Broadening Economics Education

September 4, 2010

by Mario Rizzo  

Policy Ideas in the History of Economic Thought

It is no exaggeration to say that if a bright undergraduate wants to get into a top Ph.D. program he needs to take a good deal of mathematics. Many advisors will recommend a minor in mathematics or even a double major in mathematics and economics.  

As a result of all this, many of the best undergraduate economics students are mechanical problem solvers. They are in a kind of self-referential bubble, but to a much lesser degree, of course, than are top-department Ph.D. students. They expend tremendous amounts of energy with very little payoff in understanding how real economies work. 

However, things would not be so bad if students also took courses that emphasized the broader, historical, institutional, and, dare I say, philosophical aspects of economics. But the intellectual opportunity cost is wrongly perceived as being too high. (Perhaps the career opportunity cost is high, but that is a separate question.)  

Absorbing a broader perspective would encourage tolerance for a variety of methods and a greater appreciation for the complexities of economic policy. It would also increase respect for economists of a previous age who knew so much.  

So enter my course, “Policy Ideas in the History of Economic Thought.”  (See link above.) My goal in creating this course was to stress both live and practical (that is, policy-relevant) issues from the history of economic thought.  We can learn valuable things for today’s world from this intellectual history.  

I also wanted to stress those ideas that students are unlikely to have covered in their core – especially Principles courses. To that end, a few of my goals are to demonstrate that:  

1. The classical economists did not think that markets operated in an ethical vacuum. For many decades economists have ignored this. Today it is being rediscovered.  

2. Laissez-faire or similar policy maxims were seen by classical economists as a means to “democratize” economic activity and to eliminate government-sanctioned privilege.  

3. Say’s Law of Markets was not an argument against the possibility of depressions (an absurdity if it were), and pre-Keynesian business cycle theory was quite sophisticated.  

4. The continuing contribution of the socialist calculation debate is to shape a comprehensive understanding of markets.  

5. The legal and political implications of comprehensive (and not-so comprehensive) economic planning are as important as the economic.  

Of course, it will take more than one course to overcome the narrowness imparted by standard economics today.   We must start somewhere.

 

15 Responses to “Broadening Economics Education”

  1. Jerry O'Driscoll Says:

    Bravo! Well done.

  2. Bob Murphy Says:

    I like #3 a lot. Whenever I lectured on “Say’s Law of Markets” I would defy people to read that portion of his book and tell me where he said something stupid. He certainly didn’t say, “Supply creates its own demand, QED.”

  3. Richard Ebeling Says:

    I can only highly commend Mario for, first, offering to teach such a course, and second, for designing such an excellent syllabus.

    Linking contemporary policy issues with the development of economic ideas over the last two hundred years reinforces the recent case that Bruce Caldwell made for reviving the history of economic thought in the curriculum of economics departments.

    How can we understand where we are and might be going, if we don’t have any ideas of where we’ve been and came from?

    And, as Mario emphasizes, to teach a course like this, in this manner, helps to debunk a lot of myths about a variety of ideas and policy views that too many economists have been taught.

    It is very useful to have students read excepts from Keynes’ “General Theory,” and then ask them to critically analyze Keynes’ assumptions and arguments in the context of common sense microeconomics.

    It does “wonders” in an economic policy or comparative economic systems class to have the students read Oskar Lange’s “Economic Theory of Socialism,” and then have them read Hayek’s three chapters on ‘Socialist Calculation” reprinted in “Individualism and Economic Order,” as well as “The Use of Knowledge in Society” and “Competition as a Discovery Procedure.”

    If makes any thinking student think a lot differently about the nature, limits and “impossibilities” of government planning and regulation. It sets a very useful tone to then deal with a wide variety of modern-day economic policy and institutional issues.

    Richard Ebeling

  4. Han Says:

    If this course can be video-recorded and put online I’m definitely going to watch it!

  5. Troy Camplin Says:

    The title of this should have been “Bringing economics education back to economics.”

  6. Bogdan Enache Says:

    It looks great; I think the pivotal debates over free trade in the history of economics is also a fascinating issue and deserves interest : from Smith, to Ricardo, to the infant industry argument and the “national economy” of Friedrich List and then the neo-mercantilist comeback of late 19th century and especially the inter-war period (particularly Manoilescu) and its persistance in developement economics to present day.

  7. Mario Rizzo Says:

    Bogdan,

    Yes!

    I wanted to add more on free trade controversies including the Anti-Corn Law League. But there is only so much I can teach in one semester. And right now I think interest is high in macro, Keynes and related matters. Damn that opportunity cost thing.

  8. bill butos Says:

    Well done, Mario. Nicely focused and certainly relevant. Just to pick up on the point Bob Murphy made: few Classical or early 20th c. economists were confused by Say’s theory of markets until Keynes got into the act. As Garrison has argued more generally, Keynes is a spur.

  9. anon Says:

    What is good reading on Say’s law?

  10. liberty Says:

    This looks great. I would have expected a couple more readings in each section – is the focus on just a few readings so that they can be discussed at greater length & depth?

    Also, I would love it if this course was complemented by a course on “policy ideas from economic history.” I think the history of ideas is very important, and far too often overlooked and forgotten by economists and courses, but so too are the lessons from history itself.

    Of course one can take different lessons – just as the thinkers in this course disagreed on theory. But to complement these sections one could have matching history readings. For example (just off the top of my head):

    I. The Classical Period
    “Good Money: Birmingham Button Makers, the Royal Mint, and the Beginnings of Modern Coinage, 1775-1821”, George Anthony Selgin
    &
    “The Enlightened Economy: An Economic History of Britain 1700-1850”, Joel Mokyr

    II. Business Cycles in History
    “This Time Is Different: Eight Centuries of Financial Folly”, Carmen M. Reinhart, Kenneth Rogoff

    “A History of Money and Banking in the United States: The Colonial Era to World War II”
    Murray Rothbard

    III Great Depression
    “The Great Depression”, Murray Rothbard

    “Hard Times: An Oral History of the Great Depression”, Studs Terkel

    “Essays on the Great Depression”, Ben S. Bernanke

    IV. The New Deal: The End of Laissez-Faire?
    “The Great Depression and the New Deal: A Very Short Introduction”, Eric Rauchway

    “NRA Economic Planning by. Charles F. Roos”

    V. Economic Calculation Under Socialism
    “Plan or No Plan”, Barbara Wootton

    “The Soviet Economic System”, Alec Nove

    VI. Pigovian Taxes and the history of intervention
    “Drastic Measures: A History of Wage and Price Controls in the United States”, Hugh Rockoff
    “Capitalists against Markets: The Making of Labor Markets and Welfare States in the United States and Sweden”, Peter A. Swenson

    VII. Political and Legal Consequences of Economic Planning
    “The Soviet Economic System: A Legal Analysis”, Olimpiad S. Ioffe and Peter B. Maggs
    &
    “The Road to Terror: Stalin and the Self-Destruction of the Bolsheviks, 1932-1939, Updated and Abridged Edition”, J. Arch Getty, Oleg V. Naumov

  11. David Hoopes Says:

    I recently read an old post on “OrganizationsandMarkets” featuring comments from Richard Ebeling and Lawrence H. White and found myself wishing I’d read more history of economics (among other things). Alas, I don’t think I’ll have time to catch up soon. Great discussion.

  12. Leonard Says:

    I would think that a good economic theory course would have integrated historical applications of the theory as practical examples of its weaknesses and strenghts. Listening to some of the debates between supporters and opponents of governmental approaches to the failing economy, I wonder if they too need your course as remedial instruction.

  13. Greg Linster Says:

    I wish I could take this course!


  14. […] I’m not trying to imply that abstract math is worthless, in fact, I think it’s incredibly important.  What I am trying to imply is that it isn’t important for everyone to learn abstract math and that mathematics is often misapplied to fields in which it has no relevance. Furthermore, academic disciplines such as economics’ extensive focus on mathematics is discouraging some bright minds from entering the field. NYU’s Mario Rizzo over at ThinkMarkets expresses a similar sentiment here. […]


  15. […] I’m not trying to imply that abstract math is worthless, in fact, I think it’s incredibly important.  What I am trying to imply is that it isn’t important for everyone to learn abstract math and that mathematics is often misapplied to fields in which it has no relevance. Furthermore, academic disciplines such as economics’ extensive focus on mathematics is discouraging some bright minds from entering the field. NYU’s Mario Rizzo over at ThinkMarkets expresses a similar sentiment here. […]


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