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A GUIDE TO
WRONG WITH ECONOMICS
Rest of the World: firstname.lastname@example.org
Introduction: Broadband Versus
University of the
West of England, UK
and otherwise, do not represent the world as it is but rather by
highlighting certain aspects of it while leaving others in the dark.
It may be the case that two theories highlight the same aspects
of some corner of reality but offer different conclusions. In
the last century, this type of situation preoccupied the philosophy of
science. The book you are reading, however, addresses
a different kind of situation: one where one theory, that illuminates a
few facets of its domain rather well, wants to suppress other theories
that would illuminate some of the many facets that it leaves in the dark.
This theory is neoclassical economics. Because
it has been so successful at sidelining other approaches, it also is
called “mainstream economics”.
From the 1960s onward,
neoclassical economists have increasingly managed to block the
employment of non-neoclassical economists in university economics
departments and to deny them opportunities to publish in professional
journals. They also have narrowed the economics
curriculum that universities offer students. At the
same time they have increasingly formalized their theory, making it
progressively irrelevant to understanding economic reality. And
now they are even banishing economic history and the history of economic
thought from the curriculum, these being places where the student might
be exposed to non-neoclassical ideas. Why has this
Many factors have
contributed; I will mention only three. First,
neoclassical economists have as a group deluded themselves into
believing that all you need for an exact science is mathematics, and
never mind about whether the symbols used refer quantitatively to the
real world. What began as an indulgence became an
addiction, leading to a collective fantasy of scientific achievement
where in most cases none exists. To preserve their
illusions, neoclassical economists have found it increasingly necessary
to isolate themselves from non-believers.
Second, as Joseph
Stiglitz has observed, economics has suffered “a triumph of ideology
over science”.1 Instead of regarding
their theory as a tool in the pursuit of knowledge, neoclassical
economists have made it the required viewpoint from which, at all times
and in all places, to look at all economic phenomena. This
is the position of neoliberalism.
economies, including the societies in which they are embedded, are very
different from those of the 19th century for which
neoclassical economics was invented to describe. These
differences become more pronounced every decade as new aspects of
economic reality emerge, for example, consumer societies, corporate
globalization, economic induced environmental disasters and impending
ecological ones, the accelerating gap between the rich and poor, and the
movement for equal-opportunity economies. Consequently
neoclassical economics sheds light on an ever-smaller proportion of
economic reality, leaving more and more of it in the dark for students
permitted only the neoclassical viewpoint. This makes
the neoclassical monopoly more outrageous and costly every year,
requiring of it ever more desperate measures of defense, like
eliminating economic history and history of economics from the
But eventually reality
overtakes time-warp worlds like mainstream economics and the Soviet
Union. The moment and place of the tipping point,
however, nearly always takes people by surprise. In
June 2000, a few economics students in Paris circulated a petition
calling for the reform of their economics curriculum. One
doubts that any of those students in their wildest dreams anticipated
the effect their initiative would have. Their
petition was short, modest and restrained. Its first
part, “We wish to escape from imaginary worlds”,
summarizes what they were protesting against.
of us have chosen to study economics so as to acquire a deep
understanding of the economic phenomena with which the citizens of today
are confronted. But the teaching that is offered, that is to say for the
most part neoclassical theory or approaches derived from it, does not
generally answer this expectation. Indeed, even when the theory
legitimately detaches itself from contingencies in the first instance,
it rarely carries out the necessary return to the facts. The empirical
side (historical facts, functioning of institutions, study of the
behaviors and strategies of the agents . . .) is almost nonexistent.
Furthermore, this gap in the teaching, this disregard for concrete
realities, poses an enormous problem for those who would like to render
themselves useful to economic and social actors.
The students asked
instead for a broad spectrum of analytical viewpoints.
often the lectures leave no place for reflection. Out of all the
approaches to economic questions that exist, generally only one is
presented to us. This approach is supposed to explain everything by
means of a purely axiomatic process, as if this were THE economic truth.
We do not accept this dogmatism. We want a pluralism of approaches,
adapted to the complexity of the objects and to the uncertainty
surrounding most of the big questions in economics (unemployment,
inequalities, the place of financial markets, the advantages and
disadvantages of free-trade, globalization, economic development, etc.)
The Parisian students’
complaint about the narrowness of their economics education and their
desire for a broadband approach to economics teaching that would enable
them to connect constructively and comprehensively with the complex
economic realities of their time hit a chord with French news media.
Major newspapers and magazines gave extensive coverage to the
students’ struggle against the “autistic science”. Economics
students from all over France rushed to sign the petition. Meanwhile
a growing number of French economists dared to speak out in support and
even to launch a parallel petition of their own. Finally
the French government stepped in. The Minister of
Education set up a high level commission to investigate the students’
News of these events
in France spread quickly via the Web and email around the world.
The distinction drawn by the French students between what can be
called narrowband and broadband approaches to economics, and their plea
for the latter, found support from large numbers of economics students
and economists in many countries. In June 2001,
almost exactly a year after the French students had released their
petition, 27 PhD candidates at Cambridge University in the UK launched
their own, titled “Opening Up Economics”. Besides
reiterating the French students’ call for a broadband approach to
economics teaching, the Cambridge students also champion its application
to economic research.
debate is important because in our view the status quo is harmful in at
least four respects. Firstly, it is harmful to students who are taught
the 'tools' of mainstream economics without learning their domain of
applicability. The source and evolution of these ideas is ignored, as is
the existence and status of competing theories. Secondly, it
disadvantages a society that ought to be benefiting from what economists
can tell us about the world. Economics is a social science with enormous
potential for making a difference through its impact on policy debates.
In its present form its effectiveness in this arena is limited by the
uncritical application of mainstream methods. Thirdly, progress towards
a deeper understanding of many important aspects of economic life is
being held back. By restricting research done in economics to that based
on one approach only, the development of competing research programs is
seriously hampered or prevented altogether. Fourth and finally, in the
current situation an economist who does not do economics in the
prescribed way finds it very difficult to get recognition for her
In August of the same
year economics students from 17 countries who had gathered in the USA in
Kansas City, released their International Open Letter to all economics
departments calling on them to reform economics education and research
by adopting the broadband approach. Their letter
includes the following seven points.
A broader conception of human behavior. The definition of economic
man as an autonomous rational optimizer is too narrow and does not
allow for the roles of other determinants such as instinct, habit
formation and gender, class and other social factors in shaping the
economic psychology of social agents.
Recognition of culture. Economic activities, like all social
phenomena, are necessarily embedded in culture, which includes all kinds
of social, political and moral value-systems and institutions. These
profoundly shape and guide human behavior by imposing obligations,
enabling and disabling particular choices, and creating social or
communal identities, all of which may impact on economic behavior.
Consideration of history. Economic reality is dynamic rather than
static – and as economists we must investigate how and why things
change over time and space. Realistic economic inquiry should focus on
process rather than simply on ends.
A new theory of knowledge. The positive-vs.-normative dichotomy
which has traditionally been used in the social sciences is problematic.
The fact-value distinction can be transcended by the recognition
that the investigator’s values are inescapably involved in scientific
inquiry and in making scientific statements, whether consciously or not.
This acknowledgement enables a more sophisticated assessment of
Empirical grounding. More effort must be made to substantiate
theoretical claims with empirical evidence. The
tendency to privilege theoretical tenets in the teaching of economics
without reference to empirical observation cultivates doubt about the
realism of such explanations.
6. Expanded methods.
Procedures such as participant observation, case studies and discourse
analysis should be recognized as legitimate means of acquiring and
analyzing data alongside econometrics and formal modelling. Observation
of phenomena from different vantage points using various data-gathering
techniques may offer new insights into phenomena and enhance our
understanding of them.
dialogue. Economists should be aware of diverse schools of thought
within economics, and should be aware of developments in other
disciplines, particularly the social sciences.
In March 2003
economics students at Harvard launched their own petition, demanding
from its economics department an introductory course that would have “better
balance and coverage of a broader spectrum of views” and that would
“not only teach students the accepted modes of thinking, but also
challenge students to think critically and deeply about conventional
Students have not been
alone in mounting increasing pressure on the status quo. Thousands
of economists from scores of countries have also in various forms taken
up the cause for broadband economics under the banner “Post-Autistic
Economics” and the slogan “sanity, humanity and science” (www.paecon.net).
The PAE movement, or, if you prefer, the Broadband Economics
movement, is not about trying to replace neoclassical economics with
another partial truth, but rather about reopening economics for free
scientific inquiry, making it a pursuit where empiricism outranks a
priorism and where critical thinking rules instead of ideology.3
background of accelerating momentum for radical change, 27 economists
and 2 mathematicians, many of them internationally renown and
representing eight countries and five continents, have come together to
create this book. It aims to provide you, the student,
with three things.
First, it offers you some protection against the
indoctrination process to which you are likely to be subjected as an
economics student. There are many things that your
teachers should tell you about the brand of economics they are teaching
you, but, in most cases, will not. This book will
make you aware of some of the many worldly and logical gaps in
neoclassical economics, and also its hidden ideological agendas, its
disregard for the environment and inability to consider economic issues
in an ecological context, its habitual misuse of mathematics and
statistics, its inability to address the major issues of economic
globalization, its ethical cynicism concerning poverty, racism and
sexism, and its misrepresentation of economic history.
Second, if you are
brave you may want to bring up some of the points raised in this book in
your classes. It is sure to make them more
interesting. It may even provoke lively discussion
and, for a while at least, convert the indoctrination process into an
educational one. If it does you will be doing a good
thing: we live in a time when bad economics probably kills more people
and causes more suffering than armaments.
Third, this book is
intended to appeal to your imagination and humanity by showing you how
interesting and relevant, even exciting, economics can be when it is
pursued, not as the defense of an antiquated and close-minded system of
belief, but as a no-holds-barred inquiry looking for real-world truths.
1. All the student petitions
discussed are available at www.paecon.net.
2. Stiglitz, Joseph E. (2002) “There Is No Invisible Hand”, The
Guardian, December 20, 2002.
3. For further information about the PAE, see The Crisis in
Economics: The Post-Autistic Economics Movement: The first 600 days,
Edward Fullbrook (editor), London: Routledge, 2003.
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Management Challenges for the 21st Century,