Economists must learn to subtract

As a subscriber to the ecol-econ news group through IPEnet I was fortunate enough to be tipped off about the following article in this month’s Adbusters magazine (thanks to Jonas Broth). After two decades of campaigning against the neoclassical claptrap we serve up to students of economics, I find this very heartening …

In June 2000, a group of French students arched their backs in the classic “J’accuse” posture and threw a lightning bolt across the body of economic academia: they denounced contemporary economics as “autistic.”

A word or two on Autism. Victims of the disease are seen as living in their own world, often unaware of the people and events that surround them. They develop language patterns that make sense to no one except themselves, are intolerant of change and tend to repeat the same behaviors over and over, regardless of whether or not those behaviors are appropriate. The demand for “post-autistic economics” – namely a demand for diverse approaches to issues including unemployment, inequality and globalization – soon took on a life of its own. Within a year, a commission led by the respected economist Jean-Paul Fitoussi issued findings supporting the French students. The movement also crossed the English Channel, where Cambridge University, having made its mark on the discipline of mainstream economics, became the launchpad for more than two dozen PhD students who set out to do their own assessment of their field of study. The Cambridge 27 ultimately declared economics to be “monopolized by a single approach,” and identified the dangers of teaching students the “tools” of a mainstream economics that is detached from reality. The British students’ findings differed only in timbre from the French demand for “escape from imaginary worlds,” and echoed challenges for a multifarious approach, an appreciation of the real-life context of economics and liberation from the absolute dominion of mathematical models. “Economics fails to study real-world, open, dynamic, interconnected systems,” says Dr. Tony Lawson, whose book Economics and Reality is a pillar of the post-autistic movement. He draws attention to his colleagues’ reliance on models that in no way resemble economic life as it is actually lived. How can an entire discipline refuse to move beyond theories in which humans are assumed to live forever, have entirely rational expectations and behave selfishly at all times? Lawson places the blame on “an ill-informed, uncritical awe of mathematics,” and a system that feeds on itself. Funding and recognition are funneled to economists who admire the emperor’s proverbial new clothes. More iconoclastic “heterodox” thinkers increasingly find that their only avenue for investigating and publishing their research into economic reality is to work with other, only peripherally related academic departments or journals. Professor Fred Lee, of the University of Missouri-Kansas City, is more forward in his critique. “Neo-classical economists act as religious fundamentalists in that they will attack any heterodox economist and try to drive him or her out of the profession.” Critics of autistic economics agree on a number of key concerns. The first is that mathematical models are given a near monopoly in study and research at the expense of alternative historical models and methodology. Second, orthodox economists, supported to some extent by forces opposing social change, promote the careers and works of like-minded peers who view current conditions in the chosen shades of gray. Finally, and in the most general sense, economics has detached itself from every other related field of study. Differences among the critics include whether the current problems reflect mere self-preservation among conservative economists or a trickle-down of marching orders from controlling interests. They also divide over whether the current approach to economics needs only to be expanded or, as Lee states, “What needs to he done is to develop a new economic theory that clearly rejects neo-classical theory and its properties.” In either event, the critics agree that clues to the antidote lie somewhere within the morass of economics abandoned by the mainstream. The selection ranges from Marxism and post-Keynesian theory to feminist and social schools of thought. Signs abound that the stranglehold of neo-classical economics, in its contemporary perversion, is finally being loosened. As student enrollment in economics generally declines, courses dealing with real-world issues are becoming ever more popular. “Economic theory has not delivered the goods,” concedes Princeton economist Ariel Rubinstein. And the link between economic theory and the practical problems of life in the real world? “Tenuous at best.”