Is the teaching of economics part of the problem...? Part 1
In discussing the Real Incomes Approach one often is confronted with the issue of, "Why does stating the obvious sometimes perplex others?" 1 . In discussing this with colleagues there is an issue which surfaces too often to be ignored. This is that economists seem to have different approaches to analysis and even understandings of different economic issues according to how they were taught. On the other hand, exposure to other disciplines seems to change perspectives on economics, especially those domains where economic theory is applied.
I am using this space to simply record an initial personal reflection on this topic.
I was first introduced to economics by studying agriculture and then agricultural economics at the School of Agriculture at Cambridge University in the early 1960s. There were just eleven students in my year so we were spoiled for attention and support as a result of an absurd teaching staff/student ratio as well as having a dedicated college tutor. Along with medicine and veterinary sciences, agriculture is one of the most "taught" subjects at university in that the range of disciplines one has to understand is quite extensive 2 it seemed to be lectures all morning and labs all afternoon.
Becoming an economist....
My launch into economics involved my beginning to read The Economist Newspaper in 1963 - with some initial difficulty - and my textbooks concerned with such things as farm planning covering basic accounts and how to allocate existing farm resources in a way which would maximise profits (gross margins). This was no theoretical exercise since we were required to apply a linear programming technique developed in Sweden ("the Swedish Method" 3 ) and then, at a later date, look at "real" computer-based linear programming using the Simplex method. One of the more useful aspects of this part of our course was that we were required to visit farms, try and ask the farmer appropriate questions and then come back and work out a plan for the farm. We competed on the basis of the plan gaining the highest profit would be discussed with the farmer concerned. The week that I won was also the week I began to understand some important issues concerning applied economics. I have to admit that economics was becoming, in these "optimization" exercises, little more than an exercise in applied maths. This came home to me when the farmer concerned explained why he could not accept my plan (which promised to raise his gross margin by around 66%). The criticisms were all of the order that he was a human being with a family and that although he could see what I proposed was feasible he was not prepared to put in the hours I was requiring and the intensity of activity raised outlays and therefore risks, it was probably destined to make his life a misery! Whereas I was very disappointed that my winning plan had been rejected, albeit in a diplomatic way by the farmer, I was also slightly embarrassed by the fact that I had obviously not asked the right questions. For example what constraints he would set on his work? How did he value his own time allocation and several other questions of significant to him. By placing so much emphasis on the "maximization" process there was a sort of technological or economic motivation to show what could be done as opposed to achieve what was desired; a sort of techno-economic determinism. I have seen this quandry resurface throughout my life at the social/economic interface and I feel many economists have some difficulty with this issue.
But economics is useful!
But having said that, I think all of my colleagues, including myself, saw economics as a useful glue in pulling togeher all of the the different strands of our multidisciplinary studies in agriculture, it was a wonderful way to understand how factors of production influenced production. And by the way, when I say factors, I am not just talking about a production function limited to Labour and Capital but one involving crop genotypes, availability of water, soil structures and fertility, location, equipment types and capacities, variable inputs such as seed, fertilizer and pesticides, land areas, market movements, labour, energy, seasonal transitions (temperature, day length and distribution of rainfall) and information. I always recall Nick Ventris, a student one year ahead of me, writing in the University Agricultural Society magazine, The Golden Sheaf, praising economics as the best thing in our course. This came across as criticism of the other disciplines but I do not think it was, at least to my mind, economics helped turn what is a complex system into something with knobs and levers we could play with and thereby understand better how the system we were studying, agriculutre, worked in practice. On the other hand without some understanding of he physical inter-relationships of the many factors I have mentioned 2 , it would have been difficult to apply economics in a practical fashion.
And so, on to real economics!
Having completed the Agriculutral Tripos, and gained my BA I applied and was accepted to complete the post graduate diploma in Agricultural Studies specialising in Agricultural Economics. This required that I attend the macro and microeconomic sequences at the School of Political Economy, at the relatively new Sidgwick Site as well as attend an excellent course on project evaluation given by David Newbery, a course on biometry and write a dissertation involving many hours of research undertaken largely in the Marshall and University Libraries. All of this was quite a transition from the School of Agriculture. There seemed to be hundreds of students attending the macro and microeconomic sequences and the lecturer was a tiny figure some distance away. My first surprise was how the topic of National Accounts was brushed off in one or two lectures, almost as a separate topic from macroeconomics and microeconomics. I can state, in the light of my subsequent experience, that the handling of national accounts was in fact not good at all since with time I have realised that much can be learned from national accounts if data is collected with some specific analytical purpose in mind. Macroeconomics was taught, in those days, largely from a Keynesian perspective and this was very much to the exclusion of many other approaches to economics with which I became familiar later, in my own time, as it were. Microeconomics was something else, seeming to be very much in a world of its own dealing with marginal cost and returns theory and enterprise profit maximization al la farm planning.
Evidence-based?
One of the other general impressions I had was that many of the formulae chalked up by lecturers seemed to be notional as opposed to be based upon empirical quantitative research. Having come from the agricultural domain, everything we dealt with was based on field observation either in terms of physical input-output relationships or in terms of economic performance (profitability). In large part this was because many of our lecturers were from the Agricultural School's Farm Economics Branch which was part of the old National Agricultural Advisory Service (NAAS). Therefore the lecturers were very much involved in conducting surveys on farms in East Anglia as well as assisting farmers in planning their production. In those days NAAS provided this planning service free of charge.
Production as a black box
The other issue which I found perplexing was the limitation of production functions to just two or three variables such as Labour and Capital or if we were getting really daring, Labour, Capital and Land! In the agricultural sphere, practical planning was based upon far more variables all of which had different effects depending upon the agricultural season and whether the inputs were timed well or not. I am not going to hide the fact that my initial entré into economics was one of fascination but also concern that it seemed to be overly theoretical, and occasionally I had difficulties bending the theories from their lofty perches down to ground level, but then this sort of thing comes with time and experience. I have more to say but this is enough for now.
1 I should add that the same is true in the other direction that others make statements in economics with some conviction and which appear to many to be counter-intuitive. Indeed, I have met a large number of people who are accomplished professionals in other fields and who have difficulty with economics. There is a communications issue.
2 Such as plant physiology, plant histology, plant genetics & breeding, plant identification (including crops, swards and weeds), crop production, crop pathology, crop pests, crop economics, animal physiology and histology, animal genetics, animal reproduction, animal nutrition, animal production, animal pathology, animal production economics, farm mechanization, pedology (soil science), agricultural economics, farm management & planning and others.
3 This was first described by Alexander McKay McAlister McFarquhar who was a lecturer at the School of Agriculture, a recent Ph.D. under a Milk Marketing Board fellowship on the subject of farm planning methods. "Alistair" published a useful paper on a comparison of farm planning methods in the Journal of Agricultural Economics: 'Research in Farm Management and Planning Methods in Northern Europe',McFarquhar, A.M.M. Journal of Agricultural Economics, Vol XV, No 1, 1962, pages 78-100)
Updated: 19th April, 2008 - added footnote 1 ; 26th April, 2008 - added footnote 3 ; 30th April, 2008 - added paper reference to footnote 3 |
