Post-Autistic Economics Network
from post-autistic economics newsletter : issue no. 4, January, 2001
A contribution on the state of economics in France and
Professor Robert Solow, a distinguished and notably non-autistic economist, has recently entered the debate in the pages of Le Monde on the questions of economic teaching raised originally, and now placed before the world community, by the French students. Permit me to underline the important points that Professor Solow acknowledges, while at the same offering a few points of difference where, in my view, the French students have made a stronger case than Professor Solow is willing to concede.
Professor Solow states outright the fundamental issue:
“L’économie est une discipline appliquée.... S’il est vrai, comme le prétendent les étudiants, que la composante empirique de l’économie est pratiquement inexistante dans leurs enseignements, alors leurs professeurs ne font pas correctement leur travail. Si l’on enseigne l’économie aux étudiants français comme s’il s’agissait d’une discipline abstraite, axiomatique, ou comme si elle consistait en l’application répétitive d’une seule technique d’analyse élaborée, alors ils ont raison de protester.”
This, it seems to me, summarizes the complaint of the French students exactly. Of course, Professor Solow is careful not to comment as an authority on economic teaching in France as it actually is. That would be a subject of which neither he nor I have personal knowledge. But who is in a position to know, other than the students -- and their professors? An impartial investigator must therefore turn to the evidence coming from these sources.
This evidence is straightforward. We have, first, the testimony of the students. To quote the English translation of one of their documents:
“...we are disturbed by the continuous construction of imaginary worlds: that is, the intellectual constructs (the famous models) whose relevance remains to be demonstrated. We have also questioned the manifest lack of pluralism... What we ask for is simple: to have the theoretical and empirical tools which will permit us to understand the world in which we live. Do economics classes discuss business, the state, or even the market? No. Do they teach us the operation of the French economy; of Europe; of Japan? No. Do the classes offered enable understanding of the recent Asian crises, of the fluctuations of the Euro.... No.”
To an American economist teaching courses on inequality, development and financial crises at a research university – and having just returned from national professional meetings at New Orleans where a great part of the agenda was taken up by discussions of financial instability, trade conflict, and the mis-government of globalization – these assertions are extraordinary. I would go so far as to find them mildly shocking. Are they contradicted by any opposing body of students, or by any documentation showing that such issues do, in fact, form part of economics teaching in France? To my knowledge, they have not been.
So, are they contradicted by the professors, whose work they so deeply indict? First, it is worth noting that while the students are united, the French professors are divided. Some support the students. Others do not. The latter group admits to this fact, in its counter-appeal lately published in Le Monde:
“Un certain nombre de professeurs et d'étudiants en économie ont signé et diffusé un appel demandant une refonte de l'enseignement de l'économie, estimant que celui‑ci repose trop sur la formalisation mathématique. Cet appel a le mérite de soulever un authentique problème, celui de la démarche scientifique en économie. Il l'aborde toutefois de façon réductrice, en contestant l'usage (instrumental) des mathématiques et se conclut par une attaque partisane à l'encontre de l'un des corpus centraux de notre discipline, à savoir les théories dites " néoclassiques ".
The responding professors thus raise two issues, the first being the role of mathematics in economic instruction, and the second being an allegation that the students have launched “une attaque partisane” against the central theories of modern scientific economics.
Professor Solow himself has rightly dismissed the first issue: “Plaider pour ou contre l’usage des mathématiques n’est pas pertinent, comme l’admettent les étudiants dans leur pétition.” The students have not raised an objection to the use of mathematics in economics, and it is beside the point to rebut their complaint on this ground.
It is therefore the second issue – the question of whether the French students may have improperly objected to the core propositions and methods of a scientific economics, that is pertinent, and here Professor Solow expresses his reservations about the movement. And it is this issue that is, indeed, the interesting one, the issue that tends also to preoccupy professional economists who concern themselves in a serious way with methodological questions.
To begin with, Professor Solow points out, rightly and importantly, that applied economics properly consists of a series of particular models, drawn from a variety of intellectual and scientific traditions, which help to structure thinking about empirical issues.
Thus, for example: Does the distribution of changes in asset prices or exchange rates follow a normal curve, or one with fatter tails and hence a higher risk of catastrophic deviations? Is the market for low wage labor characterized by monopsony power (so that increasing minimum wages may raise rather than reduce employment)? Can free international capital movements be justified when information is not equally available to all sides of the resulting transactions? Does economic inequality tend to fall, or rise, with economic growth? Does unemployment rise when inequality falls, and vice versa (the conventional position), or do more equal societies have fuller employment, as a rule, than less equal societies (my position)? These are issues all of which can be, and are, contestable using tools that ought to be part of the research training of economists everywhere.
Professor Solow notes that the French students do not make clear that they understand just how much of the terrain of so-called “neoclassical” economics is under such contest these days. But how could they make such a thing clear, if it is not part of their training?
And that brings us to the question, what on earth are the professors teaching? Nowhere in the counter-appeal is there the simple acknowledgment that these and similar issues are, in fact, among the most hotly and openly contested questions in economics today. Indeed, the professors do not acknowledge that any issues are contested! Instead, they resort to a characterization of their discipline that is completely at odds with the pragmatic and practical approach described by Professor Solow. Here is how they describe their role:
l'identification et la définition précise des concepts et des comportements qui caractérisent l'activité économique (consommation, production, investissement...) et l'énoncé des hypothèses de base relatives à ces comportements ; ‑ la formulation de théories ayant comme mode d'expression la formalisation de liens fonctionnels entre les éléments précédemment identifiés ; ‑ la vérification de ces théories par l'expérience. Jusqu'à preuve du contraire, en économie cette expérience ne peut être constituée que par la confrontation à l'histoire quantifiée par la statistique et l'économétrie.
In other words, the counter-appeal professors appear oblivious to the high controversy on most important issues of theory, fact and policy into which even neoclassical economics has descended in recent years. They seem unaware of the heterogeneity of models and methods breaking out everywhere in economic research. Truly, if this is a correct perception, then in Professor Solow’s words, “ils ne font pas correctement leur travail.”[i]
But what about the question of alternative theoretical approaches? Is there anything missing even from the hotly contested domains of modern mainstream economics? I believe there is, and would point to three large areas that have nearly disappeared from the teaching of economics even where that activity is otherwise competently carried out, at very considerable intellectual and social cost.
The first is the history of economics itself. The intellectual roots of our subject – going back in Anglo-American tradition to Smith, Ricardo, Malthus, Marx, Mill, Veblen (not Swedish as Le Monde has erroneously reported in passing, but American), Keynes and Galbraith père, not to mention such great French figures as Quesnay, Say, Walras... is sorely neglected, and so is the study of the historical relationship between economics and other disciplines, notably physics and the theory of evolution, as well as the modern philosophy of science (a vastly more interesting topic than the crude description of method in the French professors’ statement would make it appear). As a matter of intellectual formation, a great deal of potential creativity is lost when students do not have the origins of their own subject available to them as an object of study.
Second, there is a tradition of macroeconomic and monetary economics that has largely been submerged by the neoclassical emphasis on market transactions between firms and households. A proper understanding of monetary policy, fiscal accounting, effective demand, debt relations, the operation of banks and credit institutions, the instability of financial flows and similar subjects forms the core of a Keynesian and Post Keynesian tradition. To be sure, this tradition has not entirely disappeared from economics on the American side of the Atlantic. But it deserves a much more prominent and more stable place in the curriculum than it receives.
Here truly a question of pluralism is raised. For instance, one can view mass unemployment as a phenomenon of “imperfect labor markets” (the neoclassical framework) requiring real wage reductions as the principal solution. Or, one can view mass unemployment as mainly a phenomenon of inadequate effective demand (the Keynesian theoretical position), requiring mechanisms to support the incomes of those who are not adequately paid in private markets. Both views are capable of rigorous formulation. But both cannot be correct. The notion that mainstream economics has somehow demonstrated, as opposed to having merely asserted, the triumph of the neoclassical over the Keynesian view is quite wrong.
Third, I would argue from my experience as a teacher of research methods that the French students are correct in emphasizing the need for instruction in differing institutional contexts, political, national and international structures, policy histories, and also methods for collecting economic data and for evaluating the quality of information contained in economic data sets. There are vital differences, for instance, between the United States Federal Reserve and the European Central Bank, as regards mission, legal charter, accountability and oversight. Understanding these differences would form an important part of the backdrop of a comparative analytical study of the conduct of monetary policy in the two regions. A textbook caricature of a central bank – which is what one is led to suspect may be what economics students in France are exposed to – will not provide a sufficient basis for constructing such a study.
One can multiply examples of this general kind – I might mention my own research into the measurement of inequalities in the global economy -- but the point would remain the same. A scientific economics, as Professor Solow states with my emphatic agreement, must be a diverse, pragmatic, applied enterprise with an open discussion of controversial questions. I go beyond Professor Solow mainly in emphasizing that the core arrangement of theoretical propositions in economics also remains among the questions worthy of debate and therefore of inclusion in the curriculum of economics, since a theoretical framework cannot be debated unless it is first properly taught. The pretense that a single axiomatic framework can be, or has been, built up for all time from first principles and verified by observation – the stated contention of the counter-appeal – merely reveals how far removed from the reality of our profession that statement is.
constitutes the best evidence that the French students are correct in their
appeal for fundamental reform.
 One might add
that the remainder of the counter-appeal includes an effort to besmirch the
motives of the professors and students involved in the protest. This section,
with its reference to “conspiracy theory,” unsupported by evidence, does not
inspire confidence in the scientific disposition of those who signed the
James K. Galbraith (2001) “A contribution on the state of economics in France and the world”, post-autistic economics newsletter : issue no. 4, January, article 1. http://www.btinternet.com/~pae_news/review/issue4.htm
James K. Galbraith