Ending the Econocracy: The Need for Pluralism in Economics

To understand why economics students around the globe are calling for Rethinking Economics, the book The Econocracy is a thoughtful and accessible place to start. An econocracy, as defined by authors Joe Earle, Cahal Moran, and Zach Ward-Perkins is “a society in which political goals are defined in terms of their effect on the economy, which is believed to be a distinct system with its own logic that requires experts to manage it.” Their work carefully explains why our current system is an econocracy and discusses possible ways to change that. Based on my own experiences so far, I can’t help but agree with them. 

The Econocracy argues that the current definition of economics is limited to a narrow, neoclassical viewpoint. Institutions of higher education have accepted and helped reinforce this tendency, at the expense of the discipline. The neoclassical approach to economics requires an understanding of complex mathematical models, which leaves many citizens feeling unable to engage with it at all. However, they should not be intimidated by those who do possess the necessary quantitative skills. While today’s economic experts hold prestigious positions, their understanding of math is often greater than their understanding of the economy. As the 2008 recession demonstrated, the majority of current experts didn’t get things right. This shows “the perils of leaving economics to the experts.”

The authors’ critique of economics curricula at colleges and universities necessarily extends to a critique of the higher learning system where these curricula are taught. Interestingly enough, they argue neoclassical arguments have helped shape this system to become what it is today. “Human capital” theory has its roots in neoclassical utility maximization. One of the first exercises in standard econometrics classes is to calculate the “returns to education,” which shows that incomes are higher for those who have completed college degrees.

These type of theories are problematic because they frame education as a “financial investment” which encourages students to give “the minimum effort and engagement necessary to get a satisfactory grade.” Such a mentality “undermines many of the core principles of a liberal education.” The authors look through history at the UK’s higher education system, and show how rising tuition costs financed by personal loans also has its roots in neoclassical thinking. This type of change is symbolic of the econocracy’s influence throughout all spheres of civil life.

While studying at UC Berkeley and Bard College, I met many students who thought and acted this way. As long as you put in a minimal effort, there was little chance of failing or being expelled. Second and third chances were given out often. Teachers did not give a lot of room to think critically about what you were learning, and worksheets and one-size-fits-all curricula were the norm. Nearly every class I had was in a lecture/tutorial format, and nowhere was the socratic method used for teaching. Still, there were some great professors and fellow students who shined the light in the right direction for me. I finished school feeling like I missed out on something, but I’m glad I have my entire life to continue learning.

The Econocracy does more than offer a critiqueit also puts forth a new direction, albeit one that might be tough to achieve. For the authors, reform should start with the education system. They pose it’s necessary to shift away from “a passive student body—whose only input into their education is a tick-box feedback form—to an “active student co-production of education.” Debate and dialogue should be encouraged.

A shift needs to happen within economics curricula too. The authors recommend economics departments teach with a pluralist approach, which would place post-Keynesian, classical, Marxist, feminist, Austrian, historical, ecological, and other perspectives front and center next to neoclassical economics. This way, students would be able to see neoclassical views as one of many ways to look at things. They would recognize that scholars have debated alternative points of view for decades, often on the fringes of the institutions they call home.

As Joan Robinson quipped in Marx, Marshall and Keynes: “The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.” It doesn’t have to be this way. The Econocracy offers a different vision for economics. One where it is not only for the experts but for everyone.  They want to “democratise economics because [they] believe at its core economics should be a public discussion about how to organise society.” That’s something we should all get behind.

At The Minskys, we too hope to help advance a jargon free view of the economy that everyone feels empowered to engage with. Economics can’t just be left to the experts, because “the economy” affects us all.

Be sure to grab your own copy of The Econocracy, read it, and comment down below with your thoughts.