International debate

The Debate >> International debate

What is this whole debate about?

Economists, both professional and academic, are the stewards of a core aspect of our society: the economy.  But the thinking about that all-important economy has gotten stuck in a tunnel vision. Mainstream economics these days is built on the idea that there's only one right way to think about the economy: the economic method (details). This method is built on a foundation of non-social human beings, and lacks focused attention for any kind of organization that is not market-based (such as government, or the commons). In addition, it thinks in numbers only, making it harder for economists to see and understand structures. And finally, it is not derived from how the real economy works; it's a highly idealized and clean-scrubbed image of it. This single economic approach increasingly monopolizes our policy-making and our public debate, and it is continuously reproduced through our educational system.

A growing number of economists are resisting the dominance of this neoclassical paradigm. Since the crisis of 2008, this resistance has gained increased momentum. Why? Very few economists saw the financial crisis of 2008 coming. As Paul Krugman noted: "the economics profession went astray because economists, as a group, mistook beauty, clad in impressive-looking mathematics, for truth". Afterwards, economists collectively castigated themselves (for instance in a famous letter to the British Queen) for this failure. They described the problems in the discipline as "principally a failure of the collective imagination of many bright people, both in this country and internationally, to understand the risks to the system as a whole". The letter ends as follows: "The events of the past year have delivered a salutary shock. Whether it will turn out to have been a beneficial one will depend on the candour with which we dissect the lessons and apply them in the future."

That is now nine years ago. And this necessary shift has been worryingly sluggish. As Rens van Tilburg, director of the Sustainable Finance Lab, notes: "Whatever the biggest economic crisis in generations may have changed, not the way we educate the economic students, as this extensive research (details) unfortunately shows."

History of the debate

Of course, the movement for pluralism in economics existed long before the financial crisis of 2008. In 1992, Gary Becker got the Nobel Prize for successfully applying the neoclassical approach of market-based 'rational acting' to a range of other domains, like learning, families, crime and punishment, and discrimination. However, while neoclassical economics was expanding its reach, the economic discipline as a whole was becoming more narrow (details about this curious double development). So in that same year, in response to the findings of the U.S. Commission on Graduate Education in Economics, a group of prominent economists (including Nobel Prize winner Jan Tinbergen) published a worried statement in the American Economic Review. They called for “a new spirit of pluralism in economics, involving critical conversation and tolerant communication between different approaches. Such pluralism should not undermine the standards of rigor; an economics that requires itself to face all the arguments will be a more, not a less, rigorous science.”

This pushed forward the broader movement. In 1993, the International Confederation of Associations for Pluralism in Economics (ICAPE) was founded as a “consortium of over 30 groups in economics” that “seeks to foster intellectual pluralism and a sense of collective purpose and strength.” In 2000, a group of economics students in France, under the provoking banner “autisme-économie,” published a petition on the web in favor of a pluralism of approaches in economics. The students wrote: “We want a pluralism of approaches, adapted to the complexity of the objects and to the uncertainty surrounding most of the big questions in economics....”

In 2001, 27 economics Ph.D. students at Cambridge University in England who have come to be known as the Cambridge 27 issued a petition entitled “Opening Up Economics.” They ended their proposal for reforming economics as follows: “We are not arguing against mainstream methods, but believe in a pluralism of methods and approaches justified by debate. Pluralism as a default implies that alternative economic work is not simply tolerated, but that the material and social conditions for its flourishing are met, to the same extent as is currently the case for mainstream economics. That is what we mean when we refer to an ‘opening up’ of economics.” (details) Of course, the debate is not only about which theories to teach, but also about teaching methods. See for example this American Economic Review paper: Teaching Economics at the Start of the 21st Century: Still Chalk-and-Talk.

Where do we stand today?

So, the movement wasn't born in 2008. But has grown tremendously since. Prominent economists like Robert Schiller started once again to discuss out loud how we should reconstruct our economics programs (more discussion: 1, 2, 3, 4, 5, 6,...).

And the student movement? It exploded. In Germany and Austria, the movement for Plurale Ökonomik is organized in almost every university city. Internationally, organisations such as the International Student Initiative for Pluralist Economics (ISIPE) and Rethinking Economics bring together groups from all over the world to initiate change. Bi-yearly conferences like the Festival for New Economic Thinking, organized together with the Insitute for New Economic Thinking, draw hundreds of participants from all over Europe.

Governments, too, are worried. The British Government Economic Service launched a Steering Group to figure out how to better prepare young economists for their difficult work (conclusions). The French government ordered a similar report (conclusions). The U.S. House held hearings on the issue (see above video).

The findings of such commissions are always similar, and are concisely summarized by the British Steering Group report. Economics education requires:

• Greater awareness of economic history and current real-world context;
• Better practical data-handling skills;
• Greater ability to communicate economics to non-specialists;
• More understanding of the limitations of modelling and current economic methodology;
• A more pluralistic approach to economics;
• A combination of deductive and inductive reasoning.

So why is economics education not adapting?

That is the million-dollar question, and we invite everyone to join us in looking for the answer. For now, the best suggestions we could come up with are gathered in our Recommendations. But we know that this is not nearly the full answer.

So dear reader, what do you think? Why is it so hard to reform economics education, and to make it more socially useful?

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