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Post-Autistic Economics Network |
from post-autistic economics newsletter :
issue no. 4, January, 2001 A contribution on the state of economics in France and
the world Professor
Robert Solow, a distinguished and notably
non-autistic economist, has recently entered the debate in the pages of Le Monde on
the questions of economic teaching raised originally, and now placed before
the world community, by the French students.
Permit me to underline the important points that Professor Solow acknowledges, while at the same offering a few
points of difference where, in my view, the French students have made a
stronger case than Professor Solow is willing to
concede. Professor
Solow states outright the fundamental issue: “L’économie est une discipline appliquée.... S’il est vrai, comme
le prétendent les étudiants,
que la composante empirique de l’économie est pratiquement inexistante dans leurs enseignements, alors leurs professeurs
ne font pas correctement leur travail. Si l’on enseigne
l’économie aux étudiants français comme s’il s’agissait d’une discipline abstraite, axiomatique, ou comme si elle
consistait en l’application
répétitive d’une seule technique d’analyse élaborée, alors ils ont raison de protester.” This, it
seems to me, summarizes the complaint of the French students exactly. Of course, Professor Solow
is careful not to comment as an authority on economic teaching in France as
it actually is. That would be a subject of which neither he nor I have
personal knowledge. But who is in a position to know, other than the students
-- and their professors? An impartial
investigator must therefore turn to the evidence coming from these sources. This
evidence is straightforward. We have,
first, the testimony of the students.
To quote the English translation of one of their documents: “...we
are disturbed by the continuous construction of imaginary worlds: that is,
the intellectual constructs (the famous models) whose relevance remains to be
demonstrated. We have also questioned the manifest lack of pluralism... What
we ask for is simple: to have the theoretical and empirical tools which will
permit us to understand the world in which we live. Do economics classes discuss business, the
state, or even the market? No. Do
they teach us the operation of the French economy; of Europe; of Japan?
No. Do the classes offered enable
understanding of the recent Asian crises, of the fluctuations of the Euro....
No.” To an
American economist teaching courses on inequality, development and financial
crises at a research university – and having just returned from national
professional meetings at New Orleans where a great part of the agenda was
taken up by discussions of financial instability, trade conflict, and the mis-government of globalization – these assertions are
extraordinary. I would go so far as to find them mildly shocking. Are they contradicted by any opposing body
of students, or by any documentation showing that such issues do, in fact,
form part of economics teaching in France?
To my knowledge, they have not been.
So, are
they contradicted by the professors, whose work they so deeply indict? First, it is worth noting that while the
students are united, the French professors are divided. Some support the
students. Others do not. The latter
group admits to this fact, in its counter-appeal lately published in Le Monde: “Un
certain nombre de professeurs
et d'étudiants en économie
ont signé et diffusé un appel demandant une refonte de l'enseignement de l'économie, estimant que celui‑ci repose trop sur la formalisation mathématique.
Cet appel a le mérite de soulever un authentique problème, celui de la démarche scientifique en économie. Il l'aborde toutefois de façon réductrice, en contestant
l'usage (instrumental) des mathématiques
et se conclut par une attaque partisane à l'encontre de l'un des corpus centraux de notre discipline, à savoir les théories dites " néoclassiques ". The
responding professors thus raise two issues, the first being the role of
mathematics in economic instruction, and the second being an allegation that
the students have launched “une attaque
partisane” against the central theories of modern
scientific economics. Professor
Solow himself has rightly dismissed the first
issue: “Plaider pour ou contre l’usage des mathématiques n’est pas
pertinent, comme l’admettent
les étudiants dans leur pétition.” The students have not raised an objection
to the use of mathematics in economics, and it is beside the point to rebut
their complaint on this ground. It is
therefore the second issue – the question of whether the French students may
have improperly objected to the core propositions and methods of a scientific
economics, that is pertinent, and here Professor Solow
expresses his reservations about the movement. And it is this issue that is, indeed, the
interesting one, the issue that tends also to preoccupy professional
economists who concern themselves in a serious way with methodological
questions. To begin
with, Professor Solow points out, rightly and
importantly, that applied economics properly consists of a series of
particular models, drawn from a variety of intellectual and scientific
traditions, which help to structure thinking about empirical issues. Thus, for
example: Does the distribution of changes in asset prices or exchange rates
follow a normal curve, or one with fatter tails and hence a higher risk of
catastrophic deviations? Is the market
for low wage labor characterized by monopsony power (so that increasing minimum wages may
raise rather than reduce employment)? Can free international capital
movements be justified when information is not equally available to all sides
of the resulting transactions? Does
economic inequality tend to fall, or rise, with economic growth? Does
unemployment rise when inequality falls, and vice versa (the conventional
position), or do more equal societies have fuller employment, as a rule, than
less equal societies (my position)?
These are issues all of which can be, and are, contestable using tools
that ought to be part of the research training of economists everywhere. Professor
Solow notes that the French students do not make
clear that they understand just how much of the terrain of so-called
“neoclassical” economics is under such contest these days. But how could they make such a thing clear,
if it is not part of their training? And that
brings us to the question, what on earth are the professors teaching? Nowhere
in the counter-appeal is there the simple acknowledgment that these and
similar issues are, in fact, among the most hotly and openly contested
questions in economics today. Indeed, the professors do not acknowledge that
any issues are contested! Instead, they resort to a characterization of their
discipline that is completely at odds with the pragmatic and practical
approach described by Professor Solow. Here is how they describe their role: l'identification
et la définition précise
des concepts et des comportements qui caractérisent l'activité économique (consommation,
production, investissement...) et l'énoncé des hypothèses de base
relatives à ces comportements ; ‑ la formulation de théories ayant comme mode d'expression la
formalisation de liens fonctionnels entre les éléments précédemment identifiés ; ‑
la vérification de ces théories par l'expérience. Jusqu'à preuve du contraire, en économie cette expérience ne peut être
constituée que par la
confrontation à l'histoire
quantifiée par la statistique
et l'économétrie. In other
words, the counter-appeal professors appear oblivious to the high controversy
on most important issues of theory, fact and policy into which even
neoclassical economics has descended in recent years. They seem unaware of
the heterogeneity of models and methods breaking out everywhere in economic
research. Truly, if this is a correct perception, then in Professor Solow’s words, “ils ne font pas correctement leur travail.”[i] But what
about the question of alternative theoretical approaches? Is there anything missing even from the
hotly contested domains of modern mainstream economics? I believe there is, and would point to
three large areas that have nearly disappeared from the teaching of economics
even where that activity is otherwise competently carried out, at very
considerable intellectual and social cost. The first
is the history of economics itself.
The intellectual roots of our subject – going back in Anglo-American
tradition to Smith, Ricardo, Malthus, Marx, Mill, Veblen (not Swedish as Le Monde has erroneously reported in
passing, but American), Keynes and Galbraith père, not to mention such great
French figures as Quesnay, Say, Walras...
is sorely neglected, and so is the study of the historical relationship
between economics and other disciplines, notably physics and the theory of
evolution, as well as the modern philosophy of science (a vastly more
interesting topic than the crude description of method in the French
professors’ statement would make it appear).
As a matter of intellectual formation, a great deal of potential
creativity is lost when students do not have the origins of their own subject
available to them as an object of study. Second,
there is a tradition of macroeconomic and monetary economics that has largely
been submerged by the neoclassical emphasis on market transactions between
firms and households. A proper
understanding of monetary policy, fiscal accounting, effective demand, debt
relations, the operation of banks and credit institutions, the instability of
financial flows and similar subjects forms the core of a Keynesian and Post
Keynesian tradition. To be sure, this tradition has not entirely disappeared from economics on the American side of the
Atlantic. But it deserves a much more prominent and more stable place in the
curriculum than it receives. Here
truly a question of pluralism is raised.
For instance, one can view mass unemployment as a phenomenon of
“imperfect labor markets” (the neoclassical
framework) requiring real wage reductions as the principal solution. Or, one can view mass unemployment as
mainly a phenomenon of inadequate effective demand (the Keynesian theoretical
position), requiring mechanisms to support the incomes of those who are not
adequately paid in private markets.
Both views are capable of rigorous formulation. But both cannot be
correct. The notion that mainstream
economics has somehow demonstrated, as opposed to having merely asserted, the
triumph of the neoclassical over the Keynesian view is quite wrong. Third, I
would argue from my experience as a teacher of research methods that the
French students are correct in emphasizing the need for instruction in
differing institutional contexts, political, national and international
structures, policy histories, and also methods for collecting economic data
and for evaluating the quality of information contained in economic data
sets. There are vital differences, for
instance, between the United States Federal Reserve and the European Central Bank,
as regards mission, legal charter, accountability and oversight.
Understanding these differences would form an important part of the backdrop
of a comparative analytical study of the conduct of monetary policy in the
two regions. A textbook caricature of
a central bank – which is what one is led to suspect may be what economics
students in France are exposed to – will not provide a sufficient basis for
constructing such a study. One can
multiply examples of this general kind – I might mention my own research into
the measurement of inequalities in the global economy -- but the point would
remain the same. A scientific
economics, as Professor Solow states with my
emphatic agreement, must be a diverse, pragmatic, applied enterprise with an
open discussion of controversial questions.
I go beyond Professor Solow mainly in
emphasizing that the core arrangement of theoretical propositions in
economics also remains among the questions worthy of debate and therefore of
inclusion in the curriculum of economics, since a theoretical framework
cannot be debated unless it is first properly taught. The pretense that
a single axiomatic framework can be, or has been, built up for all time from
first principles and verified by observation – the stated contention of the
counter-appeal – merely reveals how far removed from the reality of our
profession that statement is. It also
constitutes the best evidence that the French students are correct in their
appeal for fundamental reform. [1] One might add
that the remainder of the counter-appeal includes an effort to besmirch the
motives of the professors and students involved in the protest. This section,
with its reference to “conspiracy theory,” unsupported by evidence, does not
inspire confidence in the scientific disposition of those who signed the
counter-appeal. James K.
Galbraith (2001) “A contribution on the state of economics in France and the
world”, post-autistic economics newsletter : issue no. 4, January,
article 1. http://www.btinternet.com/~pae_news/review/issue4.htm James K. Galbraith |