Because changing the curriculum and the predominant mindsets changes everything.
My previous article on this topic has been criticised for being too negative, for dismissing the large numbers of Western-trained economists as being completely useless. I have heard that criticism before.
After a particularly difficult meeting with the Treasury in 1982, I reported back to Lord Harold Lever about the day’s discussions and I made the mistake of describing these highest officials in the land as stupid. Harold’s rebuke to me was masterly. He smiled and said
“These Treasury officials are highly intelligent, throughly trained and very competent people,” he observed.“Just because you have come across a Copernican economics, which places correct issues centrally, you are referring to them as stupid when they are manifestly not in the least stupid. They are simply thinking within the wrong frame of reference.” He smiled again and added
“If you succeeded in changing their frame of reference, they would become brilliant, would they not?”
The same observation applies with great force to the large numbers of neoclassical economists who are located in all the universities of the United Kingdom and in many locations abroad. Lifelong learning is the new life experience for everyone. People can learn about a more realistic economics, they can adapt and modify their beliefs and understanding, especially when it becomes obvious that the old economic paradigms are no longer useful or appropriate. Which is the current situation.
One of the major reasons for the decline of the West has been the almost universal intellectual complacency shown by many economics departments. There are two major parts to the lack of Western understanding of Shimomuran economics. The first is the deliberate attempt of the Japanese establishment (nowadays with other members of the Tokyo Consensus) to deny the new economic knowledge to the West in order to maintain the enormous advantage of abundant capital, and they have been successful for decades in doing that. But the second major issue is the almost universal complacency not only in economics departments but in Western governments (who have failed to investigate the reasons for the success of the Asian economic miracle economies, as China did in the mid-1970s) and in the Western media, who only seem able to report upon events in China from a neoclassical or Eurocentric viewpoint, and in the virtually all the Western political and business elites, who imply that for them, things are just ideal, and better economic understanding and further social development are not required.
The epitome of that complacency may be in the glib and totally false superiority of the three public schoolboys currently leading Britain’s parliament. History is sometimes so tragic and so funny you couldn’t make it up. Cameron really appears to think he has done well in the economic management of the UK, when for the first time in generations millions of British families and their children are starving, and many British children are obsessed with, and talk continually about, the appalling consequences of the credit crunch. Osborne has said, really said, that he thinks he could advise Europe about economics. Clegg has agreed to placing higher education and the improved life-chances it confers financially beyond the reach of many bright and poor rUK children when he previously promised he would do no such thing. Poverty and starvation are not a laughing matter but the smug, callous smiles and public schoolboy chuckles in Parliament are the frequent fare of the BBC, which has turned into an organ for government propaganda for the maybe the third time in its recent history.
The smugness of parliament and the complacency of the economics profession are not unique. Most of the Western sciences think they are the bee’s knees and the dog’s ballocks. Except they are not. As usual, humankind stands once again on the brink of yet another renaissance, another period of fresh no-holds-barred intellectual enquiry into everything. In my seldom humble opinion, the Rethinking Economics movement is in the vanguard of that development. There are some small but definite signs that this may be so.
The Premier of China, Li Keqiang, has of course been fully informed about the extent of Chinese Shimomuran understanding. Suppose you were told, that the highly developed and smug cock-crowing West, in all its greatness, did not understand the fundamental principles of producing sustained high economic growth. What would you say?
“If they are that far behind in the key understanding of economic development, how well founded are all their other sciences?” What he did was call for a new Chinese-based renaissance.
I am a Scot. Dr John Arbuthnott, the President of the Royal Society of Edinburgh, has also called for another renaissance in the city and country that played such a large part in the European Enlightenment in the middle of the 18th century.
From my attendance at the Rethinking Economics Conference I could see and hear that the students are all mainly on the right track.They appreciate that they have a tremendous task on their hands in attempting at Rethinking Economics, but they are encouraged by the sheer international scale of their movement and I have no doubt that they will eventually achieve their goal after many setbacks.
The wide programme proposed for the economic curriculum set out by Lord Robert Skidelsky is a great place to start. (You can read this background to this at http://ineteconomics.org/bretton-woods/curriculumand the curriculum proposals athttp://ineteconomics.org/sites/inet.civicactions.net/files/INET_undergrad_economics_curriculum_UK.pdf ). The initial reaction of the UK economics establishment to these proposals seems to be that these proposals have gone several miles too far to be acceptable. In my considered opinion they may not have gone far enough.
The proposals present a three-year modular framework within which to teach the known historical branches of economics. But they do not seem to include the other, non-Washington-Consensus, approaches to macroeconomic development. They do not appear include a section on the German approach to economic development, to monetary economics and investment credit Shimomuran-Wernerian economics, and they should. Maybe the authors just couldn’t name these developments. Of course some of the proposed categories (eg Economics of the Real World) could be redefined to include such work, but no such inclusions seem to have been proposed. I know it’s only a three-year programme proposal, but it is perhaps inevitably based on the assumption that Western economics already knows everything, and I think it does not.
I think a section on political economics should be a fundamental part of the economics curriculum, as Ha-Joon Chang argued at the London Rethinking Economics Conference on 29 June. It should be taught that the vast income inequality in the UK and the USA is almost certainly a consequence of neo-classical economics, because that is probably its major function. The role of economics in creating a sustainable world should be part of the curriculum. The maximisation of national income by utilising all the innovative talents of all the people, with an equal role for women in a maximum development full employment economy, should be included. And the economists who are mathematicians should perhaps look at the Shimomura Model of the Japanese Economy and generalise that model for its potential application in other economies. The kind of world resulting from an abundant capital provision should be studied, for it is startlingly different from the current one, with a rainbow of potentially great possibilities. And perhaps it should also be taught that the major wars in the past appear to have been the result of the economic decline of the major hegemonic power, and that an adequate economic understanding is now required for the avoidance of similar major wars in future.
One of the contributors to the paper — John Kay — discusses the invalidity of mathematical economic theories at length but fails to note the need for more realistic research rather than tinkering with theoretical models in a fruitless effort to make them fit reality. I think the inductive method, of paying attention to reality to investigate and discover what really works, should have a larger role than is envisaged, and that alternative approaches and valid research results should be included in the curriculum.
When the Queen asked why no-one had predicted the crisis she could have received a much more adequate answer. Such as “We were so absorbed by our mathematical models, Ma’am, that we ignored the economic realities. This kind of crash has happened frequently before, and if we continue to ignore reality, it will happen again, Ma’am. We’ll try to do better.”
In discussion with students, I was quite rightly put in my place a couple of times for daring to suggest that Shimomuran Economics might be a more perfect answer to our current economic difficulties. The words of Godel’s Law echoed in my mind, that “All intellectual systems are either inconsistent or incomplete.” I accept that Shimomuran Economics is not a panacea, but I think it may be several orders of magnitude better than the neoclassical economics which only serves the interests of the rich. I will shortly illustrate that by comparing the neo-classical economics of Cameron with those of Shinzo Abe in this location.
A much better economics curriculum can be out in place in the interests of all the involved parties — students, staff and everybody else. We all have a great interest in these issues because the boundaries of economic understanding and practice determine the prosperity level of all our futures. And political action based upon a much better economic understanding is absolutely essential, preferably soon.
Note: George Tait Edwards has published a book about “Shimomuran Economics” at http://www.lulu.com/shop/george-tait-edwards/shimomuran-economics/paperback/product-21688864.html and much else elsewhere during the last four decades.
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