The need for pluralism in economics

Unless you’re involved in the profession, you may have missed the little rumble of discontent from economics students last month. Disappointed that their professors continue to teach economics from a single perspective, economics students from around the world published an open letter online as a call for pluralism:

Theoretical pluralism emphasizes the need to broaden the range of schools of thought represented in the curricula. It is not the particulars of any economic tradition we object to. Pluralism is not about choosing sides, but about encouraging intellectually rich debate and learning to critically contrast ideas. Where other disciplines embrace diversity and teach competing theories even when they are mutually incompatible, economics is often presented as a unified body of knowledge.

If you study psychology, one of the first things covered is the various perspectives – cognitive, psychoanalytic, and so on – and what their contributions and uses are. That doesn’t generally happen in economics, at least not in the US, and students have been complaining about it for years.

This week I’ve been reading Ha-Joon Chang’s new book, Economics: The User’s Guide, and he makes a similar appeal for plurality as the students in their letter. A chapter of the book is dedicated to introducing nine different schools of economics, and he suggests they should be mixed like cocktails, using their various insights to get a fuller picture of a particular problem. He even suggests some mixes. To understand “why corporations exists and how they work”, for example, try Schumpeterian, Institutionalist and Behaviourist perspectives.

Of the nine that he lists, Chang insists that “none of these schools can claim superiority over others and still less a monopoly on truth… Each theory possesses particular strengths and weaknesses, depending on what it highlights or ignores, how it conceptualizes things and how it analyzes relationships between them.”

Indeed.

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9 Comments on “The need for pluralism in economics”

  1. DevonChap June 4, 2014 at 7:15 pm #

    Economics at its heart aspired to describe and predict economic interactions between individuals and organisations (though give the complexity of society and human interactions this can never be anywhere near perfect). Therefore it aims to have a predictive power that can be tested against. You can therefore get righter and wronger answers.

    In that respect it is close to proper science than psychology. You wouldn’t talk of different schools of science having no monopoly of truth. We know alchemy doesn’t work.

    Meanwhile, proper economist work: http://www.brookings.edu/research/papers/2014/06/03-economic-consequences-delay-us-climate-policy-mckibbin-morris-wilcoxen#.U44Rh07e5pM.twitter

    • Jeremy June 5, 2014 at 10:00 am #

      Thank you DevonChap, you continue to model the problem remarkably succinctly. Economics is more akin to psychology than you think, because it deals with people, who don’t always behave rationally or predictably. Hence the need to study economists like Keynes or Hayek, who recognised complexity and uncertainty in what they were trying to do.

      If economics is all about predictions that can be tested, at a guess, how many forecasters warned about recession in 2008?
      http://timharford.com/2014/06/an-astonishing-record-of-complete-failure/

      And then how many warned about a double-dip recession in 2011?
      https://makewealthhistory.org/2013/01/03/evolving-an-economics-beyond-growth/

      • DevonChap June 5, 2014 at 7:43 pm #

        You missed the bit about ‘aspired to be’ and “though give the complexity of society and human interactions this can never be anywhere near perfect.” Nuance doesn’t come easily to you does it?

        So climate science is like psychology as its predictions are just as bad in the short term as economics..

        • Jeremy June 6, 2014 at 9:52 am #

          No, I appreciate that you qualified your statement. I’m addressing your statement that ‘the heart’ of economics is to predict. But if making predictions that can be tested is how you value economics, then on your own terms its pretty useless.

          Unlike the physical sciences, there are no iron laws of nature in economics. There cannot be, because we are ultimately dealing with human behaviour, which can only ever be generalised about. Remember that it was out of moral philosophy that the principles of the political economy emerged.

          • DevonChap June 6, 2014 at 4:34 pm #

            Economics won’t predict the value of the Dow 20 years hence but different economic schools of thought are more or less effective at producing their desired results, such as increasing the wealth and welfare of the populace over time. You can also make predictions as to what will happen. What is economic modelling such as the report I linked to if not an attempt to predict the future.

            My point about the similarity to climate science is valid. Both rely on models. Cimate science is based on generalisations because you can’t ever have enough detail to predict it close out but you can make broad predictions. Your complaints that it didn’t predict the crash is like saying AGW is a myth because the Met Office predicted a barbecue summer and it was a wash out. Short term vs long term.

            Chemistry came out of alchemy, Physics out of astrology. Doesn’t devalue them. Newton had some weird ideas.

          • Jeremy June 7, 2014 at 12:01 pm #

            Yes, but unlike those sciences, economics has never resolved into laws of nature. That’s my point. I don’t have any particular problem with economists making forecasts, as long as they’re understood as a best guess. It’s where we start describing it as a science that we are likely to go horribly wrong. Before the financial crisis, there was no shortage of economists saying how it was different this time, the end of boom and bust, etc. Economists of a different perspective was saying very different things – hence the need for a broader range of voices.

  2. mattcurrey June 6, 2014 at 9:34 am #

    Reblogged this on matt's musings .

Trackbacks/Pingbacks

  1. Twelve economic perspectives | Make Wealth History - June 9, 2014

    […] week I made a brief case for pluralism in economics, for students to be introduced to a variety of perspectives. By way of follow-up, I thought I might […]

  2. Economics is for everyone | Make Wealth History - September 8, 2016

    […] Chang is my favourite economist, and one of the chief reasons for this is that he’s a pluralist. He points out that there are at least nine different schools of economic thought, and none of them […]

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