Teaching ‘economics as if people matter(ed)’

[intro]Teni Ntoi, a student at the University of Cape Town (UCT), who forms part of the Decolonise UCT Economics collective, argues that it is essential for the School of Economics to teach a heterodox economics that introduces contending schools of economics alongside the neoclassical school, in the undergraduate programme.[/intro]

UCT’s School of Economics has belatedly decided to stop navel-gazing and engage in a process of introspection and self-reflexivity that questions what it teaches (and doesn’t teach) at the foundational undergraduate level. This is long overdue, as the neoclassical dogma taught is presented as fait, and not as just one of the many schools of thinking in economics.

Global economists Andrew Sheng and Xiao Geng, in their paper ‘Micro, Macro, Meso and Meta Economics’ write that there is a ‘substantive reconsideration of modern economics underway’ globally. The school has held engagements, with staff and students invited, to deal with the current curriculum and how best to address its many deficiencies. Out of this has come the formation of a working group, to substantively deal with the curriculum at undergraduate level.

Students have long been sceptical of the teaching of economics, as it seems as though the school had subordinated its role to being an extension of a corporate entity that sets the essay question (which counts for 10% of the course grade) for undergraduate microeconomics courses. This example is illustrative of the corporatisation of our universities and the extent to which insidious market interests have permeated the teaching of economics, and other courses, at UCT. Relevant and interesting as the topic may be, the issue highlighted is not trivial as it seeks to ascertain in whose interest is what is (and isn’t) taught, and why.

Owing to the perilous state of economics, it is imperative that from the outset this paper firmly locates the study of economics in the social sciences and not as a science (as some academic staff at UCT’s School of Economics would have us believe). The framing of economics as a social science is critical in how it is conceived of by its practitioners, and how it’s taught.

If anything, science itself is premised on falsifiability whereas, as will be argued here, the neoclassical economics taught at UCT and other universities is not. It is ludicrous that it needs mentioning that economics is about people (and not a nebulous market), yet this is not reflected anywhere in the undergraduate curriculum unless one picks an elective in development economics or public sector economics, and even here the urge is to reduce the poor to a set of cliches. Development economists Abhijit Banerjee and Esther Duflo write in their book, ‘Poor Economics’ that the economics of underdeveloped and developing nations need to be reimagined, as poor people rarely feature when wealthy nations make decisions on global poverty.

The neoclassical model that predominates the undergraduate curriculum, and society in general, is presented as being neutral when in fact it is value laden reflecting market orthodoxy as its a priori position. For example, it is worth noting that at the undergraduate level, UCT’s School of Economics teaches Pareto optimality ad nauseum and does not introduce the Bergson criterion which is broader.

This nuance is especially important in the South African context in relation to redistribution, with pervasive economic inequality owing to apartheid. Pareto optimality is a cornerstone of neoclassical economics and argues that when considering economic welfare, one should not be made worse off in resource allocation than one’s current position. Whereas Pareto optimality says not to make another worse off, the Bergson criteria argues that in some instances it is justifiable to redistribute income even if it places one or more individuals in a worse off position. This untaught Bergson criteria better dovetails with a Rawlsian notion of justice. As evidenced above, what is taught (and not taught) is discretionary and can be argued comes down to the whims, politics and ideologies of those that teach and run the school.

The use of models to approximate the functioning of an economy is critical to the study of economics. However, when the homo-economicus assumptions on which the neoclassical model rests are found to have no basis in reality, the teaching of economics increasingly creates a state of separation from issues that affect people.

Important as these models are, they become self-referential and even more elaborate with them then becoming more about how the model works and not about explaining real world phenomena. In this warped neoclassical paradigm of teaching ‘reality is presented as an anomaly and mere deviation from stylised idealised’ theories. In a thoughtful article by Paul Krugman titled ‘How Did Economists Get it so Wrong’ he states that economists did not (and could not) predict the great recession of 2008 as they ‘mistook the beauty and elegance of their models for truth’. Based on this, it is then worth questioning the appropriateness and value of teaching flawed models (theoretically based on special cases), that are not reasonable approximations of the world, and not presenting conflicting theories, to undergraduate students, many of whom will not have an opportunity to interrogate the inherent biases and flaws at a graduate level.

It is interesting that in a recent microeconomics course, the general equilibrium model was taught for weeks on end but time could not be found to teach public goods (which are also in the syllabus). What is taught matters, what is not taught perhaps even more.

Homo-economicus and perfect competition are useful models for introductory economics courses as they provide a foundation, albeit a shaky one, from which to build on. However, they are taught rather unquestioningly for the entirety of the undergraduate economics curriculum. Economic rationality, which lies at the core of modern economics, is vacuous as it explains everything and nothing at once. One of its tenets, utility maximisation, is useful only as a modeling tool but strictly does not explain any behaviour as it is unfalsifiable for any behaviour. The observed behaviour of bears, bulls and even bacteria can all be explained by utility maximisation. The traditional economic theory taught at UCT assumes economies are linear systems filled with rational actors who seek to optimise their situation. Outputs reflect a sum of inputs, the system is closed, and if a big change comes it’s an external shock. The system’s default state is equilibrium. The prevailing metaphor is a machine. But this is not how economies are, or have ever been.

Economies behave in ways that are non-linear and irrational, and often violently so. These often-violent changes are not external shocks but emergent properties—the inevitable result – of the way economies behave. As such, this approach completely misunderstands human behaviour and natural economic forces.

The problem is well stated by Eric Liu and Nick Hanaur in their paper titled ‘Complexity economics shows us why laissez-faire economics always fails’. They argue that “that the traditional approach is not an academic curiosity; it is the basis for an ideological story about the economy and government’s role—and that story has fuelled policymaking and morphed into a selfishness-justifying conventional wisdom.”

This reductionist teaching of economics at UCT, premised on its grand unifying theoretical framework of general equilibrium, falsely bifurcates economics into micro- and macroeconomics without contending with meso- and meta-economics wherein the economy is conceived of as a ‘complex living system‘ (as stated by Sheng and Geng) by within other systems.

UCT’s School of Economics teaches market fundamentalism, where the market is conceived of as a postmodern deity (that is heretical to question). It is said to be best suited to allocate resources, but what this nebulous market is and what the value of human life in it is, is not suitably articulated. It is perhaps naive to think that UCT’s school of economics would bite the invisible hand that feeds it. The free market is taught as canon and all else ends up being a departure from this.

The increased financialisation of the state as it relates to the increased centrality of markets in all aspects of social, political and economic life is causally related to what is taught, and not taught, at UCT’s School of Economics. It is perhaps asking too much of UCT for it in its teaching of economics to contend with the ramifications of unelected ratings agencies, usurping the role of the Bretton Woods institutions, and effectively dictating policy prescripts to an elected government. Might this not be an instance of ‘state capture’, too?

Moreover, as the human (and not a representative consumer) is not central to the teaching of neoclassical economics – no one can adequately articulate why it matters (if it does) that South Africa is now the third largest economy on the continent, and not the largest. A pertinent question that remains unasked is whether this matters for citizens living in relative (and absolute) deprivation.

The teaching of history of economic thought to undergraduates at UCT is important as it not only gives background to the ascendancy of the neoclassical school of thought, but also introduces different schools of thought that have had an impact on modern day economics. However, a glaring deficiency is that it does not introduce a single non-western thinker, let alone an African. Not one! Implicit in the course itself is then the old racist trope that Africans, and non-westerners generally, have made no contribution to knowledge creation. That historic African conceptions of economics are not preeminent is not to say they do not exist, and are not worthy of being taught in a course that relates to the history of economic thinking. It also begs the questions of where Africans, and other non-westerners, would be were it not for western economic thought? The power and knowledge binary relationship is one that marginalised and dispossessed black people the world over know too well, and is perhaps best articulated by a Dead Prez song that had this gem: ‘They seemed to only glorify Europeans / claiming Africans were only three-fifths a human being’.

The ability to ‘learn, unlearn, and relearn’ (as stressed by writer and former associate editor of Fortune magazine, Alvin Toffler) is imperative for one’s engagement with (and positioning in) the world today, yet UCT’s School of Economics persists with teaching outmoded theories, with no consideration of heterodox schools of economics. Zealotry relates to one’s refusal to alter one’s views in the face of evidence, and it is my hope that UCT’s School of Economics’ deliberations on the undergraduate curriculum will lead to meaningful change where people, and not the market, will be at the core of what is taught. The teaching of neoclassical sophism, absent of any empiricism, is a form of epistemic violence one hopes that those that study economics at UCT in future do not have to contend with.

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