In his opening keynote address at the recently-concluded Rethinking Economics conference in London (June 28-29, 2014), Lord Adair Turner dismissed the need for changes to microeconomics by referring to the beneficial use made of micro by two committees he chaired, the Pensions Commission and the Low Pay Commission.
His committees may well have benefited from microeconomic insights but that does not leave micro in the clear. After all, the centrepiece of the micro banquet is the model of perfect competition which is foundational for the theory of General Equilibrium which in turn lies behind those models which assured mainstream economists that the financial crash of 2008 was not merely unlikely but actually logically impossible: so micro has a lot to answer for.
Lord Turner then focused his attention entirely on macroeconomics. The obvious problem with this limitation is that it leaves most of the foundations of mainstream orthodox economics intact and so student rebels against orthodoxy are likely to be disappointed.
Every session I attended at the conference included at least one reference to ideology. In addition,'Whig' as in Whig history was heard at least once, and 'neoliberal' several times.
Yet no-one put these themes together to actually come out and say plainly that the ideology of mainstream economics is (extreme) liberal, let alone to argue that this ideology which naturally and inevitably promotes laissez faire and free markets and so on, leads to distorted and inadequate models of experience, as seen in current economic textbooks and in the 2008 crash.
Ha-Joon Chang in his concluding keynote called forcefully and eloquently for pluralism in economics teaching, without considering that some of the schools of thought within economics that he identified preach (the correct word) ideas and claims that are deeply ideological and deeply damaging, the prime culprit being the hegemonic and extreme liberal neoclassical school. Thus, I presume that DSGE models ought not to be included in any pluralist course, except possibly as a terrible example of ivory tower economists running amok.
Finally, just before the final keynote address, a short video was played in which Robert Johnson, the President of INET, sent his best wishes to the conference and congratulated the organisers - but also suggested at one point that the students should be 'guided' by INET.
This is strange. Why should the students be 'guided' by INET ? Why not the other way around? After all, it is the students who are the instigators of this revolution and who are at the front line, manning the barricades. INET are very active in their own way - the CORE curriculum project is especially interesting - and they supply invaluable funding, including for this conference*, but they are essentially secondary actors on the stage. The protagonists are the students, not just in the UK but all over the world: the ISIPE now has (at least) 65 member associations in 30 countries.
* And for researchers. I applied for a grant myself and was rejected, probably quite rationally.
Putting these points together, and writing as one of the older generation who was actually there at the time, I am reminded of the 1965 essay by Herbert Marcuse on 'Repressive Tolerance'.
Lord Turner is happy to use his vast experience to re-examine macroeconomics, but the foundations are, frankly, OK. Everyone acknowledges that ideology is present, but no-one actually wants to analyse it deeply. Robert Johnson wishes the students well but hopes that they will accept his avuncular guidance, while Ha-Joon Chang favours pluralism but without examining any ideological skeletons that various schools might be hiding in their cupboards.
If I were a student, I think that I would find this extremely disturbing.
David Wells can be contacted at email@example.com