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Issue no. 11;  30 January 2002                                     back issues at www.paecon.net

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                    In this issue:                    

                    -  Peter E. Earl,  The Perils of Pluralistic Teaching and How to Reduce Them
                    -  Marc Lavoie,  The Tight Links Between Post-Keynesian and Feminist Economics
                    -  Jean Gadrey, 
Is the Concept of Economic Growth Autistic?

                    -  Peter Söderbaum,  Democracy and the Need for Pluralism in Economics

                    -  Geoff Harcourt,  Review of Steve Keen's Debunking Economics




The Perils of Pluralistic Teaching and How to Reduce Them 
Peter E. Earl   (University of Queensland, Australia)

Many academics involved in the Post-Autistic Economics movement probably presume that
barriers to delivering the kind of pluralistic teaching and doctoral training advocated by the
French students and Cambridge postgraduates reduce to politics and infrastructure. They
presume it is a matter of having the numbers to get pluralistic policies through faculty
committees and of having the necessary teaching resources; resistance from students is
not seen as an issue. Certainly, the student petitioning that started off the movement gives
the impression that pluralistic teaching modes will be widely welcomed by students that
enrol for courses in economics, because such an approach to teaching has greater scientific
integrity than the present approach by which the neoclassical hegemony sweeps alternative
perspectives aside regardless of empirical evidence.

Such would once have been my own perspective. I had the privilege of receiving my undergraduate
training at Cambridge at a time (1974­–1977) when pluralistic teaching was the order of the day.
I received contrasting perspectives on value and distribution from Frank Hahn, John Eatwell
and Bob Rowthorn. When Ajit Singh, my director of studies, noticed that none of these
approaches satisfied me in terms of how they dealt with problems of information and knowledge,
he put me on the trail of behavioural economics despite it not being his habitual mode of
thinking. My first lectureship was in a department (the University of Stirling, 1979-1984) which
both offered subjects that were team-taught by staff with different perspectives and embraced
the case study method of teaching management economics and marketing, with all that this
entailed in opening the eyes of students to the indeterminacy of economic problem solving in
real-world settings. Students at these institutions did not see pluralism as peculiar.

On moving to the University of Tasmania in 1984, I started having to do battle with non-UK-trained
neoclassical economists who found it inconvenient to have me delivering Post Keynesian
monetary/macro economics between their first- and third-year macroeconomics units. Eventually
I was pushed out of economics and into teaching marketing and organizational behaviour, though
not after having had an enjoyable time teaching a first year unit in Australian Political Economy
that had a history of being taught in a pluralistic manner by UK-trained staff.  It covered
classics by Galbraith, Friedman, Baran and Sweezy, Hirsch,  G.B. Richardson, and so
on, but it was taken mostly by Arts students, with Commerce and Economics students
sticking to orthodox micro and macro papers.

The chance to teach a large pluralistic microeconomics class came when I took up the
Chair in Economics at Lincoln University in New Zealand in 1991. I relished this as an
opportunity to show non-pluralistic colleagues that it was possible to cover mainstream and
behavioural/institutional approaches to business economics simultaneously without diluting
their content. However, nothing had prepared me for the resistance I encountered from the
students, who had no expectation of being taught in a pluralistic manner. They were used
to multiple choice exercises and short answer types of problems and lacked experience in
essay writing and open-ended problem solving. To them, economics was a matter of moving
lines on graphs and the invitation ‘discuss’ meant ‘describe’, as indeed it did to most of my
colleagues, as I discovered each time I acted as examinations moderator. The traditional
UK-style tutorials in which students discussed economic puzzles were unfamiliar to the
New Zealanders and their full-fee-paying Asian counterparts and many in the class (whether
native English speakers or not) were unable to read at the level I expected (that of The
, not The Sun). A thinking student’s approach to economics, in which students were
expected to battle to get to grips with unresolved debates in the discipline, was a shock to
the majority of the class.  Most were not economics majors and were simultaneously being
spoon-fed marketing and management with overly simplistic texts whose bullet points they
could learn and parrot back to their examiners. They had no intrinsic interest in economics
as a subject for making sense of the world; it was taken merely as a hurdle en route to a
degree that would provide better job opportunities.

At the time, I suspected that the problem was that I was working in a third-rate institution,
many of whose students really should not have been at university at all. Even so, I taught the
subject nine times and turned the teaching resources into a textbook (Earl, 1995), before I
lost the political battle and saw it replaced by ‘intermediate Varian’. However, having recently
escaped to a university with much stricter entry requirements, I have experienced several
months of a far more brutal resistance to pluralism than anything I encountered in New Zealand.
Students who were used to knowing in advance whether or not they were handing in a high
quality assignment got very aggressive when faced with a lecturer who expected them to
read two or three original articles each week and do assignments for which they had no way
of knowing whether they had understood the question in the ‘right’ way or used the ‘right’
piece of theory to wrestle with it.  The upshot was a petition and a steady stream of e-mail
complaints about virtually every aspect of the course, which grew into an organized campaign
and gave me many sleepless nights, despite the support of a pluralistic head of department
(John Foster) who had hired me knowing full well how I was going to teach. (I should add that
the final set of grades was thoroughly satisfying; for the first time in ten years, I did not have
to dumb my standards down, as most of the class had eventually got to grips with pluralism
and open-ended problems – just as I had promised them that they would.) 

If this is what happens with a class of able students in an age when most of the class
typically consists of business/management students, nor economics majors, then those
who try to teach in a pluralistic manner risk doing terrible things to their teaching evaluation
scores and to their departmental enrolments. Economics done this way looks far harder
and more threatening than a typical one-eyed mainstream offering, even if it contains less

Much of this will not seem surprising to those who have read Pirsig’s (1974) Zen and the
Art of Motorcycle Maintenance
, but there are some things that would-be pluralists can
do to make their task a bit less harrowing that my first semester at the University of
Queensland proved to be. With my new and, on average, far more able body of students,
I made one serious mistake right at the start of the subject, exactly as I did when first
teaching in New Zealand: I presumed that students were used to the notion that a university
is a place where ideas are debated openly and difficult issues are not dodged, rather than
a place at which one receives the present state of knowledge in neatly packaged form
without any diversions into the history of the discipline or the personalities and politics
that shaped it. Students who are under the latter delusion will naturally be horrified if a
lecturer challenges the wisdom of a textbook. When I did so with my 1991 class, they
ran crying (well, almost) to the director of the education unit — and as a consequence I
was introduced to an essential source for any would-be pluralistic teacher, namely the
work of William Perry (1970) on student learning. Subsequent cohorts of my students in
New Zealand reacted differently, and this seems in large part to have been due to me
teaching them at the start of the subject about Perry’s work, and including a discussion of
it in the textbook I developed around the course. This was not presented to the Queensland
students, who also, due to some accidents of history, were not using my text on that

Perry was an educational counsellor and he concluded that the presence of different ways
of thinking within a classroom is the major barrier to satisfactory teacher/pupil interaction.
(I have explored his work in relation to economics at some length elsewhere: see Earl, 2000.)
According to Perry, less intellectually mature students operate in a dualistic mode, seeing
things in a very black-and-white manner. There is real science versus quackery. Teachers
dispense the truth; students are vessels into which it is to be poured and marks are awarded
for showing that one can replicate the material. Dualistic thinkers have a hard time seeing
what value student arguments could have in a class discussion, so they keep quiet and
wait for wisdom from the teacher.

Perry identified a progression from dualism towards a kind of ‘committed relativism’ in which
one has got used to the idea that knowledge is debatable and provisional, but becomes
attached to particular theoretical frameworks after thinking long and hard about their efficacy
relative to rivals in particular contexts.  En route, there is a growing awareness that debates
exist within a discipline. This is initially seen as reflecting ‘good’ versus ‘bad’ authorities
but is then reframed in terms of ‘it’s not really an issue about whether the scientists are
good or bad; they’ve just not yet got the data in that will enable them to resolve things’.
When students then notice the persistence of debates despite ongoing data gathering,
this initially raises questions about whether lecturers can even mark their work: what
makes any idea an idea of quality is unclear. But gradually students come to see that it
isn’t a matter of scientists simply asserting their position is right but of arguing a case,
which is what they realize everyone does in other parts of their lives. It is only by this stage
that the student will be really comfortable with pluralistic teaching in which they are given
contending perspectives and opportunities to test their fit in a variety of contexts and are
then left to make up their minds with mentoring assistances from their teachers.

The transition from one level of intellectual development to another looks, in Perry’s terms,
likely to be quite painful, but if one explains to students what is going on, they seem to be
far more receptive, particularly when they can see that in other parts of their lives they do
tolerate, even enjoy, debate and ambiguity and can argue cases. The Post-Autistic
economist’s task would be much easier if introductory economics at university level
broached the dualism/relativism issue by focusing on contending perspectives in a manner
different from high-school economics. Unfortunately, the dominance of mainstream
economics at the first year locks student expectations into continued faith in dualistic
modes of learning about economics, making pluralistic teaching at intermediate and
advance levels much more of a struggle. 

Earl, P.E. (1995)  
Microeconomics for Business and Marketing : Lectures, Cases and Worked Essays. Aldershot,
     Edward Elgar.
Earl, P.E. (2000) ‘Indeterminacy in the economics classroom’, in Earl, P.E. and Frowen, S.F. (eds)  
Economics As an
     Art of Thought: Essays in Memory of G.L.S. Shackle
, London, Routledge, pp.  25–50.
Perry, W.G., jr (1970) Forms of Ethical and Intellectual Development in the College Years: A Scheme, New York,
     Holt, Rinehart and Winston.
Pirsig, R.M.  (1974) Zen and the Art of Motorcycle Maintenance, London, Bodley Head

Peter E. Earl (2002) “The Perils of Pluralistic Teaching and How to Reduce Them ”, post-autistic
economics review
: issue no. 11, January, article 1.




The Tight Links Between Post-Keynesian and Feminist Economics
Marc Lavoie   (University of Ottawa, Canada)

My aim here is to show that there are tight methodological links between post-Keynesian
economics, as I understand it, and feminist economics, as presented by Julie Nelson (1995)
(who also argued why PAE needs feminism, in the October 2001 issue of the PAE Newsletter).
I should point out that others, specifically Lee Levin, have also found substantial points of
convergence between feminist economics and post-Keynesian economics.

In her paper, Nelson considers models, methods, topics, and pedagogy. The first three issues
only will be dealt with here, but as the French students have shown in the autistic economics
debate, pedagogy is also crucial.

Within the issue of models, Nelson questions the use and definition of rationality, as well as
the role of methodological individualism; in methods, she discusses the realism of hypotheses;
in topics, she challenges the neoclassical obsession with exchange economics. I shall
show that these elements that Nelson highlights as key methodological features of feminist
economics can also be found in the characterization of post-Keynesian economics.

In my book on post-Keynesian economics (Lavoie 1992a), and in a previously written article
(1992b), I have argued that there are four essentials, or presuppositions, which distinguish
post-Keynesian economics, along with several other heterodox schools such as the
Institutionalists and most Marxists, from mainstream neoclassical economics.  These four
essentials can be set up as four antagonizing doublets, the first term  of each doublet
applying to neoclassical economics, while the second term applies to post-Keynesian
economics and its heterodox brethren. These are: substantive or hyper rationality versus
procedural or reasonable rationality; methodological individualism versus some form of
organicism or holism; an instrumentalist/idealist ontology versus realism; exchange
versus production.

In neoclassical economics, the assumed capacities of the individual are daunting: it is
always possible for agents to optimize, and to behave as if the future could be predicted,
with some probabilistic certainty. In post-Keynesian economics and other heterodox schools,
agents have bounded capacities to acquire and treat information; in addition, their environment
can be highly uncertain, as decisions to be taken themselves may change the future economic
environment. Procedural rationality, or reasonable rationality, goes beyond maximization
subject to constrained computational abilities.  The solution sought can only be a satisfying
one, for in general, no one knows what the optimal solution is, nor whether there ever existed
such an optimal solution  Within this world, one is compelled to function on the basis of
procedural rationality, often relying on rules, habits, and the judgment of others, who we
assume to be better informed.

The use of rules, customs, and conventions brings in organicism, holism, and intersubjectivity.
In post-Keynesian economics, individual behaviour is interdependent. Individuals are influenced
by their social environment, social classes, or gender. There is organic interdependence. For
this reason, social classes and their institutions play a crucial role in the analysis. By contrast,
the mainstream neoclassical agent is generally seen as an atomistic being, devoid of any
class link or social attachment.

The third essential of post-Keynesian economics, related to epistemology, is realism. Realism
is rather vague as it can be defined in many different ways, specially with the advent of critical
and transcendental realism, but I shall define it as a school driving at putting forth realist
hypotheses, based on stylized facts, and determined to offer explanations and tell a story.
In neoclassical economics, a form of idealistic instrumentalism reigns. High-brow theory
– general equilibrium theory – defines the hypotheses which are required to describe the
world as they wish it would be; vulgar theory starts from these unrealistic premises to build
partial equilibrium models and to test their models.

Finally there is the issue of the definition of economics. Mainstream economics is the science
of scarcity, the study of the optimal allocation of scarce means. All models are variants or
extensions of the exchange economy. Producers are arbitrageurs acting in a form of
indirect exchange. By contrast, post-Keynesian economics is concerned, as the classical
authors were, with production and distribution. The major issue is not how to allocate
resources but rather how to get rid of unemployed resources and how to increase production
and living standards.

These four essentials of post-Keynesian economics can be found in Nelson’s depiction of
feminist economics. She criticizes the mainstream “rational, autonomous, self-interested
agent, successfully making optimizing choices subject to exogenously imposed constraints”
(1995: 135). In place of this atomistic agent with hyper rationality, Nelson wishes an agent
“socialized into family and community groups”, a “dependent, emotional, connected” human
being, in other words the organic economic actor that I described above.

For example, Nelson (1995: 136) points to models, such as wage efficiency models ā la
Akerlof, that emphasize the notions of fairness and equity. We know that these kinds of
models have also long been advocated by Marxist economists; and post-Keynesian
economists have also tied fairness to economic behaviour, for instance Adrian Wood in
his theory of pay (1978). Nelson also points towards Keynes’s notion of animal spirits and
conventions, which are recurrent themes along with fundamental uncertainty and liquidity
preference in post-Keynesian economics. Decisions in an environment of fundamental
uncertainty, as pointed out above, cannot be guided by mainstream hyper rationality; it
requires procedural rationality.

In some ways, Nelson (1995: 139) favours realism, as the post-Keynesians do. She
denounces the neoclassical emphasis on “logic, without sufficient attention to grasping
the big picture”, which leads to “empty, out-of-touch exercises in pointless deduction ... for
the sake of precision” – the idealism of a segment of neoclassical economics. Nelson
recommends the use of metaphors and story-telling. As post-Keynesian Paul Davidson,
has written on a number of occasions, it is better to be vaguely right than precisely wrong.

The fourth essential doublet, that of exchange versus production, is directly tackled by
Nelson (1995: 142-143). She points out that classical economists used to be concerned
with production and the distribution of all the necessaries and conveniences of life. This is
contrasted to the neoclassical definition of our field, “the processes by which things-- goods,
services, financial assets  -- are exchanged. For her, the definition of economics should be
based on “provisioning” rather than “marketization” or the use of a narrow model of individual

There are other passages in Nelson’s account of feminist economics which are reminiscent
of ideas which have been long advocated by some post-Keynesian economists. For instance,
when Nelson (1995: 137) says that “the feminist analysis suggests that there should not be
just one economic model, but rather many economic models, depending on the usefulness
of various modelling techniques in the various applications”, one is struck with the similarity
of such a statement with the Babylonian approach, the main proponent of which has been
post-Keynesian Sheila Dow (1990). Her Babylonian approach sees research as examining
an issue from “a variety of starting points” (1990: 146), by using a range of different methods
and techniques (as also argued by Nelson (1995: 140)), and by using a pluralism of models.

Finally, Nelson (1995: 141) points out the objectivity of the researcher, which is the hallmark
of positive economics as conceived by mainstream colleagues, is an illusion. This was also
pointed out by post-Keynesian Joan Robinson, who argued that, since ideology and
economics were intimately tied up, economics was little different from a branch of theology.
Robinson loathed those who claimed objectivity in the social sciences, saying that they
either deceived themselves or tried to deceive others. For Robinson (1964: 27), “the
objectivity of science arises, not because the individual is impartial, but because individuals
are continually testing each other’s theories”.

The post-autistic movement, that got started by the French students asking for more
pluralism in the classroom, ironically contributes to more objectivity in economics.

Dow, Sheila C. 1990. “Beyond dualism”, Cambridge Journal of Economics, 14 (2).
Lavoie, Marc. 1992a.  
Foundations of Post-Keynesian Economic Analysis. Edward Elgar, Aldershot.
Lavoie, Marc. 1992b. “Towards a new research programme for post-Keynesianism and neo-Ricardianism”, 

     Review of Political Economy, 4(1).
Nelson, Julie A. “Feminism and Economics”, Journal of Economic Perspectives, 9 (2).
Robinson, Joan. Economic Philosophy. Penguin Books, London.
Wood, Adrian. 1978. A Theory of Pay. Cambridge University Press. Cambridge.

Marc Lavoie (2002) “The Tight Links Between Post-Keynesian and Feminist Economics ”, post-autistic
economics review
: issue no. 11, January, article 2.



Is the Concept of Economic Growth Autistic?
Jean Gadrey   (University of Lille, France)

Since Malthus, economists have been debating the "limits to growth" in an attempt to identify
those factors that might lead to an inexorable slow-down in growth, or even to a "steady state". 
At the beginning of the 1970s, the studies carried out by the "Club of Rome" brought the terms
of the debate up to date again, drawing on analyses of the increasing scarcity of natural
resources.  We will not engage with this debate, which is undoubtedly worthy of interest, for
two reasons.  Firstly, history can be said to have decided the matter, at least up to now:
capitalism has repeatedly pushed back the limits in question and given the lie to prophecies
inspired by the Malthusian approach.  Secondly, and more importantly, it seems to us that
the main question raised by the virtually unanimous assertion that growth needs to be as
strong as possible concerns not the rate of growth but rather the concept itself and the tools
used to measure increasing wealth.  The issues addressed in debates on the limits to growth
seldom include the limits of the concept itself.

The invention of growth

The concept of economic growth, in the sense attributed to it today [1], is a relatively recent
invention, a by-product, as it were, of industrialisation.  It came into its own with Fordism,
the three decades or so of growth and prosperity following the Second World War and the
national accounting systems of the 20th century, which were themselves developed in a
particular economic context, one that saw the expansion of heavy industry and the mass
consumption of standardised goods.  What is economic growth?  It is the rate of increase,
from one period to another, in the flows of goods produced and/or consumed within a given
institutional space, which may be a firm, an industry, a national or regional territory, etc.
However, if this statistical operation is to be carried out successfully from period to period,
there has to be agreement on the nature of the goods whose "volumes" are being measured,
and these goods should not be continually changing in nature or in quality.  The ideal
situation is one in which, firstly, the transformations carried out during the production
process affect mainly the quantities of the goods produced rather than the nature and
qualities of those goods.  In this way, product standards remain unchanged from period to
period.  Secondly, there should be stable conventions governing the types of products to
be included in the accounts.

Broadly speaking, these conditions were met during the "Fordist " period, which saw the
expansion of the mass production and consumption of highly standardised goods and
services that benefited from economies of scale, the mechanisation of agriculture, the
heavy and inflexible automation of manufacturing industry (before the advent of the
computer), the establishment of large retail outlets and other "retail factories", the increased
take-up of banking services by households and their increasing connection to water, gas
and electricity suppliers and to telephone networks, or even the development of "Fordist"
tourism in the 1960s, the ideal type of which is of course the Spanish model.  While it is
true that the quality of these goods and services improved over time, it was the increase
in their volume that was the major component of this mode of development, whose progress
could be followed as the annual product flows and year-on-year increases were entered into
the national accounts, providing a picture of economic growth. As far as households were
concerned, the corresponding indicator of progress was the "standard of living", which was
measured in the same way, on the basis of the annual flows consumed.  Thus the criterion
used to assess economic "well-being" was the level of consumption: the more goods and
services were consumed, the higher economic well-being was judged to be.  At the heart
of this economy based on growth in the flows of standardised goods and services lay gains
in labour productivity. 

Contemporary economies, growth and productivity

Can the analysis of contemporary economies rely exclusively on the use of similar tools
(growth, productivity, standard of living) to measure and evaluate their own progress? 
There must be considerable doubt about this.

As far as manufacturing industry is concerned, demassification (a term coined by Alvin
Toffler as early as 1970 [2]), increasing variety, product innovations that reduce product life
cycles and, in some cases, the introduction of individualised or "customised" products,
together with the sale of integrated packages (products/services/after sales), have all
served to weaken measurement conventions based on quality standards that were
comparable over time.

The difficulties and uncertainties of these measurements are further compounded in the
service sector.  While some service industries are still at the "industrial" stage of providing
standardised services, many others do not readily lend themselves to the application of
the traditional industrial concepts.  What do terms such as "growth" and "productivity
gains" mean when applied to services such as consultancy, education, health, social
welfare, research or insurance?  Where are the standard product units that would make it
possible to compare the quantities produced over time?  If the production and diffusion of
knowledge is playing an increasingly important  role in the developed economies, what
are these units of knowledge whose increased volume is being followed?

One of the greatest ambiguities in the desperate and generally fruitless search for new
"conventions" that would make such activities amenable to the application of the industrial
concepts of growth and productivity can be illustrated by considering the case of health
services.  In such activities, is the product whose growth we are seeking to measure, and
whose definition subsequently determines the measurement of productivity gains and
standard of living, synonymous with the flows of actions, of medical and surgical treatments
and of patients treated?  Or should we look beyond these flows and recognise that what
counts (the real "product) is the improvement in the health of the individuals and population
concerned?   If the flows approach is adopted, successful preventive policies, for example,
will lead to reductions in the measurement of growth and standards of living!  However, if
priority is given in evaluations to improvements of state, those same preventive policies
could be judged to be positive contributions to the individual and collective quality of life. 
This would constitute a shift away from (economic) growth towards (social and human)
development.  We would not, for all that, be abandoning the use of statistical indicators
of that development (the name of Amartya Sen, a Nobel prize-winner in economics, is
associated with important advances in this area linked to studies carried out under the
auspices of the United Nations Development Programme), and there would still be a need
for proper economic analyses of the effectiveness of the actions and services through
which these improvements in state are to be achieved.  What is different is the favoured
indicator of progress (the others are not entirely dispensed with, however) and the
conventions on which evaluation is based.

This example of the health care sector and its output indicators is in no sense specific. 
Similar dilemmas can be found in most activities based on the production and exchange
of knowledge (education, research, consultancy of all kinds), in "relational" neighbourhood
services (help for the elderly, childcare, etc.), social work, insurance, etc., that is in the
vast majority of activities that have seen the strongest growth in employment over the past
25 years.  Notions such as the growth in processing flows and productivity gains are of
much less relevance in assessing progress in these sectors, which play a major role in
developed economies. The increase in wealth, in value created or value added or in productive
efficiency certainly seems to require mechanisms for assessing the effects or impacts of
those activities on the proper functioning or development of the realities they operate on,
whether they be individuals, organisations or technical or social systems.  Does the wealth
or value produced by a service that helps to maintain technical, economic or social systems,
or even human beings, increase with the number of "trouble-shooting" interventions or repairs
(which is the solution usually adopted by growth indicators) or, conversely, with the ability
of that service to reduce the number and gravity of the dysfunctions?  Is the wealth generating
capacity of an educational system measured by the number of hours teaching delivered or
the number of training sessions organised, or should we adopt different conventions for
assessing the contribution of the education system to the development of its users'
knowledge, personalities and socialisation?

The new growth of the "new economy", we are told, is based on the new information and
communication technologies, which constitute a new, universal technological paradigm. 
This assessment is somewhat exaggerated, but let us accept for the moment that it is true. 
Can such an economy based on information, communication and knowledge be conceptualised
and managed in terms of growth?  The answer is obviously no: the relative "dematerialisation"
of wealth has gone hand-in-hand with the gradual disappearance of those stable reference
units used to measure agricultural and industrial output.  True, it is possible to count software
programs (or the lines of programming in each package), computers, Internet connections or
bank transactions, but it is well known that "what counts" is processing and problem-solving
capacity, reliability or the useful information that can be easily obtained by means of
"intelligent" and "user-friendly" procedures.  Once again, the progress of this information
economy lies less in the growth of units produced than in the impact of these ICTs on the
functioning of other technical and human systems.  This requires the services thus obtained
to be evaluated from a development perspective that might include certain growth indicators
but would not be reduced solely to such measures.

Financial criteria and the discourse on progress

Thus if the main pillars of contemporary developed economies are services, permanent
innovation, knowledge and the new information and communication technologies, we can
reasonably suppose that it requires us to move away from the economic growth paradigm
towards a new paradigm based on the evaluation of economic and social development. 
In other words, we need to shift away from the economics of measuring flows and costs
towards the socio-economics of judging improvements in state, quality and individual and
collective well-being.

Now the advocates of the "new economy", namely some in the world of politics and the
media and a handful of economists, have not reached this point.  They extol the merits of
their new model in the language of the old model, using the concepts that enabled
economics to portray itself as a "hard" science, laying down technical laws comparable
to the law of gravitation. 

One objection can be raised here.  Observation of the management practices adopted by
firms in high-tech sectors and the financial institutions that support them clearly shows
that these major players in the new economy have long understood that the realities they
are managing can no longer be conceptualised with the old concepts.  They have successfully
put the growth paradigm into context...  Neither Bill Gates and his kind nor the pension
funds that influence the management of an increasing number of companies need the old
micro and macro-economic concepts to manage the performance of the firms in their
possession.  Their tools are indicators of financial return or, to use the language of the
day, of the "creation of shareholder value".  However, beyond the boundaries of their
companies and financial networks, what they need is a discourse that publicly legitimates
their outstanding contribution to the public good. This is where the majority of economists,
the economic media, Alan Greenspan and others play their part, making their statements in
the name of prosperity, growth and productivity.

There are other ways of putting the growth paradigm into context than by imputing a
monetary value to all the activities and all the products in competitive markets or the
financial markets.  In policy terms, the first point at issue in the observable present
economy, is not the choice of strong growth rather than slow growth. Rather, it is the
choice of a mode of thinking distinct from both the industrialist mode of judging progress
inherited from the Fordist era (based on the notions of growth, productivity and standard
of living) and the financial mode of calculating the shareholder value of all activities.  This
new mode would be one based on a pluralistic evaluation of social development, of quality
of life and of the improvement in various individual and collective states.  Putting both the
growth and productivity paradigm and the financial magnitude paradigm into context
simultaneously obviously does not mean we are depriving ourselves of economic and
financial indicators, when relevant, as a means of quantifying increases in product flows
and the efficiency with which those flows are produced, particularly in activities that
produce relatively standardised goods and services.  These indicators should be part 
- with others - of the development evaluation paradigm, but their role should be a
subordinate one.  What does the phrase "controlling health expenditure" mean, for
example, if not a policy based, over and above statistical observation of the volume of
medical and paramedical actions and their costs ("accounting control"), on assessments
of the relevance of these practices to individual and collective health objectives under
debate?  Should home help services for the elderly be evaluated in terms of their ability
to reduce old people's dependency, to give them as much autonomy as possible by
cooperating with their relatives and with voluntary workers to that end, thereby reducing
the outside assistance required to the minimum?  Or should they be measured on the
basis of the volume of visits, actions or hours of intervention, in accordance with the
argument that an increase in dependency encourages growth?

To conclude on a similar note, we will mention a modest but interesting attempt to suggest
a possible path out of this dilemma.  American researchers [3] have developed a synthetic
national indicator of "social health" in the United States by aggregating nine existing social
indicators that it has been possible to monitor statistically since 1959: the index of inequality
between rich and poor, average weekly earnings, infant mortality, child poverty, the adolescent
suicide rate, the murder rate, unemployment, old age poverty and the cost of care for the
elderly that is not reimbursed.  They then plotted the index of the growth of GDP and this
national index of "social health" on the same graph.  From 1959 until the early 1970s, the
two indexes evolved in parallel with each other. In the mid-1970s, however, they became
uncoupled from each other in spectacular fashion: GDP continued its remarkable growth,
while the social health indicator fell sharply, particularly during the lengthy period between
1978 and 1993.  Moreover, this finding is relatively insensitive to the weighting coefficients
used to construct the synthetic social indicator.  The main value of this type of research is
not that it provides a definitive new objective measure of social progress, even less of Gross
National Happiness, but that it feeds into debates on the development of more precise
pluralistic evaluations based on a limited number of indicators whose significance lies in
the fact they are the product of careful thought and discussion, rather than being chosen
unilaterally by researchers or experts.  This, among other things, is what makes the work
of the UNDP (United Nations Development Program) on indicators of human development
so interesting.

1 Our contemporary concepts have more distant origins, since they date from the early days of the Industrial
Revolution, and in particular from the work of Malthus.  However, it was not until the State took control of
"industrial policy" and planning (in Europe, just after the Second World War) that these ideas led to the
development of measuring tools, institutions and figures that could be fed into the public debate as indicators
of progress.
2 Future Shock, New York, Bantam Books, 1970.
3 See Marque-Luisa Miringoff and Marc Miringoff, The Growing Gap Between Standard economic Indicators
and the Nation's Social Health, Challenge, July 1996.

Jean Gadrey (2002) “Is The Concept of Economics Growth Autistic”, post-autistic
economics review
: issue no. 11, January, article 3.
This essay's ideas are developed further in Jean Gadrey's book 
Nouvelle économie nouveau mythe? (2001). An
English translation, New Economy, New Myth? will be published later this year by Routledge



Democracy and the Need for Pluralism in Economics
Peter Söderbaum    
(Mälardalen University, Västerås, Sweden)

The student initiative to challenge the dominance of the neoclassical paradigm at departments
of economics in various parts of the world is extremely important. Why is this so? As I see
it, the close to monopoly position of neoclassical economics is not compatible with normal
ideas about democracy. Economics is science in some sense but at the same time ideology.
Limiting economics to the neoclassical paradigm means imposing a serious ideological
limitation. Departments of economics become political propaganda centers not very different
from the many think tanks that we see these days in the USA and Europe. Instead, pluralism
and paradigm-coexistence are needed for departments of economics. Having more than one
theoretical perspective will mean that more than one ideological perspective is represented.

Economic Man assumptions imply that human beings are essentially consumers and wage
earners.  Obviously, this is close to an ideology of consumerism and neo-liberalism.  Among
alternative ways of regarding human beings, men and women can be seen as Political
Economic Persons, meaning that their roles as professionals, parents and citizens are
also considered. Furthermore, Economic Man assumptions are tied to utilitarian ethics,
which is merely one of numerous ethical theories. Our Political Economic Person, on the
contrary, is guided by an ideological orientation that is not limited to one specific ethics.

Rather than the usual 'monetary reductionism' of the neoclassical perspective, economics
and efficiency can be understood in multidimensional terms. While there are essential monetary
impacts connected with road construction, for example, it is not clear that it is 'rational' to put
a price in monetary terms on all kinds of impacts. If the issues that we face are complex,
then thinking in terms of profiles of monetary and non-monetary impacts may be a better idea.
If this philosophy, and at the same time ideology, is chosen, then monetary analysis will get
the more limited role of a partial analysis.

Cost-Benefit Analysis (CBA) with its connected ideas about 'correct prices' for purposes of
'resource allocation' is another example of the ideological character of much neoclassical
analysis. This approach is built on an idea of aggregation implying that it is meaningful to
add all impacts in one-dimensional terms. It is furthermore built on a closed ideology in the
sense that the analyst is able to point out or measure each impact correctly in monetary
terms. In this way the analyst can arrive at recommendations about the 'best' alternative
from a societal point of view. It is not difficult to understand that this role for the analyst of
being expert in an extreme sense is attractive. But again, such conclusions imply that a
specific ideology has been applied in terms of ideas about how to arrive at correct prices
for each impact. Here again there are alternate, ideologically more open, approaches,
such as Positional Analysis, built on ideas of keeping impacts separate and presenting
multidimensional profiles for each alternative considered. The purpose of analysis becomes
less one of solving a problem in a final sense and more one of illuminating an issue in
relation to possibly relevant value or ideological orientations.

While CBA probably is something that should be abandoned as incompatible with democracy,
other parts of neoclassical microeconomics may be more useful. In many ways neoclassical
economics plays an important role in public debate. If students want to understand our history
and the present situation it is good to learn some neoclassical economics at least for
background purposes. At Mälardalen University, we started in 1995 an undergraduate
ecological economics program, where the neoclassical and institutional paradigms are
systematically compared already from the first course. In this way an alternative microeconomics
is suggested in terms of views of human beings, of organizations, markets, efficiency,
development or progress, social change processes etc. (Söderbaum 2000). Students are
confronted with traditional texts in economics and business management as well as the
alternative microeconomics indicated. In this way students become 'free to choose' which
is - at least in their rhetoric - also the wish of neoclassical economists.

Readers of the post-autistic economics review may wonder how such a program could be
designed and implemented. One explanation may be that ours is a relatively young university,
which is expected to innovate with respect to interdisciplinary programs and where disciplinary
barriers are not so strong. Another is probably that the ecological economics program is
connected with a department where Business Management rather than Economics dominates
the scene. More important, hopefully, is an understanding among an increasing number of
actors that in relation to issues of environment and development, neoclassical economics is
today more of a problem than a solution. Interdisciplinary approaches, such as ecological
economics, are necessary if we want to reverse trends of environmental and social degradation
in Sweden, in Europe and at a global level.

It should be noted that the Award by the Bank of Sweden in Memory of Alfred Nobel is part
of the problem we are discussing. This award has probably contributed to making economics
more 'autistic' and to protecting the neoclassical paradigm. But occasionally economists 
who stand for a degree of pluralism and interdisciplinary approaches, such as Gunnar Myrdal,
have been awarded. At a certain stage in his career, Myrdal left neoclassical theory behind
and declared openly his sympathies for institutionalism (Myrdal 1978). In doing so, Myrdal
pointed to the role of values not only in economics but in all social sciences and questioned
claims of 'value-neutrality' concerning theories, methods or policy recommendations. "Values
are always with us" in scientific research, Myrdal argues, and this holds for all steps from
problem formulation, choice of theoretical framework, methods to be applied and the way results
are presented. Unfortunately, most neoclassical economists and even some institutionalists 
persist with the belief that they can stand outside society and observe it objectively. 

I will end this essay by returning to the important role of students as actors in influencing the
way economics and business management is taught. At Uppsala University, there is a
Center for Environmental and Development Studies, financed by the university but - with the
exception of examinations - controlled largely by the students. The students by themselves
arrange courses that they find urgent. Early this year three students made a study of the
economics programs at Uppsala University, the Agricultural University Uppsala, two universities
in Stockholm and two programs at Mälardalen University. In interviewing those responsible,
their starting point was the fact that the mentioned universities all had signed the Copernicus
University Charter implying that they were committed "to the principle and practice of
environmental protection and sustainable development". At issue was how this commitment
is reflected in the way economics is taught. Is there any systematic attempt to bring in
environmental issues into teaching and courses? Is there a role for interdisciplinarity and
for alternative perspectives in economics? The students found that with few exceptions
very little had happened. In many cases, those responsible for the programs and courses
did not even know about the Copernicus Charter and argued that since there were no
difficulties in recruiting new students there were few incentives for change. But the story
does not end with this. The students were financially supported by responsible governmental
agencies and the Ministry of Education in Sweden has signalled that a conference will be
arranged to follow up these important issues.

Myrdal, G. 1978. Institutional Economics. Journal of Economic Issues, Vol.12, No.3, pp.771-783.
Söderbaum, P. 2000.  
Ecological Economics: A Political Economics Approach to Environment and Development.
     Earthscan, London.

Peter Söderbaum    (2
002) “Democracy and the Need for Pluralism in Economics”, post-autistic
economics review
: issue no. 11, January, article 4.


Review of Steve Keen, Debunking Economics:
      The Naked Emperor of the Social Sciences
, London: Zed Books, 2001
Geoff Harcourt   (Cambridge University, UK)

Steve Keen's Debunking Economics is a provocative book; deliberately so is my conjecture. 
The anti-Vietnam war movement in Adelaide dichotomised into either militants or moderates. 
I belonged to the second group, because I thought it the proper way for academics to play a
public role in vital political and social issues.  I also thought it would be counter-productive to
do otherwise (no prize for guessing the respective weights attached to the two reasons). 
Steve, I'm sure, would have been a militant.  Certainly that is his approach here.  I worry that
this may backfire, for I have sympathy with his aims and many of his arguments and judgements. 
Time will tell who is right (perhaps I could say that the militants wanted the Australian revolution
to occur first, then the troops could be brought home and conscription abolished.  The moderates
thought it better to get an ALP government elected because these two objectives were core
items in Labor's election manifesto).

Keen's object is to go behind what is currently taught to economics undergraduates in order
to reveal the conceptual bases of their instruction and the ideological purposes involved.  He
comes to his task with a thorough knowledge of the classics of the subject, of Adam Smith
as well as of Karl Marx, and with considerable analytical skills of the modern sort.  He is a
graduate of the political economy movement at the University of Sydney, and his Ph.D.
dissertation was an amalgam of the theories of Dick Goodwin and Hy Minsky, two modern
maverick greats, both alas now dead.

Goodwin was a pupil and then a colleague of Wassily Leontief and Joseph Schumpeter at
Harvard, and a pupil of Roy Harrod and Henry Phelps Brown at Oxford.  He was much
influenced by Maynard Keynes's writings and by Richard Kahn, Joan Robinson and Piero
Sraffa of his Cambridge, England colleagues in the post-war period.  Though he ceased to
be a member of the communist party by the 1940s he remained an informed fan of Marx's
writings, especially of Marx's deep knowledge of how capitalism works.  (Joan Robinson
used to say of Schumpeter that he was Marx with the adjectives changes.)  This background,
together with his love of Wicksell's economics and teaching physics at Harvard during
World War II, led to Goodwin's pioneering contribution of models of cyclical growth.  They
incorporated his insight that trend and cycle are indissolubly mixed, not separable and
determined by different sets of factors, as usually happens in orthodox economics.

Minsky also knew his Marx.  He worked with Oskar Lange as a young man.  His great
contribution was to show how real and monetary factors interrelated to produce cycles as
capitalist economies evolved through time.  While he drew on the writings of Keynes and
Michal Kalecki, his financial instability hypothesis associated with the analysis of the
effects on firms and on the economy, of the non-realisation of the expected cash flows
arising from investment projects, is highly original.  It has proved of greater and greater
value in our understanding in recent years of the financial instabilities and crises in the
world economy.  Keen's contribution is to put these two strands together to provide a
structure for illuminating the malfunctionings of modern interrelated capitalist economies. 
He does this in a way which not only draws on the insights of our past masters but also
employs the most modern of analytical techniques.

With such a  background it is easy to understand his horror at the contents of modern
textbooks.  Increasingly they model the capitalist world as though it were conforming to the
dictates of Frank Ramsey's benevolent dictator, choosing optimum paths of accumulation
over time for all its citizens.  Keynes's long run in which "we are all dead" (well, he's dead
and we are in the long run, as an IMF wit recently put it) has returned to dominate our
supposed understanding of what is happening.  Short-term instabilities are viewed as mere
aberrations, fluctuations around this long-period optimum trajectory.

Against this macroeconomic background, modern microeconomics has a bias towards
examining the behaviour of competitive markets (as set out most fully and rigorously in the
Arrow-Debreu model of general equilibrium), not as reference points but as approximations
to what is actually going on.  Of course, departures from them are taught, increasingly by
the clever application of game theory.  Moreover, the  deficiencies of real markets of all
sorts are examined in the light of the implications, for example, of the findings of the
asymmetric information theorists (three of whom - George Akerlof, Michael Spence, and
Joe Stiglitz - have just (10/10/01) been awarded this year's Nobel Prize.  From Amartya
Sen on, the Nobel Prize electors seem to be back on track).

While professional economists increasingly get to know of these and other developments,
often through the pages of the excellent Journal of Economic Perspectives, the most used
undergraduate textbooks are usually light years away from such enlightenment.  Moreover,
alternative approaches in our subject, economic history and the history of economic thought
are either being marginalized in, or driven out altogether from most undergraduate courses. 
Keen's book is directed against these trends.  He examines what is taught in macroeconomic
and microeconomic courses and what their deficiencies and shortcomings are.  And he
suggest alternatives, some of which come out of the many influences on him and his own

As I said, I understand his impatience and anger and I applaud his aims.  I just worry that
the tone of the book and, sometimes, his assertions may allow critics to sidetrack the
arguments along byways which may seem plausible but ultimately miss the point - to the
detriment of the training of future generations in what Keynes memorably called "our
miserable subject".

Nevertheless, if I were given a free hand to design a course, I would urge my pupils to read
both Keen's book and Hugh Stretton's marvellous alternative text (Economics: A New
Introduction, published by Pluto in 1999) as well as the best of the mainstream texts now
available.  (I would also urge them to read some of the great originals too!)  Only then would
I feel they had been introduced to the appropriate material with which to make up their own
minds what approach(es) to take in their studies.  As it is, without the insights of a Keen
and a Stretton (and of the past greats), I fear we are likely to produce well trained but
uncritical cogs, the better to fit the needs of our modern industrialised societies.  It is not
the proper role of university teachers either to be hired prize fighters or produce them.

                Geoff Harcourt(2
002) “Review of Steve Keen, Debunking Economics: The Naked Emperor of the
Social Sciences
", post-autistic economics review : issue no. 11, January, article 5.
This review originally appeared in the Financial Review



EDITOR: Edward Fullbrook
CORRESPONDENTS: Argentina: Iserino;  Australia: Joseph Halevi, Steve Keen:  Brazil: Wagner Leal Arienti;
France: Gilles Raveaud, Olivier Vaury; J. Walter Plinge;  Germany; Helge Peukert;  Japan: Susumu Takenaga;
Spain: Jorge Fabra;  United Kingdom: Nitasha Kaul; Michael Murphy;  United States: Benjamin Balak,
Daniel Lien, Paul Surlis:  At large: Paddy Quick

Proposals and suggestions for articles should be sent to the editor at pae_news@btinternet.com 

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