New Economy Journal

What is it like being an economics student?

Volume 2, Issue 5

October 20, 2020

By - Duncan Wallace

Piece length: 1,516 words

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This article is based on the text of a talk given at the ANZSEE Ecological Economics Conference in November 2019. The talk was given while David Graeber was still alive. Sadly, he died recently. Vale David Graeber!

I’m sure many of you will have read David Graeber’s recent article in the New York Review of Books, called “Against Economics”. He opens with the statement that “There is a growing feeling, among those who have the responsibility of managing large economies, that the discipline of economics is no longer fit for purpose.”

My impression is that he’s absolutely right. I’ll briefly run you through my experience with economics education.

I enrolled in a Masters of Economics course at the University of Melbourne in 2012. The first semester was particularly baffling. We learnt a lot of complicated mathematical neoclassical economic models which, in the words of one of my tutors in my first semester, weren’t “designed to describe the real world”. Here’s examples of my assignments in micro and macro economics:

In my second semester I enrolled in the Monetary Economics subject, taught, I was told by the Dean at the time, by one the University’s most respected economists.

By this time, I had read Steve Keen’s Debunking Economics, and had some intellectual self-defence against what I was being taught.

This is my print out of the slides from the first lecture of the course.

As you can see, in one of the first slides he states the “representative agent” model as an assumption of the course. (also note that we assume it is a “cashless economy” – in a monetary economics course!!!)

The representative agent model, though, as I’d just learnt from Steve Keen, is a farce.

What is a “representative agent model”? A representative agent is the idea that a single agent can be used to represent everyone in the economy.

If this seems like an overstretched simplification – it is. To make this representation work – to make a single, representative agent represent all people in the economy at once – you need to assume that the consumption of any one person is “independent of the level of income of any consumer and also constant across consumers” (as it says in my microeconomics textbook).

This is obviously ridiculous, and clearly a huge problem for a theory which purports to describe the economy. It is like planning on building a wall, by assuming there is only one large brick.

So back to being asked to accept the representative agent model as an assumption in my monetary economics class.

In that first class, I had a heated interchange about this with my monetary economics lecturer. I still have my notes about the exchange which I jotted down afterwards. I wrote down that he called Steve Keen a “charlatan”, and that I didn’t need to understand why the representative agent model was justified – the important thing was that he did!

At the end of class I approached him and asked him to refer me to a paper about why the representative agent model was useful. He referred me to a chapter called Micro Data and General Equilibrium Models.

The text, however, just confirmed Keen’s observation: only under “discount factor homogeneity” could the representative agent model be justified, it said. And discount factor homogeneity, it said, only occurs either if everyone’s income is the same, or if there is a single really rich consumer who “essentially does all the consuming”.

I unenrolled in that subject after the first couple of lectures.

There’s one other thing I want to mention. I did a very interesting Mathematics for Economists class and, as part of that class, we studied John Nash’s foundational paper on game theory, called “Non-cooperative Games”.

We learnt that game theory is only useful in cases where there is an “absence of coalitions in that it is assumed that each participant acts independently, without collaboration or communication with any of the others”.

Without collaboration or communication with any of the others!!! Good maths for those situations – but I don’t know how often those situations do – or ought – to occur in the economy. It was good to learn that – the fact game theory is so core to neoclassical economics shows that it is completely incapable of being useful for when people cooperate or communicate with each other – which, of course, is what we do all the time.

I’ve given these examples of relatively obscure debates to show you what an economics student has to contend with at the moment. There is basically nothing progressive about economics in universities, and it’s extremely difficult for even a highly motivated student to wade through.

I only did the first year of the masters. I wrote an email to the Dean after I left expressing a number of concerns I had with the course. I said I was concerned that:

All the subjects offered in the course were drawn strictly from neoclassical economics. The ‘Economics’ Masters at Melbourne is really ‘Neoclassical Economics’ and should arguably be renamed.”

In his reply the Dean said he would not “enter a debate about ideological slants”. But he did provide a long response to a point I made about economic history.

I said in my initial email:

The Melbourne course website, in promoting economic history, confirms that ‘to understand today's economic climate, it is important to understand what has happened in the past, and why’ and that ‘these questions are of vital importance to policymakers and businesses’. However, only a single third year subject on the topic is available to Economics Masters students, and this subject also focuses narrowly on ‘the development of neoclassical theory’.”

This is what he said in reply:

Economic History is a bit of a vexing issue.  One reason why there is not more of it available is that students have been staying away from such subjects in droves for years… It is also difficult to find well trained staff to teach Economic History subjects. As it is we have kept an undergraduate subject available and a PhD level subject… for now at least, Economic History subjects are incredibly hard to justify financially.”

I replied that it was “a shame that a lack of well trained staff has contributed to the decline in prominence of economic history since the problem therefore appears to be self-perpetuating.”

He said he agreed. It was a problem not just at Melbourne, he said, but across Australia too, and also internationally. “As a breed economic historians are not extinct but they are rare”. “In times like these that are fairly tight financially, such subjects are always at risk”.

My perplexing and frustrating experience with economics education was not out of the ordinary. This, of course, was at the end of 2012. Subsequently, at the end of 2013, economics students at my alma mata – the University of Manchester – set up the Manchester Post-Crash Economics Society. This is a society dedicated to changing the economics curriculum at universities – so that it is not pure neoclassical economics, but also showcases other theories and viewpoints.

They have done excellent work, including a detailed, 60 page report on the practicalities of changing university economics from a neoclassical monoculture to a more pluralist approach – showcasing various theories. They have had backing from none other than the Bank of England, the UKs Central Bank.

Spearheaded mainly by the economics students from Manchester, there is now a really incredible world-wide network of students and economics professors under the banner of Rethinking Economics.

So far, however, even in Manchester, they have more or less achieved no change in the way economics is taught.

Economics is stuck. And that’s even in the most active places internationally – even in the places where the students have backing from the Bank of England!

What about Australia? So far as I can tell – from an informed outsider perspective – there is nothing being done by students to change the way economics is taught in Australia. The last movement we had was 30 years ago, and that helped create the political economy department at the University of Sydney. It was that movement, in fact, which was formative for Steve Keen, the author of Debunking Economics, and which Rethinking Economics puts front and centre of their history!

But even Steve Keen – one of Australia’s best economists – has been forced to leave Australia. He now works in London.

What to do about economics education is a kind of intractable problem. David Graeber recognised this at the end of his NY Book Review essay:

Breaking through neoclassical economics’ lock on major institutions, and its near-theological hold over the media—not to mention all the subtle ways it has come to define our conceptions of human motivations and the horizons of human possibility—is a daunting prospect.”

It is a complicated picture, as shown by the remarks made by the Dean about the teaching of the history of economics. There are constraints, tied up with university funding cuts; the increasing vocationalisation of university education etc.

I’ve personally given up on university economics departments. If progress is going to be made, that is not where it will happen.

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