by Erin Nash
Last week, we were pleased to welcome Dr Ha-Joon Chang to speak as part of our CHESS/GPI Seminar Series in Philosophy, Economics and Public Policy. Dr Chang, a leading development economist and a prominent critic of ‘intellectual monocropping’ in economics, has been teaching economics in the Faculty of Economics and through the Development Studies programme at the University of Cambridge for more than two decades.
Chang commenced his presentation by noting that the most illuminating aspect of mainstream economics today is that economics is not limited to the study of anything in particular, including the economy. Economics is defined by its tools of analysis (mathematical models, mostly involving optimisation and equilibrium), rather than it’s object inquiry. The prevalence of this view is why so many popular economics books of recent years, such as Freakonomics have claimed, to be about "everything" or, sometimes with more modesty, “almost everything”.
Defining economics this way, in terms of its methodology and tools rather than its object of inquiry, goes a long way to explaining why the current landscape within economics has become dominated by just one school, neoclassical economics, with its set of core principles and assumptions – that individuals are perfectly selfish, perfectly rational, and able to create perfect markets by acting in their own interests. Plausible competing theories have been ignored; and we are suffering for it, claims Chang.
Consequently the key thesis of Dr Chang’s presentation was that economics warrants a pluralist approach, as no economic school, theory or methodology is globally superior to any other. Part of the self-image of many academic and practicing economists today is that economics is a well-established and settled science. But it is not, Chang emphasised. Dr Chang doesn’t believe it’s possible for economics to ever be a science in the way physics is, and so he isn't looking for a formula: fundamentally, he argues, economics is politics, and thus we shouldn't be thinking in terms of an ideal answer – the discussion should never close and the diversity that already exists needs to be preserved and propagated.
He explained that there are at least nine major schools of economics, possibly more if you include some minor schools or split bigger schools into sub-schools. Those nine schools are Austrian, Classical, Marxist, Institutionalist, Developmentalist, Behaviourist, Neoclassical, Keynesian, and Schumpeterian. Each school contains many different economic theories, methodologies and tools which all have strengths and weaknesses and something to contribute to economic problem solving, depending on the context. Hence Chang’s ideal that we recognise that none of these ideas are sacred, nor worthless. He insists that you can pick and choose from each and even mix them to understand our complex reality from different perspectives and to create new, innovative solutions.
It is for these reasons, Dr Chang is an outspoken advocate for curriculum reform in academic economics and in helping the average person in society to have a deeper understanding of economics. His latest book, Economics: The User’s Guide, aims to do just this, and contains a chapter upon which this presentation was based.