Published article, the latest output from our Post-Crash Economics project
Published on 4 February 2019
Published by Palgrave Macmillan in the framework of the Campaign on Academic Excellence
The 2007-08 financial crisis represented a key event and a critical turning point in economic theory as it underlined the inadequacy of mainstream economic doctrine to explain and to address real-world questions. It has generated a debate about the necessity for economics to change and to depart from the prevailing theoretical approaches that were common practice prior to the unforeseen 2007-08 crisis. Consequently, there has been a growing demand for introducing more pluralism and heterodox ideas both in economic research and teaching and for moving away from the dominant neoclassical economic models.
The appeal for more pluralism was made by students, lecturers, teachers and professional economists. The Manchester Post-Crash Economics Society, established in 2012 by a group of economic students at the University of Manchester, promoted a profound and serious rethinking of economics curricula and teaching approaches. The Society urged the introduction of new topics in economics curricula, such as poverty and inequality issues, which are very often neglected in university programmes. Over the past few years the Society has shaped the debate about the introduction of heterodox ideas in economics teaching in the UK and has attracted the attention of national and foreign press such as The Guardian and The Washington Post. The Curriculum in Open-access Resources in Economics (CORE) project launched in 2013 and is a collaborative work among academics, teachers, policy makers and students. It aims at providing updates of the current economics curricula and at developing new approaches to undergraduate economics teaching.
Even several economists who are clearly categorised in the mainstream of economic thought have begun to raise significant questions about the validity of the orthodox approach. The Nobel laureate Paul Krugman claims that economic theory disregards limitations of human rational behaviour that might lead to speculative bubbles and therefore produce unpredictable crashes. In their very influential paper “Neoliberalism: Oversold?” Jonathan D. Ostry, Prakash Loungani and Davide Furceri, economists at the International Monetary Fund (IMF), argue that some neoliberal macroeconomic policies – such as fiscal austerity, trade liberalisation, privatisation and deregulation – which have been driven and dominated the so-called Washington Consensus, actually did not deliver the expected outcomes. They instead resulted in increased inequality, which in turn had an adverse effect on economic growth. Andrew Haldane, chief economist at the Bank of England, admits that the profession is in crisis after failing to predict and to address the 2007-08 financial crash and asserts that time has come to explicitly rethink some of the basic building blocks of economics. Paul De Grauwe, Professor at the London School of Economics and Political Science and advocate of free market, has acknowledged the necessity of strong interventions from the government to correct market forces. In his book The Limits of the Market: The Pendulum between Government and Market he examines the tensions between the free market and the state, analyses the limits of the market and the rise and fall of capitalism, challenges the orthodox view that free market leads to the optimal solution, and argues that what is optimal for some groups of the population might not be optimal for the society as a whole. The optimal solution for the whole society can be achieved as a result of government intervention. De Grauwe claims that economies will always be functioning under a mix of market and state and the question is what that mix should be. He uses the metaphor of a pendulum that swings between two extremes. De Grauwe’s proposition is that, due to the turning point determined by the recent disruptive events in the world economy, the pendulum is moving towards the government.
Themes that are neglected and ignored by orthodox approaches also include ethical issues and gender discrimination, which can be addressed by using pluralistic and interdisciplinary approaches.
Pluralist and alternative economic ideas are indeed rooted in classical economic thought and played a crucial and fundamental role in building the foundations of economic theories over the past centuries. Authors such as Adam Smith, Karl Marx, Joseph Schumpeter, John Maynard Keynes and Piero Sraffa, have been marginalised since the 1970s by mainstream economic theory and ignored by most of university curricula and should be rediscovered, in both research and teaching. They provide perspectives, approaches and methods that are able to address and to analyse economic phenomena more realistically.
We therefore believe that economics students should be taught to be complete economists, not to become devoted disciples of one particular school of thought. Introduction of innovative, pluralist and alternative approaches in the economics curricula can provide students with a broad, deep, real and objective understanding of the economy and can allow them to examine how the economic profession should evolve in the light of its current weaknesses and fallacies.
The University of Dundee School of Business therefore engaged in and contributed to the debate about the demand for more pluralism in economics by organising the conferences “Teaching Economics in the Twenty-first Century: Post-Crash Economics” in 2016 and 2018. Students and lecturers from Scotland, England and Germany had the opportunity to present, discuss and share their knowledge and experiences about teaching and learning economics. The book Post-Crash Economics. Plurality and Heterodox Ideas in Teaching and Research is the result of the debate among several authors on the problems that economic theory is facing after the 2007-08 crisis and provides the readers with a wide range of alternative approaches to economic research and teaching. A novel and significant aspect of the book is the active involvement of students who participated and contributed effectively by engaging in the discussion, by providing their reflections and experiences, by raising questions and critiques and by proposing their opinions and their ideas on the importance of pluralistic and alternative approaches to teaching economics at the university.
This is the most recent outcome of our Post-Crash Economics project.
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