COMMENTARY

Peter Burgess

Economics for our times and for our shared future requires profound departures from the orthodox economics of the past. We need an economics for the 21st century. Econ4.org is your guide to new ways of thinking about economics.

Mission

The economic crisis we face today is not only a crisis of the economy. It is also a crisis of economics. The free-market fundamentalism that attained ideological dominance in the final decades of the 20th century has been discredited by financial collapse, global imbalances, mass unemployment, and environmental degradation. To confront these challenges, we need an economics for the 21st century.

We need an economics for open minds that breaks free of the closed-minded economic dogmas of the past. We need an economics that aims to secure long-run human well-being, not an economics preoccupied with maximizing short-run output and profits. We need an economics that recognizes that we need to safeguard the Earth for our children and generations to come. We need an economics for people, the planet, and the future.

Economics for our times and for our shared future requires profound departures from the orthodox economics of the past. To secure long-run human well-being, an economy must meet four necessary conditions:

A level playing field: Every child ought to have equivalent opportunities for economic advancement. A child’s life chances should not depend upon accidents of birth such as race, gender, or parental income. Access to food, health care, education, and a clean and safe environment are basic human rights. These are not commodities that ought to be allocated on the basis of purchasing power, nor privileges to be bestowed on the basis of political power. A level playing field requires fairness in the distribution of these elements of private and social wealth.

Resilience: A healthy economy is a resilient economy able to withstand unanticipated shocks. To borrow a metaphor from the physical sciences, resilience is the ability to bounce without breaking. We can build resilience into our economy and its infrastructure by following the design principles of diversity and dispersion. The aim is not to maximize “efficiency” at a single point in time, but rather to minimize economic vulnerability over time.

True-cost pricing: The prices that guide economic decisions in markets and government policies must be based on a full accounting of costs and benefits. When costs such as pollution – or benefits such as care for children and the elderly – are hidden from view, the result is implicit subsidies and taxes that deflect incentives away from the goal of long-run well-being. Costs that are hidden from view can grow over time, as in the case of global warming pollution; and benefits that are hidden from view can erode over time, as in the provision of unpaid labor for care of dependents. A full accounting of costs and benefits does not mean that non-monetary aspects of well-being such as liberty, community, and life expectancy must be translated into dollars and cents. It means that non-market values should not be ignored and thereby effectively valued at zero.

Real democracy: An effective economy requires transparency, accountability, and democratic governance. Institutions in the private, non-profit and public sectors alike will serve long-run well-being only if safeguarded from capture by powerful players pursuing their own myopic self-interest. This can be secured only by a democratic distribution of power. A central goal of education, including economics education, must be to equip students for a life of active citizenship.

These are the central pillars of Econ4: economics for open minds, for people, and for the future. The following table lists some of the key differences between a healthy economy organized on Econ4 principles and our currently ailing economy that has been guided by the economic orthodoxy of the past:

The Opportunity

The foundations of Econ4 already exist. Resistance to intellectual monoculture in the economics profession was sustained throughout the last century in the work of distinguished scholars such as Thorstein Veblen, John Maynard Keynes, Karl Polanyi, Joan Robinson, Hyman Minsky, John Kenneth Galbraith, and Amartya Sen. In the U.S. a few institutions of higher education – such as the New School for Social Research, the University of Missouri-Kansas City, the University of Massachusetts-Amherst and the University of Utah – kept the flame of heterodox economics alive in the closing decades of the 20th century.

Our effort to build an alternative to economic orthodoxy thus does not start from a blank slate. But the sudden collapse in the credibility of orthodox economics in the wake of the 2008 financial crisis has opened a yawning gap between the demand for non-orthodox economics and its supply.

Some recent initiatives are tackling important elements of this gap. For example, the Institute for New Economic Thinking, to which George Soros has committed $5 million/year over the next ten years, is seeking to develop pragmatic alternatives to laissez-faire economics in financial markets. The U.S.-based Schumacher Society together with the U.K.- based New Economics Foundation is launching a New Economics Institute to promote environmentally conscious economics. The New Economy Working Group is working on educational materials for civil society groups concerned with economic justice, environmental sustainability, and peace. The Solidarity Economy Network is seeking to advance cooperatives, fair trade organizations, open-source technologies, and other alternative forms of economic organization.

What is missing is a unifying vision of economics that brings these and kindred initiatives together, and a strategy to translate it into lasting impacts on the economics profession and on economics as understood by the public at large. This vision must be more than the sum of disparate parts; the strategy must set out systematically to reorient economics education as well as economic practice.

Building Econ4

Our aim is to change both the economics profession and common-sense understanding about how the economy works and should work. For this we need to disseminate new ideas, train the new generation of scholars and public intellectuals, and advance new research agendas.

Among the concrete steps we propose to take are these:

Disseminate new ideas

New media and viral information networks play an increasingly important role in the propagation of new ideas. We can harness these to extend public education beyond the classroom, disseminating “atoms of consciousness” that will influence economic understanding and debate.

To do so we will launch a concerted effort to use new vehicles, such as short videos shared online, to critique the discredited economics and popularize economics for open minds, for people and for the future.3 Younger economists and media professionals will play a key role in this effort. We envision a two-way collaboration: economists will learn how to reach wider audiences more effectively, and media professionals will learn more about the new economics.

Reboot Econ 101

At the same time we cannot neglect the classroom. Approximately 40% of students in four-year colleges and universities in the United States take a course in introductory economics – about half a million students each year.4 If we add students who take economics in high schools and community colleges, this number is much higher.

To transform the key ideas taught in introductory economics, we need to create a suite of basic teaching materials including syllabi, power points, online courses, video materials, and written works. We want to disseminate these materials widely, and to train teachers to teach these courses. And we want to encourage students to demand these courses.

End intellectual monoculture in the economics profession

The orthodox economics that privileges free-market ideology, turns a blind eye to economic and social inequalities, and buries its head resolutely in the sand on pressing issues like global climate change, continues to dominate the training of new PhD’s in economics, thereby perpetuating itself. We need to propagate economics for people, for the planet and for the future in the intellectual gene pool.

To change the way America understands economics, we need to change the way economics PhD’s are trained. To do this we can:

• provide dissertation fellowships

• provide post-doctoral fellowships and research network support

• create professional Econ4 journals so that young faculty can publish and get promoted

Upload ethics into the economics profession

Among professions explicitly concerned with human well-being, economics has the dubious distinction of lacking a body of professional ethics. Over the past century, orthodox economists consistently refused to adopt or even explore professional economic ethics. The failure of economists to disclose potential conflicts of interests when writing about deregulation of financial markets has kindled fresh interest in this issue.

We need to upload ethics into the operating system of the economics profession, not only as a shield against conflicts of interest but also to integrate greater awareness of the ethical ramifications of economic theory and practice into professional training. To this end, we will press for the development and adoption of a code of professional economic ethics, and we will develop and disseminate educational materials to promote discussion of the ethical premises and impacts of economics.

People

James K. Boyce
James K. Boyce teaches economics at the University of Massachusetts, Amherst, where he directs the program on Development, Peacebuilding, and the Environment at the Political Economy Research Institute (PERI). He received his Ph.D. from Oxford University and his B.A. from Yale University. He is the author of Africa’s Odious Debts: How Foreign Loans and Capital Flight Bled a Continent (with Leonce Ndikimana, Zed Books, 2011), Investing in Peace (Oxford University Press, 2002), The Political Economy of the Environment (Edward Elgar, 2002), The Philippines: The Political Economy of Growth and Impoverishment in the Marcos Era (Macmillan, 1993), and Agrarian Impasse in Bengal (Oxford University Press, 1987), and co-author of A Quiet Violence: View From a Bangladesh Village (with Betsy Hartmann, Zed Press, 1983). He is the co-editor of Reclaiming Nature: Environmental Justice and Ecological Restoration (with Sunita Narain and Elizabeth Stanton, Anthem Press, 2007), Natural Assets: Democratizing Environmental Ownership (with Barry Shelley, Island Press, 2003) and editor of Economic Policy for Building Peace: The Lessons of El Salvador (Lynne Rienner, 1996).

Omar S. Dahi
Omar S. Dahi teaches economics at Hampshire College. He received his Ph.D. from the University of Notre Dame. His research and teaching interests are in the areas of economic development and international trade, with a special focus on the political economy of the Middle East and North Africa and on South-South economic cooperation. His publications include articles in the Journal of Development Economics, The Middle East Report, and the Review of Radical Political Economics.

George F. DeMartino
George F. DeMartino is Professor of Economics at the Josef Korbel School of International Studies, University of Denver, where he is co-director of the M.A. Degree in Global Finance, Trade and Economic Integration. He has written extensively on economics and ethics, particularly in the context of international economic integration, and also on trade unionism and political economy theory. He is the author of The Economist’s Oath: On the Need for and Content of Professional Economic Ethics (Oxford University Press, 2011) and Global Economy, Global Justice: Theoretical Objections and Policy Alternatives to Neoliberalism (Routledge, 2000). At present he is co-editing with Deirdre McCloskey an Oxford University Press Handbook on Professional Economic Ethics.

Gerald Epstein
Gerald Epstein is Professor of Economics and a founding co-director of the Political Economy Research Institute (PERI) at the University of Massachusetts, Amherst. He is also co-coordinator of SAFER, a group of economists and other analysts working for financial restructuring and reform. He received his Ph.D. from Princeton University and his BA from Swarthmore College. He has written extensively on financial regulation, alternative approaches to central banking for employment generation and poverty reduction, and capital account management and capital flows. He also has worked with numerous UN organizations. His recent writings include “Avoiding Group Think and Conflicts of Interest: Widening the Circle of Central Bank Advice (with Jessica Carrick-Hagenbarth), in Central Banking, May 2011, and Beyond Inflation Targeting: Assessing the Impacts and Policy Alternatives (co-edited with Erinc Yeldan, Edward Elgar 2009), and Financialization and the World Economy (Edward Elgar, 2005) .

Gerald Friedman
Gerald Friedman teaches economics at the University of Massachusetts, Amherst. He received his Ph.D. from Harvard University and his B.A. from Columbia University. He is the author of Reigniting the Labor Movement: Restoring means to ends in a democratic Labor Movement (Routledge, 2007), State-Making and Labor Movements: The United States and France, 1876-1914 (Cornell University Press, 1998), Success and Failure in Third Party Politics: The Knights of Labor and the Union Labor Coalition in Massachusetts, 1884-88, and What is Wrong with Economics? And What will Make it Right? (Working USA). He is an Associate Editor of Labor History.

Eban Goodstein
Eban Goodstein is Director of the Bard Center for Environmental Policy. In recent years, he has coordinated climate education events at over 2500 colleges, universities, high schools and other institutions across the country, and he currently directs two national educational initiatives on global warming: C2C and The National Climate Seminar. He is the author of the textbook, Economics and the Environment (John Wiley and Sons, 2010) now in its sixth edition; Fighting for Love in the Century of Extinction: How Passion and Politics Can Stop Global Warming (University Press of New England, 2007); and The Trade-off Myth: Fact and Fiction about Jobs and the Environment (Island Press, 1999). He serves on the steering committee of the E3 Network: Economics for Equity & the Environment, and on the advisory committee for Chevrolet’s Clean Energy Initiative. He received his B.A. from Williams College and his Ph.D. from the University of Michigan.

Juliet Schor
Juliet Schor is Professor of Sociology at Boston College. Before joining Boston College, she taught at Harvard University for 17 years in the Department of Economics and the Committee on Degrees in Women’s Studies. Her most recent book is True Wealth: How and Why Millions of Americans are Creating a Time-Rich, Ecologically Light, Small-Scale, High-Satisfaction Economy (Penguin Press, 2011, previously published as Plenitude). Her other books include the national best-seller, The Overworked American (Basic Books, 1993), The Overspent American (Harper Perennial, 1999), and Born to Buy (Scribner, 2005). She is a co-founder and board co-chair of the Center for a New American Dream and a former Guggenheim Fellow. In 2006 she was awarded the Leontief Prize for expanding the frontiers of economic thought. She is also a co-founder of South End Press and of the Center for Popular Economics, a former Brookings Fellow, and an occasional faculty member at Schumacher College.

Douglas Smith
Douglas Smith is a consultant, executive, writer, teacher, lawyer and inventor concerned with competitive performance, innovation, strategy, and change. A former co-leader of McKinsey & Company’s worldwide organization practice, his books include On Value and Values: Thinking Differently about We in an Age of Me (FT Press, 2004); The Wisdom of Teams (Harper, 2003); The Discipline of Teams (Wiley, 2001); Fumbling the Future: How Xerox Invented, Then Ignored, the First Personal Computer (iUniverse, 1999); Make Success Measurable (Wiley, 1999); Sources of the African Past (iUniverse, 1999); and Taking Charge of Change (Basic Books, 1997). His work spans more than 50 industries in the private, non-profit, and government sectors. He is the architect of many leading field-wide change programs, including NeighborWorks America’s Achieving Excellence in Community Development; the Columbia School of Journalism’s Sulzberger Program; and the Vinson Institute’s Executive Leadership program for Georgia state government leaders. He received his B.A. from Yale University and J.D. from Harvard Law School.

Yves Smith
Yves Smith is the creator of the influential blog Naked Capitalism and the author of the highly acclaimed book Econned: How Unenlightened Self-Interest Undermined Democracy and Corrupted Capitalism (Palgrave Macmillan, 2010). She has worked for more 25 years in the financial services industry and currently heads Aurora Advisors, a New York based management consulting firm. Prior to that, she worked for Goldman Sachs (corporate finance), McKinsey, and Sumitomo Bank (head of mergers & acquisitions). She has written for numerous publications including The New York Times, The Conference Board Review, Institutional Investor, and The Daily Deal. She received her B.A from Harvard and M.B.A. from Harvard Business School

Statement on OWS

We are economists who oppose ideological cleansing in the economics profession. Equally we oppose political cleansing in the vital debate over the causes and consequences of our current economic crisis.

We support the efforts of the Occupy Wall Street movement across the country and across the globe to liberate the economy from the short-term greed of the rich and powerful “one percent”.

We oppose cynical and perverse attempts to misuse our police officers and public servants to expel advocates of the public good from our public spaces.

We extend our support to the vision of building an economy that works for the people, for the planet, and for the future, and we declare our solidarity with the Occupiers who are exercising our democratic right to demand economic and social justice.

Gerald Epstein / University of Massachusetts Amherst
James K. Boyce / University of Massachusetts Amherst
Taro Abe / Nagoya Gakuin University
Bengi Akbulut / University of Manchester
Randy Albelda / University of Massachusetts Boston
Gar Alperovitz / University of Maryland
Nurul Aman / University of Massachusetts Boston
Michael Ash / University of Massachusetts Amherst
Enid Arvidson / University of Texas at Arlington
Dennis Badeen / York University
Lee Badgett / University of Massachusetts Amherst
Dean Baker / Center for Economic and Policy Research
Samuel L. Baker / Purdue University
Scott Baker / Public Banking Institute
Erdogan Bakir / Bucknell University
Benjamin Balak / Rollins College
Radhika Balakrishnan / Rutgers University
Fabian Balardini / Borough of Manhattan Community College
Nesecan Balkan / Hamilton College
Nina Banks / Bucknell University
Deepankar Basu / University of Massachusetts Amherst
Ravi Bhandari / St. Mary’s College
Peter C. Bloch / University of Wisconsin-Madison
Roger Evan Bove / West Chester University
Elissa Braunstein / Colorado State University
Ted Burczak /Denison University
Al Campbell / University of Utah
Jessica Carrick-Hagenbarth / University of Massachusetts Amherst
Scott Carter / University of Tulsa
Paresh Chattopadhyay / University of Quebec
Robert Chernomas / University of Manitoba
Jennifer Cohen / University of Massachusetts Amherst
Steve Cohn / Knox College
Lilia Costabile / University of Naples
J. Kevin Crocker / University of Massachusetts Amherst
James Crotty / University of Massachusetts Amherst
James M. Cypher / Universidad Autónoma de Zacatecas
Omar S. Dahi / Hampshire College
Anita Dancs / Western New England University
Adel Daoud / University of Gothenburg
Erik Dean / University of Missouri Kansas City
Carmen Diana Deere / University of Florida
Francois Delorme / Association des Economistes Québécois
Joao Paulo de Souza / UMASS-Amherst
George DeMartino / University of Denver
Serkan Demirkilic / University of Massachusetts Amherst
Maarten de Kadt
Hans Despain / Nichols College
Carlo D’Ippoliti / Sapienza University of Rome
Jonathan Diskin / Earlham College
Geert Dhondt / City University of New York
David Donald / Glasgow Caledonian University
Peter Dorman / Evergreen State College
Lynn Duggan / Indiana University Bloomington
Gary Dymski / University of California Riverside
Marie Christine Duggan / Keene State College
Nina Eichacker / University of Massachusetts Amherst
Benan Eres / Ankara University
Bilge Erten / United Nations, DESA
Kade Finnoff / University of Massachusetts Boston
Gerald Friedman / University of Massachusetts Amherst
James K. Galbraith / University of Texas Austin
Robert F. Garnett / Texas Christian University
Heidi Garrett-Peltier / University of Massachusetts Amherst
Armagan Gezici / Keene State College
Don Goldstein / Allegheny College
Jonathan P. Goldstein / Bowdoin College
Mitch Green / University of Missouri Kansas City
Robin Hahnel / American University
Jay P. Hamilton / City University of New York
Amy Hart / University of Sydney
Martin Hart-Landsberg / Lewis and Clark College
James Heintz / University of Massachusetts Amherst
Arturo Hermann / ISTAT
Marianne Hill / Mississippi Center for Policy Research
Michael G. Hillard / University of Southern Maine
Wolfgang Hoeschele / Truman State University
Joan Hoffman / City University of New York
Sue Holmberg / University of Massachusetts Amherst
Kiaran Honderich / Williams College
Barbara Hopkins / Wright State University
Alan Hutton / Glasgow Caledonian University
Ruth Indeck / Economy Connection
Ryan Isakson / University of Toronto
Frederic B. Jennings Jr. / Center for Ecological Economics and Ethical Education, Ipswich, MA
Tae-Hee Jo / Buffalo State College
Emily Kawano / University of Massachusetts Amherst
Seçil Aysed Kaya / Ankara University
Marlene Kim / University of Massachusetts Boston
Yun Kyu Kim / Trinity College
Mary C. King / Portland State University
Robert Kirsch / Virginia Tech
Mark Klinedinst / University of Southern Mississippi
Katharine Kontak / Bowling Green State University
Gonca Konyali / Dokuz Eylul University
David Kotz / University of Massachusetts Amherst
Philip Kozel / Rollins College
David Kristjanson-Gural / Bucknell University
David Laibman / City University of New York
Mehrene Larudee / Al-Quds Bard Honors College
Frederic Lee / University of Missouri Kansas City
Fernando Leiva / University at Albany (SUNY)
Antonio Lopes / Second University of Naples
Fiona Maclachlan / Manhattan College
Stephen A Marglin / Harvard University
Wesley Marshall / UAM-Iztapalapa
Thomas Masterson / Levy Economics Institute of Bard College
Julie Matthaei / Wellesley College
Matthew May / University of Missouri Kansas City
Elaine McCrate / University of Vermont
Andrew Mearman / University of the West of England, Bristol
Michael Meeropol / Western New England University
Ralph Meima / Marlboro College Graduate School
Peter B. Meyer / University of Louisville
Gary Mongiovi / St. John’s University
Albert Mosley / Smith College
Jamee K. Moudud / Sarah Lawrence College
Catherine P. Mulder / City University of New York
Marta Murray-Close / University of Massachusetts Amherst
Ellen Mutari / The Richard Stockton College of New Jersey
Sirisha Naidu / Wright State University
Kamran Nayeri / University of California Berkeley
Jessica Gordon Nembhard / City University of New York
Julie A. Nelson / University of Massachusetts Boston
Eric Nilsson / California State University San Bernardino
Richard B. Norgaard / University of California Berkeley
Erik Olsen / University of Missouri Kansas City
Hiroshi Onishi / Kyoto University
Cem Oyvat / University of Massachusetts Amherst
Aaron Pacitti / Siena College
Thomas Palley / New America Foundation
Susan Parks / University of Wisconsin-Whitewater
Eva Paus / Mount Holyoke College
Samuel R Pavel / Southern Illinois University Carbondale
Karl Petrick / Western New England University
Paddy Quick / St. Francis College
Peter Radford
Arslan Razmi / University of Massachusetts Amherst
Jack Reardon / Hamline University
Robert Reinauer / Rollins College
Stephen Resnick / University of Massachusetts Amherst
Meenakshi Rishi / Seattle University
Charles P. Rock / Rollins College
Leopoldo Rodriguez / Portland State University
Sergio Rossi / University of Fribourg
Héctor Sáez / University of Massachusetts Amherst
Daniel E. Saros / Valparaiso University
Harwood D. Schaffer / University of Tennessee Institute of Agriculture
Helen Scharber / Hampshire College
Elliott Sclar / Columbia University
Ian J. Seda-Irizarry / University of Massachusetts Amherst
Kristen Sheeran / Economics for Equity and the Environment
Barry Shelley / Brandeis University
Ceren Soylu / University of Massachusetts Amherst
Peter Spiegler / University of Massachusetts Boston
Liz Stanton / Tufts University
Martha A. Starr / American University
Mark Stelzner / University of Massachusetts Amherst
Tamara Stenn / Keene State College
John Stifler / University of Massachusetts Amherst
Engelbert Stockhammer / Kingston University
Ian C. Strachan / Nichols College
Sarah Surak / Virginia Tech
Janet M. Tanski / University of Missouri
Linwood Tauheed / University of Missouri Kansas City
Pavlina R. Tcherneva / Franklin and Marshall College
Hasan Tekgüç / Mardin Artuklu University
Jim Tober / Marlboro College
Zdravka Todorova / Wright State University
Junji Tokunaga / University of Massachusetts Amherst
Mariano Torras / Adelphi University
Andrew Trigg / Open University
Eric Tymoigne / Lewis and Clark College
Hendrik Van den Berg / University of Nebraska – Lincoln
Roberto Veneziani / Queen Mary University of London
Valerie Voorheis / University of Massachusetts Amherst
Mwangi wa Gĩthĩnji / University of Massachusetts Amherst
Thomas E. Weisskopf / University of Michigan
Julian Wells / Kingston University
Anastasia C. Wilson / University of Massachusetts Amherst
L. Randall Wray / University of Missouri Kansas City
Ajit Zacharias / Bard College
Klara Zwickl / University of Massachusetts Amherst

Institutional affiliations listed for identification purposes only.