I am a regular reader of the Naked Capitalism blog and I read very provocative things there. Recently there was an interview with Cahal Moran who is a co-author, with Joe Earle and Zach Ward-Perkins, of the book “The Econocracy: The Perils of Leaving Economics to the Experts.” The quotation below addressed the education of economists.
“Economics is definitely a law unto itself. In natural sciences, the culture is very much focused on the empirics: theory has empirical motivations, and you always come back to falsifiable predictions before too long. In other social sciences, the culture is instead focused on debate and the contested nature of knowledge. You learn not to take any of your beliefs for granted. But entering an economics degree feels a bit like being transported to another universe. Students are introduced to a fixed body of knowledge that is presented as if – in the words of one student – it “fell from heaven in an ever-true form”. The focus is very much on learning this body of knowledge by rote, building up the neoclassical world from abstract axioms and solving mathematical problems with at best vague and stylised references to the real world they are supposed to represent. The commonly used phrase ‘thinking like an economist’ really captures the effort to indoctrinate students into this framework.
“We did a curriculum review of the final exams and course outlines of 174 modules at 7 Russell Group universities (considered the ‘elite’ of the UK) to look systematically into how economics students are educated. Our main aim was to look for evidence of critical thinking, pluralism and real world application, all of which we would consider vital to educating the experts of the future. The results were deeply worrying: 76% of final exam questions showed no evidence of critical thinking – that is, formulating an independent, reasoned argument. When only compulsory modules (namely micro and macroeconomics) were included, this figure increased to a staggering 92%. Instead, the majority of marks are given for what we call ‘operate a model’ questions: working through a model mathematically without asking questions about its applicability. Of those questions which ask students to operate a model, only 3% even attempted a link to the real world. The remainder of the marks were given for simple description questions (‘what is the Friedman k% rule?’) or multiple choice questions, again neither of which require any critical thinking. All of this is very worrying when you consider the place economic expertise has in society.”
This interview lead me to the following train of thought: stock brokers and others of their ilk refer to the stock market as “The Market” as if it were a real thing, a singular organism that one could study and therefore learn its patterns and behaviors. The stock market is clearly no such thing; it is an organized activity in which some patterns exist for reasons both known and unknown, but it is not a thing in itself. Studies have shown that when it comes to investors in stocks, the more one knows, the less well one does, which hardly supports the idea being pitched to those contracting services to purchase and trade stocks. Those stock market workers have a vested interest in selling their expertise, even if it is hypothetical at best, so they naturally project onto “The Market” the kinds of behavior they wish it possessed and their language betrays that.
“When I was young, people talked about ‘Progress’ and ‘Better Living.’ Such terms are no longer used because ‘The Economy’ has displaced them.”
I believe the same phenomenon exists for “The Economy.” We treat it as if it were a real thing. An article right along side the interview containing the above quote was titled “Investment in Early Childhood Education Yields Substantial Gains for the Economy.” “The Economy” is a construct designed by the plutocrats and oligarchs to displace other terms that might “mislead” the proletariat into thinking that it had something to do with them. When I was young, people talked about “Progress” and “Better Living.” Such terms are no longer used because “The Economy” has displaced them. And apparently what is good for General Motors “The Economy” is good for the U.S./us. In actuality, what is good for “The Economy” is good for the plutocrats. It is no surprise that the financial institution that recovered the fastest after the Great Recession was “The Market” as often “The Market” is used as a prime indicator of the state of “The Economy.” So, the plutocrats could say “See, things are getting better.” In this most recent case, though, the Federal Government, a wholly owned subsidiary of Goldman-Sachs, gave billions and billions of dollars to “failing banks” at 0% interest in the “hope” (there were no actual strings attached, of course) that those banks would loan money to folks and businesses who could use it. The banks, though, looked at billions and billions of dollars at 0% interest and logically concluded that they could make much more by investing in stocks than investing in loans that were going to have quite low interest rates. (Besides, the starved Middle Class didn’t have disposable income to generate any demand, so businesses weren’t expanding and “consumers” weren’t buying like it was 1995.) So, the prices of stocks, mostly owned by plutocrats, were bid up quite nicely as the banks “bought in” and so while the people were mired in a paycheck-to-paycheck existence, “The Market” rose to record highs very rapidly.
You know they really should trademark their definitions of “The Market™” and “The Economy™” so we would know we were talking and reading about their financial scams and nothing actually real.