Sunday, 31 May 2015

"Another economy is possible" >>>>>>>>>>>>>>> >>>>>>>>>>>> 'orthodox' vs 'heterodox' economics

Recently, the front page of the French daily Libération carried the headline:

Alain BARRE (@AlainnBARRE) | Twitter
Economistes : La révolte «hétéro» - Libération

The most recent challenge to 'orthodox' economics started over ten years ago at the Sorbonne in Paris - and was coined as 'post-autistic' economics:

Post-Autistic Economics (PAE) is a movement of different groups critical of the current economics mainstream: behavioral economics, heterodox economics, feminist economicsgreen economics, and econo-physics. It was born through the work of University of Paris 1economist Bernard Guerrien. It was started in 2000 by a group of disaffected French economics students.[1]
The term autistic is used in an informal way, signifying "abnormal subjectivity, acceptance of fantasy rather than reality".[2]

The Post-Autistic Movement | Adbusters
Real-World Economics

The PAE Network started in France and has spread first to Cambridge and then other parts of the world. The name derives from the fact that mainstream economics has been accused of institutional autism; i.e., qualitative impairment of social interaction, failure to develop peer relationships and lack of emotional and social reciprocity. In short, economics has lost touch with reality and has become way too abstract.
The Crisis in Economics: The Post-Autistic Economics Movement: The first 600 days, Edward Fullbrook (editor) | P2P Foundation

The French do indeed have a tradition of challenging tradition:

Other, more radical, historians see the state as playing an instrumental role in getting markets going. In some accounts, it seems like the state only exists for the benefit of greedy capitalists. Michel Foucault, possibly the most radical of the lot, writes in an early work that state institutions like hospitals, asylums and prisons emerged in the early part of the industrial revolution in order to play an explicit economic function. During periods of economic prosperity, the working classes could be let free to contribute to economic growth: that helped to keep wages down. But during downturns, the working classes were locked up (madness or criminality, argues Foucault, were effectively invented to justify so doing). Locking up the poorest people minimised the risk of violent rebellion:
"Cheap manpower in the periods of full employment and high salaries; and in periods of unemployment, reabsorption of the idle, and social protection against agitation and uprisings."
Foucault’s later works—such as his most famous book, "Discipline and Punish"—are not quite so reductionist; although a whiff of what some leftists call “structural Marxism” persists. But Foucault’s general conclusion is similar to Polanyi’s and Marx's: governments were crucial for creating capitalism.
Economic history: Governments and economic progress | The Economist

This is all part of the 'heterodox' challenge to the 'orthodox' - the notion that there are 'alternatives' to the 'neoliberal mainstream':
Les économistes hétérodoxes
Bataille d'influence chez les économistes français - Libération

Which is what Libération looked at recently:

Economistes : La révolte «hétéro»

Orthodoxe contre hétérodoxe.Orthodoxe contre hétérodoxe. (Photo Pascal Colrat)

Economistes : La révolte «hétéro» - Libération

See also:
Orthodoxie et hétérodoxie en économie — Wikipédia
Heterodox economics - Wikipedia, the free encyclopedia
Heterodoxe Ökonomie – Wikipedia
Economía heterodoxa - Wikipedia, la enciclopedia libre

The 'mainstream' UK daily, the FT, also thinks there should be a re-look at how economics is perceived and taught:

Economics needs to reflect a post-crisis world

The dismal science should be grounded in reality to stay relevant
Karl Marx©Getty
hen the global economy crashed in 2008, the list of culprits was long, including dozy regulators, greedy bankers and feckless subprime borrowers. Now the dismal science itself is in the dock, with much soul-searching over why economists failed to predict the financial crisis. One of the outcomes of this debate is that economics students are demanding the reform of a curriculum they think sustains a selfish strain of capitalism and is dominated by abstract mathematics. It looks like the students will get their way. A new curriculum, designed at the University of Oxford, is being tried out. This is good news.
Defenders of the status quo have pushed back, pointing to a rich hinterland of heterodox economics thinkers. Dig deep and you can find plenty of academic treatises on bank runs, unstable credit cycles and irrational markets. That people are selfish and that businesses pursue profit is not the fault of economics but of human nature. Accurately predicting the future is an unrealistic test of any academic discipline, particularly one that encompasses limitless human interactions.
But the fundamental point made by the critics is right. For a subject so engaged with studying worldly behaviour, there is too much timeless abstraction and too little scrutiny of real-world events. The typical economics course starts with the study of how rational agents interact in frictionless markets, producing an outcome that is best for everyone. Only later does it cover those wrinkles and perversities that characterise real economic behaviour, such as anti-competitive practices or unstable financial markets. As students advance, there is a growing bias towards mathematical elegance. When the uglier real world intrudes, it only prompts the question: this is all very well in practice but how does it work in theory?
This theoretical bias left the discipline resistant to challenge at a crucial time. When in 2005 Raghuram Rajan, now governor of the Reserve Bank of India, warned that financial innovation had become a source of instability, his paper was dismissed as “slightly Luddite”. His call for greater prudential supervision of banks was ignored.
Fortunately, the steps needed to bring economics teaching into the real world do not require the invention of anything new or exotic. The curriculum should embrace economic history and pay more attention to unorthodox thinkers such as Joseph Schumpeter, Friedrich Hayek and – yes – even Karl Marx. Faculties need to restore links with other fields such as psychology and anthropology, whose insights can explain phenomena that economics cannot. Economics professors should make the study of imperfect competition – and of how people act in conditions of uncertainty – the starting point of courses, not an afterthought.
Mathematical models ought to keep their place, so long as their results are not taken too literally. But many of those used in central banks have hitherto ignored the financial sector as a source of instability. Remedying this will add even more complexity. The maths will get harder.
In the aftermath of the financial crisis the popularity of economics courses has surged. Having watched the global economy fall off a cliff, new students will not tolerate anodyne lectures on the wisdom of markets. They demand more pluralism and humility in a subject that has hitherto overvalued purism and certainty. Economics should not be taught as if it were about the discovery of timeless laws. Those who champion the discipline must remember that, at its core, it is about human behaviour, with all the messiness and disorder that this implies.
Letters in response to this editorial:
Economics needs to reflect a post-crisis world - FT.com

See also:
post-crisis |
Economics students aim to tear up free-market syllabus | Business | The Guardian
Economics of Crisis: Economic Restructuring Post-Crisis
BBC Radio 4 - Teaching Economics After the Crash



Uploaded on Aug 27, 2010
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INSIDE JOB Official Trailer in HD! - YouTube
Inside Job (2010 film) - Wikipedia, the free encyclopedia
Inside Job: how bankers caused the financial crisis | Film | The Guardian


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