David Wells
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 davidggwells@yahoo.co.uk
