By Aniket Baksy

Edited by Nidhi Singh, Junior Editor, The Indian Economist

There’s a revolution underway in Economics. It is unclear how many of those who are even aware of the revolution (and this includes Econ students) are able to fathom exactly what the rebellious gang calling themselves the International Student Initiative for Pluralism in Economics (ISIPE) want. It’s important that we understand them, however. If the ISIPE has its way, Economics will have to face the most radical restructuring in its thought since Keynes and his ideas of market failures- it will have to abandon its “academic monoculture” and embrace working with other subjects.

What is the ISIPE?

The ISIPE is by no means the first ever attempt at student-led syllabus reform and changes in the way economics is taught. It is essentially the logical conclusion of a growing bout of dissent originating as early as 1960[1]. Petitions for economic pluralism through the 1960s and 70s led to the formation of organisations like ICARE (The International Confederation of Associations for Reform in Economics)[2] and the Post-Autistic Economics Network. The fraternity has itself had its own dissidents — notably Joan Robinson, John K Galbraith and even Paul Krugman[3].

The Post Keynesian Economics Study Group has been arguing for such change for some time now (Stockhammer, et al. 2013). Student rebellions in Economics over such pluralism aren’t unheard of, either — they’ve happened in France (the École Normale Supérieur), at Cambridge and even in Harvard, where students staged a (rather public) walkout of N Gregory Mankiw’s Class (MacroBusiness 2014). The key event in the ISIPE’s formation appears to have been when the Post-Crash Economics Society at the University of Manchester had their proposed course on Bubbles and alternative theories of crises struck down by the University recently, with its supporting professor facing action by the Department. The PCES responded with a scathing report on the state of economics education in the University (The University of Manchester Post-Crash Economics Society 2014). Widespread support for the PCES across UK Universities and media attention led to cross-border association with Economics Student Bodies across the globe, and the consequent creation of the ISIPE. The ISIPE released its Open Letter to the Press on May 5, 2014, at a time when it included 42 Economics Associations from 19 nations[4].

ISIPE aims at a “radical restructuring of the way in which we view Economics.” The movement addresses a “dramatic narrowing of the curriculum,” and thereby proposes the inclusion of the real world into the Economics taught in classrooms. It argues that while most disciplines “embrace diversity”, economics is presented as a unified body of knowledge, which limits the subject’s scope to incorporate intellectually rich academic debate. Most graduates, the Open Letter on the ISIPE website reads, graduate without ever encountering any exposure to Classical, Post-Keynesian, Institutional, Ecological, Marxist, Feminist or Austrian traditions.

The ISIPE Letter argues for three forms of pluralism: theoretical, related to broadening the range of schools of thought represented in curricula and the incorporation of the philosophy and history of economics into mainstream syllabi; methodological, including the expansion of the study of economics to include qualitative as well as quantitative analysis; and interdisciplinary, wherein economics is treated as a social science and treats phenomena in their appropriate contexts derived from the other social sciences.

Some Context…

Has there indeed been a narrowing of the field of study in Economics over the past two decades or so? It is impossible to understand this without a thorough examination, across countries, of the evolution of syllabi (however, see the PCES’ study of Manchester’s syllabi). A priori, examining the Economics curriculum under Delhi University’s Three-Year Programme reveals that the course is rather plural, incorporating a significant amount of material on Marxist Theory and on the Economic Theory. More rigorous examination reveals, however, an astonishing lack of depth- economic history, for instance, is confined to the Indian Economy, and that too only from about 1800 onwards, with a single reading for a small part of the post-Mughal period.

Looking through the syllabi of the core Economics Papers — Introductory and Intermediate Micro and Macro — establishes clearly that neoclassical thought, rational expectations, “accelerationist” Phillips Curves and Taylor Rules, dominate economic teaching. This malaise, of course, goes well beyond DU[5]. Austrian Economics, for instance, figures absolutely nowhere in any of the leading textbooks on undergraduate macroeconomics, nearly half a decade after its proponents, through predictions of “fundamental maladjustments” (read: bubbles) caused by artificially low interest rates, actually predicted the 2008 crisis[6].

Other textbooks do go further into more advanced territory, devoting sections to microfoundations; however, mentions of alternative approaches in these textbooks are nowhere to be found, except the occasional chapter on “schools of thought[7]” (Araujo, O’Sullivan and Simpson 2012). J Bradford Delong, economist at UC Berkeley, notes that this striking congruence in content is the result of what he calls the “apocryphal rule about new textbooks”: They must have at most 15% new material, enough to convince professors to switch to it but not so much so that old lecture notes must be disposed of and courses redesigned. This “neat trick,” Delong argues, “makes intellectual progress in undergraduate instruction nearly impossible”(DeLong 2000).

However, the truth and perhaps the key trigger for the ISIPE movement is an impression that as a field, economics is unrepentant for its failure to explain and predict crises, and fails to accept criticism. Discussions on reforming Macro syllabi have remained within the domain of choosing between IS-LM/AS-ADModels or directly moving to New Keynesian Models, which remain firmly within the neoclassical tradition in more ways than one (Araujo, O’Sullivan and Simpson 2012). Passionate defenses of orthodox economics and the rejection of suggestions to displace “neoclassical thought” from the centrality accorded to it have further contributed to this disillusionment[8](MacroBusiness 2014).

Further issues plaguing the field itself include the “capture” of the Economics profession in terms of the promotion of pro-business attitudes by theoretical development, particularly in the Supply Side School of Economics(Krugman 2014), has been highlighted in recent times by members of the Economics fraternity themselves. Zingales’ 2013 study confirms the nexus that exists between academics, businesses, the State and eminent publications — articles which espouse a pro-business theoretical framework are more likely to be published. The “publish-or-perish” routine dominating the careers and lives of academia in economics further reinforces this. Incumbent economics professors who espouse orthodoxy also control the degrees of their graduate students- the result of course, is Graduate Students who are forced to conform (Zingales 2013).

It’s clear that breaking the cycles of self-reinforcing stagnation in Economics Teaching and thought will require an exogenous force- and this force may not necessarily be market driven, in an environment where the market clearly values “research” supporting status quo. In an environment where neoclassical theory is protected by this unholy nexus, an initiative like the ISIPE appears the only hope for change.

What happens now?

An overwhelming majority of those dealing with the ISIPE in their blogs and newspaper articles laud it for trying something that just seems so difficult. The Blogosphere has been abuzz, with aggressive social media campaigning paying dividends in reigniting forgotten debates regarding Economics and its various marginalised fields. ISIPE is, by no means, the first time there have been calls for a review of Economics and the dominance of the neoclassical regime- and yet, it just might succeed in getting people to think beyond optimization and Rational Choice.

The greatest hopes one may have for the ISIPE’s success lie in the fact that it is non-governmental and non-academic; in fact, it only includes students themselves, only backed by a handful (and yet, increasingly strident) of experts, notable names whose list includes Thomas Piketty and Ha-Joon Chang. This implies that the effort is unlikely to be diluted by politicking and the like in the near future, although as it matures, it will have to keep wary of capture by other forces. It also means that the movement has a chance of succeeding in the long haul it will have to endure before any change actually occurs. ISIPE does indeed acknowledge that change is difficult (International Student Initiative for Pluralism in Economics 2014), but points to changes already in place. For instance, the Curriculum in Open-access Resources in Economics (CORE) project attempts to bridge several gaps in traditional curricula pointed out by the ISIPE(INET CORE Project 2014)[9]. The ISIPE will, however, have succeeded only once Economics is once more a site of intense debate, one where undergraduates can have a degree of freedom in choosing a strand of thought they find most compelling.

To be sure, there have been sceptics over “occupy Economics” movements.Some of these have been supportive of ISIPE, including calls for inclusion of an ever larger number of sub-fields into the study (ecological economics(Raworth 2014) and feminist economics (Waylen 2013), for example). Others have been brusque; in particular, Simon Wren-Lewis, who argues that while there is some merit in exposing students to heterodox Economics, the dominance of mainstream theory is a result of its ability to better explain events and its flexibility. Wren-Lewis dismisses the initial Manchester PCES’s critique of economics education as “eloquently and intelligently written, but… in some respects, fundamentally misguided,” and argues that the apparent value-neutrality of economics may naturally espouse demands for “revolution” among those who take an “anti-establishment left wing view”(Wren-Lewis 2014)[10].

These criticisms have a point- while disbelievers may abound, most criticisms of Economics fail to grasp exactly how broad the field has become in recent years, even within its own paradigms. DSGE models have begun outgrowing their shortcomings, and have accepted many insights from empirics, including imperfect competition and even myopic behaviour by consumers. Inequality, the distortionary effects of executive pay and similar “non-corporate” research has expanded greatly, and has done so with only minimal modification to the prevailing theoretical frameworks. Environmental Economics and depletion of natural resources have been incorporated into models. Much of this has, however, missed the notice of the undergraduate body, whose teaching remains woefully incomplete and confined to the kinds of Economics that were in vogue 50 years ago. As Wren-Lewis points out, this implies that while Economics Teaching is indeed flawed, this is no argument for any fundamental weakness in Economics itself (ibid).

One way in which ISIPE has managed to transcend such criticism, however, has been through their demand for debate instead of elimination, and by demanding that students be exposed to alternative thought, not that neoclassical economics be neglected or outright rejected. ISIPE cleverly manages to sidestep contentious academic debates by arguing that these debates include undergraduates as well; they argue that Economics teaching must be broadened, and by extension, so must discourse in the field. It appears difficult to argue with that- one of the core messages of mainstream economics is that increasing the number of choices available to the individual simply can’t make the individual worse off (a result derived from the Axioms of Revealed Preference, dating back to Samuelson himself). The ISIPE should be wished well, for its final aims will only enrich the nature of economics taught, learnt and by extension, incorporated into the future of policymaking in a world plagued by new kinds of socio-economic crises.


References

Abel, Andrew B, Ben S Bernanke, and Dean Croushore. 2011. Macroeconomics. 7. Addison Wesley.

Araujo, Pedro de, Roisin O’Sullivan, and Nicole B Simpson. 2012. “What Should Be Taught in Intermediate Macroeconomics?” Colgate University Website. 14 February. Accessed June 27, 2014. http://colgate.edu/portaldata/imagegallerywww/21c2da91-dce7-4f08-9879-171e4440e0a4/ImageGallery/Teaching%20%20intermediate%20macro%2014Feb%202012.pdf.

Backus, Peter. 2013. “An Open Letter from Peter Backus.” Post Crash Economics Society. 15 November. Accessed June 26, 2014. http://www.post-crasheconomics.com/an-open-letter/.

DeLong, J Bradford. 2000. “(Revised) Macroeconomics Textbook Manifesto.” http://www.j-bradford-delong.net/. June. Accessed June 21, 2014. http://www.j-bradford-delong.net/teaching_folder/manifesto.html.

Gordon, Robert J. 2011. Macroeconomics. New Delhi: Prentice-Hall India Limited.

Halsey-Rogers, F. 2010. The Global Financial Crisis and Development Thinking. Policy Research Working Paper 5353, Development Research Group, The World Bank.

INET CORE Project. 2014. CORE Econ: Teaching Economics as if the Last Three Decades had Happened. Accessed June 25, 2014. http://core-econ.org/.

International Student Initiative for Pluralism in Economics. 2014. “An International Student Call for Pluralism in Economics: Open Letter.” ISIPE Website. 5 May. Accessed June 20, 2014. http://www.isipe.net/open-letter/.

Krugman, Paul. 2014. “Charlatans, Cranks and Kansas.” The Hindu, 1 July: 11.

MacroBusiness. 2014. “The Civil War Within Economics.” MacroBusiness Blog. 1 May. Accessed June 28, 2014. http://www.macrobusiness.com.au/2014/05/the-civil-war-within-economics/.

Mankiw, N Gregory. 2010. Macroeconomics. 7. Worth.

Raworth, Kate. 2014. “Economic pluralism, yes – but don’t ignore the planet.” Green Alliance Blog. 4 June. Accessed June 26, 2014. http://greenallianceblog.org.uk/2014/06/04/economic-pluralism-yes-but-dont-ignore-the-planet/.

Stockhammer, Engelbert, Gary Dymski, Mark Hayes, Annina Kaltenbrunner, Jo Michell, Özlem Onaran, and Jonathan Perraton. 2013. “Post-Keynesians are staging a comeback.” The Guardian Newspaper – Letters. 18 November. Accessed June 26, 2014. http://www.theguardian.com/education/2013/nov/18/post-keynesians-comeback.

The University of Manchester Post-Crash Economics Society. 2014. Economics, Education and Unlearning: Economics Education at the University of Manchester. Manchester: The University of Manchester Post-Crash Economics Society. http://www.post-crasheconomics.com/.

Waylen, Georgina. 2013. “Why the ‘radical’ post crash economics movement is missing a trick.” Manchester Policy Blogs. 2 December. Accessed June 29, 2014. http://blog.policy.manchester.ac.uk/featured/2013/12/why-the-radical-post-crash-economics-movement-is-missing-a-trick/.

Wren-Lewis, Simon. 2014. “When Economics Students Rebel.” mainly macro. 24 April. Accessed June 28, 2014. http://mainlymacro.blogspot.co.uk/2014/04/when-economics-students-rebel.html.

Zingales, Luigi. 2013. “Preventing Economists’ Capture.” In Preventing Regulatory Capture: Special Interest Influence and How to Limit it, by Daniel Carpenter and David Moss, 1-33. Cambridge: Cambridge University Press.

[1] William Baumol, as early as the 1930s, criticised economics for its narrow outlook. This was in response to a failure to incorporate Keynesian thought (then revolutionary) into mainstream economics.

[2] ICARE is now ICAPE, with “Reform” replaced by “Pluralism.”

[3] Krugman initially appealed to the fraternity to accept a “manifesto for economic sense”, but in later responses to the PCES document, ended up defending status quo.

[4] As of July 1,2014, ISIPE had 65 Member Associations and over 2400 signatories globally.

[5] Mankiw’s text (Mankiw 2010) focusses on a largely classical structure augmented by an IS-LM framework to study price friction, while Abel, Bernanke and Croushore (Abel, Bernanke and Croushore 2011) offer a more balanced treatment, albeit under a unified framework which replicates neoclassical macroeconomics. These books account for nearly 50% of the Intermediate Macro Textbook market (Araujo, O’Sullivan and Simpson 2012).

[6] It is, however, unfair to argue that Mainstream Economics couldn’t have “seen it coming.” A reasonably large number of senior economists- including NourielRoubini, Raghuram Rajan, Dean Baker, Med Jones and Peter Schiff- had issued warnings in advance, using tools not beyond neoclassical methodology. A more relevant critique is that many mainstream economists were compromised in their ability to use the tools of neoclassical economics appropriately by the political and financial realities of their senior positions in policy making roles.

[7] Students of Delhi University’s Three-Year programme will be aware that these chapters are usually no better than expositions of the Classical vs Keynesian debate, or the New Classical vs New Keynesian Debate (see(Gordon 2011), for example).

[8] It has been argued that while the 2008 crises “…does provide new information in key policy areas, but it need not provoke any crisis of confidence in the current state and direction of development thinking … over the longer term, the crisis could have its biggest effects on the development thinking of those who are not development specialists. In many cases, policy prescriptions from policymakers and researchers from outside the development field have relied on implicit or explicit models that assume that developing-country markets function much more like textbook models than is actually the case (Halsey-Rogers 2010).”

[9] The CORE curriculum has, however, been criticised by the Post-Crash Economics Society at the University of Manchester on grounds of having rejected alternative perspectives of economics.

[10] A slightly more diplomatic version (which amounts to practically the same as Wren-Lewis) is the Open Letter by Peter Backus, which attempts to reconstruct the image of the academic economist as a more open person(Backus 2013).


Aniket is a third-year student at St. Stephen’s College, Delhi and an Editor of the Economics Society. His inclinations extend to economic issues, and macro-level socio-economic policies and their possible impacts. He is a prolific reader, with tastes for popular science, economics and policy, science fiction and historical fiction. An inherent urge to argue and avid debating aside, his passions include Economics, Instrumental Hindustani Classical Music, Gastronomy, and writing.

Posted by The Indian Economist | For the Curious Mind