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Reforming Economics
Robert Skidesky
Friday, December 19, 2014

Here is the text of a speech I made at the Cambridge Society for Economic Pluralism (CSEP) event "The Economics Renaissance" on 10 October 2014. The piece is all about reforming the way in which economics is taught and covers my thoughts on the new CORE curriculum led by Professor Wendy Carlin.
A common aim of reformers is to give students the 'tools' to understand 'the problems that excite them'. The assumption of some reformers is that the tools already exist; the main task of reform is to 'bring them to bear' on the problems, rather than presenting them as abstract models.
To cite Professor Carlin: students must be taught how to drive car the car as well to build it.
In other words, the main problem is learning how to drive a well-built car. But the problem actually lies deeper, in the assumption that there is a single ‘right’ way to build and design the car. Many students believe that they are being taught to build a vehicle with a faulty design, which will crash the moment they try to drive it; i.e. an important source of student (and teacher) discontent is with the nature of the tools themselves, especially the neoclassical tools of the mainstream tool kit.
As Albert Einstein said: 'Whether you can observe a thing or not depends on the theory which you use. It is this theory which decides what can be observed'.  If your theory tells you that financial markets process information correctly, you are likely to miss or ignore signs of impending disaster, just like the captain of the Titanic, who sailed into an iceberg equipped with all the latest tools of navigation. As Martin Wolf says in his new book: ‘The crisis happened partly because the economic mainstream rendered that outcome ostensibly so unlikely in theory that they ended up making it far more likely in practice’.
Hence the core of student dissatisfaction, as I see it, is not with abstraction per se (Keynesian and Marxist models can be just as abstract as neoclassical ones), but with a type of abstraction which, in the interests of formal precision, abstracts from the salient characteristics of ordinary business life.
Here is an example. There is a discussion in Unit 3 of the new Carlin ‘CORE’ curriculum of why societies have taken so much of their increased real earnings in consumption rather than free time; an interesting question to be sure. However, the discussion is almost entirely in terms of individual consumer choice. The way advertising, labour market structure, and distribution of income enter into these 'individual' choices, while briefly mentioned in the conclusion, is not part of the analysis. In other words, Carlin and her team take as given matters which ought to be part of the analysis of consumer choice. Precision is purchased at the cost of narrowness.
It should be perfectly possible to teach the neoclassical view alongside theories which emphasise the social construction of consumer choice. This would make students realise that there are alternative ways of analysing 'the problems which excite them'.
Perhaps the heart of the problem lies in the claim of mainstream economics to an authority which is intellectually illegitimate. The demand to teach alternative theories of physics and chemistry makes little sense. (After all, chemistry students are no longer taught phlogiston theory as a valid alternative theory of combustion).
However, economics is not an exact science, like physics or chemistry, but a social science (Keynes called it a moral science). In physics, the interaction of two bodies is fixed by physical laws, but in economics it is fixed by context, values, and societal norms, which are shifting parameters. Because economics has no universal truths, it is no more entitled than sociology or history to possess an uber-theory or meta-methodology, with catechistic teaching.  
Yet this what neoclassical theory claims to be. It claims that its method of analysis alone is ‘scientific’, that all alternative approaches are ‘unscientific’ or even ‘pre-scientific’. Hence   the student demand for pluralism.
From these observations certain conclusions suggest themselves which are particularly important for the reform of economics teaching.
Teaching economics is about education (learning to think) not training (learning a prescribed set of studies to master a fixed type of problem).
In economics it is particularly important to uphold the classical academic virtues of open mindedness and tolerance for other perspectives, as truths are hard to come by and often unknowable.  Economics teaching should aim to turn out critical students, not human robots.
Economists who emphasise the virtue of competition should live up their theory. They should accept competition from other economic theories. In order for this to happen they should alert their customers (students) from the start that there are other products on the market.
To equip students to choose the right models for the context requires the integration of theory, economic history and the history of economic thought. It also requires economics to engage with other social sciences which seek to understand economic behaviour.
Professor Carlin has opted for a more modest approach. The Carlin curriculum is a good vehicle for teaching mainstream economics, as it includes more data and history. But in its dismissal of alternative perspectives it renounces the exciting potential of curricular reform.
Why has she chosen to do reform in this way?
I would appreciate clarity on three points:  
Is it because she believes that there is no reputable intellectual alternative to neoclassical economics?   
Is it because she believes that pluralism is pedagogically unfeasible? That students would not be able to handle conflicting narratives and schools of thought? That they would leave confused as to what to think? She is on record as having said that economics students should not study philosophy and methodology in their early stages of learning, because they would not then know how to ‘do’ economics.
Is it because she feels that pluralistic change is not politically feasible? That it will not succeed in universities, so that a softly-softly approach is the only one that promises some success?
My final question to Wendy is: are you a wolf in sheep’s clothing, or a sheep in wolf’s clothing? 

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