It’s often debated as to whether economics is a “real” science. Economics has its basis in the social sciences but has moved into utilising complex mathematical modelling and making highly specific predictions about spending, taxation, growth and wealth. Governments love to talk about “the economy”, using it as a proxy for success in every area of its administration, as well as bashing their opponents with it. Most, if not all, of the most influential institutions — governmental and private — in the Western world are filled with economists passing judgements, producing analyses, and making predictions.
However, in 2008, the global economic system was brought to its knees by a crisis that next to nobody saw coming. Organisations were bankrupted and governments were suddenly scrambling to save themselves and their closest allies. The consequences of the financial crisis are still felt today, almost 10 years later. When Cahal Moran and fellow students started their economics educations in 2011, they hoped to find economists telling them how things had gone wrong, what should have been done, and how to avoid it ever happening again. Instead, the biggest crisis in economics wasn’t mentioned. They continued to be taught just one school of thought, the neo-classical one, despite the existence of many others which offered differing angles on how the economy worked.
Because of this, they set up the Post-Crash Economics Society, which pressures the university into providing a more pluralist economics education to students, as well as offering some voluntary classes of their own to economics students who worry about the narrowness of their education. Their campaign has become one of the best-known in the world, with The Guardian continuing to support and highlight their work, and influencing the beginning of many other like-minded societies around the world.
Last year Cahal, along with fellow co-founders Joe Earle and Zach Ward-Perkins, released their first book, The Econocracy: The perils of leaving economics to the experts, which explains the goals of the Post-Crash movement as well as highlighting how dangerous the current situation is, in which vastly important decisions are taken in back rooms by economists with such a limited conception of the economy.
I talked to Cahal about the society, the book, and the university.
Tell me about the beginnings of the Post Crash Economics Society.
“So the society began around 2012 when a lot of us were in our second year of economics education, and naturally, having just experienced the financial crisis, a lot of us wanted to study economics to try and make sense of it all, to make sense of the chaos and confusion that was in the news, as people talked about the crash but didn’t really seem to understand it.
“But on entering our economics education, what we found was that rather than discussions of the financial crisis, or of really any issues that you hear about in the news like immigration, or inequality, what we instead saw was just a focus on very abstract mathematical models, large numbers of multiple choice tests, especially in first and second year, and you were essentially being asked to regurgitate these theories over and over again for exams and to solve mathematics that was related to them.
“But we were puzzled really by the complete absence of the issues which seemed to be so central to economics. While our classes were going on, the Eurozone crisis was reaching its apex, but it was scarcely mentioned, if at all, in macroeconomics. And so some of us decided that we would form the group, the Post-Crash Economics Society, to try and question what we were taught and ask ‘why is it that despite all of these important economic events going on around us, we don’t see any of it in the classroom?'”
When the crisis happened what was happening inside economics departments? They must have recognised that it had happened and they hadn’t foreseen it, so did they just stick their heads in the sand or did the questioning begin?
“It’s a really interesting question because I think there’s been a strange combination of recognition and soul-searching and sticking their heads in the sand. So when it first happened I think there was a lot of humility and soul-searching, around 2009, this was before I even came to university. You saw people like Paul Krugman in the New York Times admitting that economists had got it wrong, and you even saw Robert Lucas, who’s a sort of die-hard Chicago free-market guy, admitting that we are all “Keynesians in the foxhole” now.
“But then, after the dust had cleared, I think the profession has been quite quick to reassert itself in many ways. And this isn’t to say that there’s been no reaction, because I think there has been a reaction, and there have been changes, but the essential line that the profession has adopted is ‘OK, we missed it but, we just need to make some tweaks, we have the tools, actually there are many aspects of economics that can explain the crisis, we maybe just need to teach them a bit better, and there is not necessarily the need for fundamental change of the kind that Post-Crash Economics are calling for.'”
Might it be economics itself that’s the problem? Do we overstate our possible ability to see crashes coming or predict what’s coming next, and possibly we should be scaling that back slightly?
“Yes, it’s not like the economy and economics as a discipline are independent. In the run up to the crash, huge institutions and important institutions like central banks used economics very heavily and they were convinced that by using the policy of inflation targeting to manage unemployment and inflation, they would essentially eliminate the problem of the business cycle. Then you had people like Gordon Brown declaring the end of boom and bust; Ben Bernanke, then head of the Federal Reserve, praising the great moderation of low inflation and high growth; people like Robert Lucas saying that the central problem of depression prevention had been solved. So this blindness to the possibility of a crash is really in many ways was stemmed from economics itself.
“So in that sense, I think we do have to rethink questions like can we prevent crashes? Is it possible to prevent them? What can we do about them? And to really never again be seduced by models and ideas which say we have forever solved the problem.”
So why has the economics elite settled on the one neo-classical school of thought at the expense of others?
“I think there’s been two main things. One is the internal drive within the discipline to appear scientific. Previously, in the 18th and 19th century, economics was called Political Economy and it was quite an eclectic subject that took some of politics, some of what we would now call sociology, it was largely qualitative, economists wrote huge tomes instead of mathematical models. This by its nature was quite vague, but with the development of sort of modern mathematical methods, and the application of those to economics in the late 19th century, the subject acquired a sort of scientific-seeming nature, and a precision which meant that very clear predictions about the system and about policies could be made.
“So there was that internal drive within the discipline to appear scientific, and then there’s been the external events, the history of the 20th century — a landmark really was World War 2 — where governments needed to know how many resources they had to fund the war effort, and they wanted to make clear-cut economic decisions, and then so they employed economists, to create the first estimates of things like GDP systematically, and to really produce theories on how to direct resources optimally.
“So this meant that economists acquired positions of great power during the war, and the fact that they could do that relied on these theories which had quite clear-cut, right-or-wrong answers. And so, after World War 2, economists stuck around, and a lot of major international institutions like the IMF and the World Bank were founded shortly after World War 2, and you saw that there were things like the Council of Economic Advisors, created in 1946 to advise the White House.
“So politicians’ urge to have a scientific-seeming theory with which to manage society, and which they could point to GDP and say “we’re doing a good job, [it’s] increasing”, combined with the inner workings of the discipline to create this dominance that we see of economics today and in politics. We call that an Econocracy.”
And it’s correct that no winning manifesto before the 1950s even mentioned the economy?
“That’s correct, and then in the most recent 2015 Conservative manifesto it was used 59 times.”
So because people enjoy simplicity in terms of theory and people enjoy collecting things together to find one answer, it’s become the root of the problem itself.
“Exactly. And it appeals to everyone, from politicians to citizens, because it’s simple to see ‘GDP’s going up, that means the government’s doing well’.”
In your ideal world, what would you like to see happening instead of what we have at the moment?
“So I think so there are a few key problems that we identify with economics education. The first is that it only teaches what’s called the neo-classical school of thought, which is based on a certain type of sort of optimising mathematics, which looks at individuals and how they make decisions and how these fit together, co-ordinated by market prices.
“And that’s really all that’s taught; and not only is it all that’s taught, it’s taught as if that is all there is to economics. You could go through an entire economics degree without even being alerted to the possibility that there’s any other type of economics out there.
“So what we advocate is what is called pluralism, which is a multitude of perspectives, and there are different things like post-Keynesian economics, institutional, feminist economics, all of which have very different approaches, some mathematical, some not, but which highlight different parts of the economic system.
“The second point is the lack of real-world application and real-world events, and often evidence from economics classes. I mean, you can go through microeconomics at Manchester without referencing empirical evidence once, it’s just about axioms and proofs and things like that. So we really are calling for much more engagement with the real world, and testing of theories as well, instead of just stating and regurgitating them.
“And the final main, major change I think we would advocate is critical thinking. So this goes hand-in-hand with having many perspectives, it’s taking the facts, the theory, your values, and your own assumptions, and putting them together to come to your own conclusion about an issue, you know, [like] what was the cause of the 2008 financial crisis? Was it central bank policy, was it financial institutions, was it global imbalances, there’s lots of different valid answers to this question, it’s not as simple as a multiple choice test — that kind of broader thinking is really what we think would be crucial to improving economics education and therefore the economic experts of the future.”
Is there a problem with the University of Manchester’s economics teaching?
“Yes, I think there is. The multiple choice tests, in a curriculum review we did for the book, we reviewed seven Russell Group universities, and Exeter and Manchester stood out as having a large amount of multiple choice tests, to the extent that it’s the sole method used to evaluate a lot of first year courses in economics.
“On the one hand it is a problem, on the other hand we accept that it’s not just because of the university’s laziness or anything, economics at Manchester is one of the biggest courses in the country. You have lectures of 600 students, it’s quite difficult to expect lecturers to mark a multitude of essays which all have different answers to what caused the 2008 crisis, in classes like this, but we think there are some methods which you could use maybe to have a little bit more variation in the type of assessment.”
The university’s now doing the Understanding the Financial Crisis module, isn’t it? Is it doing any more than that?
“There’s the Economics for Public Policy course, which is quite new, with Diane Coyle, which I’ve actually tutored for now, so maybe I have a vested interest, but that’s definitely a step in the right direction. They’re also currently petitioning to have an inequality module, Economics of Inequality module put on by the department, and we’ve got a lecturer who says he’s willing to teach it.
“But while you can persuade the department and economists more generally that they should use more empirical evidence and have more applications, once you get into the realm of pluralism, and of teaching other things than neo-classical economics, they are either very dismissive of it, and just believe it’s as alchemy is to modern chemistry, or they simply say they don’t know anything about it so they can’t teach it, which is a huge institutional problem that goes beyond the department itself.”
Your society was started after the seminar Are Economics Graduates Fit For Purpose? So is it a risk that if every student is coming out with a subpar economics education, all of them are going into powerful economic and financial institutions with such a low level of readiness for it?
“Absolutely, I think that’s shown by the 2008 financial crisis. The Bank of England employs 200 economists in total, and there was evidence of this narrow thinking prior to the crisis, and the influence of economics is actually very direct and pervasive throughout lots of different areas of government. You’ve got things like cost-benefit analysis, which is really quite widely used, essentially a method that reduces everything to money values, from environment to health, and says if the benefits in money are bigger than the costs, then it’s a good policy.
“But there’s obviously a lot of shortcomings of this approach, and yet it’s the only approach that’s used at places like the government economic service to evaluate policy. I think a much broader education would really help to solve policy problems in ways that can’t be anticipated by neo-classical economics.
“There’s actually an interesting project going at the government economic service as well, with a couple of graduates who were in Post-Crash at Manchester, [who] are designing a pluralist training programme to give employees there a broader idea of the way they can approach policy problems.”
Joe Earle, Cahal Moran and Zach Ward-Perkins, with their book, The Econocracy. Photo: Post-Crash Economics Society
Tell me more about your book, The Econocracy.
“The book was intended to articulate the student movement to reform economics’ goals, and our case for reforming economics education because it should be said that Post-Crash Manchester is far from the only society like this. At a similar time, societies like Rethinking Economics, there was Better Economics at UCL, Cambridge Society for Economic Pluralism, as well as huge networks in Germany, and then one in France, as well, and even places like Uganda, Chile, I think, have had societies spring up, independently, which is really quite remarkable, all saying essentially the same thing.
“We didn’t come first, a lot of the London organisations and the German and French ones came before or at the same time as us, without our knowing about each other, so I think that was really remarkable, but we are attempting to express the argument of that student movement. Now, I should obviously say we don’t represent all of those students; everyone will have different views, we are hoping to put together the main case for economic pluralism and for reforming economics.
“So, what we want to show in the book is economics education is seriously flawed — it’s too abstract, it lacks critical thinking, it lacks history, and it lacks pluralism. But also what we wanted to show, and this is where the title of the book comes from, is why this matters to everybody, because I’m sure you could pick holes in Archeology degrees, or any subject, but none of these have the same level of political influence as economics.
“Economics is really, really commonly referenced by media pundits, by politicians, economists are really dominant in the government, and, if not economists themselves, then economic ideas are used by a wide range of government departments. And so, because of that, the education of economists is a matter of public interest. Actually, the current President of Ireland said that how economists are educated is one of the biggest political questions of our time.
“So in that sense it’s not just about improving economics education, because as the movement has progressed and as we wrote the book, we realised that there was a far bigger problem here, which was democratising economics, and the unaccountability of unelected experts deciding major policy decisions, things like quantitative easing — printing money — which the Bank of England has done massively since the financial crisis, and which it has itself admitted benefitted the top five per cent of households much more. If that increase in inequality was the result of a tax reform, it would be debated in the media, in Parliament, and by people on the street, but it hasn’t been because these decisions are taken behind closed doors by unaccountable experts, and that’s what we call the Econocracy.”
So it really goes beyond simply a change in education to a very political statement from a campaigning point of view, doesn’t it?
“Exactly, one of the things we’ve started to do as a movement is set Rethinking Economics up as a registered charity, so a lot of the people who were previously students now work there full-time, and it does public education courses. So, it’s trying to really move from being a student movement to being a social movement to reclaim economics.”
Why was yours the first movement to have a serious impact on the economic hegemony, where others have tried before?
“There have been a lot of similar-looking movements before. There was the perhaps unfortunately named Post-Autistic Economics Network in France, but I there was actually one in the 1960s, to reform economics at the height of the Vietnam War. But one of their problems was, especially the 60s one, it was very overtly Marxist, and it was intertwined with a critique of the Vietnam War and all of these standard radical causes, whereas what we’re doing is we’re not really adopting a partisan perspective. We’re not saying, you know, this is definitely for leftwing or rightwing economics, what we’re saying is we want a multitude of perspectives, and that our current education isn’t giving us that.
“As to why we have received media coverage, we have received a lot more than the other societies, The Guardian took an interest and there was an article in 2013 which was shared thousands and thousands of times, and it sort of took off from there. The media seems to have retained an interest, but it’s a testament to the students. It’s easy after student life finishes — because it’s so short — just to get on and go and work for a bank or something, and just forget about it, but the people who have been involved in this movement have really made an effort to keep it going, to keep the student societies renewing, and to set up new ones as well, which we’re still doing, and to establish that national network of Rethinking Economics, to keep things going, so it’s a multitude of factors that have explained why it’s had more attention than before, but I’m not sure exactly.”
Coming directly from students has had some effect in making the universities listen, hasn’t it?
“Especially, I think, at a time when you’ve had the rise in fees. And students are being treated more like consumers now. So you get things like the NSS [National Student Survey], which we’ve used quite a lot and we’ve given quite a lot of direct feedback and so there’s this increasing idea that we should have more of a say in what we’re taught.”
How have you used the National Student Survey?
“So, we’ve just basically tried to say to students, when you fill out the NSS, first to encourage them to fill it out, because it’s at the end of your third year and it’s obviously not going to affect you, so there’s every incentive not to, but we’ve tried to encourage people to fill it out, no matter what their views are.
“We’ve also said, look, just maybe take a second to think about what your education has brought you — is it what you expected, do you think there’s anything missing, and so forth. And so, we’ll encourage everyone to fill it out no matter what their views are, but insofar as there is an appetite for our reforms, which from speaking to people they almost always seem to say “yes, OK, that makes sense”, it’s very rare for somebody to outright disagree with what we’re calling for, but we think that there is an appetite for reform, and we just urge students if they hold those views to translate those into direct feedback, because the department does use NSS feedback and it does listen to it.”
So what do you say to the decision by the Students’ Union to call for a university-wide boycott of the NSS?
“We completely understand it and we sympathise with it, because it’s essentially a reaction against the Teaching Excellence Framework, and one of the things we do in the book is we talk about how the Research Excellence Framework has really created this sort of narrow criteria of what economics is, and really stifled the sort of creative environment in many ways.
“And there’s no reason to believe that the Teaching Excellence Framework would be any better, the Students’ Union has put out some information and some analysis which shows that it is based on some very flawed indicators, and it could have the effect of creating a two- or more-tiered university system, so we completely sympathise with that. Having said that, we do as I just said value the NSS as a form of feedback, so we don’t formally endorse the boycott.”
If people want to join the campaign, and get involved themselves, how would you recommend they did that?
“So there’s lots of ways. Number one, we are actually recruiting first year reps, so if you’d like a position in the committee to choose, there’s a wide variety of things you can do from social media and campaigning to events, then please email us at [email protected].
“We also host events, a few a term, so look out on our Facebook page and our Twitter page for those, and on posters around campus. And also if you’d like to submit a blog post then please just send us an email, we’re absolutely happy to take blog posts or submissions for even event ideas, or for campaign ideas, if you’d just like to perhaps not join the committee but get involved on some level, then we absolutely welcome your input on anything, or just your general impression of us, and what you think of our arguments, whether you agree with us or not we really welcome some input.”
