Saturday, 24 July 2010

The Economics last some fresh thinking on economics

John Barry: Have just received a review copy of The Economics Anti-Textbook: A Critical Thinker's Guide to Micro-economics by Rod Hill and Tony Myatt From a quick review it should be on all undergraduate economics courses in the spirit of pluralism in economic thinking. Some lovely quotes "The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists" (Joan Robinson) and "Will raising the incomes of all increase the happiness of all? The answer to this question can now be given with somewhat greater assurance than twenty years ago...It is 'no'" (Richard Easterlin).

It also includes a series of thought-provoking 'questions for your professor' throughout; such as "Why does the textbook suppose that democracy must end at the workplace door? In whose interest is it that economic democracy remain off the agenda?' and "The competitive labour markey model predicts that if a firm reduces its wage by one cent below the equilibrium its entire workforce will quit. Why don't we test this prediction?"

The book also includes a postscript on the global financial meltdown which as they put it "illustrates the importance of imperfect and assymmetrical information, externalities, limited rationality and inappropriate incentives. In particular, it illustrates the necessity of appropriate government regulation, and the ability of powerful business interests to change the rules of the game" .

Wish I had had this textbook when I was an ungraduate!


David Locke said...

That textbook won't stop economics from being a religion, rather than a science. As preached these days, economics is a failure leading to the decline of the world.

It doesn't matter what a book says. What matters is results.

Apparently, the only reason economics is taught is so managers have a handy excuse, so they don't have to own up to their responsibilities and their failures.

What is a world without jobs? A graveyard.

Rory O'Farrell said...

@ David Locke

Have you read the book? If anything I felt it showed that economics, and neo-classical economics in particular is NOT a religion. There is much debate within the profession, but not much of the debate gets into the mainstream text-books. The book is not anti-economics or anti-neoclassical economics but simply anti-mainstream text books, and is very interesting.

Here is a link so you can browse part of it.

I meant to put something up here on the book but I've been busy and am only 1/3 of the way through. So far I think it is excellent, and anyone wanting to do research in economics would benefit greatly from reading it. It shows how much we don't know. At the very least every lecturer should hand out the introduction to their classes.

John Barry said...

David, of course you're right, 'one progressive economics textbook does not a revolution in economics make' etc. But the point is that the book, and related efforts such as the 'Toxic Textbooks' campaign, the Heterodox economics movement, are vitally important in challenging the indoctrination of hundreds of thousands of undergraduate university students every year, fed on a diet of neo-classical economics - no history of economics, no discussion of 'politicl economy', power, how the real economy works, and above all very little pluralism and devate, and thus presenting neo-classical economics as 'the truth'.

Its not so much that one can (or ought to) criticise neo-classical economics as a 'religion' (and the book does not attempt to do this)but that economics is not value-free, objective and neutral, but deeply political, value-laden and as ideological as any other ideological view.

The value of such textbooks is that is helps open out a debate in what the economy is, how we should understand it, what should be the objectives of economic policy etc etc. Why on earth should we think that in teaching politics we should encourage students to examine a variety of views, yet not have the same pluralism and debate extended to the economy?

Michael Burke said...

Current orthodox economics contains a series of assumptions, many of which are tendentious, others completely false.

To take one key example: Economics 1.01 is that the balance of supply & demand is revealed through price, or that 'prices will adjust to clear the market'.

But,as the Salomons Bros. graduate intake were shown, their earnings potential (price of their labour) was not as great as the Rolling Stones because there were too few applicants (see Liar's Poker). On the contrary, they were inundated with applicants.

Instead, supply and demand curves are actually extremely useful in determinining revenue optimisation for the producer- but they do not reveal universal truths about prices. There are innumerable goods where demand is inelastic, demand does not fall when prices rise, so some other framework is required to explain prices in general.

The paper below argues simply for a more pluralist approach in the teaching and study of economics.