Exploring an Economics Curriculum for Our Time
There is an unsettling feeling in the world. 2019 was a year marked by protests erupting in Chile, Lebanon, Colombia, Ecuador, Iraq, and Iran in an incessant wave across continents and borders. Even in the United States, prominent leaders are indicating a looming disruption of our own. Former President Barack Obama recently remarked that if Bernie Sanders gains too much prominence in the intensifying race for the White House, he would willingly speak out against him. There is fear stirring among those in power that a radical mood is growing amongst the populace. And if the anxieties of a former president are not enough of an indication, even those furthest removed from the masses can sense it. Billionaire hedge fund manager Ray Dalio warned in a recent interview that if we don’t address the current situation there will be a violent revolution and bloodbath to follow. If you are still unconvinced, the 2016 election should serve as a good indicator of mass discontent within the nation, no explanation needed.
So where does the discontent lie? Listen to the voices now taking to the streets: growing inequality, policies that work for only those already at the top, and the continued exploitation of lower income sectors all indicate that our economic system is on the brink. The current system is perhaps nearing a brutal awakening as masses everywhere decry policies of neoliberal supply-side economics and the institutions and political forces which have supported the reign of neoliberalism. As alarming as it may sound, an economic apocalypse may lie just around the corner.
Meanwhile, in our academic institutions, everything is business as usual. Those of us in the field of economics carry on without a word about the fragile state of the global economy, and our academic curriculum permits this to be so. In our institutions of higher education, to be an economics student means to be a student of theory and mathematical models which suggest economic laws of nature humanly ordained by economists Adam Smith, John Maynard Keynes, and other wealthy, educated, white men from bygone eras.
These models were developed by the winners of the economic systems now being taught, Smith and Keynes among them, to articulate how we may attempt to control the economy in order to maximize growth. The models propose how variables like labor can function to increase production; though if you read available critiques and if your professors choose to dwell on it, there have been very real and strong exceptions to these models. Nonetheless, if you are an economics major you will learn the math and come to know the laws of nature that have been brought into being by these elevated men.
With this in mind, it is clear why economics students have celebrated the designation of their field as a STEM major at UCLA. We, scholars of the economy, have economics down to a science, or rather, we have reduced economics to science.
But here lies the problem: these models make great tools to understand how the economy may function, at least to those of us with a mathematical mind, but still they are just that, a simple tool. Without learning to apply the tool or make sense of the relationships between the variables we study, what use is it?
It is suggested in this field of study that by simply understanding Neoclassical versus Keynesian economic theories, this will allow for us to choose between the two to pick our dominant way of thinking and guide the policies that can best govern our country and the world. However, these models are outdated and should be taught with a degree of nuance, considering the context of real world implementation and the spectrum of theories available.
To further this point, the models operate on assumptions of human nature and global values that have not been called into question since their inception and adoption. However, submitting to these assumptions presents very real dangers to our world that must be considered critically in our pursuit of a new economic understanding.
Ultimately, our global economy has always functioned through other economic systems, and it was only recently that neoclassical thought has reemerged as the dominant global system through a combination of coercive forces. In fact, it was once the economics of exploitation and extraction which governed the global economy through imperialist policies that are reflected in modern day reality. This history is imperative to understanding modern-day reality and, without it, students of economics are entirely ignorant of why the global economy functions as it does.
Let’s now explore these gaps more in depth.
You cannot understand economics without the economy
There is no law of nature in economics. As much as we may try to devise a science, the economy is subject to a number of factors that make it far from mathematical. One outcome may never occur again, economics does not function in a vacuum. The policies of individual countries and international institutions, the politics of every region and nation, and even the general feeling of society is always changing.
However, the best way to consider and critique the theories we learn remains the observance and study of history and the empirical data produced therefrom. As long as we discuss theories as just that, we will fail to evaluate them. Even if one uniform understanding is not settled upon, and perhaps it never can be, learning from and discussing historical data often leads to the best learning and ideation. As the current economics curriculum stands, there is no space for discussion of the theories and the models we blindly learn how to construct. But it is imperative that we pay closer attention to historical factors in order to inquire into the policies that follow theory, how they play out in reality, and the current events surrounding them.
We also must look beyond the models and understand that they cannot provide easy answers to societal realities. One must ask why women are paid seventy percent of what men make, why white men are preferentially employed, and why specific types of labor are compensated but others are not. Models simply do not explain the injustices in the system because the economy is not made up of inputs and outputs. We are not so much studying variables as individuals in highly complex societies suffering from strong biases.
The disregard of these biases in constructing models, and the determination of what is considered exogenous information, is truly a reflection of the creators of these models and the privileges which led them to decide what was important or inessential to the models that shape our understanding of the economy. The models operate on an assumption of human nature which regards humans as selfish yet not influenced by bias, an assumption that entirely disregards the complex character of humans.
It is true that the models we study are useful for the logical, arithmetic reasoning of the functioning of the economy, however there are no economic laws of nature and we are humans, not mechanisms, operating within a machine called the market.
The false dichotomy of Keynesian and Neoclassical economics
To give a clearer point of reference, in the study of economics the models we study are grossly limited to two dominant systems of economics: Neoclassical and Keynesian. However, if one were to study these empirically, they would discover that current data renders them in many ways defunct. These models were developed by economists in the context of the United Kingdom in past centuries when economists were still thinking in terms of a closed economy, that is, an economy without trade entirely. However, these systems do not account for decades of accelerating globalization and economic interconnection that have fundamentally changed our global economy.
Consider how the Phillips Curve, a function of Keynesian economics, has been out of operation since the seventies, and the link between employment and inflation has disappeared from modern economics. Even today as President Trump continues to spend on stimulus packages and cuts taxes, there is a pressing mystery of missing inflation. The same goes for Neoclassical theory to which there have been exceptions time and again, most notably in studies that show that tax cuts for the wealthiest sectors do not lead to increased economic growth. The models we study do not hold true to the data and if we do not teach students with a level of nuance, we are failing to teach economics.
Meanwhile, the way economics is currently taught in the curriculum, these two models have come to construct a dichotomy in our thinking, one being liberal and the other conservative. Despite this, Keynes himself considered his policies a conservative effort to maintain a free market with minimal government intervention and, in reality, both theories fall to the right of a spectrum that in fact extends far beyond what is taught in the current curriculum.
One could point to the dominance of this binary economic discourse as the key force behind the protests at hand. The limited economic options have come to make up a global economy that is a patchwork of different systems for different industries, regions, and groups in society with differing results for each. At the same time, the idea that these outdated systems which were developed in an entirely different context can apply to modern countries with varying levels of development and divergent histories is a falsity.
Consider how Neoclassical economics, in our time linked to Neoliberal policies, is applied oftentimes coercively across the globe. For those in power it is not a question of which system is superior, but rather which system is best applied where and to whom.
For example, the World Trade Organization has selectively deregulated particular industries, often leaving leading industries of the United States free to benefit. Loans from the United States and organizations like the International Monetary Fund and World Bank are granted conditionally with enforced neoliberal policies that even the U.S. has never been subject to. In the United States, migrant workers still lack protections in the informal sector and as H2 Visa recipients providing inexpensive labor, just as in foreign special economic zones where workers operate without any protections in conditions likened to slavery while the manufacturers avoid taxes.
Meanwhile in the United States, large subsidies are granted to particular industries, vast protections are granted to corporations while laborers languish, and economic giants have been bailed out to be saved from collapse.
It is a falsity to believe that we can name a reigning system as being fundamentally correct precisely because the systems are out of date, such a dichotomy between systems does not exist, and when these limited systems are selectively applied, they produce uneven economic results often only to the benefit of those in power.
Calling our values into question
It is also important to consider that as students, we are not blindly studying and accepting, but investigating while in search of the truth. Of course, in the field of economics, we must understand the above mentioned models in order to have a full understanding of where the economy now stands and how it can be changed. However, we also must think critically about the assumptions which these systems were founded upon.
One of these assumptions is a philosophical conception of human nature and another the measure of success for our economies. Do we still believe in a view of human nature that is fundamentally selfish? Do we still consider profit and GDP as a measure of economic success and wellbeing? Naively following these underlying assumptions can have disastrous results.
Consider the Neoclassical and Keynesian models, both founded on the principle that maximizing GDP is a country’s ultimate economic goal; with this motive of maximizing output, each model would dictate certain policies. In a supply-driven Neoclassical model, economic actors would be motivated to minimize the cost of inputs such as resources and labor, incentivizing exploitation and environmental ruin. On the other hand, in a demand-driven Keynesian model, economic agents would push consumption to drive demand in a dangerous, consumerist cycle.
In this way, the profit motive can perhaps become more powerful than the players in the system itself, and this one-sided, incomplete measure can come to rule countries as they struggle to outcompete each other to their own detriment.
It is imperative that as these systems teeter on the edge, we fundamentally reconsider the assumptions of human nature and societal values that the dominant models have dictated. We must call into question the assumptions that humans are fundamentally selfish and consider whether profit is really the end all be all, as economics students search for a new economic system in which we are of dire need.
Modernity is meaningless without history
It is also true that these dominant, dichotomous models only came to exist relatively recently and that, for hundreds of years leading up to this point, the global economy functioned on a system of exploitation and extraction. The modern day disparities between rich and poor countries are well-explained by the history of imperialism and, while there are different views regarding this subject, to deny the influence of this history is ignorant. Years and years of racial subjugation, genocide, extraction of wealth, slavery, indentured servitude, imperialism, and physical and structural violence were the preconditions to the disparity we see today.
Even in the United States, the economy has prospered through years of protectionist policies beginning with the founding fathers and a long, though less discussed, history of imperialism. However, when countries the United States exploits decide to set their own course, the U.S. has imposed policies of neoliberalism and free-marketism that America itself has never been fully subject to. In Latin America for example, as recently as Honduras in 2009, the U.S. has intervened to prevent alternative economic models from emerging. Thus American industries prosper and dominate foreign markets by using cheap labor and resources from abroad.
This modern-day system of hegemony is allowed to function through institutitions like the International Monetary Fund and World Bank which for years have been enforcing these policies as international institutions predominantly run by the global north.
And so, with this understanding of the modern global economy, it is unthinkable that any one of us studying economics can earn our degree without hearing the words “colonialism”, “slavery”, or “World Bank” in our four years of education. You cannot understand the modern economy without understanding history and the international institutions that set the rules and perpetuate legacies of inequality and exploitation all over the world.
Our response
The protests that are currently erupting across the world make no sense without understanding the history that has led to them, the economic systems which have given rise to them, and the institutions and global forces which have controlled the global economy for so long.
We are experiencing an emerging global economic awakening and still economics students do not receive the education to understand what is occurring or possess the space to discuss it. Instead economics departments nationwide turn a blind eye. But those who have long toiled in this system will keep raising their voices until we cannot turn away any longer. We must pay attention to what is happening around us, there is no other choice and the best response is education.
I believe that through fixing the gaps in our curriculum it is possible to become educated students of modern economics. It is imperative that we study empirical economics along with the theoretical, discuss the nuances and be critical of dichotomous theories and how they are applied, call the current system’s assumptions into question, and explore the complex histories that have brought about this ongoing period of economic instability.
If top universities are not teaching and discussing these topics, we are in great danger. We pride ourselves on the prestige of our economics programs and if someday our students are expected to be leading CEOs, economists, investment bankers, consultants, and policy makers, if we are expected to run the global economy, then our education now means everything for the future.
When even those at the top are warning that “the world has gone mad and the system is broken,” it is time for a global awakening, starting with our institutions of higher learning.
Written By Katia Arami, Undergraduate Economics and International Development Student
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