WEA’s Economics Curriculum

Maria A Madi & Jack Reardon (Eds) The Economics Curriculum: towards a Radical Reformulation World Economics Association Books 2014

1. Economics Textbooks – anomalies and Transmogrification of the truth, Lars P. Syll

[Sonnenschein, Mantel and Debreu] unequivocally showed there do not exist any condition by which assumptions on the individuals would guarantee either stability or uniqueness of the equilibrium solution.

Syll quotes Keynes’ General Theory, approvingly.

2. Challenging the current economics curriculum: creating challengers and changes, Asad Zaman

… Economic theories currently being taught … state that we (human beings) are cold, callous and calculating. Microeconomic theory says that rational individuals are concerned only with their own consumption … completely indifferent to the needs of others … their decisions are not swayed by emotions of any kind. All this theorizing … creates the world we live in, and the rules we live by. … Only be re-defining what is worth living for, and what is worth dying for, can we strike at the heart of the capitalist process of production.

… Our theories of knowledge state that good and evil do not exist. …

One of the element responsible for this loss is logical positivism, which denies existence to subjective experiences which are not “observable”, and cannot be subjected to scientific scrutiny. … According to this theory, human knowledge is built on the logical analysis of sense data – incontrovertible objective empirical facts. …

… The once dominant, and still highly influential, school of behavioural psychology reduced human beings to robots which could be programmed by stimulus and response. …

…Real knowledge is acquired by life experiences … .

… The social norms of the [paternalistic, regulatory economy] are based on responsibility and cooperation, while the [self-regulated market economy] requires individualism and competition. The two types of norm are antithetical to each other, and it is impossible to evolve one into the other. …

My comments

Scientism seems to have had a dismal effect on mainstream science. Logical positivism concerns human knowledge, i.e. shared justified true beliefs. If pain cannot be directly observed and shared then logical positivism holds that we cannot have truly ‘objective’ knowledge of it, but this is not to say that it does not exist or that it might not come to be knowable (e.g., using FMRI scans). It also does not deny that we might have personal knowledge of it.

Von Neumann argues that in thinking about the kind of mathematics required in economics one can proceed as if only money had utility and it has since been common to develop economic theory as if only money has utility. But this is not what von Neumann himself was advocating. Allowing people to value collaborations for their own sake would take the sting out of much of  Zaman’s critique.

3. The role of methodology in the economics curriculum, Sheila C. Dow

… Economics is assumed to be concerned with rational choice. Theory is equated with models, which are constructed by applying deductive logic to the rationality axioms .. .

Economics lacks a sound methodology.

My comments

It is not clear to me what Dow means by ‘the’ rationality axioms. It seems to me that the mainstream takes too narrow a view of probability and hence implicitly assumes stability. Theory needs to be extended to cover broader uncertainty, as in crises.

5. The multinationals’ age is everywhere but in the economics curriculum, Grazia letto-Gillies

[Any] proper analysis of [TransNational Companies] must move away from efficiency and equilibrium models in favour of real life strategic analysis. If the latter leads to less precise results, so be it. It is better to be imprecisely correct than precisely wrong.

8. Five ideas that should be included in miocroeconomics textbooks, David Hemenway

… Teens “need” cell phones because their friends have cell phones, and they will be an outsider without one.

[Five] concepts that should be treated more fully in microeconomic textbooks are that (a) people are social animals; (b) tastes are malleable, particularly so for children; (c) children are an important part of the economy; (d) retail buyers typically have limited information, and (e) large corporations have substantial social and political power.

11. A new economics curriculum for a new century and a new economy, Constantine E. Passaris

… Contemporary economics has extended its reputation as the ‘dismal science’ to being perceived by the general public as perfunctory and incompetent.

… The emergence of the new global economy and the financial crisis of 2008 have accented the disciplinary limitations of the quantitative approach. Indeed, they have underlined the constraints associate with the extensive use of the mathematical approach in the study and appreciation of contemporary economics. …

The latter part of the 20th century witnessed a concerted effort to make the study of economics more of a science in an effort to upgrade its academic respectability. This was achieved by promoting the Newtonian approach … embracing a rigid quantitative focus and application. …

…It is worth noting that … the founding father of modern day macroeconomics, John Maynard Keynes, well versed in mathematics, hardly used it. …

A central issue regarding the quantitative approach is not how much mathematics to use and how often but rather what kind in order to avert coming to conclusions that do not reflect the contemporary and pragmatic nature of our economy and society. [Economic] pedagogy must select the appropriate mathematical formulas that will assist us in understanding, explaining and predicting the contemporary economy.

Passaris quotes Goodwin:

“… the major problems with mainstream economic theory begin with its assumption of final ends – most notably maximizing GDP – that bare not appropriate to a resource-constrained world. It views the economy as separate from its social and ecological contexts, understanding neither its dependence on these contexts nor the impacts of its meta-externalities form the economic system upon them. It only counts things that go through the market, and it has a bias against the public sector and in favour of the status quo.”

Passaris goes on:

[Economics] should resolve the confrontation between the quantitative school and the qualitative approach.

My comments

I tend to agree with the above sentiments, but have some quibbles. It seems to me that Newton made an honest attempt to reform mechanics and that neoclassical economics is more like the classical approach that Newton criticised, albeit with a thin veil of formulae. Thus, I think, mainstream economics has not even been Newtonian in its approach. Economics has a long way to go. I also find bizarre the notion that Keynes ‘hardly used’ mathematics. It seems to me that his economics is infused by an understanding of the mathematics in his Treatise. He did not foreground the mathematics, aiming for a wider readership, but it seems to me that the maths is behind almost every point that he makes. For example, it is clearly folly to put too much emphasis on quantitative formulae in a complex world, and hence to restrict one’s mathematics to the merely quantitative.

12. A radical reformation of economics, Jack Reardon

The problem with neoclassical pedagogy isn’t too much math – actually quite the opposite: it uses the wrong math (simple calculus) to study the wrong problem – optimization. And even worse, it is bad math- a distorted and misunderstanding (sic) of the limitations of mathematics (Keen).

… As Keynes wrote on the Ricardian victory, “That it could explain much social injustice and apparent cruelty as an inevitable incident in the scheme of progress, and the attempt to change such things as likely on the whole to do more harm than good, commend it to authority.” …

[The] biggest problems of our generation are: (1) poverty and the inability of existing economics systems to allow for individuals to provision for basic goods and services; (2) the crushing and debilitating burden of credit and debt; and (3) looming environmental catastrophe.

Description of the proposal: … Module 3: Modelling the economy. Understanding economic dynamics, feedbacks, system dynamics and how to develop models of the economy using the right maths. How does the system work? How does the system influence the individual and how vice-versa?

… We need a new way of thinking … .

My comments

What is the right maths? Is Keynes’ maths a good start?

My overall comments

I find the critique of the status quo convincing, but we are not provided with any real idea of any candidate curriculum content. I have jotted down some ideas, drawing on the rest of my blog. Comments welcome.

Dave Marsay

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