Competing Visions in Economics as a Social Science: A Primer

The following was posted here - I had originally written it for students in one of my intermediate courses:

Economics (indeed every discipline of the social sciences) has never been, and never will be, value-free. Social scientists have always relied, and will continue to rely, on sets of elaborate positions, perceptions, and views about the ultimate nature of reality; essentially, it is the reliance on preconceived notions of how the world works, and how it should work, when analyzing manifest phenomena. Aspects of conscientiousness precede investigation and thus one cannot separate the knowing mind from the object inquiry. What constitutes a fact perceives the observation and hence the conception of what is determined as socially significant; the mind is active in constructing and determining the lens through which observation deciphers what of social phenomena is worthy of factuality.

All theorizing is based on first order principles (Lawson, 1989). Thus, what underlie all theories of human behavior are general apperceptions and ideological convictions of the relationship between the individual and society. They are epistemological foundations-what Joseph Schumpeter labeled as 'preanalytical visions'-which dictate modes of examination and inquisition. Hence, different pre-analytical visions predispose the focusing on different social and economic problems and lead to entirely different attitudes towards social settings and human actions within those settings. Preanalytical visions have pertinent implications for normative assessments of the human condition.

The neoclassical, or mainstream, if you will, preanalytical conception of the human being is that of the single-minded seeker of maximum utility (pleasure with respect to cost-benefit analysis and bounded rationality). This perspective perceives that the nature of individual preference orderings, with respect to consumption, is taken as given (more like taken for granted) and primary, without regard to agency and the social institutions and processes within which likes and dislikes are formed. The surrounding within which individual actions take place is conceived as an endless array of opportunity costs for the attainment of constrained optimization.

Categorical positions such as class, gender, and race are systematically negated in favor of centering attention on the (rather fictitious) assumption that society is based upon isolated exchangers/producers maximizing pleasure with initial endowments given by the Malthusian notion of the natural lottery of life. The only way in which human sociality appears is in individual needs for other entities with whom to exchange. In this sense, all economic theory is exchange theory.

Neoclassical economics determines the value of a commodity on the basis of utility derived from it. The more utility that one derives from consuming a commodity, the higher would be its value. Utilitarianism is the underpinning of the theory, which holds this value to be the true value despite the fact that pleasure, is an entirely subjective feeling that varies from consumer to consumer. The theory holds that when commodity A is exchanged for commodity B, the ratio in which the exchange occurs is determined by marginal utility (MU) derived by consuming the last units of commodity A and B. The crucial point is that the origin of value lies essentially in the institution of the market since this is the arena where isolated individual exchanges occur. Hence, the successful functioning of markets reveals how the values of commodities reflect their true values because free market exchanges are seen as complete contracts.

This ideation of utilitarianism does not question the social origins of conscious human desires. The Benthamite dictum that nature places mankind under the governance of two sovereign masters-pain and pleasure-reigns supreme. The issue of whether or not desires are exclusively metaphysically given is completely ignored. Human beings are simply assumed to be sophisticated calculating maximizers of utility. Hence, it is understood that exertions of work by individuals are never undertaken without the promise (with respect to consumption) of greater pleasure or the avoidance of greater pain (Hunt, 2001: 132). Differing social and cultural contexts make no difference whatsoever.

In this sense, neoclassical economics rests on the notion that Robison Crusoe is the natural, universal, pervasive unalterable characteristic of all human beings in all societies. The aim is to demonstrate how the competitive capitalist economy automatically obtains efficient situations in which it is impossible to make one person better off without necessarily making someone else worse off whereby unique organizations of production, exchange and distribution lead to maximum attainable social welfare.

Situations of conflict are defined away; situations where improving the lot of one unit is not opposed by other naturally antagonistic units are rare within this view. Since the level of analysis is on rational calculating individual units and not social units, how can changes that might make some better off without making others worse be discerned? It precludes the scientific evaluation of the degree to which existing desires reflect underlying universal human needs and the particular sets of social institutions that enhance the necessary capabilities for which these human needs can be met.

In addition, the most essential differentiating feature of capitalism-private property-is viewed as eternal, universal, and inherently just. It absolves capitalism of all the exploitation that is undertaken to produce and make profits. Total income of society is produced and distributed simply by some sort of 'natural law'. Thus, if workers have appropriate moral virtues and exercise responsibility, jurisprudence, self-control, and unremitting hard work, they can easily become entrepreneurs and accumulate capital.

Heterodox economics, on the other hand, examines the welfare of human beings through a lens that accentuates and exhibits interconnections. Within this preanalytical vision, it is appropriate to speak of systems of human behavior and visualize modes of productions that govern how human beings relate each other at historically specific times in the process of extracting from nature the means for human survival.

Starting with an analytical framework that invokes recognition of specific modes of production, we have the capacity elucidate the underlying processes that actually govern how the products of labor are distributed and how labor in general is assigned to specific technical processes. From this perspective, we can visualize historically specific modes of political power gives us the means that detail the apparent characteristics of social decision-making and the ordering of rights, privileges and responsibilities.

In contrast to utilitarianism of neoclassical economics, heterodox economics understands human beings distinctly as producers and focuses on the fact that the starting point of any theory is the recognition that that in all societies the process of production can be reduced to series of human exertions. It is ascertained that humans, unlike animals, generally cannot survive without exerting effort transforming natural environments into more suitable living spaces. Where utilitarianism sees humans in individualistic terms where there is no difference between exchanging with nature and exchanging with other human beings, heterodox economics sees human beings as cooperative social beings dependent on each other for human survival.

Since capitalism directs production solely for the impersonal institution of the market, interdependent labor is indirectly social. To illustrate this, Karl Marx noted:

Under the rural patriarchal system of production, when spinner and weaver lived under the same roof-the women of the family spinning and the men weaving, say for the requirements of the family-yarn and linen were social products, and spinning and weaving social labor within the framework of the family. But their social character did not appear in the form of yarn becoming a universal character exchanged for linen as a universal equivalent, i.e., of two products exchanging for each other as equal and equally valid expressions of the same universal labor time [as it w would be the case under capitalism]. On the contrary, the product of labor bore the specific social imprint of the family relationship with its naturally evolved division of labor. Or let us take the services and dues in kind of the Middle Ages. It was the distinct labor of the individual in its original form, the particular features of his labor and not its universal aspect that formed the social ties at that time. Or finally let us take communal labor in its spontaneously evolved form as we find it among all civilized nations at the dawn of their history. In this case the social character of labor is evidently not affected by the labor of the individual assuming the abstract form of universal labor…The communal system on which this mode of production is based prevents the labor of an individual from becoming private labor and his product the private product of a individual; it causes individual labor to appear rather as the direct function of a member of the social organization (cited in Hunt, 1991).

In addition,

As a general rule, articles of utility become commodities only because they are products of the labor of private individuals or groups of individuals who carry on their work independently of each other [in capitalism]. The sum total of the entire labor of these private individuals forms the aggregate labor of society. Since the producers do not come into social contact with each other until they exchange their products, the specific social character of each producer's labor does not show itself except in the act of exchange. In other words, the labor of the individual asserts itself as a part of the labor of society, only by means of the relations which the act of exchange establishes directly between the products, and indirectly, through them, between the producers. To the latter, therefore, the relations connecting the labor of one individual with that of the rest appear, not as direct social relations between individuals at work, but as…social relations between things (cited in Hunt, 1991).

Heterodox economics exposes the true nature of social organization under capitalism that leads to extraordinarily pernicious effects on workers. The capitalist market systematically prevents many from developing real conscious desires that reflect potentialities for self-realization and self-appreciation, i.e. become "emotionally, intellectually, esthetically developed human beings" (Hunt, 2002:242). Human senses are shaped and refined through working and transforming nature into useful things. It is through one's relations with what one produces that an individual achieves pleasure and satisfaction. Through visible direct interdependent social production, recognitions of one's ability, dexterity, and talent are palpable. Under capitalism, however, the scenario is quite different:

The bourgeoisie, wherever it has got the upper hand, has put an end to all […] idyllic relations. It has pitilessly torn asunder the motley […] ties […], and has left remaining no other nexus between man and man than naked self-interest, than callous cash payment. It has drowned the most heavenly ecstasies of religious fervor, of chivalrous enthusiasm, of philosophical sentimentalism, in the icy water of egoistical calculation. It has resolved personal worth into exchange value (cited in Hunt, 2002: 242).

This social organization of production is not oriented to human needs and aspirations, but rather by profit calculations estimated by legally protected extortionists (capitalists, or the bourgeoisie). The effects are total and degradation and total dehumanization of working-class people where they are reduced to nothing but disconnected brutes engaged in simple animal functions, not developing freely their physical and mental capacities. Capitalism, as such, is the accumulation of wealth at one pole, and the accumulation of misery, agony of toil, slavery, ignorance, brutality, and mental degradation at the opposite pole (Cited in Hunt, 2002: 244).

Heterodox economic analysis make it apparent whether or not society meets basic human needs and are translated into realized conscious desires for higher stages of human development. It shows that with a materialist approach to the study how humans relate to each other and organize to produce what is necessary for survival one can justifiably assert whether certain systems of human behavior do, in fact, generate the conditions for social harmony.

In hindsight, it is nearly impossible (if not completely impossible) to formulate egalitarian economic and social policies based on neoclassical ontology and epistemology. Perspectives that only consider market exchange, with a reductionist sense of human desire, systematically disregard the social nature of production; in the final instance, they effectively negate clear understandings of the totality of socioeconomic inequity (Campbell, 2010).

***NOTE - This neither covers the social nature of money nor the heterodox Post-Keynesian/Sraffian perspective, which are quite pertinent; as such, it is worthwhile for the student to refer to the following:

Aspromourgos, Tony. 1960. “Sraffa’s System in Relation to Some Main Currents in Unorthodox Economics.” Pp. 2–4 in Conference on Sraffa’s Production of Commodities by Means of Commodities, vol. 2010. Retrieved September 21, 2014 (http://host.uniroma3.it/eventi/sraffaconference2010/abstracts/pp_aspromourgos2.pdf).

Bellino, Enrico. 2004. “On Sraffa’s Standard Commodity.” Cambridge Journal of Economics 28(1):121–32.

Bellofiore, R. 1989. "A Monetary Labor Theory of Value." Review of Radical Political Economics 21(1-2):1-25.

Bortis, Heinrich. 2002. “Piero Sraffa and the Revival of Classical Political Economy.” Journal of Economic Studies 29(1):74–89.

Bortis, Heinrich. 2003. “Keynes and the Classics: Notes on the Monetary Theory of Production.” Modern Theories of Money: The nature and role of money in capitalist economies 411–75.

Hein, Eckhard. 2006. "Money, Interest and Capital Accumulation in Karl Marx's Economics: A Monetary Interpretation and Some Similarities to Post-Keynesian Approaches *." The European Journal of the History of Economic Thought 13(1):113-40.

Hein, E. 2008. "Marxian and Post-Keynesian Theory-Similarities and Differences Part 2: Monetary Analysis in Marx and Similarities to Post-Keynesian Approaches." Berlin, Germany. Retrieved June 9, 2014 ( http://www.boeckler.de/pdf/v_2008_07_27_hein_lecture.pdf).

Ingham, G. 1996. "Money Is a Social Relation." Review of Social Economy 54(4):507-29.

Ingham, G. 1996. "Some Recent Changes in the Relationship between Economics and Sociology."Cambridge Journal of Economics 20(2):243-75.

Ingham, G. 1999. "Capitalism, Money and Banking: A Critique of Recent Historical Sociology." The British Journal of Sociology 50(1):76-96.

Kurz, Heinz D. and Neri Salvadori. 1998. Understanding “Classical” Economics Studies in Long-Period Theory. London; New York: Routledge.

Kurz, Heinz D. and Neri Salvadori. 2005. “Representing the Production and Circulation of Commodities in Material Terms: On Sraffa’s Objectivism.” Review of Political Economy 17(3):413–41.

Screpanti, Ernesto and Stefano Zamagni. 2005. An Outline of the History of Economic Thought. Oxford; New York: Oxford University Press.

Signorino, Rodolfo. 2005. “Piero Sraffa’s Lectures on the Advanced Theory of Value 1928–31 and the Rediscovery of the Classical Approach.” Review of Political Economy 17(3):359–80.

Sinha, Ajit. 2002. “Reading Sraffa: The Philosophical Underpinnings of Production of Commodities by Means of Commodities.” Retrieved April 2, 2015 (http://www.gipe.ac.in/pdfs/working%20papers/wp2.pdf).

Vianello, Fernando. 1985. “The Pace of Accumulation.” Political Economy: Studies in the Suplus Approach 1(1):69–88.


Works Cited:

Arge, R. C. and E.K. Hunt. 1971. "Environmental Pollution, Externalities, and Conventional Economic Wisdom: A Critique." Envtl. Aff. 1:266.

Campbell, Al. 2010. "Marx and Engels' Vision of a Better Society." Forum for Social Economics39(3):269-78.

Foley, Duncan. 2004. "Rationality and Ideology in Economics." Social Research: An International Quarterly 71(2):329-42.

Hunt, E. K. 2005. "The Normative Foundations of Social Theory: An Essay on the Criteria Defining Social Economics." Review of Social Economy 63(3):423-45.

Hunt, E.K. 2002. History of Economic Thought. 2nd Ed., Armonk, NY: M.E Sharpe.

Hunt, E.K. 1991."The Role of Value Theory in the History of Thought," in Hunt, E.K and Rajani K. Kanth.Explorations in Political Economy. Savage, MD: Rowman & Littlefield Publishers, Inc.

Hunt, E. K. 1983. "Joan Robinson and the Labour Theory of Value." Cambridge Journal of Economics7:331-42.

Lawson, Tony. 1989. "Abstraction, Tendencies and Stylised Facts: A Realist Approach to Economic Analysis." Cambridge Journal of Economics 13:59-78.

Call for Papers: URPE Reader

The Union for Radical Political Economics (URPE) has put a call for papers for the new reader. The last reader was titled Political Economy and Contemporary Capitalism and was published in 2000. I had a chapter on trade and finance (here). It provided an alternative to the mainstream in a variety of topics, including foreign financial crises, health care, social security, and welfare reform, while at the same time demonstrating the variety of heterodox (alternative) approaches available to economic inquiry. It was essentially an academic tool showcasing the latest work in heterodox research. This would be an excellent opportunity for young scholars, and very welcome for those teaching economics, in particular after the failure of the mainstream regarding the 2008 Global Crisis.

Business Schools, Liberal Arts Education and Heterodox Economics

So we're having a discussion about the new Management College at Bucknell. Traditionally resources are the main problem in the relation between business schools and economics departments. Often, as in the University of Utah, were I was before, there are issues related to the curriculum, in particular if the economics department is heterodox. In a liberal arts environment, the issues are not only associated to resources, but also to the teaching of what is assumed to be more practical knowledge or marketable skills in a milieu in which the main goal of education is to develop the essentials for civic life, where critical thinking and the ability of learning how to learn are at the center of the curriculum.

Is it possible? Or would the management goals undermine the liberal arts experience. Note that many think that liberal arts education is doomed anyway (an old topic by the way). The fear is that students cannot (given tuition costs) afford the luxury of an education for education's sake, but need 'practical knowledge,' that would be useful in the market (the market analogy was used freely in the faculty meeting). I have my doubts about how useful 'practical knowledge' is compared to a broad education that prepares citizens to think independently and critically about the world, but that's difficult to evaluate, I guess.

The experience of Cambridge and Oxford I think is relevant for the US liberal arts institutions, in particular the former which was central for heterodox economics until the 1970s or so. They did not have business schools until recently. In Cambridge the management program was in the engineering school and only in the 1990s it became independent as an institute, eventually becoming a school in this century (in Bucknell the major, became a school and now will turn into a college, but the idea is the same, it will get more independence to raise funds, hire faculty and establish its own curriculum).

The decline of heterodox economics at Cambridge, and its transformation into a second rate neoclassical department, which deserves thorough analysis (something I'm certainly not capable or planning to do), took place more or less at the same time that business became more relevant. The old Cambridge Keynesians retired (and passed away) in the 1970s and 1980s. Richard Kahn, Austin and Joan Robinson, Piero Sraffa, Nicholas Kaldor, and the neoclassical, but still Keynesian James Meade (by the way, the only one to get the Sveriges Riksbank prize in memory of Alfred Nobel) were the key figures. Harrod was at Oxford, but in a sense is a member of the same group, and perhaps the same applies to Hicks (the other neoclassical Keynesian winner of the Sveriges Riksbank prize), also from Oxford. Wynne Godley was the head of the Department of Applied Economics, brought from the Treasury by Kaldor, but even before he left in the 1990s, his team was defunded after Thatcher's conservative victory. A few token heterodox economists were left in the department, and a few still resist, but it is not a place were heterodox, critical thinking is taken seriously.

Note that I'm not suggesting that the rise of management and business are the cause of the demise of Cambridge Keynesianism. Both changes are very likely simply, and only in part, explained by the same general move, in British society and around the world, to embrace a market friendly ideology. While I'm, as I noted, skeptical about the value of 'practical' education, and cannot say for sure whether the liberal arts alternative is better, I've a fairly good idea about the value of heterodox economics.

The kind of economics that the old radical Keynesians taught at Cambridge is a better tool to understand the world than the neoclassical alternative that the department there embraced. Note that Godley was one of the few that actually forecasted the Thatcher recession (and probably got punished for that), as well as noting the limits of the dot.com boom and the housing bubble that led to the 2008 crisis (see here or here for his prescient views on the euro). Most of my heterodox teachers that were directly or indirectly influenced by the Cambridge Keynesians were not surprised by the crisis that left the mainstream of the profession puzzled. I would say that heterodox economics has practical value indeed. My feeling is that a liberal arts education is often more practical than practical knowledge.

Keynes and the Golden Age vs Greenspan and the Great Moderation

Great video post by Trixie the "Haiku Charlatan," who blogs at Hit or Miss. Enjoy!

What's in a name? that which we call Naked Keynesianism

Someone asked me this week why the blog is named Naked Keynesianism. It was in the very first post in February 2011. The story was on Fox News, about what Jamie Galbraith was teaching his students. Naked Keynesianism! And that seemed the perfect title for the blog.

At the end of the day, names do not matter, the content is what is relevant, but the Fixed News 'journalists' turn out to show a lot about the true content of their views. What was the line? "What’s in a name? that which we call a rose; by any other name would smell as sweet." For Fixed News Keynesianism does NOT smell like roses.

More on the UMKC crisis: a graduate student view

A while ago at the New School I participated on a panel on the role of the Economics Department there in academia. As I said back then I think that heterodox graduate programs are in the business of the production of heterodox economists by means of heterodox economists (my definition of the heterodox camp here). In that respect, UMKC is one of the few departments that continues to do that in the US. As I posted earlier, the retirement of two faculty members and the financial cuts may result in a significant additional burden on the economics department there. Note that this is true whether the cuts are ideologically biased or not, and simply result from the financial burdens associated to the economic crisis.

Below a letter from Christian Dodge a graduate student at UMKC. It represents a view of what is going on more broadly at the University. Note that student mobilization can be, and it has been in other cases, important in preserving the character and vitality of the institutions they belong to.

Dear Friends in the Heterodox Community,

As many of you are aware, higher education in the United States is under tremendous pressure to cut costs (i.e. hire exploited adjuncts). UMKC is no exception. As such, our economics department has come under fire as a result of a history of poor funding from the state of Missouri, and from a special initiative of the UM president to build a 60-90 day cash reserve (which is roughly 60-90 million dollars). The budget cuts are crushing our ability to grow with the larger and larger population of individuals dissatisfied with orthodox economics. More than that, we are losing two excellent professors, John Henry to retirement, and are somewhat unexpectedly losing our heterodox microeconomics professor Fred Lee. The bean counters in administration feel that these individuals can be replaced by adjunct faculty; they just don’t understand, like we do, that economics professors are not substitutable goods (nor are other goods!!)!

As members of the student movement, we have been collecting data to argue our case for 4 new professors and to replace our current losses. Here is what we know. UMKC uses the Delaware Cost study to determine how productive each department is relative to peers (University of Kansas and University of Missouri – in our case). One important note: UMKC is an urban commuter college which puts us at a disadvantage relative to our peers who are universities with large residential enrollment. The study uses two, asinine, metrics for determining how costly a department is. One measure counts the costs of compensation for full time faculty, divided by the number of students instructed. The other metric counts the costs of compensation for full time faculty, divided by total student credit hours attributed to the department. As a result, and because of the strong emphasis on the cost side and because we are an urban commuter school, any overstatement of costs can be very harmful to our department.

For one example of overstatement, we are allocated the costs of compensation and overhead of the Missouri Council for Economic Education (MCEE) (a non-profit group), which is unassociated with our department. We have estimated such costs to be roughly $200,000 in salaries. In short, the cost is no spare change. In addition, the MCEE has a fairly neo-liberal agenda, which is diametrically opposed to what we stand for, and you stand for, in our department. We think the costs of such an organization need to be counted somewhere else.

We are asking you today, for your support. If you think, as we strongly do, that heterodox economics is important not only theoretically, but for the betterment of the world, please e-mail, telephone, or write a letter to one of the people listed below. Also, let the individuals listed below know that to continue to be an epicenter of new heterodox thought we need to replace Professor Henry and Professor Lee, and also that to grow with student demand, we need 4 more professors – in fields such as development, labor, feminist economics, and ecological economics.

Thank you to Matias for allowing us this forum, and thank you to all of you for your support.

In Solidarity,

Christian Dodge (3rd year PhD student)

A Handy Link: http://www.umkc.edu/chancellor/leadership-team.cfm
Individuals to Contact:

Wayne Vaught, Dean of the College of Arts and Sciences
Phone: (816) 235-5421
vaughtw@umkc.edu

Gail Hackett, Executive Vice Chancellor and Provost
Phone: (816) 235-1107
hackettg@umkc.edu

Denis M. Medeiros
Vice Provost and Dean, School of Graduate Studies
Phone: (816)235-1301
medeirosd@umkc.edu

Cindy Pemberton
Deputy Provost for Academic Affairs
Phone: (816) 235-5623
pembertonc@umkc.edu 

Lawrence Dreyfus
Vice Chancellor for Research and Economic Development
Phone: (816) 235-5246
dreyfusl@umkc.edu

Dan Chambers
Director of Business Affairs
Phone: (816)235-2760
chamberscd@umkc.edu 

Leo E. Morton
Chancellor
Phone: 816-235-1101
umkcchancellor@umkc.edu 

Sharon Lindenbaum
Vice Chancellor, Finance and Administration
Phone: 816-235-2650
Fax: 816-235-5582
lindenbaums@umkc.edu

More on Wren-Lewis flimflam according to Palley

Simon Wren-Lewis replied to Tom's previous post on the flimflam defense of mainstream economics and says he cannot find it (the flimflam). Tom provides in a new post some hints on where to look. Note that Tom raises two points, among others, always emphasized in this blog. Namely:

Marginal productivity theory remains at the core of mainstream distribution and production theory. However, marginal productivity can be adjusted for imperfect competition to yield, what might be called, adjusted marginal products. Thereafter, things remain analytically very similar and those adjusted marginal products then determine the stock demand for capital and drive long-run capital accumulation. 

The imperfect competition model of so-called New Keynesians continues to assert price and nominal wage flexibility would restore full employment. In a financialized economy with massive inside debts, that strikes me as an implausible proposition.

Both require to be solved and provide a real alternative that the notion of the natural rate is abandoned. Note that this would strengthen Wren-Lewis and other New Keynesian arguments.

Palley on the flimflam defense of mainstream economics

By Thomas Palley

The teaching of economics has recently been in the news. One reason is the activities of Manchester University undergraduates who have formed the Post-Crash Economics Society to protest the monopoly of mainstream neoclassical economics in university lecture halls. A second reason is criticism of the neoclassical reasoning in Thomas Piketty’s runaway best seller Capital in the Twenty-First Century.

This criticism and calls for including heterodox economic theory in the curriculum have prompted a defense of mainstream economics from Princeton University’s Paul Krugman and Oxford University’s Simon Wren-Lewis. Both hail from the mainstream’s liberal wing, which muddies the issue because it is easy to conflate the liberal wing with the critics. In fact, the two are significantly different and their defense of mainstream economics is pure flimflam.

Read more here.

Innovations in Economic Education

The Review of Keynesian Economics has a call for papers for a Special Issue on Innovations in Economic Education. See below.

Guest Editors: Geoffrey E. Schneider, Bucknell University and Daniel A. Underwood, Peninsula College and University of Washington

The Review of Keynesian Economics is seeking papers of various types related to Innovations in Economic Education that help advance student understanding of the economic process, the forces shaping macroeconomic and microeconomic performance, and appropriate policy options to increase economic welfare. Papers can be short (1500-3000 word) descriptions of classroom exercises or the application of particular pedagogies (e.g., collaborative learning, service learning, active learning, web based interactive exercises) to teach heterodox economics. Submissions can also be longer, in-depth articles (up to 7500 words) which explore a particular pedagogical issue, assess student learning outcomes, or address other teaching issues related to heterodox economics. Articles should clearly stress a heterodox economic tradition (e.g., social economics, institutional economics, post-Keynesian economics, Marxian economics, Feminist economics, etc.) with an emphasis on how that tradition can advance economic education in a Keynesian tradition. Where appropriate, articles should document the effectiveness of the teaching approach described in the article. Thus, authors should make sure to include documentation of their assessment of the teaching exercises they discuss.

Manuscripts should be submitted to Louis-Philippe Rochon, at Lprochon2003@Yahoo.com. Manuscripts should be prepared in accordance with our house style guidelines.

Please specify that your paper is for the symposium on Innovations in Economic Education. The deadline for manuscript submission is May 15, 2015. Articles must be in final form by January 31, 2016. The symposium will appear in July 2016.

Papers will pass a double-blind referee process and are subject to the final approval of the Editors of the Review of Keynesian Economics.

ABOUT THE JOURNAL

The Review of Keynesian Economics encourages research and discourse in Keynesian economics – be it old Keynesianism, fundamental Keynesianism, neo-Keynesianism, Post Keynesianism, Sraffian Keynesianism, Kaleckian Keynesianism, or Marxist Keynesianism. The journal provides a forum for developing and sharing Keynesian ideas. Not only does that include ideas about macroeconomic theory and policy, it also extends to microeconomic and mesoeconomic analysis and relevant empirical and historical research.

Krugman and the neoclassical theory of distribution: will he recant on the natural rate of interest

In the previous post I noted that Krugman suggests incoherently that: "saying that capital gets its marginal product in no way says that the people who own that capital deserve what they get." The point is exactly that if you receive according to productivity, it cannot be blamed on exploitation or other social factors. Capital gets higher profits because it is productive, and unskilled labor does not for the reverse reason.

If we do not mince words about the meaning of deserve, 'to be worthy' in my dictionary, by the way, it is evident that a theory that says that remuneration is accrued according to productive capacity, and again we take productive to mean, using the same dictionary, doing or achieving a lot: working hard and getting good results, then you have that those that work hard are worthy of their remuneration. But does Krugman believe in the notion that productivity determines pay you, enlightened reader, might ask.

From the 2014 3rd edition of Krugman's Essentials of Economics:

The factor market most of us know best is the labor market, in which workers are paid for their time. Besides labor, we can think of households as owning and selling the other factors of production to firms. For example, when a corporation pays dividends to its stockholders, who are members of households, it is in effect paying them for the use of the machines and buildings that ultimately belong to those investors. In this case, the transactions are occurring in the capital market, the market in which capital is bought and sold. As we’ll examine in detail later, factor markets ultimately determine an economy’s income distribution, how the total income created in an economy is allocated between less skilled workers, highly skilled workers, and the owners of capital and land [italics added].

Fair enough, Krugman said back in 2007 in his book The Conscience of a Liberal that: "there is something wrong with textbook economics." Apparently he has not read his textbook.

So, yes Galbraith, Palley, Syll, and others that have pointed out the connection of neoclassical economics with the specific idea that inequality results from market forces, and represent what people deserve are correct. That is why this blog has insisted that Krugman's notion of a natural rate of interest undermines his own policy views on the need for social policies to redress inequality.

You get what you pay for; but not when it comes to business degrees

Veblen famously doubted whether Law Schools had a place in Universities, and as I noted not too long ago he was not altogether happy with what we would now call Business or Management Schools. He said in The Higher Learning in America:

"A college of commerce is designed to serve an emulative purpose only -- individual gain regardless of, or at the cost of, the community at large -- and it is, therefore, peculiarly incompatible with the collective cultural purpose of the university. It belongs in the corporation of learning no more than a department of athletics. Both alike give training that is of no use to the community,except, perhaps, as a sentimental excitement. Neither business proficiency nor proficiency in athletic contests need be decried, of course. They have their value, to the businessmen and to the athletes, respectively, chiefly as a means of livelihood at the cost of the rest of the community, and it is to be presumed that they are worth while to those who go in for that sort of thing. Both alike are related to the legitimate ends of the university as a drain on its resources and an impairment of its scholarly animus. As related to the ostensible purposes of a university, therefore, the support and conduct of such schools at the expense of the universities is to be construed as a breach of trust."

You would imagine then that at least for those that paid for a business degree it would have a compensation in the form of higher pay after graduation. It is not the case, as the PayScale last college salary report shows. Economics majors make considerably more than accounting, finance and business majors. Funny that enticement of pay opportunities is one of the ways in which business and management schools attract students and try to encroach economic departments in many universities.

Michael D. Yates on Teaching Workers

By Michael D. Yates

Karl Marx’s famous dictum sums up my teaching philosophy: “The philosophers of the world have only interpreted the world in various ways; the point is to change it.” As I came to see it, Marx had uncovered the inner workings of our society, showing both how it functioned and why it had to be transcended if human beings were to gain control over their lives and labor. Disseminating these ideas could help speed the process of human liberation. From a college classroom, I thought that I could not only interpret the world, I could indeed change it.

Thinking is one thing; the trick is bringing thoughts to life. How, actually, does a person be a radical teacher? How, for example, can students be shown the superior insights of Marxian economics in classes that have always been taught from the traditional or neoclassical perspective—taught, in fact, as if the neoclassical theory developed by Adam Smith and his progeny is the gospel truth? My college expected me to teach students the “principles” of economics: that people act selfishly and independently of one another, that this self-centeredness generates socially desirable outcomes. And further, that capitalism, in which we, in fact, do act out of self-interest, is therefore the best possible economic system. Had I refused to do this and taught only Marxian economics, I doubt I could have kept my job.

Read rest here.

On principles courses, DeLong, Krugman and the limits of the mainstream

 

'cause it has no implications...

In a previous post, Anonymous commented: "Brad DeLong has been posting slides from one of his classes going over supply and demand (and quotas and price ceilings, market equilibrium, etc.) on his blog. They're pretty entertaining and filled with pop-cultural references. I was wondering what a Post-Keynesian perspective on them might be."

I promised to check Brad's posts and provide a short answer. So here it is. In fact, this semester I am teaching an intro course, something I haven't done since my time in Kalamazoo College. This is not a regular course for me to teach, in other words, like say intermediate macro. At Bucknell all intro courses provide more than the neoclassical (marginalist) perspective. While Brad starts with a neoclassical version of supply and demand (see here) on the basis of Krugman's intro textbook, we start with history and history of ideas, based on a discussion of the classical authors and Marx (here, here and here) and only then get to the supply and demand approach (here). In fact, I am also using Krugman's textbook, together with Heilbronner and Milberg's The Making of Economic Society and additional readings.

In other words, while there is a need to teach the basics of what the mainstream of the profession thinks it is relevant, it is also important to provide critical alternatives to the mainstream. The liberal arts education in the US allows for a lot of flexibility and for the introduction of alternative perspectives. The textbooks (almost all neoclassical) tend to fudge the fact that the notion that economics is about rational choices of individuals faced with scarcity is relatively new (the Marginalist Revolution of the 1870s)*, and quite different from the old classical (or surplus approach) tradition of the material reproduction of society.

* Interestingly enough, in the US the profession was not dominated by neoclassical economics until the 1930s and 1940s, when the rise of Keynesian economics, in the Neoclassical Synthesis version, brought it to the forefront of research, teaching and policy influence. Samuelson's 1948 Economics, the forerunner of all mainstream textbooks, did probably more than any other book to make neoclassical economics the dominant view. Before that the profession in the US was dominated by a potpourri of eclectic and institutionalists authors that held the main teaching positions and were at the head of key institutions like the American Economic Association and the National Bureau of Economic Research (NBER).

Heterodox Microeconomics

Tae-Hee Jo, Fred Lee, Nina Shapiro, and Zdravka Todorova have compiled a list of readings in Heterodox Microeconomics that deserves attention and praise (available here). The only classic book that was central in my formation that I see missing is Paolo Sylos-Labini's Oligopoly and Technical Progress (1962). My favorite graduate textbook still is the one by Fabio Petri here.

Academics back students in protests against economics dogma

From The Guardian:

A prominent group of academic economists have backed student protests against neo-classical economics teaching, increasing the pressure on top universities to reform courses that critics argue are dominated by free market theories that ignore the impact of financial crises.

The academics from some of the UK's most prestigious institutions, including Cambridge and Leeds universities, said students were being short-changed by their courses, and they accused higher education funding bodies of being a barrier to reforms.

In a startling attack on the agencies that provide teaching and research grants, they said an "intellectual monoculture" is reinforced by a system of state funding based on journal rankings "that are heavily biased in favour of orthodoxy and against intellectual diversity".

Read rest here.

Failing grade for econ courses

From Remapping Debate:

"Until the 1980s, undergraduate students in economics were generally required to take a course in economic history or the history of economic thought, or both. Over the last twenty years, however, those requirements have been dropped from the curriculum in nearly all undergraduate programs, and even many graduate programs do not require them.

This ahistorical view of economics, according to David Ruccio of Notre Dame, deprives students of fundamental knowledge about the field they are studying and how it has developed. “The implication for students is that what exists now has always existed and will always exist,” he said. “It allows for the impression that there is only one perspective on economics and ignores the multiplicity of perspectives that have existed and exist today.”

Julie Nelson, chair of the economics department at the University of Massachusetts Boston, agreed. “Not having those courses removes the context from the theories and makes them seem like they’re divinely ordained,” she said. “There’s no sense that economics is created by people.”

According to Frederic Lee of the University of Missouri–Kansas City, “if you were actually teaching them about the economy, you might have to talk about the rise of capitalism and the industrial revolution,” he said. “You’d need to talk about American history and the plantation economy and the attack on workers in the 1880s and the Great Depression and the military–industrial complex and the Cold War. These are just some examples to illustrate that without the history we have no place to understand what we mean by capitalism, which is essentially what they’re studying.”

Of course there are a few oases in the profession.

Blog related syllabi

Here are a few of my syllabi for graduate courses: Macroeconomics, History of Economic Thought, and Economic History. As you can see we still teach history of ideas and economic history, something that is increasingly rare even in the few heterodox places left in the US. Philip Mirowski describes in this way the reasons for that:

"After a brief flirtation in the 1960s and 1970s, the grandees of the economics profession took it upon themselves to express openly their disdain and revulsion for the types of self-reflection practiced by ‘methodologists’ and historians of economics, and to go out of their way to prevent those so inclined from occupying any tenured foothold in reputable economics departments. [2] It was perhaps no coincidence that history and philosophy were the areas where one found the greatest concentrations of skeptics concerning the shape and substance of the post-war American economic orthodoxy. High-ranking economics journals, such as the American Economic Review, the Quarterly Journal of Economics and the Journal of Political Economy, declared that they would cease publication of any articles whatsoever in the area, after a prior history of acceptance. 

Once this policy was put in place, and then algorithmic journal rankings were used to deny hiring and promotion at the commanding heights of economics to those with methodological leanings. Consequently, the grey- beards summarily expelled both philosophy and history from the graduate economics curriculum; and then, they chased it out of the undergraduate curriculum as well."

 The whole interview with Mirowski is here.