John Harvey on Neoclassical Economics causing the Economic Crisis
John T. Harvey is Professor of Economics at Texas Christian University and a leading non-neoclassical economist. He is doing his bit to raise awareness of alternative approaches to economics via a blog that is published by Forbes Magazine. John explains his motivation for establishing this blog as follows:
I am a firm believer that economics can and must be made understandable to the general public, but that our discipline has done a very poor job in this regard. This is particularly true of macro issues, where people quite naturally assume that their personal experiences are analogous to those at the national scale. Very often, this is not the case, with the result that politicians and voters (and some economists) press for policies whose effects are quite the opposite of what was intended. That this is problematic has never been more evident than today. I also try to steer as clear of politics as possible. I want to explain how things work, not what you should believe.
John’s most recent blog entry takes aim at one of my favourite targets: neoclassical economists and their role in blindly leading the world into the biggest financial crisis since the Great Depression. He notes that “economists were the ones who provided the intellectual justification for the transformation of our economy over the past thirty years”, and shows just how bizarre their
When asked what was most important to success as an economist, students ranked these skills in this order:
1. Being smart in the sense of being good at problem solving.
2. Excellence in mathematics.
3. Being very knowledgeable about one particular field.
4. Ability to make connections with prominent professors.
5. Being interested in, and being good at, empirical research.
6. Having a broad knowledge of the economics literature.
7. Having a thorough knowledge of the economy.
No, I did not accidentally type the list backwards! And, if anything, the relegation of “knowledge of the economy” to dead last has become worse. Courses that would have provided context and empirical grounding to theory have been slowly replaced over the past thirty years by those teaching more mathematical methods. Today, students learn more about set theory than they do about the merger movements of the late 19th and early 20th centuries–if they hear about the latter at all, which is increasingly unlikely.
John is also very complimentary about my approach to economics.