Steve Keen, "Economists Have No Ears"

Post-Autistic Economics Network

www.paecon.net

from post-autistic economics newsletter : issue no. 7, July, 2001

Economists Have No Ears
Steve Keen (University of Western Sydney, Australia)

Thomas Kuhn once famously described textbooks as the vehicle by which students learn
how to do 'normal science' in an academic discipline. Economic textbooks clearly fulfil
this function, but the pity is that what passes for 'normal' in economics barely deserves
the appellation 'science'.

Most introductory economics textbooks present a sanitised, uncritical rendition of
conventional economic theory, and the courses in which these textbooks are used do
little to counter this mendacious presentation. Students might learn, for example, that
'externalities' reduce the efficiency of the market mechanism. However, they will not learn
that the 'proof' that markets are efficient is itself flawed.

Since this textbook rendition of economics is also profoundly boring, the majority of those
exposed to introductory course in economics do no more than this, and instead go on to
careers in accountancy, finance or management - in which, nonetheless, many continue to
harbour the simplistic notions they were taught many years earlier.

The minority which continues on to further academic training is taught the complicated
techniques of economic analysis, with little to no discussion of whether these techniques
are actually intellectually valid. The enormous critical literature is simply left out of
advanced courses, while glaring logical shortcomings are glossed over with specious
assumptions. However, most students accept these assumptions because their training
leaves them both insufficiently literate and insufficiently numerate.

Most modern-day economics students are insufficiently literate because economic
education eschews the study of the history of economic thought. Even a passing
acquaintance with this literature exposes the reader to critical perspectives on
conventional economic theory - but students today receive no such exposure.

They are insufficiently numerate because the material which establishes the intellectual
weaknesses of economics is complex. Understanding this literature in its raw form
requires an appreciation of some quite difficult areas of mathematics-concepts which
require up to two years of undergraduate mathematical training to understand.

Curiously, though economists like to intimidate other social scientists with the
mathematical rigour of their discipline, most economists do not have this level of
mathematical education. Though economics students do attend numerous courses on
mathematics, these are normally given by other economists. The argument for this
approach - the partially sighted leading the partially sighted - is that generalist mathematics
courses don't teach the concepts needed to understand mathematical economics (or the
economic version of statistics, known as econometrics). As any student of econometrics
knows, this is quite often true. However, it has the side effect that economics has
persevered with mathematical methods which professional mathematicians have long ago
transcended. This dated version of mathematics shields students from new developments
in mathematics that, incidentally, undermine much of neoclassical economic theory.

One example of this is the way economists have reacted to 'chaos theory'. Most
economists think that chaos theory has had little or no impact-which is generally true in
economics, but not at all true in most other sciences. This is partially because, to
understand chaos theory, you have to understand an area of mathematics known as
'ordinary differential equations'. Yet this topic is taught in very few courses on

mathematical economics - and where it is taught, it is not covered in sufficient depth.
Students may learn some of the basic techniques for handling linear difference or
differential equations, but chaos and complexity only begin to manifest themselves in
non-linear difference and differential equations'. A student in a conventional 'quantitative
methods in economics' subject will thus acquire the prejudices that 'dynamics is
uninteresting', which is largely true of the behaviour of linear dynamical systems, but not
at all true of non-linear systems. This prejudice then isolates the student from much of
what is new and interesting in mathematical theory and practice, let alone from what
scientists in other sciences are doing.

Economics students therefore graduate from Masters and PhD programs with an
effectively vacuous understanding of economics, no appreciation of the intellectual history
of their discipline, and an approach to mathematics which hobbles both their critical
understanding of economics, and their ability to appreciate the latest advances in
mathematics and other sciences.

A minority of these ill-informed students themselves go on to be academic economists,
and then repeat the process. Ignorance is perpetuated.

The attempt to conduct a critical dialogue within the profession of academic economics
has therefore failed, not because economics has no flaws, but because - figuratively
speaking - conventional economists have no ears. So then, 'No More Mr Nice Guy'.
If economists can't be trusted to follow the Queensberry Rules of intellectual debate,
then we critics have to step out of the boxing ring and into the streets. Hence my book
'Debunking Economics', which describes the many formal academic critiques of
neoclassical economics in a manner which - I hope - is accessible to a the interested
non-economist and non-mathematical readership. But it should also prove very useful to
those who have come to regard conventional economic theory as autistic, since it clearly
and simply explains the source of this endemic autism.
s.keen@uws.edu.au

SUGGESTED CITATION:

Steve Keen (2001) “Economists Have No Ears”, post-autistic economics newsletter : issue no. 7, July, article 4. http://www.btinternet.com/~pae_news/review/issue7.htm