Teaching Economics After The Crash BBC Radio 4 Jan 2015
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At universities from Glasgow to Kolkata, economics students are fighting their tutors over how to teach the subject in the wake of the crash. The Guardian's senior economics commentator, Aditya Chakrabortty, reports from the frontline of this most unusual and important academic war. The banking crash plunged economies around the world into crisis - but it also created questions for economics itself. Even the Queen asked why hardly any economists saw the meltdown coming. Yet economics graduates still roll out of exam halls and off to government departments or the City with much the same toolkit that, just five years ago, produced a massive crash. Now economics students around the world are demanding a radical change of course. In a manifesto signed by 65 university economics associations from over 30 different countries, students decry a 'dramatic narrowing of the curriculum' that they say prefers algebra to the real world and teaches them there's only one way to run an economy. As fights go, this one is desperately ill-matched - in one corner, young people fighting to change what they're taught; in the other, the academics who've built careers researching and teaching the subject. Yet the outcome matters to all of us, as it is a battle over the ideas that underpin how we run our economies. Aditya meets the students leading arguing for a rethink of economics. He also talks to major figures from the worlds of economics and finance, including George Soros, the Bank of England's chief economist Andy Haldane, and Cambridge author Ha-Joon Chang. Produced by Eve Streeter http://www.bbc.co.uk/programmes/b04svjbj Here is their suggested reading list: Dr Ha-Joon Chang • Herbert Simon: Reasons in Human Affairs (Stanford University Press 1983) • Phyllis Deane: The State and the Economic System: An Introduction to the History of Political Economy (Opus 1989) Rob Johnson • Frank Knight: Risk Uncertainty and Profit (1921) ; On the History and Methods of Economics (1956) • John Maynard Keynes: General Theory (1936); A Treatise on Probability (1921) • Rajani Kanth: Breaking with the Enlightenment (NJ Humanities Press 1997) • Stuart Ewen: PR!: The Social History of Spin (Basic Books 1998) Professor Steve Keen • Hyman Minsky: Can "It" Happen Again? (Routledge 1982) • John Blatt: Dynamic Economic Systems (Routledge 1983) • Karl Marx: Grundrisse (1939) Professor Diane Coyle • John McMillan: Reinventing the Bazaar - A Natural History of Markets (Norton 2003) • Thomas Schelling: Micromotives and Macrobehaviour (Norton 1978) Dr Victoria Bateman • John Maynard Keynes: The General Theory of Employment, Interest and Money (chapter 12) • Avner Offer: The Challenge of Affluence (OUP 2006) • Mariana Mazzucato: The Entrepreneurial State: Debunking Public vs Private Sector Myths (Anthem Press 2013) Professor Wendy Carlin • David Soskice and Peter Hall (ed): Varieties of Capitalism (OUP 2001) • Paul Seabright: The Company of Strangers: a Natural History of Economic Life (PUP 2004) Professor Philip Mirowski nakedcapitalism.com or larspsyll.wordpress.com Lord Robert Skidelsky • Josh Ryan-Collins, Tony Greenham, Richard Werner and Andrew Jackson: Where Does Money Come From? A Guide to the UK Monetary and Banking System (New Economics Foundation 2014) • Anat Admati and Martin Hellwig: The Bankers' New Clothes: What's Wrong with Banking and What to Do About It (Princeton University Press 2013) • Erik Brynjolfsson and Andrew McAfee: The Second Machine Age: Work Progress, and Prosperity in a Time of Brilliant Technologies (WW Norton 2014) Dr Devrim Yilmaz • Karl Polanyi: The Great Transformation (1944) Professor Danny Quah • Edward Tufte: The Visual Display of Quantitative Information (Graphics Press 2001) • Paul Kennedy: The Rise and Fall of the Great Powers: Economic Change and Military Conflict from 1500 to 2000 (Random House 1989) • Jared Diamond: Guns, Germs, and Steel: A Short History of Everybody for the Last 13,000 Years (Vintage 1998) Yuan Yang, Rethinking Economics • Tony Lawson: Economics and Reality (Routledge 1997) Joe Earle, Post-Crash Economics Society • George Packer: The Unwinding (Faber 2014) • Rod Hill and Tony Myatt: The Economics Anti-Textbook: A Critical Thinker's Guide to Economics (Zed 2010) Broadcasts Tue 2 Dec 2014 20:00 BBC Radio 4
Comments
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Economics professionals are either colluding or they are utterly clueless. Great financial/economic theories are often humbled by reality. All they do is waste valuable time claiming to understand what happened yesterday.
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it snot problem about knowing history. its about core. any physicist could tell you (if they ever asked them but obviously didnt) economics is chaotic system with all kinds of reverse feedbacks. You just need experts for feedback and chaotic systems with some historic knowledge to parametrize model to real world .
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Not one mention of gold or fractional reserve banking just a load of welfare state economists Marx?ffs!
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Questioning the economics being taught in our colleges and universities is not a new trend. The history of economic thought is filled with debates over economic theory and conventional wisdom. I was fortunate enough to have studied world history before studying economics.
What today's students face is the choice between credentials and actual accumulation of knowledge. I would urge anyone who has a desire to discover how the world works to first study the history of economic thought. First, study the works of Richard Cantillon, then the writings of the key Physiocratic writers (Quesnay, Turgot, Du Pont de Nemeurs) and Adam Smith. Their works set the stage for debates over the morality as well as the economic efficiency of systems of law and taxation, over whether property rights were justly extended to nature as well as the goods we produce. A good deal can also be learned from the writings of people such as Benjamin Franklin, Thomas Paine and Alexander Hamilton.
On banking, Adam Smith provides an excellent study of the Bank of Amsterdam, established as a deposit bank, issuing certificates of deposit that circulated as a global currency substitute for gold and silver coinage.
One person, the American Henry George, took what his predecessors had built and studied how their theoretical arguments squared with the real world. George was highly critical of most of his contemporary political economists, for the good reason that they wrote in order to protect entrenched privileges of all sorts. And, in particular, landed privilege and land monopoly. The key was tax policies that confiscated earned income flows, actual capital goods and profits from the exchange of goods and services, while leaving the rent of land and land-like assets in private hands. What Henry George argued convincingly to reforms in his time was that the new generation of economists were aiding landed interests by redefining nature (i.e., land) as just another factor input with the same characteristics as capital goods. From that point on, economics (neoclassical theory) would never describe what happens in the real world. They ignored the fact that price does not clear the market for nature unless the full potential rental value of land in all of its forms is captured to pay for public goods and services.
A small number of economics professors during the 20th century held onto the analytical model developed by Henry George. Their work and research was largely ignored. Late in life, William Vickrey was awarded a Nobel Prize in economics for his work that had its origins in the work of Henry George. At the moment, the one economists who sounds the most like Henry George is Joseph Stiglitz, who has identified land speculation and "rent-seeking" as the fundamental cause of crisis in our economies. Less well known but even more direct is the work of economists such as Mason Gaffney (US), Nicolaus Tideman (US), Fred Foldvary (US), Bryan Kavanagh (Australia), Fred Harrison (UK). There are others as well who deserve to be elevated to the top of the economics profession because of their clear and accurate explanation of the cause and cure of business cycles, how to create full employment economies, and the eventual elimination of generational poverty.
Edward J. Dodson, Director
School of Cooperative Individualism
www.cooperative-individualism.org -
The ONLY COMMON SENSE solution to this financial madness: the debt-free and interest-free Bradbury Pound aka National Credit. Go to www.ukcolumn.org and start your journey!
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