• Democratizing Economics: The Heterodox Approach

  • Boye and Kvangraven

    This profile originally appeared on Research Matters

    Like many students in the Economics Department at The New School for Social Research, Ebba Boye and Ingrid Kvangraven want to widen the lens through which we examine economies. Their approach to economic issues inside and outside the classroom not only offers a critique of our most established theories but also fosters alternative ways of thinking about economics, politics, and education.

    “The field of economics used to be much broader than what it is now,” said Boye. She attributes its narrowing to the hardening of neoclassical economic theory into rigid doctrine. It can often seem as though this doctrine has become “the singular way of understanding how the economy works.” In this context, the practice of economics becomes a question of learning and applying a single set of laws, rather than exploring alternative pictures of the economy.

    “You don't have the idea that academia is about learning about different theories in order to compare them and critique them,” Boye said.

    The neoclassical approach to economics — sometimes referred to simply as mainstream economics — would likely sound familiar to anyone who has taken an introductory undergraduate course in the subject, as it still dominates the landscape of the discipline. It builds on assumptions that free market competition leads to the most efficient allocation of resources. To address economic problems such as unemployment, orthodox economists typically ask what imperfections might be preventing markets from achieving what they call a Pareto efficient equilibrium, and how these imperfections can be removed or remedied.

    By contrast, heterodox economists — and heterodox economics departments at institutions like The New School for Social Research — ask whether perfect markets and general equilibrium might not be the best starting points for real-world analysis, and instead propose other theoretical frameworks. Whereas many of the neoclassical models aspire to the articulation of trans-historical and universal laws, many heterodox economists try instead to integrate historical and context-specific analysis into their picture of how economies work.

    “For somebody who wants to study economics to try to better understand how the world works, the traditional economics education can be very disappointing,” Boye said, adding, “A lot of it feels very far away from the economic reality we live in.” After taking her undergraduate degree in Oslo, Norway, Boye decided to pursue further graduate work at The New School for Social Research, precisely because she wanted to close the gap between economic theory and the realities she observed in world economies.

    Kvangraven expressed similar sentiments.

    “I didn't even realize there were different ways of doing economics,” she said, thinking back to her experience of taking economics classes during her undergraduate degree at the University of Oslo. It wasn't until she studied for her master's at the London School of Economics that she first encountered heterodox perspectives, such as institutional, Marxian, and post-Keynesian economics. “One of my professors at LSE actually talked about The New School in his lecture. […] I wanted to go into economics but into the different varieties of economics, and The New School was the only place I'd heard of that did this.”

    As a doctoral student in the Economics Department, Kvangraven now works on structural explanations of underdevelopment in Africa, drawing from the work of Professor Anwar Shaikh. She explained, “I use a Classical-Keynesian theory of trade, apply it to the African context, and try to explain why exchange rates don't automatically move to balance trade — which is an idea in neoclassical economics.” Kvangraven also conducts research on “dependency theory,” in which “scholars argue that developing countries can't develop in the same way as developed countries did because of structural barriers.” Her work recently brought her to the United Nations, where she and assistant professor of economics Paulo Dos Santos discussed their research with the UN's Capital Development Fund.

    Boye, who recently received a master's degree from the department, similarly focused her research on the ways international economies interact. “I have taken a lot of finance classes [at NSSR], trying to understand how international systems work,” she said. She has been especially interested in what seems like unsustainable levels of household debt in Scandinavia, and has used a sectoral balances approach to look at connections between government surpluses, current account balances, and private-sector deficits. “For my thesis I used a theory about sectoral balances and applied it to Norway. In the U.S., this method of analysis became relevant in the late 1990s, as it helped us understand why President Bill Clinton´s effort to reduce the public-sector deficit resulted in a huge increase in the amount of private household debt.” In response to this observation, Boye is curious to know, “What pushes growth? Is it the government, the private sector, or foreign trade? How does a change in one of these affect the others?”

    In addition to their research, Boye and Kvangraven have found new outlets for promoting and discussing the trajectory of heterodox economics.

    In the wake of the 2008 financial crisis — which challenged many orthodox economic models and rattled confidence in the expertise of neoclassical economists — Kvangraven discovered a new appetite for diverse perspectives on issues like economics education, development, and finance. She explored these not only in her research but also throughout her tenure at the student-run New School Economic Review.

    When several of Kvangraven's posts on New School Economic Review went viral, she decided to launch an online platform called Developing Economics dedicated exclusively to discussing development issues from a more critical and interdisciplinary perspective. “I started realizing that the topics that I was choosing were underrepresented in the blogosphere,” Kvangraven said.

    Judging from its success, Kvangraven feels confident that Developing Economics has struck a chord with readers who are hungry for alternatives to mainstream economics. The site has fostered discussion among students, younger academics, and policymakers, as well as their senior counterparts. Even when senior professors reply critically, Kvangraven said, “they think it's a serious enough critique to warrant engagement.”

    Kvangraven, who is preparing for the academic job market, noted that the most popular articles are the ones that isolate and criticize a given tenet of mainstream economic thought. Her wish, however, is to see Developing Economics move in a more constructive direction, becoming a space where concrete alternatives to the status quo can be theorized and debated.

    Meanwhile, Boye has focused her energies on a project called Rethinking Economics, a London-based networking and educational group founded in 2012-2013. The initiative uses the Internet to help like-minded economists connect and learn about one another's work. Boye helped to found a Norwegian chapter as a student and will return to Norway this summer to help facilitate its growth.

    Rethinking Economics Norway champions changes to university economics curricula that will ensure that students have access to a wider variety of theoretical perspectives much earlier in their academic journey. Boye's economics columns regularly appear in Norwegian press, representing one part of her effort to raise public awareness of alternative ways of thinking about economic issues.

    Rethinking Economics pushes academics to ease their reliance on jargon, which can often push people out of the field and unreasonably mystify the economy. “Democratization is a big part of the mandate,” says Boye. The organization organizes conferences, lectures, and debates that are open to the public and focus on issues of common economic concern — and, just as important, it aims to increase the visibility of diverse perspectives on economics. As Boye put it, “The goal is that every economics student in Norway will learn that these other fields exist and know a little bit about them.”

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