A couple of months ago, seemingly every book review section in every newspaper or magazine carried a review of “How To Talk About Books You Haven’t Read” (here’s an example). How is a literary critic supposed to resist reviewing a title like that?
I have here a book called “A Guide To What’s Wrong With Economics“; how am I supposed to resist looking at a book like that? More to the point, I haven’t actually read it properly yet, but just by browsing I know what it’ll say, because it’s actually a (very thorough) critique of that thing called “neoclassical economics“, which is familiar but important stuff, even if my guide would be a bit different. Economists who write these kind of books are, by the way, called “heterodox economists”, though perhaps not by themselves.
There are lots of promising chapter titles, anyway: “The Pitfalls of Mainstream Economic Reasoning (and Teaching)”, “Five Pieces of Advice for Students Studying Microeconomics”… there’s a whole section called “Micro Nonsense”! I feel compelled to share this brilliant quotation:
“Because there is no direct access to the ‘real’ world, an economist is forced to see that world through the lenses of theory.”
Either I’m living in a complicated dream, or we do actually have access to the real world… I see what the author (Charles Wilber, in the chapter “Teaching Economics as if Ethics Mattered”) is getting at, though. It’s a theme that keeps cropping up throughout the book, one that seems to be raised again and again, something like “there is not enough diversity in economics teaching and practice”. I think Wilber might be saying that the economist is forced to see the world through the lenses of a particular theory that he, and the heterodox economists, dislike.
Superficially, I agree, if by that we mean that too often differences of opinion are suppressed in the profession, when in fact positive economics is logically incapable of doing so. However, the criticisms being raised again and again in the book are that “neoclassical economics” is taught as a loaded dogma, which is terrible, but not the same thing. The method of economics, whatever you think of it, can accommodate anything, any theory. Not just that, but exactly the same “anything” could happily be accommodated in any other method.
Would the authors be happy if we taught our methods on a blank slate, or would they demand that their own particular views were put on the academic pedestal? This must not degenerate into an arms race: the method is the language, not the meaning. I am suspicious that the “heterodox” economists want to change the language only to change the meaning. Please: there is no substance in a method, a language.
Actual theories are invoked incessantly, through all chapters: the usual suspects, like perfect competition, “rationality”, equilibrium… what’s “wrong” with economics, according to these essays, is that these theories are presented as “true”. Now, of course, a proved theory cannot be false under its own conditions; by “true” we really mean “does not conform to the real world, either in assumption or prediction”. That’s something I can buy into, and that is, perhaps, the valid, practical version of the criticism.
It’s twofold: first, using methods to promote a single normative angle is certainly possible, but doesn’t show what the method can do, and in any case is probably bad teaching. Second, it might indeed be nice to bring some more reality into introductory economics courses, not just “applications”. There are certainly valid reasons to construct abstractions, but it might keep people on board if we devote at least some time to economics that conforms to reality – it’s odd that when a student progresses through an economics sequence, the economics she sees often gets less unreal as it gets more esoteric, if that makes sense. We don’t need boring tables of numbers, just show the flexibility of the economic method to deal with the real.
What bothers me about this so-called “heterodox economics” is that it’s attacking the wrong thing. They are not questioning the teaching and practice of economics by digging as far as it’s possible to dig to find the true foundations of what we do, absent any superficial details. Whether it’s right or wrong to try that, it’s fundamentally different to the heterodox method. See the wood for the trees: you don’t have to convince anyone – student, economist, layperson – that economic theory is usually unrealistic. Deep down, though, we’re all playing for the same team, and if we could just figure out what our team was doing, we could have a real competition.