Tuesday, January 10, 2012

Jim Stanford reviews The Economics Anti-Textbook

Jim Stanford, an economist with the Canadian Auto Workers and the author of the excellent introductory primer, Economics For Everyone, recently reviewed The Economics Anti-Textbook for the Canadian journal Labour/Le Travail (Issue 68, Fall 2011). If you're interested in reading the review and don't have access to that journal, a copy of the review appears here, at least for now.

Here is the last part of his review:
My only significant critique of this book probably derives inherently from its basic structure as a topic-by-topic critique of simplistic neoclassical pedagogy. The extremes of neoclassical thought, especially in its stereotypical textbook incarnations, provide an easy target for piece-by-piece disassembly and refutation. The specific critiques catalogued so helpfully by Hill and Myatt are not, for the most part, new. Yet the edifice of Walrasian thought still dominates academic economics and (more importantly) real-world economic discourse and policy-making. In addition to highlighting the logical failures of specific neoclassical assumptions, models, and conclusions, there is also a way in which neoclassical analysis--rooted in a model of optimizing behaviour by atomistic agents who engage in equal, efficient exchange--fundamentally misportrays the essence of economic activity in real-world capitalism.  
We therefore need to do more than just snipe around the edges of the neoclassical edifice--with critiques that ultimately accept the Walrasian portrait of the economy as a place where people exchange things through markets. (My former professor John Eatwell describes this class of criticisms as "imperfectionist" in nature, in the sense that if it were not for some flaw or imperfection in the market mechanism--be it imperfect information, limited rationality, "sticky prices," or whatever--then the assumed mutually beneficial equilibrium would finally come to pass.) That's where we need a textbook that presents a comprehensive and holistic alternative depiction of how the economy actually works. I can imagine one that would start by describing the reality of work, production, accumulation, and innovation under capitalism, highlighting the asymmetry and inequality between different stakeholders (in terms of power and agency, not just income and wealth), describing the core mechanism of production for profit that defines capitalism, explaining the history and institutional reality of money (which neoclassical microeconomic models still have not successfully incorporated), and exploring the dynamics of all these processes for growth, development, cycles, and distribution. This would not constitute an anti-textbook in the sense of refuting specific assumptions and predictions of the Walrasian system. It would, instead, erect a competing intellectual edifice.  
There are places in this book, despite the incrementalist mission they set at the outset, where Hill and Myatt do verge on a more fundamentalist critique of neoclassical economics (moving beyond just challenging the formulations of its simplistic textbook variants). For example, in numerous locations in the book they discuss the role of power in shaping both production and exchange. That is not an imperfection or a market failure, it is a completely different dimension along which to understand human economic interactions. Their discussion of government and political-economy similarly reveals a more fundamental divergence from the core structures of neoclassical analysis. In this way, Hill and Myatt's catalogue of the many specific failures of neoclassical microeconomics should hopefully whet the appetite of critical thinking students to pursue completely different, heterodox explanations of how the economy actually works. While many references are provided to examples of this sort of work, Hill and Myatt could be more explicit, in my view, in connecting the dots and guiding the reader to those comprehensive alternative models.  
Nevertheless, for students and others who possess a gut-level faith in the potential of economics to make the world a better place, but are constrained by stultifying introductory neoclassical curriculum, this anti-textbook will be invaluable in enhancing their capacity and their confidence to challenge orthodoxy--and ultimately to look beyond it. 

1 comment:

  1. It strikes me that Karl Marx provided that 'comprehensive critique' along time ago.

    More recently, David Orrell has an (almost) completely fresh take, although he still uses the term 'free market' and repeats mainstream misconceptions of Keynes. Worth a read though.

    Generally, I do agree with him: every heterodox book I've read still buys into the neoclassical framework in some ways, even when they reject others. You might be interested in my blog, which attempts to reject the neoclassical view of the world in its entirety, and so sweeping the feet out from underneath economists.