Printer Friendly

Rod Hill and Tony Myatt, The Economics Anti-Textbook: A Critical Thinker's Guide to Micro-Economics.

Rod Hill and Tony Myatt, The Economics Anti-Textbook: A Critical Thinker's Guide to Micro-Economics (Black Point, NS and Winnipeg: Fernwood Publishing, and London: Zed Books 2010)

IMAGINE BEING AN undergraduate student with a critical social conscience, interested in the all-too-obvious problems of the modern global economy: unemployment, poverty, environmental destruction, financial meltdowns, and the sheer uselessness and wastefulness of so much economic activity. Thinking (reasonably) that the world needs more committed and creative economists working to solve these problems, you enroll in Economics 101 to begin your training. There you are immediately confronted with a contorted and factually erroneous depiction of human nature (namely that we are motivated by material greed, and nothing else), an analytical method that is other-worldly (the axiomatic assertion of initial assumptions, followed by working out the elegant but irrelevant implications of the resulting theoretical structure), and an endless string of supply-and-demand graphs (which always cross in the middle) or, worse yet, simultaneous equation systems. You would be forgiven for thinking you had accidentally stumbled into a physics class, where the graphs describe the behaviour of atoms, not human beings--except that, in this post-modern era, even physics admits more uncertainty and chaos than neoclassical economics.

Most likely you would abandon the course before the first mid-term, becoming yet another refugee from the dismal science. And the economics profession would thus lose another of what it desperately needs to reverse both declining economics enrolments and the declining relevance of economics: critical-thinking minds determined to apply economic ideas to the solution of real existing crises. A few rare and determined critical thinkers might stick with the discipline, regurgitating what they have been taught in order to pass their exams. Surely, however, in a university, every subject benefits from some debate and challenge, and brave students will want to challenge what they are being taught. But where to begin? Both the subject matter and the methodology are so arcane, and very often so artificially and unnecessarily technical, that well meaning students on their own would be hard-pressed to challenge the orthodox curriculum.

That's where this "anti-textbook" for critical thinking economics students comes in very handy, indeed. Rod Hill and Tony Myatt are members of an all-too-small constituency: heterodox economists teaching in a mainstream economics department (at the University of New Brunswick). They have assembled an anti-textbook that can be read alongside an orthodox microeconomics course. It provides a needed antidote to the unreal and infuriating doctrines of fundamentalist free-market theory.

Neoclassical economics is traditionally divided (not very successfully) into two broad streams: microeconomics and macroeconomics. (Hill and Myatt cite the old joke that microeconomists are wrong about specific economic issues, whereas macroeconomists are wrong about the economy in general.) In my experience, microeconomics is the more obtuse of the two, particularly removed from the sorts of real-world issues that motivate the interest of many students. However, since orthodox prescriptions, even macroeconomic ones, are ultimately rooted in the underlying microeconomic general equilibrium system, it is essential that even critical economists fully understand that Walrasian micro vision, all the better to critique it more completely and convincingly. So the need for this micro anti-textbook is especially pressing, but the profession could certainly benefit from a companion volume that critiques macroeconomic orthodoxy, as well (which Tony Myatt is currently planning).

The book's introduction states the authors' cote thesis: standard textbook treatments of microeconomic theory are an ideologically-motivated distortion of economics, and these caricatures cause great harm by instilling in practitioners and policy-makers a confidence in market mechanisms that is not justified by serious economic inquiry. Their target, they claim, is not mainstream economics in general, but mainstream textbook economics. They argue that standard introductory presentations of neoclassical economics oversimplify their subject matter, deny the diversity of opinion that exists even within mainstream circles, and promotes a unidimensional worship of markets that is neither analytically justified nor appropriate in the real world. All this is surely correct, although in my view there is something more fundamentally off-base with the neoclassical tradition than is implied by this cautiously-stated objective (more on this below).

The next two chapters introduce the reader critically to the methodology of economic analysis: reviewing first the use of abstract models to isolate and analyze the main forces of interest in a complex system, and then the central role of self-adjusting market forces in determining neoclassical outcomes. The authors rightly highlight the unreality of the neoclassical ideal of an anonymous, automatic, ephemeral "market." 2hey show that a market is in fact an embedded social institution and practice, not a neutral automatic omniscient force. Markets embody history, power, and custom--not neutral self-adjustment.

The core of the book then consists of seven chapters that address the most common and important distinct topics covered in a typical microeconomics textbook: consumer behaviour, firm behaviour, market structure, externalities, income distribution, government, and international trade. An appendix considers the 2008-09 global financial crisis, attempting to relate it to the market failures described in earlier chapters. Each chapter begins with a dense summary of the main tenets of orthodox neoclassical textbook material on each topic. (These summaries are useful in and of themselves, especially for those students who might have completed their assigned neoclassical readings and still not have a clue what they were saying!) Then the weak spots of the neoclassical approach are exposed, and the implications of those failures to the overall coherence and policy conclusions of the neoclassical model are explored. The text is punchy and often humorous; it is illustrated not only with charts and graphs, where relevant, but also with subversive cartoons (by Andy Singer and other illustrators). the book's expansive bibliography provides an awesome collection of heterodox references that will give budding graduate students a huge headstart in surveying the range of critical thought within each subject area. There is some technical material, but it is well-introduced; undergraduate economics students, and even non-economists, should be able to work their way through it. The book thus constitutes a more accessible complement to Steve Keen's wonderful critique of neoclassical thought, Debunking Economics: The Naked Emperor of the Social Sciences (Pluto 2001), which pursues similar themes but at a more rigorous intellectual level.

Each chapter even contains a few sample questions that could be posed by a student to their orthodox professor, on the basis of the critique provided in each chapter. It would take a brave student to actually ask these questions. Mind you, I asked questions like them (though not nearly as well-informed) in my own undergrad classes. Luckily, I survived (and even passed the program!), but would have been much successful had I been armed with this book.

My only significant critique of this book probably derives inherently from its basic structure as a topic-by-topic critique of simplistic neoclassical pedagogy. The extremes of neoclassical thought, especially in its stereotypical textbook incarnations, provide an easy target for piece-by-piece disassembly and refutation. The specific critiques catalogued so helpfully by Hill and Myatt are not, for the most part, new. Yet the edifice of Walrasian thought still dominates academic economics and (more importantly) real-world economic discourse and policy-making. In addition to highlighting the logical failures of specific neoclassical assumptions, models, and conclusions, there is also a way in which neoclassical analysis--rooted in a model of optimizing behaviour by atomistic agents who engage in equal, efficient exchange--fundamentally misportrays the essence of economic activity in real-world capitalism.

We therefore need to do more than just snipe around the edges of the neoclassical edifice--with critiques that ultimately accept the Walrasian portrait of the economy as a place where people exchange things through markets. (My former professor John Eatwell describes this class of criticisms as "imperfectionist" in nature, in the sense that if it were not for some flaw or imperfection in the market mechanism--be it imperfect information, limited rationality, "sticky prices," or whatever--then the assumed mutually beneficial equilibrium would finally come to pass.) That's where we need a textbook that presents a comprehensive and holistic alternative depiction of how the economy actually works. I can imagine one that would start by describing the reality of work, production, accumulation, and innovation under capitalism, highlighting the asymmetry and inequality between different stakeholders (in terms of power and agency, not just income and wealth), describing the core mechanism of production for profit that defines capitalism, explaining the history and institutional reality of money (which neoclassical microeconomic models still have not successfully incorporated), and exploring the dynamics of all these processes for growth, development, cycles, and distribution. This would not constitute an anti-textbook in the sense of refuting specific assumptions and predictions of the Walrasian system. It would, instead, erect a competing intellectual edifice.

There are places in this book, despite the incrementalist mission they set at the outset, where Hill and Myatt do verge on a more fundamentalist critique of neoclassical economics (moving beyond just challenging the formulations of its simplistic textbook variants). For example, in numerous locations in the book they discuss the role of power in shaping both production and exchange. That is not an imperfection or a market failure, it is a completely different dimension along which to understand human economic interactions. Their discussion of government and political-economy similarly reveals a more fundamental divergence from the core structures of neoclassical analysis. In this way, Hill and Myatt's catalogue of the many specific failures of neoclassical microeconomics should hopefully whet the appetite of critical thinking students to pursue completely different, heterodox explanations of how the economy actually works. While many references are provided to examples of this sort of work, Hill and Myatt could be more explicit, in my view, in connecting the dots and guiding the reader to those comprehensive alternative models.

Nevertheless, for students and others who possess a gut-level faith in the potential of economics to make the world a better place, but are constrained by stultifying introductory neoclassical curriculum, this anti-textbook will be invaluable in enhancing their capacity and their confidence to challenge orthodoxy--and ultimately to look beyond it.

JIM STANFORD Canadian Auto Workers
COPYRIGHT 2011 Canadian Committee on Labour History
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2011 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Author:Stanford, Jim
Publication:Labour/Le Travail
Article Type:Book review
Date:Sep 22, 2011
Previous Article:Leo Panitch and Colin Leys, eds. Morbid Symptoms: Health Under Capitalism.
Next Article:Annual meeting Canadian Committee on Labour History St. Thomas University, Fredericton, 1 June 2011.

Terms of use | Privacy policy | Copyright © 2019 Farlex, Inc. | Feedback | For webmasters