Why don't people like and ignore economists?

Conclusion - the business blog

It is a miracle that something is still going on in this country. Because our business students are trained to become unworldly model fetishists at the universities. They stupidly learn mathematical models that have nothing to do with reality. Selfishness is paramount. Thoughts on ethics and the history of ideas? Are completely alien to them.

This is, somewhat exaggerated, the criticism that has rained down on economics with full force since the financial crisis. It is put forward by students, critical economists and representatives of other social sciences. Your wish: more diversity at the business faculties. They talk more about than with each other. Representatives of the so-called mainstream, such as the Münster finance scientist Johannes Becker, feel attacked. The tone of the “plural” ranges from “mocking to openly aggressive”, he writes in the economist blog “Makronom”. Becker regrets that, because “fundamental opposition” endangers the success of the movement - which one should actually find sympathetic: Nothing is wrong with young people discussing current economic problems and demanding more history of ideas and philosophy of science in the curriculum. The pointed replica of the plural, which will appear soon: "How can you not like them: established economics professors who praise the successes of plural economics and are worried about our future prospects."

That is, roughly summarized, the state of the discussion. Ten years after the outbreak of the financial crisis, that is sobering. Which raises the question of whether the much-scolded mainstream is really as rigid as it is claimed - or whether the plural turn a blind eye to what is actually going on in the subject.

A first observation in search of answers: There is hardly any other science in which so much is reflected and in which the traditional is doubted. Unfortunately, this does not apply to the lectures for Bachelor students, in which a shortened standard program is plowed through, but it does apply to cutting-edge research. Current publications by successful “mainstream researchers” support this. Bruno Frey (University of Basel) and David Iselin (ETH Zurich) have compiled dozens of once established economic ideas in their book that “should be forgotten”. On the hit list: “Markets are efficient”, “Volatility means risk”, “More choice is always better”, “The Coase theorem”, “Economics has nothing to do with religion”. Doubting assumptions is the core of economics, the authors write. Many economists today would advocate ideas that clashed with orthodoxy and parts of textbook knowledge.

Plural critics may object that many examples are more of a correction within the existing system than a real paradigm shift. Which leads to the counter-question of what alternative there is to this discovery process within the system if one does not want to lose oneself in any variety of more or less justifiable approaches.

The respected Harvard economist Dani Rodrik takes a clear position on this. He responds to the critics, makes concessions, but essentially defends his discipline: Even if some see the model world of economists as too tight a corset, it has proven to be very useful for getting to the bottom of social phenomena. “The rules have disciplined my research and made sure I knew what I was talking about,” writes Rodrik. They are by no means so restrictive “that they have prevented me from pursuing interests and paths that produce unorthodox conclusions”. The accusation made by the plurals that the established establishments are forming a club that is closed to outsiders is nowhere near. It constantly happens that there are deviations from the existing assumptions. But not all assumptions are equally acceptable. The greater the deviation, the better one has to justify it.

What the unconventional development economist Rodrik criticizes about his own guild is the exaggeration of individual models into omnipotent explanatory machines. Models are always good when they are used correctly. This is exactly what economists would have forgotten, for example before the financial crisis. Economists had numerous approaches in their drawers that could expose dangerous undesirable developments as such. The dominant belief in the efficiency of the markets blinded them to this.

The bottom line is that Rodrik sees enough scope for change. Research today is completely different from what it was three decades ago: empirical research and field research are the gold standard; psychological, institutional and historical factors determine the agenda.

So it is possible to move from the edge to the center - provided you have enough theoretical and practical substance with you. The plurals must ask themselves critically whether this is the case with every alternative approach. It is undisputed that every economist should learn what Marxism is all about. However, the importance of the history of ideas does not inevitably lead to a claim to chairs and research funding.

Established research also has some catching up to do. Frey and Iselin criticize a “power structure” in the hierarchically organized discipline. Conformism is rewarded, doctoral students think more about publications in certain specialist journals than about their own research interests for career reasons. Business ethicists rightly point out that the spirit of the long buried “Homo Oeconomicus” lives on in the narrowly defined concept of rationality. And both Rodrik as well as Frey and Iselin criticize a “lack of narrative culture”: Economists rarely manage to package their findings and their diversity as a good story, which leads to misunderstandings.

It makes sense to argue about all of this. Like in Siegen, where there has been a degree in “Plural Economics” for a year, or at the alternative Cusanus University on the Moselle. Finance scientist Becker calls for constructive dialogue in his blog entry. In their reply, the plurals propose a joint meeting in the coming year. Go ahead.

Keywords: Bruno Frey, Dani Rodrik, Johannes Becker, mainstream, network plural economics, plural economics
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Economists in the pillory

By Johannes Pennekamp

Economists have no idea of ​​reality, say critics. What a fairy tale.

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