from Neva Goodwin
There are some true and useful things to be learned in standard 20th century economics, such as the basic concepts of supply and demand intersecting to create wages and prices. However if you ever took an economics course you may have since discovered that many other things also affect prices, such as advertising, or consumers’ lack of information. And wages involve even more complicated human interactions, habits and expectations. These complexities and exceptions don’t get much hearing in introductory courses – and, surprisingly, they get even less at the upper levels, where, instead, progressively more mathematics are imposed on a progressively more abstract picture of an economy. Meanwhile the students are also being taught a lot that is dangerous. Here are some of the take-aways from the standard economics course:
- We don’t need to worry about material resources – the price system and human ingenuity ensures that all resources are directed to their most valuable uses (with “value” determined by ability to pay).
- Concentration of economic power is not much of a problem. Its entanglement with political power doesn’t merit any attention at all.
- Increased consumption (regardless of the content) is the primary measure of well being.
About 40% of college students in the United States take at least one economics course. Students who, two years later, have forgotten the diagrams and equations, are likely to still retain an impression that only selfishness is rational, that limitless greed is a universal human characteristic, and that economic success – of a nation, or an individual – can be assessed strictly in terms of the dollar value of consumption. Beliefs like this are the background for a culture that will accept as perfectly normal Ponzi schemes and cooked accounts, tax fraud and tax havens, the exploitation of children, women and immigrants, and corporate expenditures to get the most favorable political environment. Institutions – from governments and legal or banking systems, to the institutions of the family or formal education – are shaped by socio-cultural norms whose roots can be traced, in some significant part, to the standard teachings of economics – especially what it says about human psychology.
In recent decades the sorry state of the economic culture (e.g., on Wall Street) has repeatedly bubbled up into disasters. But the economic culture has not yet changed in significant ways – and neither has the economic theory beneath it. This poses a significant challenge. The economics profession is one of the most tightly closed in all of academia. Economists who write about different ways of understanding the economy don’t get published in the mainstream journals. Faculty who disagree with the mainstream generally don’t get tenure.
Fortunately, as the core of the profession has continued to marginalize those who disagree, there has come to be a growing outer circle of hyphenated economists: institutionalist-, Keynesian-, ecological-, feminist-, radical-, social, socio- economics, and many more. Some of the better known names associated with alternative views include John Kenneth Galbraith, E.F Schumacher, and Herman Daly, as well as Wassily Leontief, George Akerlof, Joseph Stiglitz, and Amartya Sen; the last four are among the Nobel prize winners who continue to pose serious challenges to the mainstream. The closed ranks of academic economists has been able – thus far – to keep out even those who have received such recognition in the world (creating, for example, Obama’s dilemma). However the alternative voices are increasingly being heard – especially the new group of behavioral economists. This paper aims to provide a summary, and a little additional forward motion, for some of these critical alternative ideas.
Neva Goodwin, “The human element in the new economics: a 60-year refresh for economic thinking and teaching”, real-world economics review, issue no. 68, 21 August 2014, pp. 98-118, http://www.paecon.net/PAEReview/issue68/Goodwin68.pdf