politics and methodology: alternative teaching resources

"Pyramid of Capitalist System"

We at Anti-Mankiw are no strangers to the idea that politics shapes economists' theories about how the world works. Unlike Mankiw, who regularly asserts in his textbook an ideal-type of "observation, theory, observation" method of economic science, the fact of the matter is that how we view the world often shapes our evaluation of the facts of that world.

Perhaps in no other place in economic theory is this fact more true, and thus more dangerous, than in the Marxian vs. non-Marxian (or neoclassical) theory of distribution. When Marx argued that the source of all wealth is the laborer and that surplus value, or profits, were taken from the laborer by the capitalist, neoclassical economists replied with a theory of distribution asserting that capital earns its fare share of the output, too.

The neoclassical response in the late 1800s offered a new theory, or new way of looking at the world. This subsequently helped shape how all neoclassical economists thought about the source of profits: instead of seeing them as fundamentally sourced from workers, these economists saw capital and entrepreneurs simply getting their fair share of the pie -- represented by the marginal price of capital multiplied by the marginal physical product of capital, or the value added by capitalists to production. This victory was a major one for capitalists because it essentially legitimated their control/monopoly over the means of production, which is really the main role capitalists play.

No more explanation for all the profit was necessary! And the political consequences were indeed severe. For one, the neoclassical response to Marx came in the 1870s, when labor militancy across Western Europe and America was reacting to a rapidly growing capitalist power in politics and the workplace. And the political victory is felt even up to today: even when compensation starts to be outstripped by worker productivity as it did in the 1970s, neoclassical economists could simply ignore it because in their baseline model, workers get what they put in, and so does capital. The rest was just minor details.

Why do we mention this now? Because Fred Moseley from Mount Holyoke College has written an excellent introduction to the neoclassical theory of distribution as well as some ways to critique it for an introductory- or intermediate-level class. Find it here. We highly recommend checking it out and trying it out in your own classes!

advanced pedagogical techniques: introducing the topic of exploitation

"The Intimately Oppressed": How to talk about exploitation in the classroom

 A few years ago, in a conversation one of us had with a fellow graduate student, the issue came to surface of how to approach certain issues that have become a mainstay of the mainstream curriculum over time. We were specifically discussing the issue of how easy it is to fall into the so-called "markets in everything" trap -- whereby you start thinking about how markets for everything from organs to healthcare could solve most of the problems of social inefficiency. But the issue is much more general than that, and exposing that generality is the topic of this post.

So when one of us was discussing how to approach the "markets in everything" issue, which is really quite widespread among the blogosphere (particularly Marginal Revolution, which has made a type of blog series out of the idea... but Greg Mankiw is also guilty of perpetuating the idea, not surprisingly), our friend made the point that, why not start from the other direction, and work your way back? Instead of beginning with the idea that everything should be marketized, begin from the idea and theory that nothing should be marketized, and then ask what would qualify something to be marketized. That is to say, we should expose students' inherent repugnant feelings about a market for body parts or healthcare from the start, and then work backward from there, adding in markets as a qualification of the general argument that commodification should not exist. (In fact, if you think historically, this is actually the way in which the debate occurred -- we didn't start out with a fully marketized society and we only got there from peeling off various layers of social-institutional control!)

It's simple, and it works remarkably well. Furthermore, such a logic can be applied to other ideas which are not easily raised in the classroom, such as the issue of class or exploitation. By starting with certain ideas of exploitation that are more easily recognizable to students (such as the treatment of women in the workplace vs. men), it becomes easier to identify general principles of exploitation that may be applied to workers.

Talking about how women have traditionally been discriminated against in the workplace is a clear example of exploitation. Or talking about how, when they were first integrated into the industrial labor force in the early 1800s, they were pulled from both directions -- into the home because of preconceived notions of women's place in a private sphere; and out to work because of the need to make enough money to feed their children and support their family; all the while not being allowed to vote -- shows vividly how gender norms shape capitalism and employer behavior more generally. The continued persistence and use of racism after formal political freedom had been established by emancipation is another example of using the tools of race or gender to strike at ideas and issues of class exploitation.

Similar arguments can even be made for immigrants. Here is an example of how one of us has incorporated gender into a story of industrial capitalism. We have found that through doing so, it then becomes easier to talk about exploitation in the workplace more generally, because now students have seen how management policy has affected women workers. It is just a small step (really!) from that point to then talking about workers in general.

Sports Stars Versus Business "Stars"

Mankiw links to a Ken Rogoff piece that asks why people seem to have no problem with star athletes pay versus supposed star-CEOs and private business executives.   Mankiw, while not explicitly stating so, appears to agree with Mr. Rogoff. 

The argument is nonsensical for a few big reasons.  First, it assumes that people don’t think superstar athletes are overpaid.  Informal evidence suggests otherwise. Second, athletes are not generally paid millions for leading his or her own team’s failure. Third, athletes, while not always the pinnacle role models we wish them to be, have never contributed to the disintegration of an economy while simultaneously leading the perversion of our democracy -- controlling special interest lobby groups on one hand and begging for government bailouts on the other.

There are differences. Equating 'stars' in the sports industry to the top private sector businesses simply doesn't make sense.