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post-autistic economics review ( formerly "newsletter")
Issue no.
11; 30 January 2002 back issues at www.paecon.net
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In this issue:
- Peter
E. Earl, The
Perils of Pluralistic Teaching and How to Reduce Them
- Marc Lavoie, The Tight Links Between Post-Keynesian and Feminist
Economics
-
Jean Gadrey,
Is the Concept
of Economic Growth Autistic?
- Peter Söderbaum, Democracy and the Need for
Pluralism in Economics
- Geoff Harcourt, Review of Steve Keen's Debunking Economics
The Perils of Pluralistic Teaching
and How to Reduce Them
Peter E. Earl (University of Queensland,
Australia)
Many
academics involved in the Post-Autistic Economics movement probably presume
that
barriers to delivering the kind of pluralistic teaching and doctoral training
advocated by the
French students and Cambridge postgraduates reduce to politics and
infrastructure. They
presume it is a matter of having the numbers to get pluralistic policies
through faculty
committees and of having the necessary teaching resources; resistance from
students is
not seen as an issue. Certainly, the student petitioning that started off the
movement gives
the impression that pluralistic teaching modes will be widely welcomed by
students that
enrol for courses in economics, because such an approach to teaching has
greater scientific
integrity than the present approach by which the neoclassical hegemony sweeps
alternative
perspectives aside regardless of empirical evidence.
Such would once have been my own perspective. I had the privilege of
receiving my undergraduate
training at Cambridge at a time (1974–1977) when pluralistic teaching
was the order of the day.
I received contrasting perspectives on value and distribution from Frank
Hahn, John Eatwell
and Bob Rowthorn. When Ajit
Singh, my director of studies, noticed that none of these
approaches satisfied me in terms of how they dealt with problems of
information and knowledge,
he put me on the trail of behavioural economics despite it not being his
habitual mode of
thinking. My first lectureship was in a department (the University of
Stirling, 1979-1984) which
both offered subjects that were team-taught by staff with different perspectives
and embraced
the case study method of teaching management economics and marketing, with
all that this
entailed in opening the eyes of students to the indeterminacy of economic
problem solving in
real-world settings. Students at these institutions did not see pluralism as
peculiar.
On moving to the University of Tasmania in 1984, I started having to do
battle with non-UK-trained
neoclassical economists who found it inconvenient to have me delivering Post
Keynesian
monetary/macro economics between their first- and third-year macroeconomics
units. Eventually
I was pushed out of economics and into teaching marketing and organizational
behaviour, though
not after having had an enjoyable time teaching a first year unit in
Australian Political Economy
that had a history of being taught in a pluralistic manner by UK-trained
staff. It covered
classics by Galbraith, Friedman, Baran and Sweezy, Hirsch, G.B. Richardson, and so
on, but it was taken mostly by Arts students, with Commerce and Economics
students
sticking to orthodox micro and macro papers.
The
chance to teach a large pluralistic microeconomics class came when I took up
the
Chair in Economics at Lincoln University in New Zealand in 1991. I relished
this as an
opportunity to show non-pluralistic colleagues that it was possible to cover
mainstream and
behavioural/institutional approaches to business economics simultaneously
without diluting
their content. However, nothing had prepared me for the resistance I
encountered from the
students, who had no expectation of being taught in a pluralistic manner.
They were used
to multiple choice exercises and short answer types of problems and lacked
experience in
essay writing and open-ended problem solving. To them, economics was a matter
of moving
lines on graphs and the invitation ‘discuss’ meant
‘describe’, as indeed it did to most of my
colleagues, as I discovered each time I acted as examinations moderator. The
traditional
UK-style tutorials in which students discussed economic puzzles were
unfamiliar to the
New Zealanders and their full-fee-paying Asian counterparts and many in the
class (whether
native English speakers or not) were unable to read at the level I expected
(that of The
Times, not The Sun). A thinking student’s approach to
economics, in which students were
expected to battle to get to grips with unresolved debates in the discipline,
was a shock to
the majority of the class. Most were
not economics majors and were simultaneously being
spoon-fed marketing and management with overly simplistic texts whose bullet
points they
could learn and parrot back to their examiners. They had no intrinsic
interest in economics
as a subject for making sense of the world; it was taken merely as a hurdle
en route to a
degree that would provide better job opportunities.
At the
time, I suspected that the problem was that I was working in a third-rate
institution,
many of whose students really should not have been at university at all. Even
so, I taught the
subject nine times and turned the teaching resources into a textbook (Earl,
1995), before I
lost the political battle and saw it replaced by ‘intermediate
Varian’. However, having recently
escaped to a university with much stricter entry requirements, I have
experienced several
months of a far more brutal resistance to pluralism than anything I
encountered in New Zealand.
Students who were used to knowing in advance whether or not they were handing
in a high
quality assignment got very aggressive when faced with a lecturer who
expected them to
read two or three original articles each week and do assignments for which
they had no way
of knowing whether they had understood the question in the
‘right’ way or used the ‘right’
piece of theory to wrestle with it.
The upshot was a petition and a steady stream of e-mail
complaints about virtually every aspect of the course, which grew into an
organized campaign
and gave me many sleepless nights, despite the support of a pluralistic head
of department
(John Foster) who had hired me knowing full well how I was going to teach. (I
should add that
the final set of grades was thoroughly satisfying; for the first time in ten
years, I did not have
to dumb my standards down, as most of the class had eventually got to grips
with pluralism
and open-ended problems – just as I had promised them that they
would.)
If this
is what happens with a class of able students in an age when most of the
class
typically consists of business/management students, nor economics majors,
then those
who try to teach in a pluralistic manner risk doing terrible things to their
teaching evaluation
scores and to their departmental enrolments. Economics done this way looks
far harder
and more threatening than a typical one-eyed mainstream offering, even if
it contains less
maths.
Much of
this will not seem surprising to those who have read Pirsig’s
(1974) Zen and the
Art of Motorcycle Maintenance, but there are some things that would-be
pluralists can
do to make their task a bit less harrowing that my first semester at the
University of
Queensland proved to be. With my new and, on average, far more able body of
students,
I made one serious mistake right at the start of the subject, exactly as I
did when first
teaching in New Zealand: I presumed that students were used to the notion
that a university
is a place where ideas are debated openly and difficult issues are not
dodged, rather than
a place at which one receives the present state of knowledge in neatly
packaged form
without any diversions into the history of the discipline or the
personalities and politics
that shaped it. Students who are under the latter delusion will naturally be
horrified if a
lecturer challenges the wisdom of a textbook. When I did so with my 1991
class, they
ran crying (well, almost) to the director of the education unit — and
as a consequence I
was introduced to an essential source for any would-be pluralistic teacher,
namely the
work of William Perry (1970) on student learning. Subsequent cohorts of my
students in
New Zealand reacted differently, and this seems in large part to have been
due to me
teaching them at the start of the subject about Perry’s work, and
including a discussion of
it in the textbook I developed around the course. This was not presented to
the Queensland
students, who also, due to some accidents of history, were not using my text
on that
occasion.
Perry
was an educational counsellor and he concluded that the presence of different
ways
of thinking within a classroom is the major barrier to satisfactory
teacher/pupil interaction.
(I have explored his work in relation to economics at some length elsewhere:
see Earl, 2000.)
According to Perry, less intellectually mature students operate in a
dualistic mode, seeing
things in a very black-and-white manner. There is real science versus
quackery. Teachers
dispense the truth; students are vessels into which it is to be poured and
marks are awarded
for showing that one can replicate the material. Dualistic thinkers have a
hard time seeing
what value student arguments could have in a class discussion, so they keep
quiet and
wait for wisdom from the teacher.
Perry
identified a progression from dualism towards a kind of ‘committed
relativism’ in which
one has got used to the idea that knowledge is debatable and provisional, but
becomes
attached to particular theoretical frameworks after thinking long and hard
about their efficacy
relative to rivals in particular contexts.
En route, there is a growing awareness that debates
exist within a discipline. This is initially seen as reflecting
‘good’ versus ‘bad’ authorities
but is then reframed in terms of ‘it’s not really an issue about
whether the scientists are
good or bad; they’ve just not yet got the data in that will enable them
to resolve things’.
When students then notice the persistence of debates despite ongoing data
gathering,
this initially raises questions about whether lecturers can even mark their
work: what
makes any idea an idea of quality is unclear. But gradually students come to
see that it
isn’t a matter of scientists simply asserting their position is right
but of arguing a case,
which is what they realize everyone does in other parts of their lives. It is
only by this stage
that the student will be really comfortable with pluralistic teaching in
which they are given
contending perspectives and opportunities to test their fit in a variety of
contexts and are
then left to make up their minds with mentoring assistances from their
teachers.
The
transition from one level of intellectual development to another looks, in
Perry’s terms,
likely to be quite painful, but if one explains to students what is going on,
they seem to be
far more receptive, particularly when they can see that in other parts of
their lives they do
tolerate, even enjoy, debate and ambiguity and can argue cases. The
Post-Autistic
economist’s task would be much easier if introductory economics at
university level
broached the dualism/relativism issue by focusing on contending perspectives
in a manner
different from high-school economics. Unfortunately, the dominance of
mainstream
economics at the first year locks student expectations into continued faith
in dualistic
modes of learning about economics, making pluralistic teaching at
intermediate and
advance levels much more of a struggle.
References
Earl, P.E. (1995) Microeconomics for Business and Marketing :
Lectures, Cases and Worked Essays. Aldershot,
Edward Elgar.
Earl, P.E. (2000) ‘Indeterminacy in the economics classroom’, in
Earl, P.E. and Frowen, S.F. (eds) Economics As an
Art of
Thought: Essays in Memory of G.L.S. Shackle, London, Routledge,
pp. 25–50.
Perry, W.G., jr (1970) Forms
of Ethical and Intellectual Development in the College Years: A Scheme,
New York,
Holt, Rinehart and Winston.
Pirsig, R.M. (1974) Zen and the Art of Motorcycle
Maintenance, London, Bodley Head
p.earl@economics.uq.edu.au
SUGGESTED CITATION:
Peter E. Earl (2002) “The Perils of Pluralistic Teaching and How to
Reduce Them ”, post-autistic
economics review : issue no. 11, January, article 1. http://www.btinternet.com/~pae_news/review/issue11.htm
The Tight
Links Between Post-Keynesian and Feminist Economics
Marc Lavoie (University of Ottawa, Canada)
My aim here is to
show that there are tight methodological links between post-Keynesian
economics, as I understand it, and feminist economics, as presented by Julie
Nelson (1995)
(who also argued why PAE needs feminism, in the
October 2001 issue of the PAE Newsletter).
I should point out that others, specifically Lee Levin, have also found
substantial points of
convergence between feminist economics and post-Keynesian economics.
In her paper, Nelson considers
models, methods, topics, and pedagogy. The first three issues
only will be dealt with here, but as the French students have shown in the
autistic economics
debate, pedagogy is also crucial.
Within the issue of models, Nelson
questions the use and definition of rationality, as well as
the role of methodological individualism; in methods, she discusses the
realism of hypotheses;
in topics, she challenges the neoclassical obsession with exchange economics.
I shall
show that these elements that Nelson highlights as key methodological
features of feminist
economics can also be found in the characterization of post-Keynesian
economics.
In my book on post-Keynesian
economics (Lavoie 1992a), and in a previously written article
(1992b), I have argued that there are four essentials, or presuppositions,
which distinguish
post-Keynesian economics, along with several other heterodox schools such as
the
Institutionalists and most Marxists, from
mainstream neoclassical economics.
These four
essentials can be set up as four antagonizing doublets, the first term of each doublet
applying to neoclassical economics, while the second term applies to
post-Keynesian
economics and its heterodox brethren. These are: substantive or hyper
rationality versus
procedural or reasonable rationality; methodological individualism versus
some form of
organicism or holism; an instrumentalist/idealist
ontology versus realism; exchange
versus production.
In neoclassical economics, the
assumed capacities of the individual are daunting: it is
always possible for agents to optimize, and to behave as if the future could
be predicted,
with some probabilistic certainty. In post-Keynesian economics and other
heterodox schools,
agents have bounded capacities to acquire and treat information; in addition,
their environment
can be highly uncertain, as decisions to be taken themselves may change the
future economic
environment. Procedural rationality, or reasonable rationality, goes beyond
maximization
subject to constrained computational abilities. The solution sought can only be a
satisfying
one, for in general, no one knows what the optimal solution is, nor whether
there ever existed
such an optimal solution Within this
world, one is compelled to function on the basis of
procedural rationality, often relying on rules, habits, and the judgment of
others, who we
assume to be better informed.
The use of rules, customs, and
conventions brings in organicism, holism, and intersubjectivity.
In post-Keynesian economics, individual behaviour is interdependent.
Individuals are influenced
by their social environment, social classes, or gender. There is organic
interdependence. For
this reason, social classes and their institutions play a crucial role in the
analysis. By contrast,
the mainstream neoclassical agent is generally seen as an atomistic being,
devoid of any
class link or social attachment.
The third essential of
post-Keynesian economics, related to epistemology, is realism. Realism
is rather vague as it can be defined in many different ways, specially with
the advent of critical
and transcendental realism, but I shall define it as a school driving at
putting forth realist
hypotheses, based on stylized facts, and determined to offer explanations and
tell a story.
In neoclassical economics, a form of idealistic instrumentalism reigns.
High-brow theory
– general equilibrium theory – defines the hypotheses which are
required to describe the
world as they wish it would be; vulgar theory starts from these unrealistic
premises to build
partial equilibrium models and to test their models.
Finally there is the issue of the
definition of economics. Mainstream economics is the science
of scarcity, the study of the optimal allocation of scarce means. All models
are variants or
extensions of the exchange economy. Producers are arbitrageurs acting in a
form of
indirect exchange. By contrast, post-Keynesian economics is concerned, as the
classical
authors were, with production and distribution. The major issue is not how to
allocate
resources but rather how to get rid of unemployed resources and how to
increase production
and living standards.
These four essentials of
post-Keynesian economics can be found in Nelson’s depiction of
feminist economics. She criticizes the mainstream “rational,
autonomous, self-interested
agent, successfully making optimizing choices subject to exogenously imposed
constraints”
(1995: 135). In place of this atomistic agent with hyper rationality, Nelson
wishes an agent
“socialized into family and community groups”, a
“dependent, emotional, connected” human
being, in other words the organic economic actor that I described above.
For example, Nelson (1995:
136) points to models, such as wage efficiency models ā
la
Akerlof, that emphasize the notions of fairness and
equity. We know that these kinds of
models have also long been advocated by Marxist economists; and post-Keynesian
economists have also tied fairness to economic behaviour, for instance Adrian
Wood in
his theory of pay (1978). Nelson also points towards Keynes’s notion of
animal spirits and
conventions, which are recurrent themes along with fundamental uncertainty
and liquidity
preference in post-Keynesian economics. Decisions in an environment of
fundamental
uncertainty, as pointed out above, cannot be guided by mainstream hyper
rationality; it
requires procedural rationality.
In some ways, Nelson (1995: 139)
favours realism, as the post-Keynesians do. She
denounces the neoclassical emphasis on “logic, without sufficient
attention to grasping
the big picture”, which leads to “empty, out-of-touch exercises
in pointless deduction ... for
the sake of precision” – the idealism of a segment of
neoclassical economics. Nelson
recommends the use of metaphors and story-telling. As post-Keynesian Paul
Davidson,
has written on a number of occasions, it is better to be vaguely right than
precisely wrong.
The fourth essential doublet, that
of exchange versus production, is directly tackled by
Nelson (1995: 142-143). She points out that classical economists used to be
concerned
with production and the distribution of all the necessaries and conveniences
of life. This is
contrasted to the neoclassical definition of our field, “the processes
by which things-- goods,
services, financial assets -- are
exchanged. For her, the definition of economics should be
based on “provisioning” rather than “marketization”
or the use of a narrow model of individual
choice.
There are other passages in
Nelson’s account of feminist economics which are reminiscent
of ideas which have been long advocated by some post-Keynesian economists.
For instance,
when Nelson (1995: 137) says that “the feminist analysis suggests that
there should not be
just one economic model, but rather many economic models, depending on the
usefulness
of various modelling techniques in the various applications”, one is
struck with the similarity
of such a statement with the Babylonian approach, the main proponent of which
has been
post-Keynesian Sheila Dow (1990). Her Babylonian approach sees research as
examining
an issue from “a variety of starting points” (1990: 146), by
using a range of different methods
and techniques (as also argued by Nelson (1995: 140)), and by using a
pluralism of models.
Finally, Nelson (1995: 141) points
out the objectivity of the researcher, which is the hallmark
of positive economics as conceived by mainstream colleagues, is an illusion.
This was also
pointed out by post-Keynesian Joan Robinson, who argued that, since ideology
and
economics were intimately tied up, economics was little different from a
branch of theology.
Robinson loathed those who claimed objectivity in the social sciences,
saying that they
either deceived themselves or tried to deceive others. For Robinson (1964:
27), “the
objectivity of science arises, not because the individual is impartial, but
because individuals
are continually testing each other’s theories”.
The post-autistic movement, that
got started by the French students asking for more
pluralism in the classroom, ironically contributes to more objectivity
in economics.
References
Dow, Sheila C.
1990. “Beyond dualism”, Cambridge Journal of Economics, 14
(2).
Lavoie, Marc. 1992a. Foundations of Post-Keynesian Economic Analysis. Edward Elgar, Aldershot.
Lavoie, Marc. 1992b. “Towards a new research programme for
post-Keynesianism and neo-Ricardianism”,
Review of Political Economy, 4(1).
Nelson, Julie A. “Feminism and Economics”, Journal of Economic
Perspectives, 9 (2).
Robinson, Joan. Economic Philosophy. Penguin Books, London.
Wood, Adrian. 1978. A Theory of Pay. Cambridge University Press.
Cambridge.
SUGGESTED CITATION:
Marc Lavoie (2002) “The Tight Links Between Post-Keynesian
and Feminist Economics ”, post-autistic
economics review : issue no. 11, January, article 2. http://www.btinternet.com/~pae_news/review/issue11.htm
Is the Concept of Economic Growth
Autistic?
Jean
Gadrey (University of Lille, France)
Since Malthus, economists have been debating the
"limits to growth" in an attempt to identify
those factors that might lead to an inexorable slow-down in growth, or even
to a "steady state".
At the beginning of the 1970s, the studies carried out by the "Club of
Rome" brought the terms
of the debate up to date again, drawing on analyses of the increasing
scarcity of natural
resources. We will not engage with
this debate, which is undoubtedly worthy of interest, for
two reasons. Firstly, history can be
said to have decided the matter, at least up to now:
capitalism has repeatedly pushed back the limits in question and given the
lie to prophecies
inspired by the Malthusian approach.
Secondly, and more importantly, it seems to us that
the main question raised by the virtually unanimous assertion that growth
needs to be as
strong as possible concerns not the rate of growth but rather the concept
itself and the tools
used to measure increasing wealth. The
issues addressed in debates on the limits to growth
seldom include the limits of the concept itself.
The invention of growth
The concept of economic growth, in the sense attributed to it today [1],
is a relatively recent
invention, a by-product, as it were, of industrialisation. It came into its own with Fordism,
the three decades or so of growth and prosperity following the Second World
War and the
national accounting systems of the 20th century, which were themselves
developed in a
particular economic context, one that saw the expansion of heavy industry and
the mass
consumption of standardised goods.
What is economic growth? It is
the rate of increase,
from one period to another, in the flows of goods produced and/or consumed
within a given
institutional space, which may be a firm, an industry, a national or regional
territory, etc.
However, if this statistical operation is to be carried out successfully from
period to period,
there has to be agreement on the nature of the goods whose
"volumes" are being measured,
and these goods should not be continually changing in nature or in
quality. The ideal
situation is one in which, firstly, the transformations carried out during
the production
process affect mainly the quantities of the goods produced rather than the
nature and
qualities of those goods. In this way,
product standards remain unchanged from period to
period. Secondly, there should be
stable conventions governing the types of products to
be included in the accounts.
Broadly speaking, these conditions were met during the "Fordist " period, which saw the
expansion of the mass production and consumption of highly standardised goods
and
services that benefited from economies of scale, the mechanisation of
agriculture, the
heavy and inflexible automation of manufacturing industry (before the advent
of the
computer), the establishment of large retail outlets and other "retail
factories", the increased
take-up of banking services by households and their increasing connection to
water, gas
and electricity suppliers and to telephone networks, or even the development
of "Fordist"
tourism in the 1960s, the ideal type of which is of course the Spanish
model. While it is
true that the quality of these goods and services improved over time, it was
the increase
in their volume that was the major component of this mode of development,
whose progress
could be followed as the annual product flows and year-on-year increases were
entered into
the national accounts, providing a picture of economic growth. As far as
households were
concerned, the corresponding indicator of progress was the "standard of
living", which was
measured in the same way, on the basis of the annual flows consumed. Thus the criterion
used to assess economic "well-being" was the level of consumption:
the more goods and
services were consumed, the higher economic well-being was judged to be. At the heart
of this economy based on growth in the flows of standardised goods and
services lay gains
in labour productivity.
Contemporary economies, growth and
productivity
Can the analysis of contemporary economies rely exclusively on the use of
similar tools
(growth, productivity, standard of living) to measure and evaluate their own
progress?
There must be considerable doubt about this.
As far as manufacturing industry is concerned, demassification
(a term coined by Alvin
Toffler as early as 1970 [2]), increasing variety, product innovations that
reduce product life
cycles and, in some cases, the introduction of individualised or
"customised" products,
together with the sale of integrated packages (products/services/after
sales), have all
served to weaken measurement conventions based on quality standards that were
comparable over time.
The difficulties and uncertainties of these measurements are further
compounded in the
service sector. While some service
industries are still at the "industrial" stage of providing
standardised services, many others do not readily lend themselves to the
application of
the traditional industrial concepts.
What do terms such as "growth" and "productivity
gains" mean when applied to services such as consultancy, education,
health, social
welfare, research or insurance? Where
are the standard product units that would make it
possible to compare the quantities produced over time? If the production and diffusion of
knowledge is playing an increasingly important role in the developed economies, what
are these units of knowledge whose increased volume is being followed?
One of the greatest ambiguities in the desperate and generally fruitless
search for new
"conventions" that would make such activities amenable to the
application of the industrial
concepts of growth and productivity can be illustrated by considering the
case of health
services. In such activities, is the
product whose growth we are seeking to measure, and
whose definition subsequently determines the measurement of productivity
gains and
standard of living, synonymous with the flows of actions, of medical and
surgical treatments
and of patients treated? Or should we
look beyond these flows and recognise that what
counts (the real "product) is the improvement in the health of the
individuals and population
concerned? If the flows approach is
adopted, successful preventive policies, for example,
will lead to reductions in the measurement of growth and standards of
living! However, if
priority is given in evaluations to improvements of state, those same
preventive policies
could be judged to be positive contributions to the individual and collective
quality of life.
This would constitute a shift away from (economic) growth towards (social and
human)
development. We would not, for all
that, be abandoning the use of statistical indicators
of that development (the name of Amartya Sen, a Nobel prize-winner in economics, is
associated with important advances in this area linked to studies carried out
under the
auspices of the United Nations Development Programme), and there would still
be a need
for proper economic analyses of the effectiveness of the actions and services
through
which these improvements in state are to be achieved. What is different is the favoured
indicator of progress (the others are not entirely dispensed with, however)
and the
conventions on which evaluation is based.
This example of the health care sector and its output indicators is in no
sense specific.
Similar dilemmas can be found in most activities based on the production and
exchange
of knowledge (education, research, consultancy of all kinds), in
"relational" neighbourhood
services (help for the elderly, childcare, etc.), social work, insurance,
etc., that is in the
vast majority of activities that have seen the strongest growth in employment
over the past
25 years. Notions such as the growth
in processing flows and productivity gains are of
much less relevance in assessing progress in these sectors, which play a
major role in
developed economies. The increase in wealth, in value created or value added
or in productive
efficiency certainly seems to require mechanisms for assessing the effects or
impacts of
those activities on the proper functioning or development of the realities
they operate on,
whether they be individuals, organisations or technical or social
systems. Does the wealth
or value produced by a service that helps to maintain technical, economic or
social systems,
or even human beings, increase with the number of
"trouble-shooting" interventions or repairs
(which is the solution usually adopted by growth indicators) or, conversely,
with the ability
of that service to reduce the number and gravity of the dysfunctions? Is the wealth generating
capacity of an educational system measured by the number of hours teaching
delivered or
the number of training sessions organised, or should we adopt different
conventions for
assessing the contribution of the education system to the development of its
users'
knowledge, personalities and socialisation?
The new growth of the "new economy", we are told, is based on the
new information and
communication technologies, which constitute a new, universal technological
paradigm.
This assessment is somewhat exaggerated, but let us accept for the moment
that it is true.
Can such an economy based on information, communication and knowledge be
conceptualised
and managed in terms of growth? The
answer is obviously no: the relative "dematerialisation"
of wealth has gone hand-in-hand with the gradual disappearance of those
stable reference
units used to measure agricultural and industrial output. True, it is possible to count software
programs (or the lines of programming in each package), computers, Internet
connections or
bank transactions, but it is well known that "what counts" is
processing and problem-solving
capacity, reliability or the useful information that can be easily obtained
by means of
"intelligent" and "user-friendly" procedures. Once again, the progress of this
information
economy lies less in the growth of units produced than in the impact of these
ICTs on the
functioning of other technical and human systems. This requires the services thus obtained
to be evaluated from a development perspective that might include certain
growth indicators
but would not be reduced solely to such measures.
Financial criteria and the discourse
on progress
Thus if the main pillars of contemporary developed economies are services,
permanent
innovation, knowledge and the new information and communication technologies,
we can
reasonably suppose that it requires us to move away from the economic growth
paradigm
towards a new paradigm based on the evaluation of economic and social
development.
In other words, we need to shift away from the economics of measuring flows
and costs
towards the socio-economics of judging improvements in state, quality and
individual and
collective well-being.
Now the advocates of the "new economy", namely some in the world of
politics and the
media and a handful of economists, have not reached this point. They extol the merits of
their new model in the language of the old model, using the concepts that
enabled
economics to portray itself as a "hard" science, laying down
technical laws comparable
to the law of gravitation.
One objection can be raised here.
Observation of the management practices adopted by
firms in high-tech sectors and the financial institutions that support them
clearly shows
that these major players in the new economy have long understood that the
realities they
are managing can no longer be conceptualised with the old concepts. They have successfully
put the growth paradigm into context...
Neither Bill Gates and his kind nor the pension
funds that influence the management of an increasing number of companies need
the old
micro and macro-economic concepts to manage the performance of the firms in
their
possession. Their tools are indicators
of financial return or, to use the language of the
day, of the "creation of shareholder value". However, beyond the boundaries of their
companies and financial networks, what they need is a discourse that publicly
legitimates
their outstanding contribution to the public good. This is where the majority
of economists,
the economic media, Alan Greenspan and others play their part, making their
statements in
the name of prosperity, growth and productivity.
There are other ways of putting the growth paradigm into context than by
imputing a
monetary value to all the activities and all the products in competitive
markets or the
financial markets. In policy terms,
the first point at issue in the observable present
economy, is not the choice of strong growth rather than slow growth. Rather,
it is the
choice of a mode of thinking distinct from both the industrialist mode of
judging progress
inherited from the Fordist era (based on the
notions of growth, productivity and standard
of living) and the financial mode of calculating the shareholder value of all
activities. This
new mode would be one based on a pluralistic evaluation of social
development, of quality
of life and of the improvement in various individual and collective
states. Putting both the
growth and productivity paradigm and the financial magnitude paradigm into
context
simultaneously obviously does not mean we are depriving ourselves of economic
and
financial indicators, when relevant, as a means of quantifying increases in
product flows
and the efficiency with which those flows are produced, particularly in
activities that
produce relatively standardised goods and services. These indicators should be part
- with others - of the development evaluation paradigm, but their role should
be a
subordinate one. What does the phrase
"controlling health expenditure" mean, for
example, if not a policy based, over and above statistical observation of the
volume of
medical and paramedical actions and their costs ("accounting
control"), on assessments
of the relevance of these practices to individual and collective health
objectives under
debate? Should home help services for
the elderly be evaluated in terms of their ability
to reduce old people's dependency, to give them as much autonomy as possible
by
cooperating with their relatives and with voluntary workers to that end,
thereby reducing
the outside assistance required to the minimum? Or should they be measured on the
basis of the volume of visits, actions or hours of intervention, in
accordance with the
argument that an increase in dependency encourages growth?
To conclude on a similar note, we will mention a modest but interesting
attempt to suggest
a possible path out of this dilemma.
American researchers [3] have developed a synthetic
national indicator of "social health" in the United States by
aggregating nine existing social
indicators that it has been possible to monitor statistically since 1959: the
index of inequality
between rich and poor, average weekly earnings, infant mortality, child
poverty, the adolescent
suicide rate, the murder rate, unemployment, old age poverty and the cost of
care for the
elderly that is not reimbursed. They
then plotted the index of the growth of GDP and this
national index of "social health" on the same graph. From 1959 until the early 1970s, the
two indexes evolved in parallel with each other. In the mid-1970s, however,
they became
uncoupled from each other in spectacular fashion: GDP continued its
remarkable growth,
while the social health indicator fell sharply, particularly during the
lengthy period between
1978 and 1993. Moreover, this finding
is relatively insensitive to the weighting coefficients
used to construct the synthetic social indicator. The main value of this type of research is
not that it provides a definitive new objective measure of social progress,
even less of Gross
National Happiness, but that it feeds into debates on the development of more
precise
pluralistic evaluations based on a limited number of indicators whose
significance lies in
the fact they are the product of careful thought and discussion, rather than
being chosen
unilaterally by researchers or experts.
This, among other things, is what makes the work
of the UNDP (United Nations Development Program) on
indicators of human development
so interesting.
Notes
1 Our contemporary concepts have more
distant origins, since they date from the early days of the Industrial
Revolution, and in particular from the work of Malthus. However, it was not until the State took
control of
"industrial policy" and planning (in Europe, just after the Second
World War) that these ideas led to the
development of measuring tools, institutions and figures that could be fed
into the public debate as indicators
of progress.
2 Future Shock, New
York, Bantam Books, 1970.
3 See Marque-Luisa Miringoff and Marc
Miringoff, The Growing Gap Between Standard
economic Indicators
and the Nation's Social Health, Challenge, July 1996.
SUGGESTED CITATION:
Jean Gadrey (2002) “Is The Concept of
Economics Growth Autistic”, post-autistic
economics review : issue no. 11, January, article 3. http://www.btinternet.com/~pae_news/review/issue11.htm
_________________________
This essay's ideas are developed further in Jean Gadrey's book Nouvelle économie nouveau mythe? (2001). An
English translation, New Economy, New
Myth? will be published later this year by Routledge
Democracy and the Need for Pluralism in Economics
Peter Söderbaum (Mälardalen University, Västerås,
Sweden)
The student initiative to
challenge the dominance of the neoclassical paradigm at departments
of economics in various parts of the world is extremely important. Why is
this so? As I see
it, the close to monopoly position of neoclassical economics is not compatible
with normal
ideas about democracy. Economics is science in some sense but at the same
time ideology.
Limiting economics to the neoclassical paradigm means imposing a serious
ideological
limitation. Departments of economics become political propaganda centers not very different
from the many think tanks that we see these days in the USA and Europe.
Instead, pluralism
and paradigm-coexistence are needed for departments of economics.
Having more than one
theoretical perspective will mean that more than one ideological perspective
is represented.
Economic Man assumptions imply that human beings are
essentially consumers and wage
earners. Obviously, this is close to an ideology of consumerism
and neo-liberalism. Among
alternative ways of regarding human beings, men and women can be seen as
Political
Economic Persons, meaning that their roles as professionals, parents and
citizens are
also considered. Furthermore, Economic Man assumptions are tied
to utilitarian ethics,
which is merely one of numerous ethical theories. Our Political Economic
Person, on the
contrary, is guided by an ideological orientation that is not limited to one
specific ethics.
Rather than the usual 'monetary reductionism' of the neoclassical
perspective, economics
and efficiency can be understood in multidimensional terms. While there are
essential monetary
impacts connected with road construction, for example, it is not clear that
it is 'rational' to put
a price in monetary terms on all kinds of impacts. If the issues that we face
are complex,
then thinking in terms of profiles of monetary and non-monetary impacts may
be a better idea.
If this philosophy, and at the same time ideology, is chosen, then monetary
analysis will get
the more limited role of a partial analysis.
Cost-Benefit Analysis (CBA) with its connected
ideas about 'correct prices' for purposes of
'resource allocation' is another example of the ideological character of much
neoclassical
analysis. This approach is built on an idea of aggregation implying that it
is meaningful to
add all impacts in one-dimensional terms. It is furthermore built on a closed
ideology in the
sense that the analyst is able to point out or measure each impact correctly
in monetary
terms. In this way the analyst can arrive at recommendations about the 'best'
alternative
from a societal point of view. It is not difficult to understand that this
role for the analyst of
being expert in an extreme sense is attractive. But again, such conclusions
imply that a
specific ideology has been applied in terms of ideas about how to arrive at
correct prices
for each impact. Here again there are alternate, ideologically more open,
approaches,
such as Positional Analysis, built on ideas of keeping impacts separate and
presenting
multidimensional profiles for each alternative considered. The purpose of
analysis becomes
less one of solving a problem in a final sense and more one of illuminating
an issue in
relation to possibly relevant value or ideological orientations.
While CBA probably is something that should be
abandoned as incompatible with democracy,
other parts of neoclassical microeconomics may be more useful. In many ways
neoclassical
economics plays an important role in public debate. If students want to
understand our history
and the present situation it is good to learn some neoclassical economics at
least for
background purposes. At Mälardalen University, we
started in 1995 an undergraduate
ecological economics program, where the neoclassical and institutional
paradigms are
systematically compared already from the first course. In this way an
alternative microeconomics
is suggested in terms of views of human beings, of organizations, markets,
efficiency,
development or progress, social change processes etc. (Söderbaum
2000). Students are
confronted with traditional texts in economics and business management as
well as the
alternative microeconomics indicated. In this way students become 'free to
choose' which
is - at least in their rhetoric - also the wish of neoclassical economists.
Readers of the post-autistic economics
review may wonder how such a program could be
designed and implemented. One explanation may be that ours is a relatively
young university,
which is expected to innovate with respect to interdisciplinary programs and
where disciplinary
barriers are not so strong. Another is probably that the ecological economics
program is
connected with a department where Business Management rather than Economics
dominates
the scene. More important, hopefully, is an understanding among an increasing
number of
actors that in relation to issues of environment and development,
neoclassical economics is
today more of a problem than a solution. Interdisciplinary approaches, such
as ecological
economics, are necessary if we want to reverse trends of environmental and
social degradation
in Sweden, in Europe and at a global level.
It should be noted that the Award by the Bank of Sweden in Memory of
Alfred Nobel is part
of the problem we are discussing. This award has probably contributed to
making economics
more 'autistic' and to protecting the neoclassical paradigm. But occasionally
economists
who stand for a degree of pluralism and interdisciplinary approaches, such as
Gunnar Myrdal,
have been awarded. At a certain stage in his career, Myrdal
left neoclassical theory behind
and declared openly his sympathies for institutionalism (Myrdal
1978). In doing so, Myrdal
pointed to the role of values not only in economics but in all social
sciences and questioned
claims of 'value-neutrality' concerning theories, methods or policy
recommendations. "Values
are always with us" in scientific research, Myrdal
argues, and this holds for all steps from
problem formulation, choice of theoretical framework, methods to be applied
and the way results
are presented. Unfortunately, most neoclassical economists and even some institutionalists
persist with the belief that they can stand outside society and observe it
objectively.
I will end this essay by returning to the important role of students as
actors in influencing the
way economics and business management is taught. At Uppsala University, there
is a
Center for Environmental and Development Studies,
financed by the university but - with the
exception of examinations - controlled largely by the students. The students
by themselves
arrange courses that they find urgent. Early this year three students made a
study of the
economics programs at Uppsala University, the Agricultural University
Uppsala, two universities
in Stockholm and two programs at Mälardalen
University. In interviewing those responsible,
their starting point was the fact that the mentioned universities all had
signed the Copernicus
University Charter implying that they were committed "to the principle
and practice of
environmental protection and sustainable development". At issue was how
this commitment
is reflected in the way economics is taught. Is there any systematic attempt
to bring in
environmental issues into teaching and courses? Is there a role for interdisciplinarity and
for alternative perspectives in economics? The students found that with few
exceptions
very little had happened. In many cases, those responsible for the programs
and courses
did not even know about the Copernicus Charter and argued that since there
were no
difficulties in recruiting new students there were few incentives for change.
But the story
does not end with this. The students were financially supported by
responsible governmental
agencies and the Ministry of Education in Sweden has signalled that a
conference will be
arranged to follow up these important issues.
References
Myrdal,
G. 1978. Institutional Economics. Journal of Economic Issues, Vol.12, No.3,
pp.771-783.
Söderbaum, P. 2000. Ecological Economics: A Political Economics Approach to Environment and
Development.
Earthscan, London.
SUGGESTED CITATION:
Peter Söderbaum (2002) “Democracy
and the Need for Pluralism in Economics”, post-autistic
economics review : issue no. 11, January, article 4. http://www.btinternet.com/~pae_news/review/issue11.htm
Review of Steve Keen, Debunking Economics:
The Naked Emperor of the Social Sciences,
London: Zed Books, 2001
Geoff
Harcourt (Cambridge University, UK)
Steve Keen's Debunking Economics is a
provocative book; deliberately so is my conjecture.
The anti-Vietnam war movement in Adelaide dichotomised into either militants
or moderates.
I belonged to the second group, because I thought it the proper way for
academics to play a
public role in vital political and social issues. I also thought it would be
counter-productive to
do otherwise (no prize for guessing the respective weights attached to the
two reasons).
Steve, I'm sure, would have been a militant.
Certainly that is his approach here.
I worry that
this may backfire, for I have sympathy with his aims and many of his
arguments and judgements.
Time will tell who is right (perhaps I could say that the militants wanted
the Australian revolution
to occur first, then the troops could be brought home and conscription
abolished. The moderates
thought it better to get an ALP government elected because these two
objectives were core
items in Labor's election manifesto).
Keen's object is to go behind what is currently
taught to economics undergraduates in order
to reveal the conceptual bases of their instruction and the ideological
purposes involved. He
comes to his task with a thorough knowledge of the classics of the subject,
of Adam Smith
as well as of Karl Marx, and with considerable analytical skills of the
modern sort. He is a
graduate of the political economy movement at the University of Sydney, and
his Ph.D.
dissertation was an amalgam of the theories of Dick Goodwin and Hy Minsky, two modern
maverick greats, both alas now dead.
Goodwin was a pupil and then a colleague of Wassily
Leontief and Joseph Schumpeter at
Harvard, and a pupil of Roy Harrod and Henry Phelps
Brown at Oxford. He was much
influenced by Maynard Keynes's writings and by Richard Kahn, Joan Robinson
and Piero
Sraffa of his Cambridge, England colleagues in the
post-war period. Though he ceased to
be a member of the communist party by the 1940s he remained an informed fan
of Marx's
writings, especially of Marx's deep knowledge of how capitalism works. (Joan Robinson
used to say of Schumpeter that he was Marx with the adjectives changes.) This background,
together with his love of Wicksell's economics and
teaching physics at Harvard during
World War II, led to Goodwin's pioneering contribution of models of cyclical
growth. They
incorporated his insight that trend and cycle are indissolubly mixed, not
separable and
determined by different sets of factors, as usually happens in orthodox
economics.
Minsky also knew his Marx. He worked with Oskar
Lange as a young man. His great
contribution was to show how real and monetary factors interrelated to
produce cycles as
capitalist economies evolved through time.
While he drew on the writings of Keynes and
Michal Kalecki, his
financial instability hypothesis associated with the analysis of the
effects on firms and on the economy, of the non-realisation of the expected
cash flows
arising from investment projects, is highly original. It has proved of greater and greater
value in our understanding in recent years of the financial instabilities and
crises in the
world economy. Keen's
contribution is to put these two strands together to provide a
structure for illuminating the malfunctionings of
modern interrelated capitalist economies.
He does this in a way which not only draws on the insights of our past
masters but also
employs the most modern of analytical techniques.
With such a background it is easy to
understand his horror at the contents of modern
textbooks. Increasingly they model the
capitalist world as though it were conforming to the
dictates of Frank Ramsey's benevolent dictator, choosing optimum paths of
accumulation
over time for all its citizens.
Keynes's long run in which "we are all dead" (well, he's
dead
and we are in the long run, as an IMF wit recently
put it) has returned to dominate our
supposed understanding of what is happening.
Short-term instabilities are viewed as mere
aberrations, fluctuations around this long-period optimum trajectory.
Against this macroeconomic background, modern microeconomics has a bias
towards
examining the behaviour of competitive markets (as set out most fully and
rigorously in the
Arrow-Debreu model of general equilibrium), not as
reference points but as approximations
to what is actually going on. Of
course, departures from them are taught, increasingly by
the clever application of game theory.
Moreover, the deficiencies of
real markets of all
sorts are examined in the light of the implications, for example, of the
findings of the
asymmetric information theorists (three of whom - George Akerlof,
Michael Spence, and
Joe Stiglitz - have just (10/10/01) been awarded
this year's Nobel Prize. From Amartya
Sen on, the Nobel Prize electors seem to be back on
track).
While professional economists increasingly get to know of these and other
developments,
often through the pages of the excellent Journal of Economic Perspectives,
the most used
undergraduate textbooks are usually light years away from such
enlightenment. Moreover,
alternative approaches in our subject, economic history and the history of
economic thought
are either being marginalized in, or driven out altogether from most
undergraduate courses.
Keen's book is directed against these trends. He examines what is taught in macroeconomic
and microeconomic courses and what their deficiencies and shortcomings
are. And he
suggest alternatives, some of which come out of the many influences on him
and his own
contributions.
As I said, I understand his impatience and anger and I applaud his aims. I just worry that
the tone of the book and, sometimes, his assertions may allow critics to
sidetrack the
arguments along byways which may seem plausible but ultimately miss the point
- to the
detriment of the training of future generations in what Keynes memorably
called "our
miserable subject".
Nevertheless, if I were given a free hand to design a course, I would urge my
pupils to read
both Keen's book and Hugh Stretton's
marvellous alternative text (Economics: A New
Introduction, published by Pluto in 1999) as well as the best of the
mainstream texts now
available. (I would also urge them to
read some of the great originals too!)
Only then would
I feel they had been introduced to the appropriate material with which to
make up their own
minds what approach(es) to take in their
studies. As it is, without the
insights of a Keen
and a Stretton (and of the past greats), I fear we
are likely to produce well trained but
uncritical cogs, the better to fit the needs of our modern industrialised
societies. It is not
the proper role of university teachers either to be hired prize fighters or
produce them.
SUGGESTED CITATION:
Geoff Harcourt(2002) “Review of
Steve Keen, Debunking Economics: The
Naked Emperor of the
Social Sciences", post-autistic
economics review : issue no. 11, January, article 5. http://www.btinternet.com/~pae_news/review/issue11.htm
__________________
This review originally appeared in the Financial Review
______________________________________________________________________________________________
EDITOR: Edward Fullbrook
CORRESPONDENTS: Argentina: Iserino;
Australia: Joseph Halevi, Steve Keen:
Brazil: Wagner Leal Arienti;
France: Gilles Raveaud, Olivier Vaury;
J. Walter Plinge; Germany; Helge Peukert; Japan:
Susumu Takenaga;
Spain: Jorge Fabra; United
Kingdom: Nitasha Kaul;
Michael Murphy; United States: Benjamin Balak,
Daniel Lien, Paul Surlis: At large: Paddy
Quick
_______________________________________________________________________________________________
Proposals and suggestions for articles should be sent
to the editor at pae_news@btinternet.com
__________________________________________________________________________________
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