The Soviets had an expression about the paradoxes in the Capitalist West, that they would sell each other nooses to kill themselves. It appears that due to the transformation of the educational system to a market based system, and less so of an abstract academic, intellectual nature (where students pay and expect to get a reward, a job); consumers of this product we call education are questioning it’s validity, considering the neoclassical model of economics has been proven incorrect on many occasions in the last 30 years. Of course students want to get jobs, but why study a model that has been proven to be wrong, and pay for it? From the Guardian:
From any rational point of view, orthodox economics is in serious trouble. Its champions not only failed to foresee the greatest crash for 80 years, but insisted such crises were a thing of the past. More than that, some of its leading lights played a key role in designing the disastrous financial derivatives that helped trigger the meltdown in the first place.
Plenty were paid propagandists for the banks and hedge funds that tipped us off their speculative cliff. Acclaimed figures in a discipline that claims to be scientific hailed a “great moderation” of market volatility in the runup to an explosion of unprecedented volatility. Others, such as the Nobel prizewinner Robert Lucas, insisted that economics had solved the “central problem of depression prevention”.
Any other profession that had proved so spectacularly wrong and caused such devastation would surely be in disgrace. You might even imagine the free-market economists who dominate our universities and advise governments and banks would be rethinking their theories and considering alternatives.
After all, the large majority of economists who predicted the crisisrejected the dominant neoclassical thinking: from Dean Baker and Steve Keen to Ann Pettifor, Paul Krugman and David Harvey. Whether Keynesians, post-Keynesians or Marxists, none accepted the neoliberal ideology that had held sway for 30 years; and all understood that, contrary to orthodoxy, deregulated markets don’t tend towards equilibrium but deepen the economy’s tendency to systemic crisis.
Alan Greenspan, the former chairman of the US Federal Reserve and high priest of deregulation, at least had the honesty to admit his view of the world had been proved “not right”. The same cannot be said for others. Eugene Fama, architect of the “efficient markets hypothesis” underpinning financial deregulation, concedes he doesn’t know what “causes recessions” – but insists his theory has been vindicated anyway. Most mainstream economists have carried on as if nothing had happened.
Many of their students, though, have had enough. A revolt against the orthodoxy has been smouldering for years and now seems to have gone critical. Fed up with parallel universe theories that have little to say about the world they’re interested in, students at Manchester University have set up a post-crash economics society with 800 members, demanding an end to monolithic neoclassical courses and the introduction of a pluralist curriculum.
They want other schools of economic thought taught in parallel, from Keynesian to more radical theories – with a better record on predicting and connecting with the real world economy – along with green and feminist economics. The campaign is spreading fast: to Cambridge, Essex, the London School of Economics and a dozen other campuses, and linking up with university groups in France, Germany, Slovenia and Chile.
Revolutions in economic thinking usually happen in front of the curve, not behind. In other words, Capitalism was brought mainstream and promoted as a new ‘modern’ economic / political philosophy, in order to justify a neo-colonialism that was being criticized at the time, especially by the victims of it. If the same ends could be justified by a new economic ideology, the victims might even applaud the invading corporations plundering their local resources. And so this has worked for a long time, but how much economic expansion and growth can be contributed to technology, to the industrial revolution, and to cheap energy discoveries? Most systems would have flourished under such circumstances. But when times get tough, such as the recent crisis, a real systemic stress test occurs. Clearly, these economic models have failed. Fortunately we have exploited enough resources and technology from the planet that no matter how bad it gets, it won’t look like the 30’s, or the 19th century. But academics and students are seeing through the lies promulgated by ideologies such as “neoclassical economics.” Maybe this is the beginning of a new economic thinking, such as the transformation that happened 400 years ago.
