I thought love was more or less a given thing, but the more I gave the less I got. Oh yeah. What’s the use in trying, all you get is pain. When I wanted sunshine, I got rain. And then I saw her face, now I’m a believer. Not a trace, of doubt in my mind. I’m in love, I’m a believer. I couldn’t leave her if I tried. These lyrics are from the 1966 Neil Diamond song by the pre-fab four, the Monkees. The single was number one on the Billboard Hot 100 for seven weeks.
Maybe the success of the song had less to do with either lead singer Micky Dolenz or Mr. Diamond, but more to the fact that most people want to be believers. I won’t go into religion or deeply held emotional beliefs here, but people want to be believers in a whole lot of social, environmental and economic concepts that often make little sense. I have commented before that George Washington was killed by the best medical minds of his day when they bled him to get rid of a cold, a simple fact that shows how dogma, no matter how well accepted, is often incorrect. In a world that does not understand germs, bleeding to rebalance one’s humors may seem a perfectly reasonable way to cure a cold.
There are dozens of dogmatic beliefs that the vast majority of people, or leaders, or scientists once held to be undeniable fact (or as President Obama might say where “the debate is over”) that were subsequently proven to be completely wrong. In addition to the idea of the four Humors that ended President Washington’s life, these include: the Geocentric universe (or the concept that the Earth was at the center of the universe); the miasmatic theory of disease (which held that infectious diseases were caused by a poisonous vapor or mist filled with particles from decomposed matter – ok so this is closer to germ theory that the humors); Phlogiston (or the belief in a fire-like element called phlogiston which released during combustion) and of course the Flat Earth Theory.
It is also just as likely that many of the dogmas that people consider to be undeniably true today will be proven wrong tomorrow. The minute a Bigfoot steps out of the forest and into a parking lot, the idea that giant apes in America are a myth would be turned on its head.
So too is the case with economic theories. The economic boffins that hold court today are schooled almost solely in the Keynesian school of economics. While Keynes was a brilliant economist, and added much to the field, even he – arrogant as he was – would not have taken his theories as religious gospel in the same was as those in charge of economic policy do today. Keynes was famous for saying, The difficulty lies, not in the new ideas, but in escaping from the old ones, which ramify, for those brought up as most of us have been, into every corner of our minds. More importantly when asked about a flip-flop in his position on monetary policy, Keynes was quoted as saying, When my information changes, I alter my conclusions. What do you do, sir?
Economics is a complex field of thought that has been developed over hundreds of years. It is not conducive to dogma, but unfortunately the method for teaching and the key economists in policy making positions (both on the Republican and Democratic side of the aisle) are all dogmatic believers in what can best be called “demand side economics.” The dogmatic nature of the field is making it particularly irrelevant as a means to understand, interpret and most importantly recommend policy.
I recently read about a movement in colleges across the country, including in two of my own, Columbia and the New School, whereby students are rising up against the dogma and demanding that the field start recognizing the importance of the diversity in economic thought over time. The group, International Student Initiative For Pluralism In Economics, released an open letter stating that the teaching of economics is in crisis and that this crisis has consequences far beyond the university walls. As is fitting a letter written by economists and economic students, it’s long and difficult to read but in short it calls for an increase in diversity in the curriculum including theoretical, methodological and interdisciplinary diversity
Most important in my opinion is to teach about the entire broad tradition of economic thought. I was horrified when I hired PhD students from New York University and they had never even heard of Adam Smith. As the students wrote in the open letter, theoretical pluralism is not about choosing sides, but about encouraging intellectually rich debate and learning to critically contrast ideas. They go on to state that the kind of orthodoxy practiced in the study of economics is unheard of in other fields, and that nobody would take seriously a degree program in psychology that focuses only on Freudianism, or a politics program that focuses only on state socialism
I was fortunate enough to have studied under the famous economic historian Dr. Robert Heilbroner. This gave me the opportunity to understand nearly every school of economic thought and more importantly to put them in a historical context. Markets change with time and therefore so should the study of economics. Keynesian is no more “right” than the classical school of Mill and Ricardo, and Marx is no more “right” or “wrong” than Friedrich Hayek. All of these economists have something to add and currently most schools teach nothing about them.
The students also addressed another problem that I see in the teaching and use of economics. That is that many economists are frustrated (and undereducated) physicists. In order to understand complex data one has to use complicated mathematical techniques, but economists have a tendency to overcomplicate their models and more often than not use improper techniques simply to add complexity.
The people that truly created the field of economics were not medieval doctors, or Pharisees preaching a dogma based on mysterious ancient texts. Economics was designed to tell a story. From Smith, to Marx, to Marshall, to Hayek to Keynes, economists did a great job telling stories that helped people to better understand the markets around them. It is only when economics becomes dogma – like Marxism in Mao’s China, or Peron’s populism or today’s Keynesianism – that it becomes both useless and dangerous. In this, I’m a believer.