Wednesday, November 20, 2013

On Teaching Economics

Chris Giles, Financial Times, economics editor: HERE
There was a time when any self-respecting economics undergraduate could distinguish between neo-Keynesian, new-Keynesian and post-Keynesian thinking; they would write essays on the difference between Marxist and monetarist policies; and they would have to know how classical economists, such as Adam Smith, influenced the neoclassical school and how new classical economics developed subsequently in the 1970s.
Economics teaching was about understanding the way the world worked; how the discipline had changed; and how to make the world a better place.               
When Gordon Brown called in 1994 for greater use of post neoclassical endogenous growth theory in policy, for example, many economics graduates would have known what he meant, even if they sniggered at his language.
But that was before mathematical models came to dominate economics degrees in the 1990s, replacing critical evaluation and the study of economic thought. …
…While the old ways do not feel sufficiently scientific to many economists, other university teachers sense there is little merit in making students rote-learn the more recent discredited models. The new thought is a return to the past: less maths and more history of economic thought might make for more enthusiastic and useful graduates.
I concur with Chris Giles’s view of the now wasted decades of the triumph of neoclassical economics, general and partial equilibrium theories, to which I would add rational expectations, predictions, and the disregard of the history of economic theory.
In this Gadarene rush to irrelevance neoclassical economics lost its way.  It can neither explain the past nor the present and its pretentions to predict the future are embarrassing.   Classical economics was and still is about complex evolving economies and such maths that it uses are relevant to its economics.
I recommend David Simpson’s new book: The Rediscovery of Classical Economics: adaptation complexity and growth, 2013, Edward Elgar, Massachusetts, for an oversight of the controversy and the readable history of relevant thinking from Adam Smith to today.
That this problem has reached the Editor of the financial Times is encouraging to say the least.


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