Abstract
We need alternative teaching in introductory economics. Not only is economics one of the largest undergraduate majors in American colleges and universities, but even more take a course in introductory economics to fulfill general education requirements or because their parents insist they take something “practical” even if they are to major in an esoteric field in the humanities or fine arts. It has been estimated that 40 percent of undergraduates take at least one course in economics, or over 8 million introductory students out of 21 million enrolled (Siegfried 2000). Of the million students taking an introductory course every semester, the vast majority of these are taught the orthodox, neoclassical regimen of marginal utility, marginal cost, and perfect equilibrium of supply and demand at full employment, an economic theory often taught with its full conservative political ramifications. If they are mentioned at all, most economics departments reserve “complications,” including institutions, imperfect competition, irrational behavior, power, and exploitation, for upper-level courses.
While the popularity of introductory economics courses has created a huge textbook market, nearly all of the books are virtually the same. The market is almost exclusively dominated by books that teach that economics is a “science” whose truth is told in the orthodox, neoclassical model. One text alone, Greg Mankiw’s Principles of Economics, has spread the gospel of perfectly competitive equilibrium with a Pareto-optimal distribution without government or other social regulation in over a million copies sold. (Mankiw, former economics adviser to President George W. Bush, sells his book for over $300 and has earned nearly $50 million in royalties (Oregonian/OregonLive 2015; Mankiw 2011).) While it is hard work to write a credible textbook, some have tried to bring an alternative vision to the introductory market. David Colander has a textbook that consciously stays within 86 percent of the mainstream in the hope that it will be used to bring a bit of new insight into orthodox programs (Colander 2012; I recall him saying that, in his experience, publishers will allow only 14 percent of alternative material in a textbook that they are selling to the general market). Along with several coauthors, Neva Goodwin has a text that blends alternative material, including extensive discussion of policy issues and public goods, with orthodox material (Goodwin et al. 2013). In the 1980s, my colleagues Sam Bowles and Richard Edwards wrote an alternative text, later revised by Frank Roosevelt; it is incompatible with an orthodox course (Bowles, Edwards, and Roosevelt 2005). And, I have a microeconomics textbook that tries to straddle the heterodox/orthodox divide by presenting the orthodox model and then critiquing it from the perspective of institutional and social economics (Friedman 2015).
Despite the strength of alternative books, it has proven nearly impossible to replace the standard textbooks. Of course, most of our colleagues are trained neoclassicists and agree with the standard model. Even many heterodox economists use Mankiw and his fellows. It is easier, of course, because most of us studied the orthodox model as undergraduates. Others are compelled by their departments to use orthodox books chosen by the department; and even if not compelled, heterodox economists often teach the orthodox model to prepare their undergraduates for intermediate courses to be taught from an orthodox perspective. (This concern may be overblown. Most students who take an introductory course in economics do not take an intermediate course.)
Seeking to introduce alternative material into courses primarily taught from an orthodox perspective, some have developed supplementary texts. Some have used the Bowles/Edwards/Roosevelt text in this way. The magazine Dollars and Sense has had some success in filling this niche with its long-running series of Real World Micro and Real World Macro. This is where John Komlos would position his new book, What Every Economics Student Needs to Know. A well-regarded and widely-published economist and historian with roots in both Europe (Germany) and the United States, Komlos is an excellent candidate for preparing a work like this, one that ranges widely in time and space with data and models challenging and contradicting the orthodox economic model. The book is a fun read, clearly written and with useful and challenging tidbits ranging from wages and productivity, monetary policy, and cigarette consumption during the Great Depression of the 1930s. It would be a great thing if every economics student was taught the material in Komlos’s book.
Komlos arranges his text to parallel a standard course curriculum. After introductory material on the nature of economics and ideology, the microeconomics part of the book covers the theory of demand, firms, production, and supply, and then applications of the supply and demand framework to issues such as minimum wages, price controls, and unions. His section on macroeconomics is similarly designed to be read alongside a conventional text. After a discussion of the Keynesian revolution and monetarist counter-revolution, he discusses the use of monetary and fiscal policy with some special attention to issues in open-economy macro and to financial markets. Throughout, Komlos adds challenges and nuances too often neglected by busy instructors. His discussion of demand, for example, includes challenges to the rational actor model and some of the work by behavioral and experimental economics as well as a serious discussion of social influences on demand. In discussing market equilibrium, he addresses imperfect competition, market failure, and the need for public regulation. And when he considers trade policy, he addresses the new trade theory and endogenous growth theory. Throughout, Komlos gives students a corrective to the simple, and simple-minded, neoclassical textbook perfectly competitive model, and gives instructors material to take their students beyond that model.
Alas, it may be a hard sell to get this book into classrooms. First, it will be hard for most undergraduates to read. Komlos is poorly served by his publisher (M. E. Sharpe). The book is poorly laid out: the print is small and dense with a monotonous layout.
Beyond the formatting problems, Komlos needs a good editor. Unlike the Dollars and Sense series, for example, it is written well above the level of introductory texts. Consider, for example, how in the discussion of management, Komlos introduces difficult concepts using unfamiliar language of “subsets,” “information problems,” and “attributes”:
Principal-agent problems refer to an important subset of information problems in which an employee, say a CEO (the agent), works on behalf of someone else (the principal), such as the shareholders. The principal does not have information on all attributes of the agent that are important . . . . (Komlos 2014: 78)
Again, when he discusses wage determination, he uses language unfamiliar to many 18 year-olds:
Given the difficulty of ascertaining the marginal product of labor and the uncertainty associated with it, firms satisfice in order to find a viable solution to their problem. They use heuristics and signals to determine the wages of their workers. Of course, education, diploma, work experience, age, gender, ethnicity, and appearance also all play a role. That does not mean that anticipated productivity is not part of the guesstimate, but the above signals are used as proxies . . . . (Komlos 2014: 115)
Komlos makes important points in these cases, but his use of challenging language throughout the book will make it hard for undergraduates to use the book. I wish that my students would leave class thinking about these problems. But I wonder, however, how many will be able to work with sentences peppered with words like “heuristics,” “signals,” “relative deprivation” (discussed on Komlos 2014: 164) and even “subset.”
It might be easier to use the book if Komlos placed his work within a clear framework. He does seem to have a slant towards a psychological critique emphasizing bounded rationality and the social structuring of decisions rather than a theory focused on conflict. Economic problems are more due to mistakes than exploitation and power. In practice, this places Komlos in the awkward position of using a methodological individualist framework to argue for a social science position. While not illogical, it means his work is more a critique of existing theory than the presentation of a substitute model. This may make it easier to get the book adopted by faculty teaching orthodox economics but aware of some of its problems. It may also make it harder for undergraduates to understand material, however, that presents a critique of models that they are struggling to understand, and without providing any other grounding.
All this said, John Komlos has given us a valuable tool that we can use to enrich our teaching and open the minds of our students before they are completely ruined by Mankiw. It would be a great contribution to the world if everyone who teaches introductory economics would use Komlos’s book. We owe him our thanks. More, we owe him our students’ patronage.