views with effective arguments is an essential part of the battle to win hearts and minds, in an effort to create a better world for humanity than the one currently created by capitalism — where a handful of rich people own more resources than the bottom billion.
Because the message is aligned with the self-interest of the masses, reaching them with the news of good alternatives to capitalism should be easy. However, the dominant media sources have been purchased by the wealthy, so that dissenting voices cannot easily be heard. The top twenty journals do not publish articles critical of orthodoxy, and similarly a very small cluster of billionaires owns the leading newspapers.
An earlier post by Mady provided an introduction to Polanyi’s classic work The Great Transformation. This book is crucial to understanding both HOW and WHY we need to re-structure economic education today. Unfortunately, the book is quite complex, a bit dry and technical at times, and consequently hard to follow. Although many leading economists have praised it, I did not see any glimmer of understanding of its central arguments anywhere in orthodox arena. Even among heterodox economists, it is not frequently mentioned or cited.
Mostly for the purposes of understanding it for myself, I set out to write a compact summary of the key arguments in the book. The central theme of the book is a historical description of the emergence of the market economy as a competitor to the traditional economy. The market economy won this battle, and ideologies supporting the market economy won the corresponding battle in the marketplace of ideas. I quote from the introduction of my article:
The market economy has become so widespread that it has become difficult for us to imagine societies where the market does not play a central role. Yet, for reasons to be clarified in this article, this is the need of the hour. The unregulated market has done tremendous damage to man, society and nature. Bold, imaginative steps to find alternative ways of organizing economic affairs in a society are essential to our collective survival.
Polanyi’s arguments are complex and remain unfamiliar to majority of economists. They run
counter to received wisdom, and are directly opposed to what is taught
about economics in leading universities. They are summarized in FIVE points listed below.
While there exist many books, journals and forums discussing improved teaching of neoclassical theories, our goal at WEA Pedagogy blog is radically different. Our goal is to change the teaching of economics in ways that will help all human beings on this planet lead richer and fuller lives, and enable them to realize the potential for excellence possessed by all humans. We would like to eliminate hunger, poverty, economic oppression and injustice, and move towards greater equality in standards of living. We would like all children to have equal opportunities for education, and access to health care.
Is it possible to do this by changing the way we teach economics? Many people, including myself, believe that it is. Indeed, among the major props which support the current extremely oppressive global economic system are the wrong economic theories currently being taught at universities throughout the world. Below I discuss three major obstacles to creating positive changes posed by conventional economics theories. Each of these obstacles provides us with a pedagogical goal: we should change our teaching of economics so as to remove these obstacles.
FIRST Obstacle to improvements: Normative Positive Distinction
In my paper entitled “The normative foundations of scarcity,” published in issue 61 of Real World Economics Review (download pdf) I have shown that even what is currently taken to be the fundamental defining concept of economics is deeply normative. This is an application of an argument of Hilary Putnam, who showed that facts and values can be entangled in such a way that it is impossible to separate the two. Only after we come to the understanding that economics is not an objective and value-free scientific endeavor, does it become possible to formulate a goal for teaching and studying economics.
ACTION PLAN 1: To remove this obstacle, we need to show that norms are everywhere involved in current economic thinking. An excellent textbook for this purpose is Hausman and MacPherson: Economic Analysis, Moral Philosophy, and Public Policy. We should try to make this text the basis of a compulsory course everywhere that we can. Where we cannot change the syllabus, we should introduce this as an optional course and popularize it among teachers and students. In addition, we should learn how to bring out and highlight normative assumptions hidden within the framework of the economic theories we teach. My paper referenced earlier makes a start on this aspect. This will allow us to bring normative concepts into discussion in virtually all economics courses.
SECOND Obstacle to improved pedagogy: A-historical Methodology