Economists -- you say you want a revolution?

It seems that some people never fail to get worked up at the sight of young people standing up to an entrenched power. That’s the only way I can explain the vehement reaction to my recent Op-Ed article, “Not their fathers’ economics,” about the budding movement against orthodox economics among students from around the world.

The general dismissive attitude seems to be that these students have no real right to speak their minds because they’re so young that they haven’t had a chance to be fully informed. Another, less politic way of delivering the message would be, “Shut up freshmen and listen to what you’re told.”

This line of thinking was most aptly summed up in a comment by “Sneezer142” and a follow-up comment by “hisfrogness.”

Sneezer142 at 8:13 AM April 12, 2012

Shouldn’t these young militants at least take a few economic courses, and get a grounding in the basics, before they roundly reject what they’re being taught in Mankiw’s (or any other professor’s) class? The fact that they’ve already made up their minds, while living in near total ignorance of the subject at hand, isn’t something to be applauded. It’s something to be alarmed about. It’s a disturbing reflection of an arrogant and willful cluelessness that we saw manifest in the Occupy Movement -- which may be the first protest movement in American history made up of civic illiterates without a coherent message or cause. What these students are rejecting isn’t one school of economics, since they don’t know one school from another at this point. They’re protesting the fact that this professor has links to a former President who the current President (rather than taking responsibility and ownership) is blaming for all the country’s ills. They will tolerate no real diversity of thought or opinion at Harvard, which isn’t anything new. They want to be spoon-fed ideas that conform to their left-wing prejudices, which they pick up by watching Jon Stewart and bathing in the liberal zeitgeist of our brain-dead popular culture. Nothing wrong with a little rejection and rebellion, but why not first take the time to know a little more about what you’re rebelling against and rejecting?

hisfrogness at 11:06 AM April 12, 2012

Bravo Sneezer! I couldn’t have said it better myself.

At some point these kids are going to hit an [ideological] wall; humans operate under the laws of free will. [Everything] on this earth competes for resources. To be alive in this universe means that you will have to compete with others.

There is no idea or ideal that will ever change this and when attempts are made to do so it invariably leads to the need to change humans.

The answers they seek lie nowhere near the field of economics.

First, there are a few things to understand about the context of the student walkout at Harvard I described at the start of my piece. Every other year, Harvard offers two introductory economics courses. One class is taught by N. Gregory Mankiw, who was the subject of the walkout. The other, called “Economics: A Critical Approach,” is taught by professor Stephen Marglin. But Marglin’s class is only available every other year. This was a year when students were not given a choice of introductory economics classes. So anyone wishing to learn about alternative perspectives on these issues had no option.

It’s also worth noting that Marglin’s class is offered specifically as an alternative to the orthodox school of economics that Mankiw embodies. Indeed, Mankiw has criticized Marglin’s class precisely because it criticizes the ideas he teaches. “A main disagreement I have with Steve is pedagogical,” Mankiw wrote in his blog on Dec. 10. “I believe his critiques of mainstream economics should be presented after students have had a standard course like ec 10.”

Of course, this raises the question, is EC 10 a standard introductory course? Mankiw’s economic ideas are very much part of the mainstream political economy that has dominated American economic thinking for decades -- from the Reagan and Bush administrations, to the Clinton administration, to the second Bush administration, to the Obama administration. In other words, Mankiw’s ideas are not a political issue since the leaderships of both parties have pursued policies that are very similar to those that he espouses.

But his ideas also are at the heart of the economic structure we have today, which has resulted in disastrous financial bubbles that occur with increasing frequency, unprecedented inequality both in the U.S. and around the world, and extreme environmental degradation.

So the central issue actually is, are the market-centric ideas Mankiw is teaching his students correct? Evidence from the recent economic meltdowns in the U.S. and Europe, where all of our economic models have proved useless, would seem to indicate that they aren’t.

As Nobel Laureate Joseph Stiglitz said in a recent interview, “Academic economists played a big role in causing the crisis. Their models were overly simplified, distorted, and left out the most important aspects. Those faulty models then encouraged policy-makers to believe that the markets would solve all the problems.”

Obviously the belief in the market as a savior turned out to be false. Yet this mode of thinking remains at the heart of the way economics largely is taught in academia.

All that being said, “Sneezer142” would have a valid point if the only people rising up against the Mankiw mind-set were freshman students who have yet to finish a single economics course. After all, education and experience do matter. However, that is not what’s happening.

The economics research and education foundation I work for, the Institute for New Economic Thinking, or INET, recently held its annual conference in Berlin. The event was overwhelmed by students and young scholars from around the globe who were eager to talk about fresh economic ideas that don’t hew to the traditional modes of thought.

INET uses the term “young scholars” purposefully because these are not students in the typical way we think of the term. For the most part these are graduate students, doctoral candidates working on their dissertations, postdoctoral researchers and young faculty members. So they are studying, but they’re light years from introductory courses. And they too are eager to break through the wall of economic orthodoxy.

Of course, none of this is to say that INET has a monopoly on revolutionary thinking about economic issues. The New York Times recently reported on a conference called “Transitioning to a New Economy” at Harvard that attracted attendees from universities across the country. And Stiglitz himself noted in the interview cited earlier: “I think that change is really occurring with the young people. My young students overwhelmingly don’t understand how people could have believed in the old models.”

So that’s where we are in the economics debate. This is not a “reflection of arrogant and willful cluelessness” on the part of some uninformed ideologues, as “Sneezer142” states. Rather, it’s an ongoing challenge to an entrenched belief system that is wrong and needs to change.

This change will come, slowly and over years, not in days or weeks. But as we move through the coming decades, these students and young scholars will eventually represent the economic orthodoxy. And as this happens, we will start to get a new conventional wisdom in economics, one that is less focused on elegant theories that can be proved wrong with our eyes and that is more reflective of society’s messy reality.

There will undoubtedly be mistakes in these new systems too. But at least they won’t repeat the mistakes of the past.

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