Not their fathers’ economics

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There is a growing student protest movement against orthodox economics that could change the field as we know it.

If it is sustained, historians likely will cite Nov. 2, 2011, as the start of the revolution. On that day at Harvard University, roughly 70 students organized a walkout of an introductory economics class taught by N. Gregory Mankiw.

Mankiw is the former head of the Council of Economic Advisers for President George W. Bushand an advisor to Republican presidential candidate Mitt Romney. He is also the author of “Principles of Economics,” the predominant textbook used in introductory economics classes worldwide. Not surprisingly, he has an extremely traditional, market-oriented view of the discipline.

The students who walked out of Mankiw’s class explained their reasoning in an open letter printed in the Harvard Political Review. It began with this declaration: “Today, we are walking out of your class, Economics 10, in order to express our discontent with the bias inherent in this introductory economics course. We are deeply concerned about the way that this bias affects students, the University [sic], and our greater society.”

They went on to explain that instead of presenting a broad introduction to economics, Mankiw’s teaching was narrowly focused, did not offer alternative approaches to orthodox economic models and ultimately was complicit in perpetuating systemic global inequality.

Their argument struck a chord with the wider economics community. Suddenly, many more economists started to acknowledge, at least in private, that something is terribly wrong with the field.

If you think all of this seems to be coming out of the blue, you’re not alone, because much of the debate is taking place behind the walls of cloistered academia. Indeed, sometimes you don’t even realize that there’s a social revolution going on until you find yourself in the middle of one. That’s what’s happened to me.

I work for the Institute for New Economic Thinking, a research and education foundation in New York. Each year we hold an international conference that gathers major figures from the global economic community to discuss new ideas for addressing the critical challenges facing society.

Our conference this year starts Thursday in Berlin. Considering the location and timing, our focus naturally is on the financial crisis in Europe.

To incorporate some younger voices into the mix, we decided to invite a few students. So we put out word that we were accepting applications for 25 doctoral candidates from around the world to attend the conference, all expenses paid, and actively participate in our program and panel discussions. We figured that we’d receive from 100 to 150 responses. We got 563.

Obviously, we were caught off-guard by the level of enthusiasm. But in that heaping pile of applications we also could see a budding community of young scholars who don’t want to pursue economics as it’s traditionally been taught.

These students are frustrated by a field that they believe could provide so much to society but instead is mired in outmoded thinking. Today’s economics is dominated by ideas, like the efficient market hypothesis, making such sweeping generalizations that they render human beings practically unrecognizable. Do people ever have “perfect information” or a complete understanding of their best interests? Of course not. They’re humans.

In paper after paper, the students applying to attend the conference described their frustrations with pursuing fresh avenues of economic inquiry that are applicable to real-world issues. The problem is that the economics establishment doesn’t want them to do this. In fact, the discipline is so dominated by orthodox ideology that the students risk jeopardizing their careers simply by engaging in research that runs counter to economics’ fundamental assumptions.

As one student wrote in his application, “During the last 40 years economics captivated itself in an axiomatic hypothetical theory prison. Freedom of opinion, one of the most fundamental characteristics of an enlightened and pluralistic society, disappeared.”

Now these students are looking to the senior members of the economics profession for guidance. Of course, this is something our institute wants to encourage. So we decided to set up an overflow room at the conference specifically for students to view the proceedings on a live video stream. For these attendees, however, we couldn’t pay any expenses.

We weren’t sure what to expect. But the demand became so great that we had to limit access to this overflow room as well.

At this point, hundreds of students from around the globe are making their way to Berlin to spend four days watching the conference, sharing ideas with major economic figures who are eager to visit with them — the next generation — and discussing new approaches with their peers. Suddenly it feels as if we’re setting up the coffeehouses and backroom parlors for the fomenters of an underground uprising.

Why is this happening, and why now? Obviously, the global financial crisis brought the failures of the economics profession into stark relief. But there still hasn’t been a significant public movement of established professional economists away from orthodox theories. However, as the pernicious effects of instability and inequality become part of daily life, frustration with stale economic ideas is starting to turn into action — at least on the part of some.

So this is where economics finds itself today, stuck between failed methodologies and whispered realities. It can continue to produce elegant theorems that work only by ignoring obvious real-world situations and conditions. Or it can break free of its restrictions and apply its rigor to addressing society’s most intractable problems.

The choice is up to the economics establishment. But the revolution has begun.

Eric J. Weiner is the senior editor and director of communications at the Institute for New Economic Thinking in New York.