Economists often claim that they are the only genuine social scientists. Not everybody buys this line.
Instead, skeptics argue that the economics that dominates the teaching of undergraduates and graduate students is only a single school of economic thought – generally, described as mainstream economics or neo-classical.
Today, such economic heretics are being joined by Nobel Prize winners, such as Milton Friedman, Douglass North, Ronald Coarse, Joseph Stiglitz and Robert Solow, who are on record with statements like
- “Economics has become increasingly an arcane branch of mathematics, rather than dealing with real economic problems.”
- “It is a peculiar fact that economics . . . contains so little discussion of the central institution that underlies neo-classical economics—the market.”
- “Economics as taught . . . bears testimony to a triumph of ideology over science.”
- “Existing economics is a theoretical system which floats in the air and which bears little relation to what happens in the real world.”
Three timely published works raise big questions about the scientific and political status of traditional Econ 101.
Editor Edward Fullbrook’s wide-ranging book of reform-minded articles, Real World Economics: A Post-Autistic Economics Reader (2007), has two overarching messages:
1) economics should be dealing more with real economic problems and more of its analysis should be intelligible to the public, and 2) economics in reality is a pluralist field—Austrian Economics, New Institutional Economics, Old Institutional Economics, Marxist Economic Thought, Post-Keynesian Economics, et cetera have lots of devotes. (In addition, there are the closely related fields, such as Economic Geography, Regional Studies, and Economic Sociology.)
This is inevitable. Every theory and analysis uses models that simplify reality and at best are a partial view of the economy. These points of view should be included in economics instruction. Economic history, moreover, should be a bigger element in the curriculum. And the history of economics should be presented with more context surrounding past debates and describe “roads not taken” by current conventional economics.
The Fullbrook volume treats dozens of important topics, ranging from ethics and assumptions in economics to the importance of institutions and history; from methods to ideologies.
The next book travels to the past and then speculates about the future of economics by exploring the road not taken by neo-classical economics. Erik Reinert, an economist and former business consultant, has authored a book, How Rich Countries Got Rich, Why Poor Countries Stay Poor (2007). It digs deep in both economic history and the history of economic thought to distill and describe an alternative “canon” of economics. His clever detective work illuminates a more institution-focused, more historical, more pro-government school of economics, beginning in many respects with the Renaissance in Italy, a time of intellectual creativity and economic development in places like Venice. And in the 20th century, followers of this view included: Veblen, Commons, Galbraith, Weber, Sweezy, Boulding, Schumpeter, Myrdal and many others.
The author does a good job of presenting this historical background, then applying this tradition of political economics to today’s economic problems, such as fostering growth in poor nations.
He argues that rich countries, furthermore, were built in the beginning by the state and protectionism. And only when they were on their feet did free trade make sense. He also objects to the one-size-fits-all framework of neo-liberalism being applied to all developing countries. 1 It’s all too much like the Greek myth about Procrustes. 2
Reinert also includes a number of good diagrams for comparing the mainstream canon and the lost one.
This message of letting different flowers bloom comes out clearly in an objective and rich treatment of the history of economics—An Outline of the History of Economic Thought (Second edition, 2005). Economists Ernesto Screpanti and Stefano Zamagni are not “gunning for economics,” they just want to tell a more holistic story than is typical. Theories and research are presented historically and not as established truths. Their conclusion is that, despite impressions to the contrary, economics may be on the verge of a Post-Smithian Revolution, which will be strongly brought about continued globalization, the spread of post-modernism ideas about theory, changing philosophies of science, incisive critiques of neo-classical economics, refinements in the theoretical and research of alternative schools of economics, and ecological challenges to customary economic policies and practices.
They believe that the traditional paradigm will be cut down to size by an emerging and evolving pluralism in economic thought. Neo-classical economics would no longer have hegemony in the field and would constitute more of a tool for addressing certain issues.
1 “Neo-liberalism” is a term coined by European critics of free trade that refers to a very conservative policy agenda that poor countries must agree to if they are to receive crisis funds provided by the International Monetary Fund. It is now more broadly used as a referent to libertarian and/or conservative economics, espoused by President Reagan, Prime Minister Thatcher, and others.
2 Procrustes was a “host,” who kept a house by the side of major “road where he offered hospitality to passing strangers, who were invited in for a pleasant meal and a night’s rest in a very special bed. Procrustes described it as having the unique property that its length exactly matched whomsoever lay down on it. What Procrustes did not volunteer was the method by which ‘one-size-fits-all’ was achieved, namely as soon as the guest lay down Procrustes went to work upon him, stretching him on the rack if he was too short for the bed and chopping off his legs if he was too long. Theseus turned the tables on Procrustes, fatally adjusting him to fit his own bed.”