Even reformist economists too often forget the lesson of nature—growth cannot go on foreverby Kate Raworth / July 13, 2018 / Leave a comment
Published in August 2018 issue of Prospect Magazine
A raging debate about economics has kicked off after Howard Reed suggested in Prospect’s May issue that we need to “rip it up and start again.” Fierce resistance has come from academics who insist that such critics ignore what economists really do. My concern lies not with what economists do—many do excellent and innovative research—but with what economists teach, especially in introductory courses.
Most people who study economics only study a little before becoming politicians, journalists, civil servants, executives, lawyers and community leaders. That makes the most basic course—Economics 101—the most influential one. It frames the economic narrative in boardrooms, in editorial meetings, in parliamentary debates, and in public discourse.
Paul Samuelson, author of the classic 1948 economics textbook, understood the power of Econ 101, writing: “The first lick is the privileged one, impinging on the beginner’s tabula rasa at its most impressionable state.” Samuelson’s textbook, and those derived from it, have indeed licked the impressionable minds of students ever since, determining what’s made visible and what’s left invisible; what’s seen as central and what’s peripheral.
Pictures that speak a thousand words
Take the first diagram taught to novice students today. Worldwide it is almost always the same: supply and demand, a criss-cross of two smooth curves representing the market in balance. This chosen starting point has far-reaching implications, implying from the outset that the economy is essentially the market, and that markets tend towards equilibrium. That’s two untruths in one sentence and not a wise way to begin.