THE ECONOMICS ANTI-TEXTBOOK REVIEW 11
TheEconomics Anti-Textbook Review
TheEconomics Anti-Textbook Review
Theimportance of economics cannot be gainsaid as far as dictating thecourse of a country’s wealth and health is concerned. In thecontemporary human society, capitalism has been the topmost and mostpropagated economic way of life that countries can adopt. Indeed,capitalism has ultimately edged out socialism in terms of popularity.Needless to say, volumes of books on economics have been writtentrying to outline the varied concepts pertaining to the science, aswell as describing the varied models of the same. It is often assumedthat the current world amounts to frictionless wonderland made up offree and fair markets in which every person earns his marginalproduct, where there is voluntary exchange, and where the invisiblehand of market forces benevolently coordinates the desire for scarceresources to meet the best possible results. It has well been notedthat a large proportion of economic books underline the fact thateconomics is a value-free science and that economists share a commonground pertaining to methodology and that they know the bestapplicable models to any problem. This means that economics bookscreate the impression that markets are considerably competitive thatoften have efficient results and that unions and minimum wages aredetrimental to the workers, while government regulation is harmful oreven ineffective. However, the book “TheEconomics Anti-Textbook”underlines the mythical nature of the all these notions.
Thebook acknowledges that value judgments are common in a large numberof economic textbooks. The value judgments are a reflection of thepolitical and social philosophy and may even be termed as world-viewsor ideologies. The book does not imply that the value judgments orideologies are wrong, rather it aims at pointing out their existenceand the fact that there exists alternative views that should beconsidered.
Inthis book, the authors who self-describe themselves as European-stylesocial democrat and a “post-Keynesian” pull back the veilpertaining to the glittering utopia of free markets to expose aquagmire of hidden assumptions, market fundamentalism and valuejudgments that are presented as objective social science. Ofparticular note is the fact that the value judgments are notrestricted to introductory textbooks that are the key target of theauthors. The textual examples demonstrate that they are “likea vise on the mind of economists [and policy-makers], who get tetchywhen you present results that reveal the behavior of real people tobe not as those textbooks assume”.These policymakers and economists often balk at statements thatcreate the notion that efficiency that is defined by increasedproduction may, in fact, not be the only determinant of humanhappiness rather there exists other things such as pervasiveexternalities and equity costs.
Hilland Wyatt write the book around the thesis that textbooks areselective, as a matter of necessity, in which case they have toincorporate and lay emphasis on some things while downplaying others,place some topics or subjects on a higher pedestal than others andeven push some topics on the periphery. The decisions are areflection of implicit rather than explicit value judgmentspertaining to the things that are crucial and interesting, in whichcase it is impossible to have an objective account. While this maynot be surprising or even problematic, the key problem is the factthat the textbooks create the impression that they are the epitome ofobjectivity while underlining the notion that economics is a sciencethat primarily deals with theories and facts that are used in makingpredictions pertaining to the future. On the same note, the textbookscreate the impressions of economists as technicians who have thecapacity to objectively compare the different theories and makepolicy prescriptions with the support of professional opinionconsensus (Barry, 2012). However, such notions are not only mythicalbut also far from true. Indeed, they also double up as dangerouslymisleading. These value judgments come up right from the beginningwhile the textbooks try to define the subject and the key issues thatit addresses. They are made in instances when a particular authorprovides a particular view while ignoring the varied alternativepossibilities. For instance, a particular definition may underlinethe crucial nature of the elimination of deprivation and poverty soas to meet every person’s fundamental needs. Economics is by naturea battle ground where opposing ideologies, theories and possibilitiesare pitted against each other. This is not entirely undesirable asthe recognition of this reality makes economics more exciting andcontroversial and exposes a vibrant and fascinating field of studythat revolves more around the art of persuasion than science. This
Variedthemes are explored in this book. One of the key themes in the textis the function and roles that capitalist states play in general, andparticularly, how it is related to corporations. Hill and Myatt haveunderlined the fact that the orthodox or conventional economicparadigm sees the states as a neutral entity that intervenes so as tocorrect market failure, as well as redistribute income and enhancethe equitable nature of the market outcomes. However, this is adeliberately false and misleading view of the reality pertaining tocapitalism where the power that is incorporated by the largestcorporations is much more than that of the state. In fact, suchcorporations often hijack the power of the state so as to furthertheir own agenda (Fullbrook, 2008). As much as the more advancedpostgraduate monographs and texts in the neoclassical economicsparadigm, some of which are written by the same authors who havewritten the standard undergraduate textbooks, actually acknowledgethe deficiencies pertaining to simplistic free market modelrepresentation by textbooks, such acknowledgement is often downgradedor absent in the textbook presentation. This implies that a largeproportion of the individuals who partake or learn about economicsare not sufficiently exposed to the anomalies pertaining to thecritical perspectives and orthodox paradigms. Further, the bookexplores the theme of post-growth view of economies and vouches forthe ecological, political and economic irrationality pertaining tothe capitalist imperative for accumulation and growth (Fullbrook,2008). This may partly be related to the credit and debt basis formodern capitalism. The post-growth view has been explicitly connectedto an egalitarian view, whether it is associated with theinconvenient truth that orthodox economic textbooks have ignored thatthe things that mater to an individual are the relative rather thanabsolute wealth, consumption and income, or even the notion thatcapitalist debt-based growth may actually be a technique form maskingand managing inequalities and not reducing them as espoused by otherauthors (Barry, 2012). Other scholars have underlined the notion thatdebt-based money issue is problematic as it generates a growthimperative in the economy and that debts have, indeed been used for along time to trap individuals into work as indentured labor. It iswell acknowledged that the credit card culture explosion thatoccurred in the mid and late 80s may have covered the realitypertaining to dwindling wages in western nations and played afundamental role in the elevation of the financial services andfinance capital sector as 21stcentury capitalism’s dominant sector (Barry, 2012).
Needlessto say, the book sets itself against the dominant and foremostparadigm. However, it is within a burgeoning body of heterodoxeconomic literature that the contemporary human society has seen inthe last couple of years. Nevertheless, the revelations made in thebook are largely frightening. The fact that the neo-classicalparadigm that has fully dominated the teaching of economics impliesthat numerous students across the globe are effectively indoctrinatedevery year (Boyle & Simms, 2009). Indeed, such students whoconsume the economics outlined in these textbooks are systematicallydenied exposure to other types of economic analysis. It is well notedthat the complete absence of consideration and debate over thealternatives and even pluralism implies that it is likely thatstudents hold the view that there exists only a single way ofthinking about and organizing the economy, which revolves aroundcapitalist status quo and free market economics. The impressioncreated here is that this way is not only the best but also the onlyway of doing this. Hill and Myatt opine that “economics’has come to be synonymous with the economics of a particular view ofcapitalism.It wasn’t always this way. At one time, economic textbooksroutinely contained chapters on alternative economic systems” (Hill& Myatt, 2010).
Ofcourse, the fundamental question is why the introductory textbooksare adamant at propagating such outgrown myths. Hill and Myatt statethat the fundamental reason is the need to be seen as apolitical andobjective so as to sustain the pretense that economics is still ascience. In essence, controversial subjects such as political power,inequality, global warming and monopoly are often relegated to theperiphery of the final chapters (that is if they even appear at all)where the instructors may never reach.
Hilland Myatt’s book challenge quite a number of theories and notionsthat I have learnt and been exposed to in the economics classes. Topon the grid is the notion of “perfect competition”, a model thatis based on the assumption that a single product is bought and soldby numerous buyers and seller, none of whom is sufficiently large asto impact on the price of the product. This model also assumes thatthe buyers and sellers have perfect rationality and full information,while also assuming that there exist no spillovers in the marketsincluding pollution. Such assumptions create the notion that marketswill produce maximum consumer satisfaction alongside maximallyefficient utilization of resources. As much as textbook authors haveperfect comprehension of the fact that such markets are inexistent,they often justify the assumption of perfect competition based on thereasoning that it is extremely simple and demonstrates thefundamental tendencies of markets. However, this is apparently farfrom the fact in the real world where markets are largely local andincorporate only a few buyers and sellers. Products are never uniformincluding the example of wheat, as used and expounded in numeroustextbooks, is on collision course with the reality pertaining to alarge number of varying grades of wheat that grows in variedlocations and becomes ripe in varied seasons. It is evident thatalmost all consumer goods come in unique brands, which there aredifferent types of market participants including monopolists andmonopsonists who have the capacity to push the prices up or down soas to maximize their utility or profits (Hill & Myatt, 2010).Further, such monopsonists and monopolists incorporate somesufficient political power to compose the tax and regulatory rules totheir own advantage.
Thisis the same case for the assumption pertaining to perfect informationand rationality. For quite a number of decades, behavioral economistshave bombarded students with illustrations that human beings, moreoften than not, yield to their emotions and functions on rules of thethumb simply because it is extremely difficult to obtain fullinformation. However, Hill and Myatt outline how mental shortcuts andemotions caused the bubble and crash witnessed in 2008. They notethat imperfect information is often understated as far as thinkingabout the future is concerned. Unfortunately, a large number oftextbooks ignore this notion and scarcely mention issues pertainingto uncertainty and time or even the role that speculators play in themarket. Further, they scarcely outline or even give any considerationof the likelihood of price bubbles, in which unsustainable increasesin price are driven by expectations that result in the collapse ofthe prices. Unfortunately, such ignorance and the assumptionpertaining to rational actions o behavior of human beings haveblinded a large number of economists.
Inaddition, textbook economics is based on the basis of the assumptionthat individuals must solely judge markets on the basis of efficiencyrather than effect on inequality or even fairness. However, this isseen as a contradiction economists’ most favored measure offairness called “Pareto Optimality”, which describes a situationwhere it is impossible to make any change in the wellbeing of anindividual without making another person worse off. However, ParetoOptimality primarily starts with status quo irrespective of itsillegitimacy or cruelty. Further, Hills and Myatt’s chapter thatexplores “Trade and Globalization” reveals some element ofhypocrisy on the part of classical economists such as David Ricardoand Adam Smith. By Free Trade, these economists clearly implied thearm’s length trade in items such as cloth, wine, coal, wheat andiron, which had the capacity on imparting enormous savings viaspecialization and elimination of monopolies (Hill & Myatt,2010). It is ironical that they were vouching for free trade at atime when England was in the frontline in the conquest andexploitation of overseas colonies. Currently, the colonial empiresmay have been eliminated, at least in theory but not in practice,especially considering the fact that multinational corporationscollaborate and conspire with national governments to enact rules oftrade that places them at an advantaged position as is the case withthe so-called Trans-Pacific Partnership.
Nevertheless,it is easy to understand why it may be difficult for neoclassicaleconomists and economics to reform. First, such economists would beextremely reluctant to admit the vanity of their life work. Indeed,it is difficult for practitioners of a discipline that occupies thehigh pedestal of rationality to eliminate their life-long beliefs andtake up an extremely new paradigm (Soderbaum, 2008). Sadly, thefundamentalist and myopic restrictions pertaining to their educationrules out the possibility of comprehension of the manifoldalternatives. On the same note, the fundamental neoclassicaleconomics institutions such as university departments, classificationsystems, journals, as well as the discipline’s fundamentalnarrative, block, both interactively and collectively hinder anyattempts at meaningful reform (Soderbaum, 2008). Other scholars havenoted that the insuperability and intransigence emanates from thefact that as institutions, although there are autonomouslyconstituted, they are also inter-locking, while their characteristicsare inter-determined. Further, considering that the neoclassicaleconomics did not ascend on the basis of fair selection of ideas in ademocratic forum but as a result of disparaging, expelling, cajoling,threatening and bullying, it is only expected that the neoclassicaleconomists would not voluntarily relinquish their ascendant paradigm(Boyle & Simms, 2009). Lastly, economics stand in the way ofcomprehending these issues in its current practice and constitution.Issues such as the ignorance of alternative paradigms, obsession withfailed policies and the bullying of dissenters would be bettercomprehended if only economics allowed.
In conclusion, the importance of economics cannot be gainsaid as faras dictating the course of a country’s wealth and health isconcerned. Needless to say, volumes of books on economics have beenwritten trying to outline the varied concepts pertaining to thescience, as well as describing the varied models of the same. It isoften assumed that the current world amounts to frictionlesswonderland made up of free and fair markets in which every personearns his marginal product, where there is voluntary exchange, andwhere the invisible hand of market forces benevolently coordinatesthe desire for scarce resources to meet the best possible results. Ithas well been noted that a large proportion of economic booksunderline the fact that economics is a value-free science and thateconomists share a common ground pertaining to methodology and thatthey know the best applicable models to any problem. This means thateconomics books create the impression that markets are considerablycompetitive that often have efficient results and that unions andminimum wages are detrimental to the workers, while governmentregulation is harmful or even ineffective. However, the book “TheEconomics Anti-Textbook”underlines the mythical nature of the all these notions. This bookacknowledges that value judgment, which are a reflection of thepolitical and social philosophy and may even be termed as world-viewsor ideologies, are common in a large number of economic textbooks.The book does not imply that the value judgments or ideologies arewrong, rather it aims at pointing out their existence and the factthat there exists alternative views that should be considered. Hilland Myatt’s book challenge quite a number of theories and notionsthat I have learnt and been exposed to in the economics classes, oneof which is the notion of “perfect competition”, a model that isbased on the assumption that a single product is bought and sold bynumerous buyers and seller, none of whom is sufficiently large as toimpact on the price of the product. Indeed, these have been shown asinaccurate and far from factual. Nevertheless, the rigidity ofneoclassical economists to adopt new or alternative theories may stemfrom the fact that such an action would mean all their life’s workhas been in vain, not to mention that there are institutionalhindrances to such attempts.
Barry,J (2012), ThePolitics of Actually Existing Unsustainability: Human Flourishing ina Climate Changed, Carbon Constrained World.Oxford: Oxford University Press).
Boyle,D & Simms, D (2009), TheNew Economics:ABigger Picture.Cheltenham: Edward Elgar).
Fullbrook,E (2008), PluralistEconomics,(London: Zed Books).
Hill,R & Myatt, T (2010). TheEconomics Anti-Textbook: A Critical Thinker’s Guide toMicro-Economics. London:Zed Books
Soderbaum,P (2008). UnderstandingSustainability in Economics: Towards Pluralism in Economics.London: Earthscan.