Economic theory creates the world we live in, and the rules we live by.

This is a supplement to the previous post by Maria, describing the edited volume regarding radical changes in the economics curriculum. My article entitled Creating Challengers and Change is one of the chapters in this volume. Although many are calling for radical changes, few have gone the distance required to make a real revolution. Most calls for reform accept  major underlying assumptions of neoclassical theory, and therefore are unable to take a radical stance. As I stated in an earlier post (Three Goals for Pedagogical Change), we need to re-introduce history, morality, and re-define optimality by using human welfare instead of wealth as a criterion. Market societies may maximize wealth but cause great harm to human welfare. Thus the economists’ claim that markets are good ways of organizing economic affairs is very far from the truth. Indeed, as Polanyi argued in The Great Transformation, Market societies come into being by destroying human and humane societies.

My contribution to the volume put together by Maria Alejandra Madi and Jack Reardon argues that we have to reject the idea that human beings can be studied “scientifically.” In my paper entitled “Deification of Science and Its Disastrous Consequences” I have argued that Mathematics, Science, and Humanities each have radically different methodologies proper to the subject. Use of one methodology in another area simply does not work.  Economics cannot be studied in isolation from other dimensions of human existence, including spiritual, social and political dimensions. An integrated study requires and necessitates really radical changes. Recently, Edward Fullbrook posted the first two paragraphs from my article on the RWER Blog; these are also reproduced below. The provocative title comes from the last line:

How did it come to pass that we have given our quiet assent to a situation where the richest 85 individuals have more money than the bottom 3.5 billion? Where vultures wait for starving children to die, while others eat luxurious meals on private resort islands? Where horrendous military and commercial crimes leading to deaths, misery, and deprivations of millions are routinely committed by highly educated men with multimillion dollar salaries in luxury corporate and government suites?

A core component of the answer to these critical questions is that we have been educated to believe that this is a normal state of affairs, which comes about through the operation of iron laws of economics. Economic theories currently being taught in universities all over the world are an essential pillar which sustains the economic system currently in operation. These theories state that we (human beings) are cold, callous, and calculating. Microeconomic theory says rational individuals are concerned only with their own consumption. They are callous; completely indifferent to the needs of others. They maximize, calculating personal benefits to the last penny. They are cold – their decisions are not swayed by emotions of any kind. All this theorizing is not without power – it creates the world we live in, and the rules we live by.


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