Fed up with destructive economic theories, a growing number of economists are forging a new path for our monetary future.
Every few years, the economic textbooks are updated. A few more years of data are added to graphs celebrating economic growth. Stories of “economics in the news” are revamped to make them relevant to new recruits. Theoretical dead ends, paraded five editions ago as the leading edge of the discipline, are quietly dropped. A new cover is slapped on, and students are required to fork out even more money for the new edition, despite the contents being 95 percent recycled.
Old professors retired to new pursuits are replaced by new professors pursuing old ideas. The new recruits were carefully screened for their orthodoxy. They studied at leading departments, where they demonstrated their commitment to markets, economic growth, free trade and learned to respect the consumer as king. They were not exposed to other disciplines and they will never read an article published in the natural sciences. Like their predecessors, they too will lecture while they draw graphs on blackboards, discouraging any questioning. The students who question, probe, explore contradictions and ask the big questions are weeded out. Those who conform are nurtured. And so the profession recreates itself and industrial society, relying on the economic priesthood for its guidance, merrily follows the same path, despite signs of trouble ahead.
But then, circa 2007, the unthinkable began to happen. The disciplinary straightjacket loosened; there were substantive debates in economic department corridors and the received wisdom was put under scrutiny. The conditions were ripe for change.
Economic theory had ossified to a remarkable degree, but the world it purported to explain had been changing dramatically. Leading economists were becoming embarrassed about how economics textbooks, which hearken back to 1948, retain so much deadwood and fail to incorporate even the modest insights accumulated over the last quarter century.
Milton Friedman, to whom we owe the global contagion of market fundamentalism, died in November 2006. He preached that self-interest is to be given free reign, because thanks to the magic of markets, an invisible hand will ensure the result is socially optimal. His simplistic theory will not survive him by much. As Nobel laureate Joseph Stiglitz wrote in a recent book, “today, the intellectual defense of market fundamentalism has largely disappeared… the reason that the invisible hand seems invisible is that it is not there.”
In January 2007, another Nobel laureate, George Akerlof, took advantage of his position as president of the American Economics Association to make clear to the profession that existing macroeconomic models were simplistic and misleading because they failed to incorporate human motivations beyond self-interest. It was time for more realistic theory.
The conclusions of the British government’s Stern Review on the Economics of Climate Change continued to reverberate throughout 2007. Not only did this report finally make it clear that strong action to reduce carbon emissions made economic sense, it also found that the problem of climate change stretched economics to its limits. The discipline would need rethinking.
Students, too, are beginning to ask probing questions in their economics classes. They want to debate the fundamental assumptions. They want to understand the sorry state of the planet, the linkage between the economy and climate change, between consumption and the fate of the Amazon. They have caught on to how the accepted textbooks fail to address the key issues of our era.
New economics textbooks are appearing on the market. They are no longer just recycled ideas on virgin paper, but new ideas on recycled paper. At universities and colleges where these books are being adopted, professors are reporting how their students are showing interest in economics not seen for decades.
There is a widely shared yearning for a new kind of economics. An economics that isn’t surprised by global warming, an economics that isn’t sexist, that understands humans in all their complexity, an economics that focuses on the economy as a vehicle to improve human wellbeing rather then humans as cogs to expand the economy ever further.
The stakes are high. Since economic thinking shapes the world, we can’t then leave economists alone to putter with their theories. Too many of them hung up their thinking caps the moment they got their degree, and stopped looking out their windows.
They have to be prodded to learn from other disciplines, to acknowledge that economies exist on a fragile planet and recognize that the consumer bonanza is not serving human’s wellbeing.
New economic ideas will mean new guidance for humanity on this beleaguered planet. It might be our best chance of making the urgently needed course correction.
_Tom Green is a Vancouver-based ecological economist who is currently working on his Ph.D. He is researching how the undergraduate economics curriculum can be reformed and textbooks rewritten to address sustainability.