Economics professors sometimes respond to these demands for change by arguing that, though the crisis presents unique challenges, there’s still a core set of knowledge that needs to be taught. If students want, they can move on to advanced classes which give a more nuanced view of elements of economics. But in order to critique economics, either inside the discipline or outside of it, they need to know the basics.
These professors have a point. But the stakes of even basic economic education are high. The language of economics is the language of elite discourse, and revamping undergraduate economic curriculum has the potential to profoundly shift the ways the next generation understands economies and crises--for better or for worse.
So here’s one temporary fix for introductory economics: teach it backwards. Reversing the order in which introductory economic classes are taught today might be the easiest way to respond to the crisis in undergraduate education. Plus, the history of how it gets taught now is more interesting and more political than you might think.
Today, first-year undergraduate students typically start with microeconomics, or the study of individuals and individual markets. This begins with the study of abstract, decontextualized, markets, where supply and demand work perfectly, individuals exist in isolation, and they effortlessly trade with others in isolation of society, the law, and politics. Students are often asked to imagine Robinson Crusoe, stranded on his island, making choices about how to work, eat and play. Introductory studies then proceed, at the end, to situations where markets don’t work perfectly--for instance, when environmental pollution imposes costs on others, or when someone has monopoly power to set prices.
In their second class, students begin to learn macroeconomics, or what happens when you add up all those markets. After gathering the basics of the field, they study the concept of long-run growth first. Though hard answers are often unclear to expert economists, this course of study is meant to figure out how things in the long-run change. Then, if there’s time left in the term, the class may turn to short-run issues, particularly the topics of the business cycle, recessions, and involuntary unemployment.
Notice how this orients the casual student, the non-major who will only encounter economics once in this survey course. They start off with an abstract market that always works, versus having to see the messy parts when it doesn’t. They then proceed to the long-run, and only after everything else do they get to something that might help them understand why unemployment is so high for young college graduates. Only then might they be introduced to the institutions that make markets happen, if those are discussed at all.
So, what if we just reversed all that?
What if macroeconomics came first, before the study of individual markets? If were to reverse the typical curriculum, the first thing undergraduates would encounter wouldn’t be abstract theories about people optimizing, but instead the idea of involuntary unemployment and the idea that the economy could operate below its potential. They’d study the economy in the short-run before going to issues of long-term growth, with professors having to explain the theories on how the two are linked, bringing in crucial concepts like hysteresis.
Then, in the second class, they would get to microeconomics. But that too would be taught backwards. They’d start with institutions, understanding what enables a market economy to exist. Then they’d move on to the issue of firms with market power and externalities. Then, only at the very end, they’d get to the purest abstraction of perfect markets, with a final emphasis on what it means to be the isolated, optimizing Robinson Crusoe at the very end.
None of the core elements of today’s economics survey would go missing. But it would radically alter the content, shifting the subtle priorities and emphases communicated to students in how the materials are laid out. Economics would be less the study of abstract, perfect individuals and markets, but instead start with the messy business of the business cycle, of there being a macroeconomy that works or doesn’t, and also the institutions that make such things possible.
This could matter a great deal. As Simon Wren-Lewis notes, current economics textbook doesn’t call for austerity. But imagine the difference for the student who spent a semester studying the (false) notion that high debt-to-GDP ratios might impact growth, only to get a quick module on that issue of mass unemployment shoved in the week before finals.
Perhaps you’re thinking, “Wait, I’m sure, since economics is a science, this ordering is entirely the result of people in white lab coats looking into microscopes and other such science-y things to figure out the best way to understand the materials.” Funny you say that, because the ordering is partially the result of history and politics.
It used to be different. The preeminent economist Paul Samuelson once said "I don't care who writes a nation's laws, or crafts its treatises, if I can write its economics textbooks." And he was the one writing its textbooks for a long while. In the first version of his blockbuster textbook Economics (1948), the study of macroeconomics came first. And institutions were emphasized before the more abstract microeconomics that start off the education now. One of the central ideas was the “fallacy of composition,” or how things true of individual people or markets were not true of the aggregate behavior of the economic system.
Now, however, the newest editions of this textbook follow the normal curriculum. When did it change? Between the 13th and 14th editions, which came out in 1989 and 1992. In the 13th edition macroeconomics come first, while in the 14th edition there was a massive the whole ordering has been flipped.
The preface to the 14th edition is very clear on why it changed. The 14th edition says it has a new “leitmotif” in the “rediscovery of the market.” Celebrating the end of the Soviet Union, countries in Eastern Europe were rushing to introduce capitalism, while Western countries were deregulating and privatizing industries. Samuelson describes these political events marking the End of History as “parallel to placing microeconomics first in the sequence.” Microeconomics was seen as intellectually prior to and necessary for macroeconomics, tossing the concept of the fallacy of composition overboard. Not only that, but the new emphasis on an abstract and decontextualized microeconomics meant that the authors “deleted a great deal of institutional material that is less important for an understanding of modern economics.”
In Age of Fracture, Daniel Rodgers’ magisterial intellectual history of the past 30 years, this change of the Samuelson textbook is used to describe the major shift in the understanding of economics since the 1970s, as well as how the metaphor of a “market” gained such a foothold in the popular imagination. In the old model, still there as late as 1989, “the real-world complexities of the aggregate, institution-thick, ‘mixed’ state-and-private economy had come first.” However, by the early 1990s, all economics education would just be “a series of elaborations and qualifications of the idea of perfect competition.” (The same could be said about the field as a whole.)
Alas, it turns out that things like institutions, regulations, income distribution, the way markets are introduced into formerly Soviet countries, and the viciousness of the business cycle and mass unemployment all actually matter. Who knew? This won’t get us all the way out of the problem, as many economic topics will need intermediate-level reboots. But it’s a start that takes place entirely within the mainstream economics tent. Though economics forgot all these things when explaining itself to young students in the euphoria of the post-Soviet, End of History period, now would be a great time to reorientate the field to them.
Mike Konczal is a fellow at the Roosevelt Institute, where he focuses on financial regulation, inequality and unemployment. He writes a weekly column for Wonkblog. Follow him on Twitter here.