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Rewriting Economics - what is taught matters

Economic pluralism, yes – but don’t ignore the planet.

The rewrite of economics is on the move. Student groups from 30 countries (and rising) recently issued a call for a pluralist approach to teaching economics. Known as ISIPE – The International Student Initiative for Pluralism in Economics – they plainly point out that, ‘What is taught shapes the minds of the next generation of policymakers, and therefore shapes the societies we live in.’

Their mission? To get universities teaching a range of economic perspectives, theories and methods, rather than offering neoclassical economics alone, which has throttled (or ignored) its academic competitors for decades. ISIPE is a fantastic initiative, led by an inspiring cohort of next-generation economists (and economic cartoonists).


Cartoon by Neil Lancastle and Sophie Bedard of ISIPE

Their call for pluralism is a smart strategy: who could reasonably object to alternative points of view being aired? Some universities are responding – like Kingston University in London, which has just appointed Prof Steve Keen to head up its Department of Economics, History and Politics, and is promising that it will be a great place to rethink economics.

So pluralism is in. But just how plural is it shaping up to be? Will all economic perspectives that matter for future policymakers get a place in the new curricula? I’m starting to doubt it.

Having a choice of theories to debate is great, but surely they should include among them perspectives that capture the defining characteristics of the times. And one of the most defining facts of our times – one which makes this era so utterly different to the days of the founding fathers of economics – is that the scale of the global economy in relation to the biosphere has been profoundly transformed.

Today the global economy is 300 times greater than when Adam Smith wrote The Wealth of Nations, and over 10 times bigger than when Paul Samuelson wrote his classic textbook Economics in 1948 – just before the ‘Great Acceleration’ of rapidly increasing use of cars, fertilizers, water, and energy, matched by rapid growth of deforestation, greenhouse gas emissions, and chemical pollution. Yet Samuelson’s pre-acceleration worldview still underpins almost all economics textbooks today.

Ignoring the economy’s dependence on Nature’s sources and sinks looks increasingly ridiculous. It means that the classic diagram of the Circular Flow of Goods and Money – featured in almost every textbook – amounts to little more than a magic trick. Why? Because it presents inputs of capital and labour as the factors of production which are then transformed into outputs of goods and services. And so it conjures those goods and services out of thin air, and disposes of their wastes without a trace. In doing so, it defies the first law of thermodynamics which tells us that matter and energy cannot be created or destroyed. Fun for a magic show, but worrying for a discipline whose conceptual frameworks form the back bone of public policy.

The Circular Flow of Goods and Money: a magic trick

Recognising that the economy is a (rather large) subset of ecological systems has to be a foundational starting point for 21st century economics. As Herman Daly and many other ecological economists have long pointed out, we have gone from Empty World to Full World. Indeed, we have entered the Anthropocene, the geological era in which humanity is the major driver of change at the Earth system scale – and we are driving much of that change through economic activity.


From empty world to full world. Size does matter.

So I’m worried. Because recognising the ecological foundations of the economy does not seem to feature high among priorities in the current academic promise to rewrite the teaching of economics.

Much of the current call for pluralism was triggered by the financial crash of 2008. It quickly gave rise to books promising the rewriting economics, but their focus was clear, from Adair Turner’s Economics After the Crisis, and Diane Coyle’s What’s the Use of Economics? Teaching the Dismal Science After the Crisis and Philippe Legrain’s After Shock: reshaping the world economy after the crisis. The words ‘after the crisis’ sing through every time. The economy created just one crisis, it seems, and we are through it.

But these are not the only books on rewriting economics. So I held out high hopes for Ha-Joon Chang’s just-published book Economics, The User’s Guide. It’s brilliantly written and gives the reader a really valuable overview of many heterodox approaches alongside the mainstream. Chang compares and contrasts what he calls the nine major schools of economics (classical, neoclassical, Marxist, developmentalist, Austrian, Schumpeterian, Keynesian, institutionalist and behaviouralist) but – to my real surprise – he gives only a footnote of passing mention to ecological economics, and moves swiftly on.

So I turned next to the Institute for New Economic Thinking and its promising CORE project, the Curriculum in Open-access Resources in Economics, which is about ‘teaching economics as if the last three decades had happened’. Great strapline, and quite a lot has happened to the biosphere over the past 30 years. So will CORE deliver?

CORE’s twenty modules are works in progress on their website at the moment, so it’s too early to say exactly how much the curriculum will acknowledge the ecological underpinnings of the economy. But to be honest I don’t feel it bodes well. Yes, the first module promises to present climate change as an example of the negative impacts of contemporary capitalism. But out of the twenty modules planned, it’s only when we reach Module 17 that we learn about ‘The economy of the Earth’ (does that make it something separate from the rest of the economy?). And in the outline of the whole curriculum there doesn’t appear to be any room to discuss whether or not unlimited economic growth is theoretically, technically or socially possible. Yet this question has ramifications for every school of thought that presumes an endlessly growing economy – ie all of them.

So yes to the call for pluralism in economics. It’s a sure step forward from the long-held monoculture of neoclassical economics. But so far this version of a ‘pluralistic’ response is shaping up to be an unhelpfully narrow one, putting the behaviour of financial markets and the monetised economy at the heart of its rethink, while leaving the economy’s (and of course humanity’s) life support systems in the margins of concern.

I hope the activists in ISIPE and every other student group calling for rewriting the way economics is taught will push back against such a narrow interpretation of economic pluralism. As the future policymakers of the 21st century, the challenge of ecological crisis is hardly something they can afford to let drop off the curriculum.

26 May Update: movement in response to this blog:

1. Prof Steve Keen has agreed, via Twitter, that economics must start with the laws of thermodynamics. Go Kingston! You get my vote.

2. Tim Phillips of INET’s CORE online economics curriculum has confirmed (in a comment below) that one of the goals of the course is “to teach that the economy is an integral part of a biological, physical and social system”. My response: if CORE puts this commitment at the heart of its conceptual framing, it can be truly ground-breaking in the teaching of economics. I’m watching with hope…

Keep up with this debate by subscribing to the Doughnut Economics blog in the side bar, and get in touch on Twitter @KateRaworth

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