Neoclassical economics fighting back from “the Ropes”?

In 2003 the the heterodox economics faculty at Notre Dame University were removed from the Economics Department. Now I gather their new home, The Department of Economics and Policy Studies, will be eliminated as well.  The story can be found in The Chronicle of Higher Education

An interesting analysis appeared today in the Chronicle titled ” Neoclassical Economists on the Ropes (Except at Notre Dame)

September 22, 2009, 01:48 PM ET
Neoclassical Economists on the Ropes (Except at Notre Dame)
By Teresa Ghilarducci
That squeaking sound you hear on your college campus is coming from economists nervously shifting in their chairs.

As the recession wallops jobs, eagle eyes and sharp tongues are pointing to economists asking where they were when the economy collapsed. (After all we would haul up the Center for Disease Control after an outbreak of TB.)

A serious European paper, “The Systematic Failure of Academic Economists” came out at the beginning of the year; The Nation started a good discussion in May; and preeminent economist Paul Samuelson indicted neoclassical economics by summer. The business press chimed in: Mainstream Financial Times rudely asked (rude if you are an economist):  “What is the point of economists?”

Just two weeks ago, Nobel prize winner Paul Krugman, prominently criticized our profession arguing that mathematical models and abstract formulations got the better of the neoclassical economists who should have, but didn’t, warn the world of very risky unregulated leverage. Why? perhaps 1) they just didn’t pay attention, 2) they didn’t know enough, 3) they were compromised by consulting deals by a financial industry that wanted praises, not rebukes.

What is the solution? Economists need to be broader, more self-critical, deeply knowledgeable about economic institutions. This is why it’s dumbfounding that the University of Notre Dame created an economics department filled — by intent! — of only neoclassical economists and banned their Ph.D. economists who are policy-oriented and non-orthodox from the department.

I since left — happily, to head to the New School for Social Research — but I started my career on the Notre Dame faculty attracted by it’s mission to address problems facing humanity and thrived where neoclassical economists interacted with historians, policy economists, Keynesians, Marxists, philosophers, and other faculty deeply committed to the same goal.

Notre Dame students, faculty, and scholars everywhere question ND’s move. Orthodoxy and intolerance in the economics profession helped plunge the world into the deepest recession since the 1930s: It doesn’t take a rocket scientist — or even an economist — to recognize narrowness has a cost.

Here is a modest recommendation for this aspiring top-tier university: Put all the economists it hired for the economics department in an economics department and let ideas interact. After all that is what universities do and what economic thinking and economic regulation needs.

3 comments

  • Can you imagine a poor NC doctoral student having to confront Phil Mirowski’s pointed questions and wit. How would they proceed to play their role in creating the TOE (theory of everything) after that?

    Scientific liberalism is in decline if all they can do is wall themselves off in talk shops and group think salons.

    But you have to admire the tenacity of Stalinists, who after hearing of the fall of the wall, continued on BAU. In this regard scientific socialism and liberalism are close cousins.

  • Just as sociology departments have begun to reflect the system by becoming dominated by (so-called) criminology, Economics has become largely just a reflection of Capitalist ideology. At least that is how appears to a non-economist like me who is watching from outside.

  • Seems to me that a lot of economic wisdom over the past few decades has been directed at eliminating regulations, taxes, social programs, government interference in the economy (for instance, public housing), unions, minimum wages, economic nationalism, etc., etc.

    This has all been done to let “markets” rule and to lower expenses for business.

    It also had the effect of decimating the consumer side of the economy and continued consumption growth had to be met with increased consumer debt. Aside from debt-financed consumerism and economic development coming from developing countries benefitting from off-shoring of labour and the massive US trade deficit, economic growth in the US had to be based on bubbles in the FIRE sectors.

    This was always going to have been unsustainable.

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