Management Consultant Mike Eldon

How economists have lost touch with reality

A few weeks ago I wrote about the need to amplify the voice of economists in our country. In my article I spoke glowingly about my own experience as an economics undergraduate, acknowledging the way my professors opened up my powers of critical analysis and connected me so fully to the economic issues of the day.

I mentioned that I was still in touch with Vicky Chick, one of my lecturers from those times, and I sent her the article. She immediately wrote back, telling me that the education from which I benefitted was “so different from the usual fare dished up to students now”, and that I was lucky to study economics when I did. I was “educated”, she stated, while today’s students are “trained, indoctrinated or brainwashed”.

She remembered how we used to sit around working things out from first principles, but nobody does that today. Students are over-reliant on multiple-response based assessment, with limited opportunity to critically or independently assess alternative approaches. She then recommended the book The Econocracy: The perils of leaving economics to the experts, written by three dissenting students, members of “Rethinking Economics” (now active in 15 countries), who were fed up with the state of economics in the aftermath of the 2008 financial crisis. They wanted to see economist teachers and technocrats engage much more closely with the economic issues on the ground, and to communicate their proposals more simply.

My story moves to London, where I was recently. During my time there I met with now Emeritus Professor Chick for a coffee, and we returned to the subject of how the teaching of economics has degenerated – and not just in the UK. When we finished we walked across to the nearby bookshop where she bought me a copy of The Econocracy, which she signed below the message “Enjoy and share”.

So, obedient to my mwalimu, here goes. I’ll start by taking from the foreword to the book, written by the chief economist at the Bank of England, Andrew Haldane. He is unreserved in his condemnation of his fellow economists, citing their woeful inability to influence the Brexit battle that preceded – and is now succeeding – the referendum over membership of the EU. With their linguistic complexity these “experts” failed to win over the heads, never mind the hearts, of the voters. As a result, those who took part in the referendum won the day for democracy, marginalising the elite… the “econocracy”.

The book shows how the long-lasting crisis in the economy has led to a crisis in the field of economics itself – fuelled by disgruntled and hitherto compliant students who now rebelled against their obstinately disconnected professors. Faced with freezes on hiring and suffering under the burden of heavy student debt, they now found a bold anti-establishment voice – reinforced by the likes of Jeremy Corbyn in Britain and Bernie Sanders in America.

The book castigates the narrowing of economics to a mere mathematical cost-benefit analysis of alternative policies – applying a mechanical logic that delivers solutions to economic challenges such as harsh austerity programmes – while ignoring broader adverse social consequences and in particular the likely exacerbation of societal inequalities.

No wonder populist politicians assert that we have had enough of experts; no wonder that economist graduates are not fit to advise politicians on how to tackle economic challenges; and no wonder we have become divided between a minority who feel they own the language of economics and a majority who do not. I have no space to elaborate on the CORE (Curriculum Open-access Resources in Economics) economics education – founded at UCL, where I studied – but I urge those interested to look into how this initiative uplifts students of “the dismal science” to a much more positive, realistic and relevant place.

The messages of The Econocracy apply to us here in Kenya too: take a holistic view of policy-making – beyond the confines of narrow economic theory based on the unrealistic assumption of rational human behaviour, and taking account of social and moral perspectives; accept the uncertainty and unpredictability of our world so as not to rely on rigid and perhaps obsolete economic theories; and communicate technical complexities in ways that everyone can follow.