Reform of the Anglo-Saxon economics curriculum

Robert Skidelsky joins the debate over reforming economics pedagogy. This is followed by interesting comments from Brad Delong. With so many joining the chorus for change, not sure when it will change? And this is not just about the anglo-saxon world. It is also about other parts of the world where what is taught in the west is blindly copied. Atleast in the west, some people understand the limitations of current economics teaching, in the other places this is not even understood. There is just competition on most places to keep pace with the west..

Skileddesky says economics teaching should be more pluralistic:

Today’s “post-crash” students are right. So what is keeping the mainstream’s intellectual apparatus going?  For starters, economics teaching and research is deeply embedded in an institutional structure that, as with any ideological movement, rewards orthodoxy and penalizes heresy. The great classics of economics, from Smith to Ricardo to Veblen, go untaught. Research funding is allocated on the basis of publication in academic journals that espouse the neoclassical perspective. Publication in such journals is also the basis of promotion.
Moreover, it has become an article of faith that any move toward a more open or “pluralist” approach to economics portends regression to “pre-scientific” modes of thought, just as the results of the European Parliament election threaten to revive a more primitive mode of politics.
Yet institutions and ideologies cannot survive by mere incantation or reminders of past horrors. They have to address and account for the contemporary world of lived experience.
For now, the best that curriculum reform can do is to remind students that economics is not a science like physics, and that it has a much richer history than is to be found in the standard textbooks. In his book Economics of Good and Evil, the Czech economist Tomáš Sedláček shows that what we call “economics” is only a formalized fragment of a much wider range of thinking about economic life, stretching from the Sumerian epic of Gilgamesh to the meta-mathematics of today.
Indeed, mainstream economics is a pitifully thin distillation of historical wisdom on the topics that it addresses. It should be applied to whatever practical problems it can solve; but its tools and assumptions should always be in creative tension with other beliefs concerning human wellbeing and flourishing. What students are taught today certainly does not deserve its imperial status in social thought.
Delong says we should encourage liberal arts graduates in the program:

I have long been of the view that, whatever there is to be said for and against–and there is a lot on both side–economics departments and subdisciplines as the right modality for organizing groups of scholars, and economics Ph.D.s as the right way of training a new professional scholars, two things are very, very clear:

  1. We have no business throwing applied-math majors into an economics Ph.D. program. Both a liberal arts mora-philosophy B.A. or equivalent and two years out in the real world working at a job of some sort should be required.

  2. We have no business offering a narrow economics B.A. at all. At the undergraduate social-science level, the right way of organizing a major curriculum is to offer some flavor of history and moral philosophy: enough history that students are not ignorant, enough sociology and anthropology that students are not morons, and enough politics and philosophy that students are not fools. (And, I would say, a double dose of economics to ensure that majors understand what is key about our civilization and do not get the incidence of everything wrong.)

Let me postpone (1) to some future date and talk about (2):

I think that modern neoclassical economics is in fine shape as long as it is understood as the ideological and substantive legitimating doctrine of the political theory of possessive individualism. As long as we have relatively-self-interested liberal individuals who have relatively-strong beliefs that things are theirs, the competitive market in equilibrium is an absolutely wonderful mechanism for achieving truly extraordinary degree of societal coordination and productivity. We need to understand that. We need to value that. And that is what neoclassical economics does, and does well.

He also points to this really interesting way to learn and unlearn about neoclassical eco:

Of course, there are all the caveats to Arrow-Debreu-Mackenzie:

  1. The market must be in equilibrium.
  2. The market must be competitive.
  3. The goods traded must be excludable.
  4. The goods traded must be rival.
  5. The quality of goods traded and of effort delivered must be known, or at least bonded, for adverse selection and moral hazard are poison.
  6. Externalities must be corrected by successful Pigovian taxes or successfulCoaseian carving of property rights at the joints.
  7. People must be able to accurately calculate their own interests.
  8. People must not be sadistic–the market does not work well if participating agents are either the envious or the spiteful.
  9. The distribution of wealth must correspond to the societal consensus of need and desert.
  10. The structure of debt and credit must be sound, or if it is not sound we need a central bank or a social-credit agency to make it sound and so make Say’s Law true in practice even though we have no reason to believe Say’s Law is true in theory.

An adequate undergraduate economics major will spend due time not just on the excellences of the competitive market equilibrium but on these 10 modes of market failure, and in so doing become, effectively, a history and moral philosophy major as well.

A first-rate undergraduate economic major will also spend due time on government failure and bureaucratic failure, and thus reach the very economic conclusion that there are substantial trade-offs, and we must pick our poison among inadequate and imperfect alternatives, even in institution design.

High time..


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