Dissenting Economics


The Lehman Brothers company sign for Auction after bankruptcy at Christie’s. London, UK. Photograph by Jorge Royan

From Radical Philosophy:

The dissent of students to the dominance of neoclassical economics in the curriculum is not new. As early as 2000, a group of French students organized under the name ‘Post-Autistic Economics’ was criticizing the teaching of economics for lack of realism, excessive reliance on mathematical techniques, and the dominance of the neoclassical approach. However, building upon the relatively stable conditions in Western economies and the euphoria brought about by the long boom years, neoclassical macroeconomics had announced its triumph over the conduct of economic policy prior to the Great Recession. Managing the economy successfully only required following a set of simple rules, according to which central banks would target inflation rates; fiscal policy was mainly irrelevant and capital controls were unnecessary. In such a climate, dissenting voices were easily ignored, silenced or discredited. Policymakers and international institutions raced to celebrate the victory of free markets, and the new economic order, pointing at the long period of economic expansion during the bubble as the evidence for successful economic policy and design.

But the unforeseen Great Recession ruined the party. Not only had neoclassical macroeconomists not given any warnings of a forthcoming downturn but the scale of the crisis was so large that it threatened the integrity of global capitalism, raising unemployment rates to levels not observed in the industrial world for several decades and leading to widespread social unrest. Coupled with the public anger towards excessive financial-sector salaries, bank bailouts and cuts in social spending, macroeconomic policy decisions on financial regulation, the structure of the monetary system, capital taxation and austerity became central topics in the public discussion space. Social movements such as Occupy Wall Street managed to gain significant public support for a short period of time before being contained and fading away gradually.

On the other hand, several heterodox economists, such as Steve Keen, Wynne Godley, Michael Hudson, Dean Baker and Jim Crotty, had been warning of a severe crisis because of the rising household debt levels and property bubbles since as early as 2003, as documented in detail by Bezemer. The ‘unexpected’ nature and the magnitude of the recession that followed the collapse of Lehmann Brothers in September 2008 provided these heterodox economists with an unprecedented opportunity to access a much larger audience. Similarly, prominent heterodox thinkers such as Minsky, Marx and Hayek gained popularity in the financial press and in social media in the post-crisis period, as heterodox economists who had correctly warned of the dangers of financial instability had frequently referred to these thinkers.

It was in this environment that the student dissent towards the teaching of economics revived. Surrounded by the public discussion on macroeconomic policy and exposed to a variety of heterodox ideas, particularly in the press and blogosphere, student groups once again started criticizing the unrealistic, socially detached nature of mainstream economics, and its absolute monopoly in the economics curriculum. Following the emergence of student organizations such as Peps-Economie in France early after the financial turmoil in 2009, the movement found strong support in Germany, where in 2011 economics students at the University of Tübingen set up the reading group Rethinking Economics and organized two conferences under the same name in 2012 and 2013, offering workshops on various issues such as philosophy of economics, the history of economic thought, complexity economics and post-Keynesian economics. The collaboration of this group with fourteen similar student societies, researchers and lecturers in Germany subsequently led to the emergence of Network for Plural Economics. In the US, on the other hand, a group of around seventy students walked out of Gregory Mankiw’s introductory economics module at Harvard University to express solidarity with the Occupy movement, arguing that the module is heavily biased towards the promotion of conservative economic policies.

The UK-led student movement, initiated by the Post-Crash Economics Society (PCES) at the University of Manchester, started a new round of discussions on pluralism. The group demanded modules on heterodox approaches to economics, as well as more real-world-oriented and interdisciplinarity economics teaching.

“Alternative economics: A new student movement”, Engelbert Stockhammer and Devrim Yilmaz, Radical Philosophy