Economists Push for a Broader Range of Viewpoints in Their Field

M. Scott Brauer for The Chronicle

A recent Occupy Harvard teach-in featured a speech offering a perspective on what an alternative to prevailing U.S. economic theory might look like.
December 13, 2011

In the wake of the financial crisis of 2008, mainstream economists in academe were criticized for treading in ethically murky waters. The 2010 documentary Inside Job recounted how influential economists were being paid by the companies and governments that they were analyzing, but failing to disclose conflicts of interest publicly or in reports they produced.

Recently critics have mounted a more fundamental line of attack on mainstream economists, taking aim at the ideology that has grown dominant over the past 30 years, which they say played a significant part in causing the Great Recession and not doing much to help solve it.

The dispute, which has been echoed in critiques made by Occupy Wall Street activists, has roiled blogs, op-ed pages, and university campuses. Students at Harvard University recently walked out of one prominent professor's class.

Critics call this ideology "free-market fundamentalism," and it rests on certain core tenets: The market is the most efficient way to allocate resources; people generally make rational decisions when buying goods and services; and government regulations are to be minimized because they risk undermining purer market forces and can lead to corruption.

Embraced by presidential administrations from both political parties, this view of economics is most often associated with prestigious academic departments in the Ivy League, at Stanford University, and the University of Chicago. But it has devolved into dogma, critics say.

Critics want an alternative vision—or visions—of the discipline to be more widely accepted. "We need an economics that aims to secure long-run human well-being, not an economics preoccupied with maximizing short-run output and profits," reads the mission statement of a new group, called Econ4, which was started at the University of Massachusetts at Amherst in September.

It is too soon to say that the group, or others, like the Institute for New Economic Thinking, which is financed by George Soros, have had much of an effect yet, and Econ4's organizers acknowledge that intellectual change seems to be bubbling below the surface more than prompting any broad rethinking of beliefs.

It is also difficult to quantify the impact of something called "heterodox economics," a term that refers to schools of thought outside mainstream economics, but is a category so wide that it can mean just about anything. One measurement can be glimpsed in Econ4's declaration of support for the goals of Occupy Wall Street. More than 375 economists and others have endorsed it.

The founders of Econ4 want the economy, and the study of economics, to pay more attention to such issues as the fair distribution of opportunities; to emphasize minimizing vulnerability in the economic system instead of maximizing efficiency; and to strive to give a fuller accounting of the costs and benefits of market and government decisions, including consequences for the environment and the value of caring for dependents.

"Our basic aim is to try to produce a change in economics in the United States," said James K. Boyce, professor of economics at UMass-Amherst, and a founder of the group. "We see a connection in how the economy is such a mess and what has happened in the economics profession over the last two decades."

The continuing political debate over whether the government should intervene in the markets, or whether they should be left to themselves, also needs to be reframed, Mr. Boyce said. "The central question is the distribution of wealth and power," because the two are increasingly correlated.

"If you don't have purchasing power, you lose when markets operate. If you don't have political power, you lose when it comes to how governments operate," he said. "Do we live in a democracy or an oligarchy?"

Tussle Over Pedagogy

The way the discipline is traditionally taught has also come up for fresh scrutiny.

Last month, 70 students walked out of the introductory macroeconomics class of N. Gregory Mankiw, professor of economics at Harvard University, arguing that his teaching was too ideologically biased in favor of a market-embracing philosophy.

The author of two widely used economics textbooks and former chairman of the Council of Economic Advisers for President George W. Bush, Mr. Mankiw agrees that he represents mainstream economic thought in academe. But he does not see the study of the discipline as inherently laden with ideology. Economics does not lend itself to a body of settled conclusions, he has said. It is a method, a means of investigation, not a doctrine.

"The recent financial crisis, economic downturn and meager recovery are vivid reminders that we still have much to learn," he wrote recently in The New York Times. "A prerequisite for being a good economist is an ample dose of humility."

But such humility has been in short supply among mainstream economists, say critics. Part of the problem is that they have embraced mathematics too fervently, according to one view. This embrace has bolstered the prestige of the discipline, making it appear more intellectually rigorous and academically selective. But it has also made economics more abstract and divorced from the illogical or inconsistent ways that people, and large groups of people, can behave.

"Economists got so preoccupied with elegance that they sort of forgot about realism," said Nancy Folbre, a professor of economics at UMass-Amherst.

Another part of the problem is that the neoliberal, or free-market, view has crowded out other dissenting perspectives, said Stephen A. Marglin, a professor of economics at Harvard who last week delivered a speech called "Heterodox Economics: Alternatives to Mankiw's Ideology" at an Occupy Harvard teach-in.

Mr. Marglin teaches an alternative introductory course to economics at Harvard that includes both mainstream economics and several critiques of it. His course, though, is for students majoring in fields other than economics, while Mr. Mankiw's course is geared toward future economists.

"I don't think it matters so much which critiques are presented as much as that students don't get the sense that there are established truths handed down from Mount Sinai," he said. "This is contested terrain, and this is what they should take away from it."

Mr. Mankiw posted a video of Mr. Marglin's speech on his blog, saying that he largely agreed with his colleague. His main dispute was on pedagogical grounds. Critiques of mainstream economics should be presented after students have had a standard introductory course and be aimed at sophomores, he said, which would attract more economics majors.

Higher education is no stranger to complaints of ideological dominance in certain disciplines, but they regularly come from conservative scholars who see a bias against their viewpoints. The irony is not lost on those who want economics to be more intellectually inclusive.

While he acknowledged that political bias probably does sometimes exist in such departments as gender or ethnic studies, the difference in economics is that the bias is not just one of perspective but also of methods, said Gerald A. Epstein, a professor of economics at UMass-Amherst and a founder of Econ4.

"The problem is that their view of how to think like an economist is extremely narrow to the point of being cut off from some of the major questions affecting society," Mr. Epstein said. "In the end it is a form of indoctrination."

Ethics and Realpolitik

Economists are also debating other contentious changes to their discipline.

Inside Job explored how some economists made millions of dollars serving on the boards of businesses, and then giving advice to governments that also served the interests of those businesses.

After a longstanding resistance, economists are now looking at adopting an ethics policy, in which they would divulge their conflicts of interest, much the way physicians do. The American Economic Association, which is meeting in January, has asked a committee to draw up guidelines on these matters.

"I agree that there have certainly been problems in this area in the past," Orley C. Ashenfelter, professor of economics at Princeton and president of the association, wrote in an e-mail.

Getting such agreement on the need to change prevailing economic methods and views is expected to be much tougher.

While every discipline is resistant to unorthodox ideas, said Ms. Folbre of UMass-Amherst, this tendency is amplified in economics departments because its scholars study how economic power is deployed. "Whether you favor the current deployment of power has big implications for what kind of resources you can get," she said. "It's more subject to ideological bias than sciences that aren't so embedded in realpolitik."

Ms. Folbre pointed to the pay that economists earn as proof of the perceived value of the discipline.

Over the past 30 years, economics and business professors have seen their salaries soar in comparison with their colleagues, according to a recent analysis published in The Chronicle. In 1980, a full professor of economics earned 13.9 percent more than a full professor of English. Thirty years later, the economics professor earns 41 percent more. Similarly, business faculty were paid 11 percent more than the typical full professor of English in 1980. Business professors now earn 50.9 percent more. The only gap larger was for law professors.

"The closer you are to the center of power, the better you're paid," Ms. Folbre said. The stakes and penalty for acting out, she added, also increase.