Rethinking Economics is a group campaigning for a pluralist
approach to economics. They have put together a book which contains a
collection of short essays introducing various schools of thought that you
generally won’t hear about in a typical economics class. As I indoctrinate
lecture students in mainstream economics, and have followed the progress of the
RE group, I thought it was worth a read.
If you attend a lecture in economics at university, the
chances are you will most likely be learning a neoclassical approach to
economics. One of the first things I noticed when reading each chapter was how
many schools of thought define themselves in contrast to neoclassical economics.
As there is no chapter on neoclassical economics, I think this book is perhaps
designed for someone who has already taken an introductory class. I think
future editions would benefit from a chapter at the start of the book for
individuals who are completely new to the subject as well as defining a few key
things such as inflation, growth etc.
One of the arguments mainstream economics roll out against
calls for pluralism is that you need to learn the basics first: by that they
mean simple neoclassical models. If you are going to define heterodox schools
of thought against the mainstream, then this kind of reinforces the
mainstream’s point. Personally, I did find it helpful when the schools
clarified their position against the mainstream.
A common theme throughout the chapters was that the main
divergence from the mainstream tended to take the form of rejecting the use of
mathematics. There a pros and cons in using mathematics to model economics which
I won’t get into here. Mathematics, however, is undoubtedly a barrier to entry
for the study of economics and I do often wonder how best to approach this. For
example, if you were only taking one course in Econ101 what would you want
students to take away? With so many Econ101ism’s that economists spend time trying
to debunk (e.g. the labour market is not a simple supply and demand diagram!)
this is undoubtedly a problem. It may actually be a good exercise for RE to set
out how they would design an Econ101 course as it is extremely difficult in
terms of what should go in. One initial problem for a more pluralist approach is
the more schools of thought you put in, the less you will be able to deal with
them in detail.
One major issue I had throughout the book was a lack of empirical
evidence to back up arguments (other than the well-written Feminist economics
chapter). I am not sure if this is a
feature of these schools of thought but given that one of the desires of RE is
for “real world” application I found this somewhat lacking.
What I was perhaps most surprised with was how much of an
overlap with what I think is known to most academic economists. For example,
the institutional economic section cites Daron Acemoglu, the complexity
economics chapter gives a detailed treatment of the work of Noble prize winning
Robert Sheller, and there is a chapter on behavioural economics. Their
approaches are certainly not neoclassical, and perhaps I have a more inclusive
view of the mainstream consists of, but perhaps the heterodoxy is not so
different after all?
This brings to me to my main concern about “schools of
thought”: they become isolated and reclusive. For example, some Post-Keynesians
are annoyed that a lot of what they have been saying to do with finance and
animal spirits are now in vogue within the mainstream. But if you totally
reject the methodology of the mainstream, and define yourself by being outside the
mainstream, organise conferences around your school of thought, you eventually
end up talking to yourselves. At the same time the mainstream needs to become
more of a broad church and accepting of other approaches (which I think it is
doing). There is undoubtedly a trade-off here in terms of innovation through
competing schools of thought and lack of effective communication/reinventing
the wheel.
So what can a mainstream economist like me learn from this
book (and RE in general) that even sceptics of pluralism can agree on? Firstly,
students need the opportunity to be critical of the models we teach, and
assumptions behind them, whether this is in the form of essays or discussion in
class. Secondly, always give real world examples and data
supporting/contradicting models. Thirdly, try and show where these simple
models can go in the future (e.g. behavioural, complexity). Finally, you may
not agree with everything that students in RE are asking for, but a lot of the
students who attend these meetings are really interested in economics and should
be encouraged.
For economic students all I ask is to be critical of
everything: the mainstream, the heterodoxy, and even pluralism!
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