by Ronnie Morrison
The professional economist is prominent among the ‘experts’ who influence our politicians. For example, both Thatcher and Reagan were heavily influenced by the free market monetarist model propounded by Milton Friedman. These neo-classical economists, employed by fat walleted bankers, are seldom far from the media spotlight as we stumble from one financial or economic crisis to the next. A visitor from another planet might well ask why we continue to seek the advice of such people who consistently get it wrong for the rest of us.
It is said that economic forecasters were invented to make weather forecasters look good … their predictions of Government income last year were only £20 billions out. As J.K. Galbraith put it, ‘the only economic certainty for an economic forecaster is that he will collect his salary at the end of the month’.
How refreshing therefore to read that economics students in France were celebrating an additional portent for humankind this Christmas. On 19 December, six representatives of the student reform group Autisme-Economie met with J-P Fitoussi, the economist appointed by the French Minister of Education to draft a report on the National curriculum for the teaching of economics.
The campaign started last June when the influential Paris daily Le Monde sent the French economics mainstream into a state of shock by featuring a long article under the headline “Economics Students Denounce the Lack of Pluralism in the Teaching Offered”. Students at the Ecole Normale Superieure, France’s premier institution of higher learning, were circulating with great success a petition protesting:
1- the exclusion of theory which is not neo-classical from the curriculum,
2- the mismatch between economics teaching and economic reality,
3- the use of mathematics as an end in itself rather than as a tool,
4- teaching methods that exclude or prohibit critical thinking,
5- the need for a plurality of approaches adapted to the complexity of objects analyzed.
In the language of academia, the petition states that the subject of economics has lost touch with reality and has become inward looking. It is creating mathematical structures on foundations which are essentially non mathematical in order to justify a scientific label. “It fails to take into account the institutions, history, environmental and geopolitical realities, strategies of actors and groups, the sociological dimensions including gender relations, as well as more epistemological matters”.
There are two petitions. At the last count the one for students boasted over 800 signatures and the other for professors some 150. The campaign is actively supported in Belgium but is showing early signs of repression in the UK and the USA. This is not altogether surprising, London and Washington being home to the prime beneficiaries of monetarism and financial deregulation. Nevertheless, as far back as 1993 at a conference at Utrecht University, a group of British, American and Continental heterodox economists formed ICAPE – The International Confederation of Associations for Pluralism in Economics. This organisation enjoys significant academic membership in the US and is locked into a major battle with the mainstream AEA – American Economics Association – which effectively controls the academic branch of the profession and its primary ‘learned journals’ in America. The novel aspect of the French movement is that it has reached beyond the Citadels of Academia first to the popular press and now to the status of a Government enquiry.
It should now be a priority for all environmentalists, economic reformers, Third World Debt Campaigners and indeed every citizen concerned with the future of our society to assist this movement take root in all British and American Universities. But equally important we should be recruiting this major division within the economics profession as a serious weapon in the fight for Economic Reform.
Both countries have a wealth of sound literature on alternative economics and monetary reform which never get near an official curriculum. At present no serious student PhD (econ) would consider submitting a thesis based on these radical views, yet surely this is what a doctorate is supposed to be about – research, alternative and original work relative to the subject. This is much more than an internal academic wrangle – it is a matter of grave importance to everyone of us.
And surely one of the greatest missing factors in the study of economics is a basic definition of money – its multiple functions, its source, incorruptibility, quantity and so on. Money is the lifeblood of economic activity yet neo-classical economics barely touches upon the basic subject.
There are, however, repeated references to ‘price’ and the ‘tendency of markets towards equilibrium’, and endeavours to create mathematical constructs and models based on a technically unlimited supply of bank credit, free cross border capital flows and speculative hedging against National currency values – all relative to a quantifiable volume of goods and services.
Moreover, how can any mathematical quantity be measured in units issued by private corporations for the express purpose of making a profit? It is like asking a cabinetmaker to construct a cabinet using competitive inches made available by several merchants competing to make a profit!
For the neo-classicist there hasn’t been a new thought about money in 300 years. Money – in terms of notes and coins issued by the State – is and always has been quantifiable, regulated and spent into circulation by government for the public good. Now that money has all but been replaced by bank credit, lent into circulation for no other reason than profiting the banks’ shareholders, it too requires to be defined, quantified, regulated and returned to democratic control.
Like weights and other measures, the means of exchange is one of the few elements of contemporary economics which can and should be incorruptible. Until this variable becomes mathematically fixed then by definition all other variables associated with it remain floating and notional.
Whether New Economics eventually evolves into a science or a humanity, it will remain a tenuous and discredited subject for so long as it continues to build a profession on top of a house of cards.
The Post Autistic Economics Newsletter should be prominently and regularly displayed on every University notice board throughout the world.
Anyone can subscribe free of charge at www.paecon.net and download the Newsletters and forms for both petitions. You can also visit ICAPE at www.econ.tcu.edu/econ/icare/contact.html