Meet the Students Who Brought Their Econ Class Back to the Real World
For all of you who are tired of the same, mindless economic classes, rejoice! A group of undergraduate students at Manchester University in the UK, supported by other English professors, have created the Post-Crash Economic Society in order to overhaul their university's economics curriculum, which has failed to explain the current crisis and only seems to focus on training for a job in The City, London's financial district.
The basic idea behind this movement is excellent. As a recently graduated student in political economy, I completely agree that the teaching of economics needs to be reviewed. There is indeed too much focus on neoclassical economics, which uses unrealistic assumptions such as perfect availability of information (which is impossible), perfect competition (which is arbitrary), and profit maximization (which hasn't been observed in empirical studies).
Also, as correctly pinpointed by Joe Earle, spokesman for the Post-Crash Economic Society, neoclassical economics places is too much focus on mathematics. While its presence can sometimes be useful, especially when it comes to statistics, the use of math in economics is generally overrated. Look at the Lagrangian multiplier, for example, which is supposed to scientifically calculate a consumer's preference to consume now versus later. While this concept is extremely useful in pure and applied sciences, its place in social sciences (which economics is part of) is more questionable. How are we supposed to quantify human choice? We are not atoms that can be manipulated like in chemistry nor are we simple-minded animals which can be observed without bias. Choice is by definition subjective, and one needs to use things like psychology to explain seemingly irrational choices like smoking. To quote Paul Krugman, "the economics profession went astray because economists, as a group, mistook beauty, clad in impressive-looking mathematics, for truth."
Earle also denounces how little modern economics departments stress critical-thinking skills. He is right when it comes to an economics BA, where at Oxford or even Harvard, core classes focus solely on economics and mathematics. This completely ignores politics, sociology, philosophy, and everything that has influenced economics or which economics influences. By offering politics classes as part of the core curriculum of an economics degree, Manchester has understood this principle. After all, how can we talk about economic incentives without talking about the "visible hand" of the government? How can we talk about wealth without showing how it was accumulated before the Industrial Revolution? And how we talk about the effect of poverty on people without knowing some of its causes?
However, we have to be careful here. While it is important to let students develop their critical thinking skills and show them the various economical theories, it has to be done with an eye towards which economics have been proven right over time. Just as creationism isn't (usually) taught in science classes alongside evolution, Marx and Keynes can't be given equal time toas Adam Smith, whose famous quote about professional guilds still holds today, and Friedrich Hayek, whose insights of 1944 about central planning can be applied to the NSA scandal and the PATRIOT Act today.
Of course, economics like Marx and Keynes are not totally worth ignoring. Marx did understand monetary theory and saw that too much paper money meant that more had to be used — a lesson that has been lost on many of modern economics' supposed best and brightest. Keynes, meanwhile, noticed that prices and wages weren't as easily adjustable as classical theories implied and that a high velocity of money was a precursor to high inflation. However, Keynes also made crucial mistakes of in his analysis of what causes recessions: They don't happen because there is less demand, there is less demand because there is a recession. His theory were proven wrong with the stagflation epidemic of the 1970s.
So while there is certainly room for improvement when teaching economics, it still needs to be taught in an orderly manner. Successful theories, namely those showing that government intervention does more harm than good, should be given priority. Those that think that government is the answer rather than the problem should still be taught, as they have played a huge role in shaping economic history. But one must be able to see why thinkers came to these faulty conclusions, and by encouraging history, psychology, and politics as part of a standard economics curriculum, the students of the Post-Crash Economic Society are closer to making sure these lessons are more widely known.