At the end of this semester, I finish with economics forever. I feel that near the end of three and a half years of an undergraduate economics education, I have not found what I was looking for. And I struggle with this realization, as I doubt whether I was capable of knowing what it was I was looking for in the first place. Perhaps one never truly is.
Yet as I finish my own story of economics and move on to other areas, I know that the story of economics generally will plod on, as ever incomplete, self-conscious, crashing through a thorny wood and bewildered by the many paths it has to choose from. I wonder whether economics itself knows what it is looking for.
I am reminded of that beautiful moment from Alice in Wonderland:
‘Would you tell me, please, which way I ought to go from here?’
‘That depends a good deal on where you want to get to,’ said the Cat.
‘I don’t much care where—‘ said Alice.
‘Then it doesn’t matter which way you go,’ said the Cat.
‘—so long as I get somewhere,’ Alice added as an explanation.
‘Oh, you’re sure to do that,’ said the Cat, ‘if you only walk long enough.’
I have often thought that undergraduate economics has turned out more technical and two-dimensional than necessary, providing clever tools of analysis with seemingly limited use in the real world. And I know I am not alone in thinking this.
In this my final semester, however, I’ve been taking a course in the history of economic ideas, and it has in many way alleviated much of my previous dissatisfaction with three years of straight macro- and microeconomics.
By looking at thinkers such as Petty and Cantillon, Quesnay and Smith, Malthus, Ricardo, Mill and Marx, and more recently Walras and Pareto, I have been startled at how the evolution of economics is speckled with not just technical quarrels, but core methodological and epistemological issues, dealing with the limitations and inadequacies of economics and political economy itself as a branch of knowledge, and where it ‘fits’ in the overall format of human inquiry and knowledge proper. It is, I think, a problem of identity.
Economics was never, and probably never will be, a truly stand-alone discipline. The great economic thinkers did not specialise in economics nor identify exclusively as economists. Smith a philosopher, Marx a philosopher-sociologist, Mill a political philosopher, and Marshall a professor of moral sciences but a trained mathematician.
If we take the example of the Lausanne School of economic thought, the ‘identity issue’ that besets much of the rest of economics is clear. Leon Walras and Vilfredo Pareto were the two main thinkers of this school. The Lausanne School is usually characterized in contrast to the Cambridge School (Marshall, Pigou and Keynes) on the basis of the general equilibrium approach to analyzing markets and prices. General equilibrium theory considers many interacting markets simultaneously, whereas the Marshallian partial equilibrium approach looks at price determination in single markets.
The main criticism of the general equilibrium approach is that it is too reliant on pure theory in its mathematical representation and its assumption of ‘simultaneousness’, and thus bears little relevance to the real world. A common criticism of Walras is that he was not enough concerned with the real world implications of economic theory. Conversely, Marshall and Pigou’s economics was grounded in how economics could be used to improve the welfare of society along utilitarian principles.
Yet in a way, Walras came under most scrutiny from his own side: Pareto. In contrast to Walras’s pure economics, Pareto developed a more wholesome approach to economics. Pareto’s pluralistic positivist methodology considered a variety of approaches in studying related phenomena, and then evaluated according to their correspondence with the facts. Pareto was intent on emphasising facts and experience. He ended up exceeding his predecessor at the Lausanne School, Walras, in formulating a ‘social equilibrium’, a notion as much involved with sociology as economics.
The point of going into the Lausanne school like this is to give some idea of the differences within that school and to indicate the fluidity of economic inquiry. I am astonished at how subtle the development of economic ideas is, and how if a student does not opt to do a course on the history of economic ideas, they would be unaware of all this.
The result of this is that a student, who graduates with a standard, neo-classical macro- and micro-economics education, will be left with a very skewed perspective of economic phenomena. They will have an extremely limited and two-dimensional understanding. From my viewpoint, this surely has implications for business and public policy in the real world, and it does not exactly fill me with much optimism about those with their hands on the levers of economic and political power.
I am not suggesting that everybody needs to have a PhD in the history of economic ideas. But at least we can foster a better understanding of the intellectual evolution and context of economics.
Knowledge, ultimately, is a product of cultural and historical context. Our understanding of things changes, and how knowledge changes and evolves is much more complicated than a simple cumulative process. This is where post-modernism becomes an important intellectual, cultural and artistic development, in its doing away with modernist exceptionalism. It would be interesting to consider the implications of post-modernism on economics, given the impact it has had on philosophy and political theory.
Economics should be taught with a huge disclaimer of this nature. But it isn’t. Further, it is telling that many economics faculties these days are part of ‘business schools’, which usually occupy the most lavish and opulent facilities at universities and are beneficiaries of large corporations and the ultra rich. To me, this is indicative of not the development of economics itself, but of what is expected and assumed of economics more widely.
Many people naively perceive economics in terms of public policy, money, business and markets. But you cannot impose such an identity on such a complex and interdependent field of inquiry. It is wrong that I should be a ‘commerce’ student first and an economics major second. Economics should never have been absorbed into the sciences entirely, much less an appendage to ‘business’ disciplines. The model of undergraduate economics has the potential to breed ignorance.
It is easy to become disillusioned with economics. It is justifiable, and for some, inevitable. It is an unsure balance between the self-serving ‘exclusivity’ of economics in politics and business on the basis of its ‘scientific rigor’ and empirical grounding, and the degree to which it is holistically useful in understanding human action, if we can at all. Will economics into the future be allowed to carelessly bleed into less worthy rabbit holes (to reference Alice in Wonderland again), misguided, internally disparate, delusional and lost?
There are labyrinths and rabbit holes, and deceptions to lure us from our initial course. By the by, we might even stop and smell the roses on our way. But better gardens grow and freely stretch, and maybe we should respect this bloom if we ourselves are so in amongst the climb.