Motivations for Pluralism: Politics and Values in Economics

Friday, 4 April 2014

 Bog Ref Link http://www.p2pfoundation.net/Transfinancial_Economics


 

This document openly and explicitly states the motivations that bring together the RE organisers and RE groups, and address the underlying question of why we chose the aims that we have, and the direction for economic curriculum reform we have. We address the pertinent question: how political is our organising?

1. We are not a politically aligned network, but we hold political, philosophical and ethical values at the core of our organising. By this, we mean that we share a broad vision of what is good for academia and society. Namely:
2. We believe that the ability to effectively participate in democratic processes is vital for all citizens.
3. Because of this, we want to demystify economics in the public eye and bring it closer to mass critique.  We believe that the current state of economic policy debate, in which citizens are liable to over-deference to experts and reliant on often badly argued “expert” opinion, is a bad one.
   
4. We believe that a fully functioning democracy requires rich and imaginative debate at the level of economic concepts.
5. Because of this, we want to enrich both public debate around economics, and the academic economics that feeds it. Right now both policy and academic debates have become mono-cultural and stale.
   
6. We believe that the current neoclassical economics taught in most departments is not politically neutral, and thus it is important to introduce pluralism in economics. Nor did the classical economists see themselves as practising a politically neutral discipline.

7. We believe that pluralism and open-mindedness to other disciplines is a value that would improve the culture, methodology, and practice of economic research and teaching. We do not collectively advocate for any single economic theory or policy to dominate others; we want to introduce substantial debate back into economics.

Appendix

I: What we mean by “value-neutrality” in the social sciences

By “value-neutrality”, we mean neutral or silent on issues of: what kinds of changes are good for society; what one ought to value (ethical, normative or positive values); what kind of society is a good one; what is the good life; what is the essential nature of being human, that reaches beyond particular configurations of society.

Although every model is, by necessity, an abstraction from the full complexity of society, the abstractions that are made in neoclassical economics impose particular emphases that have values explicitly or implicitly embedded in them. The questions that any school of social science chooses to pose as its most fundamental questions reveal 1) what is considered as “important” or “relevant” for the discipline, and 2) a pre-made conception of what society is and how one ought to study it, prior to actual research. Therefore we cannot pretend that neoclassical economics is simply a value-neutral science, and instead we ought to discuss and debate what kinds of values it embeds, in contrast to other ways of studying society, and in contrast to other schools of economics.

II: Examples of posits of neoclassical economics that are not value-neutral

In the below section, we give examples of concepts, theories and assumptions that are predominant in neoclassical economics. Not all of them are included in every model, but we seek to give a wide range of examples. This does not mean we support the teaching of the opposites of these examples, but that we believe it is problematic to teach one side in isolation.

a) Normative concepts (concepts that explicitly suggest what is better or worse for people or for society)

1. Pareto optimality: the major criterion of what it means for a situation to be good, or in economic terms, “efficient”; status-quo biased, blind to distributional issues such as inequality
2. Kaldor-Hicks efficiency: possibly the second most popular criterion of efficiency after Pareto optimality; assumes that everyone has the same marginal utility of money
3. Utility and welfare: both these terms are heavily structured economic concepts, with heavily ethical connotations in both their naming and their use
4. Utility is derived from personal preference-satisfaction: this is implicitly politically libertarian, as it assumes individuals always know what is best to maximise their own utility, or equivalently, that a person’s preferences are the most important to satisfy
5. Consumers’ and producers’ surplus: used in microeconomic analysis of gains from trade, prone to same problems as Kaldor-Hicks efficiency
6. Discount rates: the use of exponential discounting under-estimates long-term costs such as environmental risks  

b) “Thick” descriptive concepts (concepts that are descriptions of human nature, but which imply ethical attitudes as to what is important or what is good)

1. Agents arrive at the market with preferences ready-formed: this assumption means that economists have not ventured into the questions of where preferences arise and how preferences themselves might be shaped by the structure of the economy or society
2. Utility in macroeconomic models is determined solely by consumption: implies consumerism and materialism: people have no preferences over relational aspects of production, or even over whether they are employed or not (other than through its effects on their being able to afford more stuff)
3. Representative agent modelling is utilitarian: the “social planner” in DSGE models aggregates individual utilities and maximises this aggregate utility
4. Representative agent modelling is atomistic: this commits macroeconomics to an individualistic rather than holistic understanding of society

III: References to more material on value-neutrality and economics

Ingrid Robeyns, Economics as a Moral Science, http://crookedtimber.org/2013/10/31/economics-as-a-moral-science/

Robert Shiller, Economists as Worldly Philosophers, http://www.aeaweb.org/aea/2011conference/program/retrieve.php?pdfid=490

Rethinking Economics Italia - Manifesto

Friday, 11 April 2014

Blogger Ref Link http://www.p2pfoundation.net/Transfinancial_Economics

 

 

Modern economics is a discipline that confronts a stark contrast between its willingness to reform and the static reality it faces, endlessly stuck on its own problems.

 Supporters of quantitative methods and supporters of qualitative methods often disagree about the role either plays in modern economics. While the former put forth a realist view of the world, the latter cry for normative reforms: students need to be taught how things should be rather than how they just are. Herein lies the figure of the social scientist, whose lack of interdisciplinarity today inevitably leads to a debate that is nothing short of hollow.

We need to stop thinking of the economist as someone who is able to tell us how things are going to change, how any economic policy affects our lives, and start turning future economists into social scientists who know how to face social, ethical, and anthropological problems alike. It is they who are going to carry on the normative approach, in a better, independent way.

Social scientists of tomorrow must base their work on their own beliefs, yet must overcome their creeds and to refute them, if needed. Their job is not to find the truth as much as disprove it. It is their own intellectual honesty and open-mindness which makes them a reliable scientist.

For this very purpose, we need to challenge the concept of the economics faculty as an institution whose sole job is to prepare its pupils to manipulate the inner workings of financial capitalism.

But even here universities fall short, and there are two words that tell us why: mainstream economics. In almost every university swathes of students are taught but mainstream economics – post-Keynesian and neoclassical. The rationale underlying this choice is that these are the only theories used by policymakers. A vicious cycle is thus created: alternative economic theories are put aside because they lack empirical evidence, and they lack empirical evidence because no policymaker wants to use them.

Therefore, we need to provide students, if possible from the very start of their academic careers, with the chance to have a taste of the different lines of economic thought, and to provide them with teachings that go pari passu with the evolution of the economic thought itself. To study different ways of thinking does not mean making things hard for the pupils as much as it means broadening their horizons.

We also need to overcome the hegemony of quantitative thinking. Quantitative tools, lacking variables that economic processes themselves cannot take into account, inevitably lead many a theory to fail. However, it needs to be said that challenging this hegemony does not mean reducing the use of quantitative tools; rather, it means aiming at discovering mathematical and statistical models that can take into account social and political parameters.

As of now, in fact, theoretical teachings and practical matters are completely out of kilter with each other. Economics, like any other social science, is created by people for other people. Hence, it withholds human virtues as much as its vices. Wrongdoings are commonplace and just because a law – be it economic, social, or political – works, it does not mean that it is right. Along similar lines, just because an economic theory has worked in the past, does not mean that it will fulfill any future needs.

Future social scientists, therefore, need to be prepared to work on the subtle difference between equity and equality and it is crystal-clear that modern economics cannot provide them with the necessary tools to face such a gigantic task. Rather than trying various (and not very successful) one-size-fits-all measures, universities should focus on offering specific trainings that encourage their students’ inclinations. This way, students can choose whether to follow a business-oriented career by applying to a business school, or to to continue towards a more academic path, in brand-new schools for social sciences.

Draft Manifesto: A direction for the reform of economics education

Friday, 4 April 2014

 

 

This draft manifesto is intended as a statement to provide a unifying direction for those groups campaigning for economics curriculum reform in universities across the world. Please show your support by signing your name and organisation below.

This manifesto is based on the Manchester Post-Crash petition and the Rethinking Economics CORE feedback.
Blogger Ref Link http://www.p2pfoundation.net/Transfinancial_Economics

Signed:

Rafe Martyn and Marco Schneebalg (University of Cambridge, Cambridge Society for Economic Pluralism)

Thomas Youngman and Hoang Nguyen (UCL, Better Economics Society)

Alex Andrade Martins (SOAS, Open Economics Forum)

Benolas Tippet, Katarzyna Buzanska & Franck Magennis (LSE, Post Crash Economics at LSE)

Yuan Yang and Diana Garcia Lopez (Rethinking Economics Organisers’ Hub)

Nicolò Fraccaroli and Mathia Achei (LUISS University Rome, Rethinking Economics Italia)

1. We believe students should be taught to think independently and critically. This involves a critical approach to particular models within each school of economics, as well as the whole methodological structures underlying different schools of economics.


2. We need to recognise the plurality within economics. In most courses “economics” is shorthand for “neoclassical economics”. There is no recognition of the variety of schools of thought within economics, across history or across the world. Academic integrity requires that alternative economic theories be introduced to students, alongside those currently taught. Economic questions cannot necessarily be answered adequately from a single theoretical standpoint, or solely from a mathematical approach.


3. Economics, as in the case of any other social sciences, cannot always be value-neutral. Therefore we demand that the philosophical, political and ethical underpinnings of different economic theories should be explicitly discussed during lectures and seminars. Economists need to remain critical of the ethical underpinnings and consequences of their theories.


4. Economics as it is taught currently is disconnected from real-world events and policies. In many departments, much of the curricula in the last few decades have slowly lost all mention of contemporary events or facts. This means that students are not being equipped to engage in real-world debates. We believe economics graduates should be prepared to consider and react to the economic problems that the world faces, because societies are shaped by economic events and policies, which are in turn shaped by people’s understandings of economics.


5. Economic theory needs to be presented alongside economic evidence. Real-world data should be used to spark discussions of how useful different theories are. Students should be able to weigh up theories against evidence, criticise the multiple uses of evidence, and understand why statistical methods are contestable. This includes debating what constitutes evidence, and conditions under which finding evidence may not be possible.


6. We believe a context-free economics is a misguided economics. Economic theories cannot be fully understood independently of the institutional, cultural and technological context in which they were formulated. Therefore, links to economic history and the history of economic thought should be made wherever possible. We should recognise that while some of today’s economic theories are a scientific “progression” from the past, many of them are just a different way of looking at society.


7. As well as recognising the strengths of our approaches, we should foster humility and self-awareness within economics. We need to specifically mention the limitations of our approaches, and recognise that there are a plurality of disciplines that study society which have insights to offer economics. Interdisciplinary dialogue is necessary for economics to grow. We must stop isolating ourselves from anthropology, sociology and political science when we have much to learn from them.

We want to stress that individual departments are not the cause of the problem. It is difficult for any individual economist or department to act independently of others. We need to take the lead by pushing for reform together, within and across countries.