Teaching Economics After the Crisis

Teaching Economics After the Crisis: Report from the Steering Group

In the April 2012 Newsletter, Diane Coyle reported on a conference sponsored by the Bank of England and the UK’s Government Economic Service to discuss the teaching of economics since the recent financial and economic crises. One outcome of the Conference wasthe formation of a steering group, including both academics and employers of graduate economists, to discuss recommendations for reforms to the teaching of economics students in the UK, In this article, Diane summarises the issues discussed and sets out the group's recommendations. It will be for others to consider how to respond.
http://www.res.org.uk/view/article7Apr13Features.html

The rediscovery of Classical economics

In recent issues the Newsletter has published a number of articles on what passes for ‘good’ economics and what students should be taught, in the light of the recent crisis.* In this article, David Simpson makes a case for replacing ‘equilibrium economics’ with a more classically focused approach.¹ We leave it to readers to note the similarities in some of David’s recommendations to the suggestions made by the Bank of England — Government Economic Service steering group, summarised by Diane Coyle in our April issue.

The congruence of Austrian economics and complexity theorising is indeed remarkable:

• Austrians see market institutions as ‘spontaneous orders’ that have emerged from the self-organising processes of the economy. What Austrians called ‘spontaneous orders’ correspond to the aggregate patterns that emerge from complex adaptive systems.

• Both see economic systems as dynamic processes involving direct interactions between individuals. The fundamental Austrian principle of subjectivism insists upon an economic analysis that looks at things from the perspective of the individual human being. The corresponding methodological principle in complexity theory is agent-based reasoning.

• Austrians and complexity theorists recognise that agents may be heterogeneous in their objectives and in their behaviour. Both tend to model agents as rule-followers. Although Austrians believe that human beings act purposefully, they may follow rules of thumb to achieve their objectives. In both systems of thought, agents adapt their behaviour as a result of their interaction with one another.

• The Austrian principle of ‘verstehende’ or ‘understanding’ claims that one cannot describe human action without reference to human meanings. In other words, human action cannot be fully explained in terms of physical laws alone. The same point can be expressed in the language of algorithmic information theory.⁸

^Mais