A recent report in The Christian Science Monitor details a great stirring among academic economists about how to teach Econ 101. This is both good news and bad news. The good news is that, at long last, the profession is acknowledging and growing dissatisfied with its own stale methodology.
The bad news is that the changes being adopted are wrong-headed and counterproductive.
Revising the way Econ 101 is taught is long overdue. During my career, I can’t tell you how many adults I’ve met who, upon learning that I was a professor of economics, responded, “Oh, I took an economics course when I was in college.” Then, usually after a slight pause, they would often add, “I didn’t like [or ‘hated’] economics.”
I always empathized with those individuals. I didn’t like my own introductory Econ courses when I took them more than 50 years ago. They were dry and abstract. Economic graphs supposedly offered clarity and precision, but when I tried to relate classroom lessons to the real world, it was like trying to grab ahold of smoke. The theoretical precision in the classroom was nowhere to be found and attempts to capture the complexities of the real world in neat, tidy diagrams proved to be fruitless and frustrating.
It’s a crying shame that mainstream academic economics has been teaching Econ 101 unchanged from the mechanistic abstractions that turned me off a half-century ago. Students still have to endure such sterile fictions as “homo economicus” (a bizarre and nonexistent soulless, profit-maximizing automaton), “perfect competition” (sorry, there’s no such thing as perfection in this world), equilibriums of this or that (again, sorry, but our dynamic world is constantly in flux, so markets are never static or at an equilibrium), and what one astute UC–Berkeley sophomore called an “oversimplified economic universe of modeling” in the abovementioned report.
Another student mentioned in the report commented with great common sense: “Society isn’t just numbers.” Correct! The study of economics indeed needs to be liberated from mathematization and reconnected with the real world.
Austrian economists have been making these points for more than a century. Ludwig von Mises developed a comprehensive theory of human action—praxeology—that acknowledges that people have emotional, psychological, and spiritual values as well as economic ones. This lays the foundation for teaching the subjective, fluid nature of value, which students can understand from their own experience (think of times you sold a personal possession at a garage sale for 50 cents that you once bought for $50).
That leads to the understanding of how value induces positive-sum exchanges—at least, wherever property rights are secure—that generate economically meaningful prices. Market prices coordinate production and make possible the calculation of profit and loss, the absence of which is a fatal defect of socialism. It naturally follows that people benefit from trade and a sound medium of exchange (money).
Praxeology illuminates the role of time preferences in organizing production and determining the interest rates they’ll earn on their savings or pay on their loans. Econ 101 is eminently practical, and as the students see how relevant elementary economic phenomena are to their lives, they readily engage with the material and appreciate what they’re learning.
Unfortunately, the reforms in the Econ 101 curriculum currently being adopted are moving in a different direction. Instead of correcting the methodological errors, professors of economics are trying to make them more palatable by offering some intellectual catnip to their students. Professors are asking their students to offer opinions about how they think the world should change for the better.
Yep, it’s the old progressive “let’s be saviors of the world” syndrome all over again.
The political correctness of some of these curricular adjustments is cringeworthy: “Is what we are teaching inclusive?” or “There’s a recognition of how modern economics has not incorporated nearly enough of the reality of climate change and sustainability.”
Sometimes, there are even overt attempts to achieve the goal of manipulating student behavior, such as, “How can economics be taught to make students more generous?”
This is all poppycock and balderdash. Asking students to imagine how to construct a more perfect world before learning how the world works is irresponsible, even dangerous. The purpose of Econ 101 should be to elucidate the basic principles—the ABCs—of economics, not to come up with a political wish-list for certain preferred outcomes. Many of our current problems (of which a $29 trillion national debt is a glaring symptom) have resulted from political considerations eclipsing sound economic principles. Let’s not make it worse by grafting a progressive political agenda onto Econ 101.
The move to inject the normative “shoulds” into the positive “hows” in Econ 101 will further sacrifice economic understanding to political correctness and produce ignorant activists. It will lead to more of the kind of irrational emotionalism whereby young people can, with a straight face, protest poverty and demand to “kill capitalism” in the same breath—all without the slightest comprehension that free markets have done a better job of fulfilling the Benthamite/Marxian principle of “the greatest good to the greatest number” by lifting more people out of poverty and making prosperity more widespread than any socialist system has.
I implore my fellow economists to give students the tools they need to understand economic activity. There’s no need to reinvent the wheel and create a new way to teach economics. Just adopt the Austrian approach—at least in Econ 101. Then, students will understand much more clearly how the real world works. Of course, once people understand how marvelous and beneficial free markets are, they’re less prone to embracing government intervention and progressive nostrums. But at least they’ll be equipped to view the world realistically, rather than in terms of academic utopian ideals.
Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.