New Ways to Teach Economics

Our world is much too complex to be effectively understood by just one type of economist.

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July 9, 2022

By Joris Tieleman and Sam de Muijnck

Education is a curious thing. It should prepare the next generation for tackling future challenges. And yet it is generally a reflection of our current worldviews, with even some unavoidable delay built in. 

As two young economists from the Netherlands, we grew up in a world of reliable economic progress. Our education reflected this: a technical toolkit for tinkering and optimizing market mechanisms. Our professors felt no need to question or even mention the institutions and norms that made these markets work, to teach us any non-market mechanisms, to describe actual economic sectors, or to discuss the ecological foundations of our society and economy.

That seemingly stable system is now rapidly hitting its limits. Inequality is spiraling up, our financial sector is bloated and ecological collapse looms large ahead. If our generation and the ones after us are to continue thriving on this planet, the next generation of economists will need a fundamentally different education.

Current programs teach students a narrow skill set, geared to deliver graduates who can quantitatively model market dynamics based on the neoclassical paradigm. Such skills have their uses. But as these programs are theoretically narrow and math-centered, they leave out many of the core elements that shape our economy and leave key questions unasked and unanswered.

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What we need are programs which, step by step, introduce students to the economic system as a whole and to various ways of understanding it. Building on a decade of work by the Rethinking Economics student movement and with input from some 150 professors throughout the field, we have created a toolkit to design such programs: Economy Studies.

Three core principles underpin our suggestions. First, a pluralism of theoretical and methodological approaches. Second, a foundational knowledge of the real-world economy. Third, a clear understanding of the role of values in economics. In this article we invite you to join us in walking through its building blocks, and imagine a very different kind of economics program. 

Economy Studies: A Guide to Rethinking Economics Education

Any good study program starts by defining its subject matter and relevance. So ask: What is the economy? What distinguishes its discipline, economics, from other social sciences focusing on society, politics, culture, etc.?

Then, show why economics matters. Economic activities are fundamental to and intertwined with many other human endeavors. Whether it is putting food on the table, providing medical care, ensuring a roof over one’s head, fighting a war, running an education system, organizing a social outing for a football club or simply getting a coffee. All these activities take place within the context of larger economic systems. It is these systems that we need to understand, if we want to ensure the continued fulfillment of basic human needs.

Real world: make things concrete

Next, make things concrete by grounding the program in the real world. Introduce students to the economy around them: Show them the main economic sectors of their country, the core institutions and the distribution of wealth. But also let them experience the economy firsthand in their own daily lives, by identifying what forms of economic organization they interact with, and exploring their own position in the world through platforms like Dollar Street.

Dive into history with them, of economic thought and of the real economy. The evolution of economies throughout history is a fascinating and motivating field, full of drama and action. It is also highly relevant for anyone trying to understand the current economy: History can provide great insight into how economic processes work, how the current status quo has come about, and how it might be changed.

A good understanding of the past can also help us look more sharply towards the future. Economists have claimed, repeatedly, to have solved the economic problems of the past, such as booms and busts. Recent history, however, has shown us that this is far from the truth. Many of the key issues of our time – financial instability, trade wars, economic inequality – are not new at all. Teach them to draw on past episodes, to learn how to avoid old mistakes and how they might tackle the problems their generation will face.

Pluralism: show the whole economic ecosystem

Sketch the current system in more detail. Economies are like ecosystems. What types of organizations do ours contain, how do they interact? Households, production and extraction multinationals, unions, network organizations, family firms, nation states and their various agencies, small businesses, cooperatives. Which among these are the keystone species, holding the entire fabric together?

Show through what mechanisms these organizations function and connect: market trade, hierarchy, reciprocity and other traditions. Sketch, also, how these systems work at larger scales, including their political sides. Canada’s current capitalism is a very different ecosystem from the Chinese political-economic system, which again differs enormously from, say, Cuba’s integration of market mechanisms and government organization.

Grasping such diversity requires a different approach to research methods. The T-shape model comes to mind: a broad basis in qualitative and quantitative methods so that students know what’s out there. From this basis, they can choose where to specialize. It also calls for a pluralist approach to theory. As the famous story of the blind men and the elephant illustrates, it is hard to understand something if you can ‘see’ it only from one perspective.

This theoretical pluralism is perhaps the greatest challenge of our proposal. As a lecturer, already pressed for time, how do you find your way through 10+ competing schools of thought, and judge which ones really bring the core insights on each topic? To help with this, we have created an overview of where each school specializes.

Values: what kind of economy do we want?

Our generation needs practical and future-oriented economists. So do not stop at theory: teach your students how to approach a real-world problem. And not just going from a dataset to a statistical conclusion, but from a concrete problem to a concrete solution. For example, in our own country there is growing debt-driven poverty, including social isolation and homelessness. In a case study on this phenomenon, students could interview key actors and sketch the field, look for relevant data, explore various systemic approaches to debt-driven poverty in other countries, and evaluate these through interviews and basic statistical evaluation. From concrete problems, to concrete solutions.

Finally, we need economists who can openly deal with values. What works in our current economic systems, and what doesn’t? What values underlie these judgements, and how are these values embedded in the analytical tools we use? Think of ideas such as the ‘perfect market’, ‘exploitation’, or a ‘cost-benefit’ analysis: what exactly do these terms capture and what do they ignore?

Look also beyond our current analytical tool sets: what economic visions are out there, such as the wellbeing economy, circular economy, and how are these related to the real world? Students should not be indoctrinated in one set of political-economic values, nor should these questions be swept under the academic carpet, as currently happens. Rather, students should learn to compare and contrast various perspectives.

How does all this fit into one program? A first step is to focus on the key ideas and intuitions behind the taught models, rather than their technicalities. As teaching students to reproduce and work through mathematical models often takes up a large part of the teaching time, this would give the teachers the opportunity to devote more time to practical knowledge, the relevance, institutions, and history.

Making the change happen

Our book, freely available through open access and creative commons, is not a polemic for new approaches, nor a program syllabus, nor a textbook. It is a construction toolkit. The program described above is composed of ten building blocks, which could be combined in a wide variety of configurations. We do not believe in ‘one program to rule them all’. Our world is much too complex to be effectively understood by just one type of economist: it requires pluralism within and between programs.

This shift is a daunting task. Fortunately, the change is already happening. As for starting from the real world: use of the excellent new CORE textbook The Economy is growing exponentially. In our own city, Amsterdam, professors in the Vrije Universiteit are using our toolkit to design a new bachelor program called Humane Economics. Worldwide, Rethinking Economics groups are gaining traction with their faculty.For the longest part of its history, until WW2, our discipline was a pluralist and real world oriented one, with attention for the politics and values underlying our economic systems. Despite the growing monopoly power of neoclassical thought, that diversity is still alive and kicking in the heterodox world, mostly outside the traditional econ departments. New approaches, such as ecological economics and feminist economics, are maturing. It is now time to bring all these perspectives together, and re-make the diversity of our discipline to face the challenges of the 21st century.

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