In the last weekend of June, we attended the Rethinking Economics Conference organised at UCL by the grassroots student association of the same name. Rethinking Economics is a global network of students that, together with other student associations from around the world, crafted the open letter that formed the International Student Initiative for Pluralism in Economics in May 2014. The London conference brought together frustrated academics and students from numerous countries to debate the sorry state of the economics academic discipline. Adair Turner and Ha-Joon Chang made keynote addresses on either end of two days that sought on the one hand to rethink standard concepts and research methodologies, while on the other to introduce marginalised perspectives by largely heterodox-leaning economists. Curriculum reform, admitting pluralism, was the overarching objective of the conference, which clearly sought to displace neoclassical economics from the royal box of economic investigation.
Central to the weekends’ exchanges was not only an intrinsic emphasis on pluralism, but for a greater appreciation of the past in thinking about the present. This was explicitly present in the Saturday afternoon seminar dedicated to rethink the Whig history of mainstream economics. The demise of economic history from the curriculum, and even more so the history of economic thought, is as evident today as it was when the fatherly neoclassical figure of Paul Samuelson celebrated it as a form of progress in 1987. The problem with ‘progress’ as Samuelson understood it, is that it is a mere glorification of the present, implying that past theories are imperfect forms of the present theory of social reality. This downplayed version of history is present in many of the core concepts of today’s dominant methodology of economic research and practice, the neoclassical approach. For example, the very notion of ‘equilibrium’ eschews the impact of the past when analysing a phenomenon of interest. It is like a marble that is dropped in a bowl: once it arrives at equilibrium when at the centre of the bowl its past is erased; how it arrived at its ‘natural resting point’ is irrelevant. This defines neoclassical economics – with its obsessive emphasis on equilibrium – as a study of ends and not means. However, by ignoring history (a means in itself), the desired ends are not often arrived at. What follows are more small snippets of what came out of some of the sessions.
The first day opened with a keynote speech by Lord Adair Turner, former head of the Financial Services Authority – where he was appointed a week after the collapse of Lehman Brothers in September 2008. As he aptly put it, it felt like becoming captain of the Titanic “after hitting the iceberg but before the boat actually sunk”. Overall, the speech was very compelling and well delivered. It addressed the flaws of the dominant neoclassical approach to economics, a model in which the recent financial crisis could simply not occur. Mr Turner questioned some of the key neoliberal assertions: human beings as purely rational agents, GDP growth as the main objective of economic policy and free markets as a way to achieve this end. He stressed the need to change economic thinking to avoid future crises.
After a much needed coffee break, the next talk we attended was interesting albeit extremely technical – and, to be frank, quite soporific for those not trained in pure economics and/or philosophy. Two academics from Cambridge and Sterling University discussed the concept of equilibrium in economics, and its main flaws. Very active in the debate were the students. In a session of their own held around lunchtime, student associations from Denmark, France, Germany, Scotland, Israel, Chile, Switzerland presented their motivations and public engagements they have undertook to date, in order to bring about changes to the teaching of the discipline. Many have proposed curriculum analyses and changes in their respective countries. Of particular note was a curricula survey carried out by the French student association PEPS (‘Pour un Enseignement Pluraliste dans le Supérieur en Économie’) looking at the extent of pluralistic teaching in economics at 50 French universities. The results of the survey showed that economics curricula lacked courses on current real-world economics issues, heavily emphasized mathematical techniques, had little place for courses on the history of economic thought and was closed from interaction with other social sciences.
In the afternoon, Cambridge professor Tony Lawson reminded us of Alfred North Whitehead’s dictum: if you wanted to question the philosophy of an age, don’t look at the claims or assumptions that are defended by the practitioners of the age, but those that are taken for granted by them. What is taken for granted in modern economics – especially in the dominant neoclassical tradition – is the emphasis on mathematical modelling in understanding the social world. In fact it appears ever more evident, as Lawson hinted, that notions like equilibrium and rational expectations were devised to facilitate mathematical modelling, to the point where the frontiers of economic investigation are marked by its very use. Within this context Lawson, alongside UCL philosopher of science and mathematics Donald Gillies, provided one of most penetrating analyses of the weekend by questioning the use of mathematics in economics. While both men had slight differences in approach, both concluded that mathematics is more often than not an inappropriate tool for the analysis of inter-related social phenomena.
The second day opened with a great speech by Post-Keynesian economist Engelbert Stockhammer, who outlined the main differences between Post-Keynesian and other approaches, notably neoclassical ones. The German professor, who teaches at Kingston University, clearly explained the implications of such differences for modern policy-making. The next lecture was held by UCL professor Paul Ormerod, the author of Butterfly Economics. Like Adair Turner the day before, professor Ormerod argued rational agent models of economics pervade many social sciences and are incapable of explaining why the crisis happened. He mentioned behavioural economics to stress the role of groupthink, complexity and asymmetrical information.
The weekend ended with two similar lectures by the one and only Ha-Joon Chang, one of which was the closing keynote speech. As expected, the Cambridge scholar insisted on the role played by political institutions, even within so-called “free markets”. While neoclassical economists tend to depoliticise the economy and take institutions as given, setting boundaries for markets is a highly political endeavour. Chang noted that child labour and slavery were abolished thanks to considerable regulations now accepted by the most orthodox libertarians. Towards the end of his second lecture, he criticised one-size-fits-all approaches to economics and stressed the need for pluralism to account for different countries and eras. In his view, pluralism and cross-fertilisation between several schools of thought – Keynesian, Marxist, Austrian… – would be a major step forward for the subject. This was a constructive and insightful comment concluding what had been a very fruitful weekend at University College London.