A GUIDE TO
WHAT’S WRONG WITH ECONOMICS
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Introduction: Broadband Versus Narrowband
Economics
Edward Fullbrook
University
of the West of England, UK
Theories, scientific and
otherwise, do not represent the world as it is but rather by highlighting
certain aspects of it while leaving others in the dark. It may be the case that two theories
highlight the same aspects of some corner of reality but offer different
conclusions. In the last century, this
type of situation preoccupied the philosophy of science. The book you are reading, however,
addresses a different kind of situation: one where one theory, that
illuminates a few facets of its domain rather well, wants to suppress other
theories that would illuminate some of the many facets that it leaves in the
dark. This theory is neoclassical
economics. Because it has been so
successful at sidelining other approaches, it also is called “mainstream economics”.
From the 1960s onward,
neoclassical economists have increasingly managed to block the employment of
non-neoclassical economists in university economics departments and to deny
them opportunities to publish in professional journals. They also have narrowed the economics
curriculum that universities offer students.
At the same time they have increasingly formalized their theory,
making it progressively irrelevant to understanding economic reality. And now they are even banishing economic
history and the history of economic thought from the curriculum, these being
places where the student might be exposed to non-neoclassical ideas. Why has this tragedy happened?
Many factors have contributed;
I will mention only three. First,
neoclassical economists have as a group deluded themselves into believing
that all you need for an exact science is mathematics, and never mind about
whether the symbols used refer quantitatively to the real world. What began as an indulgence became an
addiction, leading to a collective fantasy of scientific achievement where in
most cases none exists. To preserve
their illusions, neoclassical economists have found it increasingly necessary
to isolate themselves from non-believers.
Second, as Joseph Stiglitz has observed, economics has suffered “a triumph
of ideology over science”.1
Instead of regarding their theory as a tool in the pursuit of
knowledge, neoclassical economists have made it the required viewpoint from
which, at all times and in all places, to look at all economic
phenomena. This is the position of neoliberalism.
Third, today’s economies,
including the societies in which they are embedded, are very different from
those of the 19th century for which neoclassical economics was
invented to describe. These
differences become more pronounced every decade as new aspects of economic
reality emerge, for example, consumer societies, corporate globalization,
economic induced environmental disasters and impending ecological ones, the
accelerating gap between the rich and poor, and the movement for
equal-opportunity economies.
Consequently neoclassical economics sheds light on an ever-smaller
proportion of economic reality, leaving more and more of it in the dark for
students permitted only the neoclassical viewpoint. This makes the neoclassical monopoly more
outrageous and costly every year, requiring of it ever more desperate
measures of defense, like eliminating economic
history and history of economics from the curriculum.
But eventually reality overtakes
time-warp worlds like mainstream economics and the Soviet Union. The moment and place of the tipping point,
however, nearly always takes people by surprise. In June 2000, a few economics students in
Paris circulated a petition calling for the reform of their economics
curriculum. One doubts that any of
those students in their wildest dreams anticipated the effect their
initiative would have. Their petition
was short, modest and restrained. Its
first part, “We wish to escape from
imaginary worlds”, summarizes what they were protesting against.
Most of us
have chosen to study economics so as to acquire a deep understanding of the
economic phenomena with which the citizens of today are confronted. But the
teaching that is offered, that is to say for the most part neoclassical
theory or approaches derived from it, does not generally answer this
expectation. Indeed, even when the theory legitimately detaches itself from
contingencies in the first instance, it rarely carries out the necessary
return to the facts. The empirical side (historical facts, functioning of
institutions, study of the behaviors and strategies
of the agents . . .) is almost nonexistent. Furthermore, this gap in the
teaching, this disregard for concrete realities, poses an enormous problem
for those who would like to render themselves useful to economic and social
actors.
The students asked instead for a broad
spectrum of analytical viewpoints.
Too often the
lectures leave no place for reflection. Out of all the approaches to economic
questions that exist, generally only one is presented to us. This approach is
supposed to explain everything by means of a purely axiomatic process, as if
this were THE economic truth. We do not accept this dogmatism. We want a
pluralism of approaches, adapted to the complexity of the objects and to the
uncertainty surrounding most of the big questions in economics (unemployment,
inequalities, the place of financial markets, the advantages and
disadvantages of free-trade, globalization, economic development, etc.)
The Parisian students’
complaint about the narrowness of their economics education and their desire
for a broadband approach to economics teaching that would enable them to
connect constructively and comprehensively with the complex economic realities
of their time hit a chord with French news media. Major newspapers and magazines gave
extensive coverage to the students’ struggle against the “autistic
science”. Economics students from all
over France rushed to sign the petition.
Meanwhile a growing number of French economists dared to speak out in
support and even to launch a parallel petition of their own. Finally the French government stepped
in. The Minister of Education set up a
high level commission to investigate the students’ complaints.
News of these events in France
spread quickly via the Web and email around the world. The distinction drawn by the French
students between what can be called narrowband and broadband approaches to
economics, and their plea for the latter, found support from large numbers of
economics students and economists in many countries. In June 2001, almost exactly a year after
the French students had released their petition, 27 PhD candidates at
Cambridge University in the UK launched their own, titled “Opening Up
Economics”. Besides reiterating the
French students’ call for a broadband approach to economics teaching, the
Cambridge students also champion its application to economic research.
This debate is important because in our view
the status quo is harmful in at least four respects. Firstly, it is harmful
to students who are taught the 'tools' of mainstream economics without
learning their domain of applicability. The source and evolution of these
ideas is ignored, as is the existence and status of competing theories.
Secondly, it disadvantages a society that ought to be benefiting from what
economists can tell us about the world. Economics is a social science with
enormous potential for making a difference through its impact on policy
debates. In its present form its effectiveness in this arena is limited by
the uncritical application of mainstream methods. Thirdly, progress towards a
deeper understanding of many important aspects of economic life is being held
back. By restricting research done in economics to that based on one approach
only, the development of competing research programs is seriously hampered or
prevented altogether. Fourth and finally, in the current situation an
economist who does not do economics in the prescribed way finds it very
difficult to get recognition for her research.
In August of the same year
economics students from 17 countries who had gathered in the USA in Kansas
City, released their International Open Letter to all economics departments
calling on them to reform economics education and research by adopting the
broadband approach. Their letter
includes the following seven points.
1. A
broader conception of human behavior. The
definition of economic man as an
autonomous rational optimizer is too narrow and does not allow for the roles
of other determinants such as instinct, habit formation and gender, class and
other social factors in shaping the economic psychology of social agents.
2. Recognition of culture. Economic
activities, like all social phenomena, are necessarily embedded in culture,
which includes all kinds of social, political and moral value-systems and
institutions. These profoundly shape and guide human behavior
by imposing obligations, enabling and disabling particular choices, and
creating social or communal identities, all of which may impact on economic behavior.
3. Consideration of history.
Economic reality is dynamic rather than static – and as economists we must
investigate how and why things change over time and space. Realistic economic
inquiry should focus on process rather than simply on ends.
4. A new theory of knowledge. The
positive-vs.-normative dichotomy which has traditionally been used in the
social sciences is problematic. The
fact-value distinction can be transcended by the recognition that the
investigator’s values are inescapably involved in scientific inquiry and in
making scientific statements, whether consciously or not. This
acknowledgement enables a more sophisticated assessment of knowledge claims.
5. Empirical grounding. More effort must
be made to substantiate theoretical claims with empirical evidence. The tendency to privilege theoretical
tenets in the teaching of economics without reference to empirical
observation cultivates doubt about the realism
of such explanations.
6. Expanded methods. Procedures
such as participant observation, case studies and discourse analysis should
be recognized as legitimate means of acquiring and analyzing data alongside
econometrics and formal modelling. Observation
of phenomena from different vantage points using various data-gathering
techniques may offer new insights into phenomena and enhance our
understanding of them.
7. Interdisciplinary dialogue.
Economists should be aware of diverse schools of thought within economics,
and should be aware of developments in other disciplines, particularly the
social sciences.
In March 2003 economics
students at Harvard launched their own petition, demanding from its economics
department an introductory course that would have “better balance and
coverage of a broader spectrum of views” and that would “not only teach
students the accepted modes of thinking, but also challenge students to think
critically and deeply about conventional truths.”2
Students have not been alone in
mounting increasing pressure on the status quo. Thousands of economists from scores of
countries have also in various forms taken up the cause for broadband
economics under the banner “Post-Autistic Economics” and the slogan “sanity,
humanity and science” (www.paecon.net). The PAE movement,
or, if you prefer, the Broadband Economics movement, is not about trying to
replace neoclassical economics with another partial truth, but rather about
reopening economics for free scientific inquiry, making it a pursuit where
empiricism outranks a priorism and where
critical thinking rules instead of ideology.3
Against this background of
accelerating momentum for radical change, 27 economists and 2 mathematicians,
many of them internationally renown and representing eight countries and five
continents, have come together to create this book. It aims to provide you, the student, with
three things.
First, it offers you some protection against the
indoctrination process to which you are likely to be subjected as an
economics student. There are many
things that your teachers should tell you about the brand of economics they
are teaching you, but, in most cases, will not. This book will make you aware of some of
the many worldly and logical gaps in neoclassical economics, and also its
hidden ideological agendas, its disregard for the environment and inability
to consider economic issues in an ecological context, its habitual misuse of
mathematics and statistics, its inability to address the major issues of
economic globalization, its ethical cynicism concerning poverty, racism and
sexism, and its misrepresentation of economic history.
Second, if you are brave you
may want to bring up some of the points raised in this book in your
classes. It is sure to make them more
interesting. It may even provoke
lively discussion and, for a while at least, convert the indoctrination
process into an educational one. If it
does you will be doing a good thing: we live in a time when bad economics
probably kills more people and causes more suffering than armaments.
Third, this book is intended to
appeal to your imagination and humanity by showing you how interesting and
relevant, even exciting, economics can be when it is pursued, not as the defense of an antiquated and close-minded system of
belief, but as a no-holds-barred inquiry looking for real-world truths.
Notes
1. All the student petitions discussed are available at
www.paecon.net.
2. Stiglitz, Joseph E. (2002) “There Is No Invisible Hand”, The Guardian,
December 20, 2002.
3. For
further information about the PAE, see The
Crisis in Economics: The Post-Autistic Economics Movement: The first 600 days,
Edward Fullbrook (editor), London: Routledge, 2003.
available at: amazon.com,
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