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!

Mankiw on the Consensus View Within Economics

Mankiw often likes to tout the view that there is vast agreement in the economics profession over most of the major economic issues. In chapter 2 of his textbook, for example, he argues that while most economists differ on normative claims in economics (i.e., what ought to happen), there is widespread agreement about its positive claims (i.e., what actually happens). He often cites various polls of economists in support of his argument. His most recent cite is here.  Another one here. Another one here....  It's almost as if he's not only trying to convince the public that economists largely agree on everything; he's trying to convince himself.  

There are, however, a few problems with how his argument is made.  

1. It's easy, though misleading, to cite sentence-long themes framed in a specific way and obtain consensus - it's much harder to dig into the details and find the same level of agreement.   For example, the statement "If the federal budget is to be balanced, it should be done over the business cycle rather than yearly" might get 85% support among polled economists, but one wonders whether, if the question were asked "how" or via "what mechanism" etc., the agreement would be drastically reduced.  This piece by Arindrajit Dube leads us to reflect on the idea that if the survey questions were framed differently or according to greater detail, they might reflect a growing consensus within economics that minimum wages do not necessarily have a significantly negative impact on employment. Other examples abound.

2. It's easy to get consensus if you only ask people who agree with you. I'm not suggesting that no members of the AEA or other academic economists polled have any heterodox inclinations (for example John Kenneth Galbraith was actually president of the AEA in 1972), but when the vast majority of economics departments and its institutions are run by and for mainstream economics, and when heterodox economists are so marginalized from the profession that they may not even be a part of mainstream professional institutions, you are bound to get the mainstream response.   All you've really proven is that on some things there exists agreement among mainstream academic economists only.    Additionally, if you only ask American economists, the skew is even greater because the United States has some of the least academic support for heterodox thought.   A good example of this fact is the story of how a whole heterodox department is forced to close its doors. Expand this to business economists and financial economics experts who may not call themselves 'academic economists' but who, nevertheless, are prominently featured in policy circles and mainstream media outlets, and the skew could get even wider.

3. Perhaps the most important point is that agreement does not make you right. When groupthink is set as a priority above seeking the truth, that in and of itself suggests there is a fundamental problem within the economic profession. And that, at the end of the day, is the direction Mankiw would have mainstream economics continue to travel - a conglomeration of brainwashed groupthinkers who close their eyes to any alternative dialog that might challenge their worldview.

mankiw's bias revealed

Greg Mankiw recently woke up extra early to do an interview with the Fox News morning show Fox and Friends and posted the interview on his blog. The interview focused on the recent walkout that took place during his EC 10: Principles of Economics class. Both the show's host and Mankiw disputed the claims that the class was biased by indicating that the class was "mainstream", not "too conservative", and resembles the principles of economics classes that are taught at most college classes nation wide.

But those claims are precisely what makes Mankiw's class and textbooks biased: namely, the refusal to step out of the mainstream and look critically at what is being taught. Those who claim that Mankiw's approach is bias aren't simply saying that what is being said is too conservative and that it needs to be more liberal. The problem with Mankiw's approach lies in the limitations of the assumptions in the theory being discussed, methodological issues, and in the failure to recognize that there are alternative approaches to neoclassical economics. To refuse to do so is a refusal to provide his students with the education that they expect and deserve.

The purpose of a liberal education is to expose students to a plurality of ideas and modes of thought, and from the interview it seems like the Fox News anchor and Greg Mankiw would agree. But, Mankiw's supposed dedication to liberal education contradicts his approach to teaching economics. By teaching an exclusively mainstream approach to economics he fails to provide his students with a wide ranging and critical account of economics failing the students the education they were promised when they entered into academia.

It is not simply that he is failing to provide his students with the liberal education that they are promised, but that by doing so he is failing the broader project that is the development of economic thought. Throughout the history of economic thought most if not all advancement in theory came from people drawing from a plurality of ideas -- not by simply staying within the mainstream framework. By limiting the ideological scope of his class he is limiting the potential advancement of his field.