May 13, 2014 - New Yorker

Rebellious Economics Students Have a Point

Posted by John Cassidy

In case you missed it—and you probably did—there’s a revolt afoot in the universities. It’s not exactly Paris, 1968, but there is a significant, if small, movement, extending from New York and London to Rome and Tel Aviv, that’s determined to change the way economics is taught.

Echoing complaints that have been mounting in the economics world for at least twenty years, and which became louder after the financial crisis of 2008, the student rebellion is calling for a more pluralistic and diverse approach, rejecting the textbook methodology that all too often reduces economics to a set of mathematical exercises. “The real world should be brought back into the classroom, as well as debate and a pluralism of theories and methods,” a group called the International Student Initiative for Pluralism in Economics said, in an open letter that was posted online last week. “This will help renew the discipline and ultimately create a space in which solutions to society’s problems can be generated. United across borders, we call for a change of course.”

The protest group consists of more than forty associations of economics students from nineteen countries. Obviously, they represent only a tiny proportion of the over-all student body studying economics. But the group’s emergence reflects some concerns about the subject that have deep roots, and that many professional economists privately share. Back in 1996, I wrote a piece for the magazine entitled “The Decline of Economics,” in which I quoted a number of economists at big firms and business groups who complained that many of the economics graduates they hired, although technically proficient, had little knowledge of the actual workings of the economy. Over the years, this grousing has only increased. Particularly at the graduate level, economics students are obliged to spend so much time learning the relevant mathematical techniques and theories that they largely ignore economic history and economic organization.

In his book “Capital in the Twenty-first Century,” which I reviewed in March, Thomas Piketty, the economist of the moment, writes that after he obtained an economics doctorate, and spent several years teaching at M.I.T., “I was only too aware of the fact that I knew nothing about the world’s economic problems.” Piketty goes on, “To put it bluntly, the discipline of economics has to get over its childish passion for mathematics and for purely theoretical and often highly ideological speculation, at the expense of historical research and collaboration with the other social sciences.”

The student group agrees with Piketty. In the open letter, the students argue that an economics degree “should include interdisciplinary approaches and allow students to engage with other social sciences and the humanities.” But the students’ main beef is that, even within the subject of economics, the standard curriculum is overly restrictive, and excludes much that is valuable. The letter calls for students to be exposed to “a variety of theoretical perspectives, from the commonly taught neoclassically-based approaches to the largely excluded classical, post-Keynesian, institutional, ecological, feminist, Marxist and Austrian traditions—among others. Most economics students graduate without ever encountering such diverse perspectives in the classroom.”

That’s true, and it’s a serious problem. If you wanted to understand the roots of the financial crisis, you would have done better studying the Financial Instability Hypothesis of Hyman Minsky, a post-Keynesian, or the business-cycle theory of Knut Wicksell, one of the founders of the Stockholm school, than the standard neoclassical textbooks. But in the United States, at least, there is little sign that the basic economics curriculum is being overhauled. (Things are slightly different in the United Kingdom, where a serious effort to teach economics “as if the last three decades had happened” is under way.)

Facing widespread criticism following the financial crisis, the response of the U.S. economics profession was largely to ignore the complaints, and hope they would go away. To some extent, they have. In this country, at least, students still sign up for economics courses in large numbers, and the demand for graduates, particularly those with skills in mathematics and statistics, remains high. Anecdotal evidence suggests that many students still regard economics, unlike other social sciences, as a major that will help them secure a decent job.
Maybe it will. Technical expertise is valuable. Nobody should be allowed to graduate in economics without at least a rudimentary knowledge of statistics. Exposure to theories of finance, such as the capital asset pricing model, explains a good deal about Wall Street and the business world that would otherwise remain mysterious. But economics should surely aspire to more than providing foot soldiers for the financial industry and Big Data companies.

For all their concerns with their careers, many students go into economics with an idealistic presumption that it will help them understand, question, and change the world. The best economics programs seek to foster this sort of intellectual development, to be sure, but many of them have become increasingly narrow and arid. Economic-history courses were once standard; now they are much rarer. Courses in the history of economic thought and alternative approaches to economics were once pretty common; today, they are an endangered species.
The dissident student movement, which started out in Germany, spread across Europe, and includes a New York-based group of students from Columbia and the New School, doesn’t claim to have all the answers. “But we have no doubt that economics students will profit from exposure to different perspectives and ideas,” they write. “Pluralism could not only help to fertilize teaching and research and reinvigorate the discipline. Rather, pluralism carries the promise to bring economics back into the service of society.”

That last part sounds a bit grandiose. But it’s also got a ring of truth and hopefulness about it.


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