Why Teach Economics?

No I am not going to get upset about mainstream economics. Today I have a different issue to be vexed about: why do degrees in economics exist?

It makes no sense to me to teach economics in a vacuum. None at all. The economy is simply one part of a very complicated and intertwined thing called society, so why isn’t that the centerpiece, possibly with specialization at a later stage?

This isn’t new of course. People have been arguing about this for ages, but if we want to rid the world of the hyper-specialized-to-the-point-of-irrelevance oddity that economics has become we have to try to drag it back towards reality.

A reality that is not simply endless reflection on the machinery of markets either. Successive waves of formalization have reduced the study of markets to meaningless applied mathematics. I suppose it’s nice to understand all that stuff, but it doesn’t provide an understanding of actual markets.

Let me take another hack at this:

I know that economists everywhere would be contradicting me by pointing out all the amazing work that’s been done to examine the various major ‘failures’ of markets, so the idealization I always complain about has been given a thorough critique. My point remains the same: why don’t we start teaching about markets with the real ones? You know: the ones riven through with perpetual failures. You can compare them with the utopian model if you want, but the earliest exposure anyone should have is to the markets they see around them. Not to the ideal that exists only in the imagination – vivid imagination – of economists wanting to make their life easy by eradicating reality in order to make formalization more tractable.

And do we even know what a market is?

Is it a system?

I suppose it is. That’s one way of describing what happens when a group of people engage in exchange. The characteristics of exchange can be explained as a kind of system. But there isn’t just one kind of such system. The idealized version is just one of many. In fact within the entire set of all possible exchange-systems-markets the one that is taught in school is extremely rare. Why don’t we start with the more commonly found versions?

Which gets me back to teaching economics. Why bother as a separate subject? The moment we allow ourselves to explore the full set of relationships that surround exchange – not just the act of exchange, but the prior acts of innovation, exploration, resource provision, and production, and the subsequent acts of consumption, depreciation, and disposal we will have a better way of understanding how the economic acts fit within and complements the wider and richer activities of society at large.

Not only that, but by situating the economic acts as one component of a great cycle of activity we would introduce a sense of history and dynamism so missing from the current subject. We would also be able to fit those acts within the reality of the human environment with its physical limitations and its unbounded intellectual capacity.

It is that contest between a physical limitation, a social/historical dynamic, and an intellectual discovery process that defines opportunity, constraint, and objective. Economics ignores all this and focuses narrowly on only one aspect of the entire cycle. It cannot, therefore, make commentary on discovery, on the development of needs, on the limits of production, or on any of the other essential aspects of the creation of supply and demand.

It is, in other words, a technique for examining the interplay of supply and demand. It remains mute on all the really interesting content of what makes an economy. Or, indeed, what makes a market.

So why teach it? Why not simply bury it as a method, one of many, needed to explore society?

And, no, I am not going to complain about mainstream economics.