Finance:The Economics Anti-Textbook

Short description: Economics textbook

The Economics Anti-Textbook

Author	Roderick Hill and Tony Myatt
Language	English
Subject	Economics
Publisher	Zed Books
Publication date	2010
ISBN	ISBN:1-84277-939-7

The Economics Anti-Textbook is both an introduction to, and critique of the typical approaches to economics teaching, written by Roderick Hill and Tony Myatt in 2010. The main thrust of the authors' argument is that basic economics courses, being centered on models of perfect competition, are biased towards the support of free market or laissez-faire ideologies, and neglect to mention conflicting evidence or give sufficient coverage of alternative descriptive models. This book has been updated and superseded by The Microeconomics Anti-Textbook and The Macroeconomics Anti-Textbook, by the same authors.

Goals

The book seeks to both teach economic material and also to counter what is written in other economics texts. The book encourages its readers to become skeptics, urging critical thinking against the hegemony of rigid free market ideology.

The book advocates for empiricism in economics and demonstrates the abundance of un-empirical free-market ideology in undergraduate economics classes. Many authors have since repeated similar concerns about economics education.

Structure

Each chapter begins with a dense but readable summary of common neoclassical economic textbook teaching on a topic, and then proceeds to discuss the limitations of these teachings and their public policy implications.

Throughout the text are suggested "Questions for Your Professor" designed "to reveal the ignorance of neoclassical economics professors of their own discipline, their lack of understanding of alternative theories and their wilful neglect of conflicting evidence."

Content

The book primarily discusses major topics of microeconomics, including consumer behavior, firm behavior, market structure, externalities, income distribution, government, and international trade. An appendix discusses the 2008 financial crisis in light of the earlier discussions of markets.

Example

An example of the book's approach is the theories surrounding minimum wage. Classical micro-economic theory dictates that in a perfectly competitive market, raising the legal minimum wage will increase unemployment, as it prevents the hire of workers whose market value falls below the legal minimum. Society therefore loses from the imposition of a minimum wage due to the loss of allocative efficiency. While real markets may not be perfectly competitive, the model of perfect competition provides a good approximation to real market behaviour. A number of counterarguments to this are given.

1. The classical model, while neat, is only a hypothesis which should be experimentally verified before being accepted as fact.
2. Over 30 years of econometric studies have failed to conclusively prove or disprove the hypothesis that raising minimum wage will increase unemployment. The theory is surrounded by a `protective belt of assumptions' which makes conducting such studies near impossible.
3. The existence of market friction, asymmetric information and search costs all violate the assumptions of perfect competition. The authors argue that monopolistic price theories may depict reality better than the perfectly competitive model. In this case it can be shown that raising a minimum wage can in some circumstances, lead to a decrease in unemployment.
4. The existence of multiple equilibria in a supply/demand system may mean that imposition of a minimum wage forces the system over a tipping point from a less efficient to a more efficient equilibrium.
5. Arguments in favour of increasing allocative efficiency were in any case constructed in an era where society was less wealthy than it is today. Recent studies have shown that for well-off societies, the happiness of a population has little correlation with its absolute wealth. Therefore, efficiency may not necessarily be an important goal of resource allocation in any case. In any case, efficient markets can have morally undesirable outcomes.

Other areas

Later chapters explore the concept of bounded rationality and how it confounds classical arguments in favour of laissez faire; in particular it is noted that the very existence of an advertising industry disproves rational behaviour. Arguments from the field of game theory explain limited rationality and the balance of power of corporations over the individual.

Conclusion

Overall, the authors argue – with reference to Thomas Kuhn's The Structure of Scientific Revolutions – that the existing economic paradigm is due for a change. The book presents their own paradigm for interpreting economic behaviour.

Context

The book is one of several textbooks comparing mainstream and heterodox perspectives on economics, along with (Cohn 2007) and (Bougrine Seccareccia). Other similar textbooks offering alternative perspectives to mainstream economics include (Earl 1995) and (Earl Wakeley). None of these have yet achieved widespread adoption. A thorough review of critical economics books relevant to 21st century economies recommended this book as a textbook in real-world economics which supports a broad view of economic perspectives, along with (Nelson Harris), (Goodwin Nelson), and (Gowdy 2009) It is one of the most popular works critiquing neoclassical economics, along with and (Keen 2001).

The book was part of a movement of economists attempting to offer explanations of economic theory to the general public in the wake of the Great Recession.

Reviews

Despite not yet being reviewed in mainstream journals, as of February 2011 the introductory chapter has received 13,000 views on stumbleupon and the book has attracted positive comment on various blogs.

The Huffington Post especially recommended the last chapter on trade and globalization. In the journal Labour / Le Travail, Jim Stanford described it as a "needed antidote to the unreal and infuriating doctrines of fundamentalist free-market theory" taught in standard introductory economics courses and textbooks. On the blog Progressive Economics, Professor of Green Political Economy at Queen's University, Belfast, John Barry said, "it should be on all undergraduate economics courses in the spirit of pluralism in economic thinking." In the International Journal for Pluralism and Economics Education, Swiss economic sociologist Michael Derrer called it a "a genuine treasure of well-researched and referenced arguments". He suggested to the authors to write a second edition in a less scholarly writing style, in order to reach a global audience.

References

• Baiman, Ron P. (5 January 2016). "Exposing Textbook "Supply and Demand" Ideology: A "Demand and Cost" Alternative to the "Ghost" Supply Curve". Pluralism in Economic Pedagogy, the Annual conference of the American Economic Association/Allied Social Science Association. San Francisco, CA. https://www.aeaweb.org/conference/2016/retrieve.php?pdfid=405. , adapted from Baiman, Ron P. (2016). "Ghost Curve Ideology: The Supply Curve Generally Does Not Exist, So Why Is It a Core Concept in Almost Every Economics Textbook?". The Morality of Radical Economics. New York: Palgrave Macmillan US. p. 93-137. doi:10.1057/978-1-137-45559-8_5. ISBN 978-1-137-45558-1. 
• Birks, K. Stuart (2014). "Teaching Economics: The WEA Textbook Commentaries Project". SSRN Electronic Journal (Elsevier). doi:10.2139/ssrn.2515373. ISSN 1556-5068. http://ssrn.com/abstract=2515373. 
• Blinder, A.; Canetti, E.R.D.; Lebow, D.E.; Rudd, J.B. (1998). Asking About Prices: A New Approach to Understanding Price Stickiness. Russell Sage Foundation. ISBN 978-1-61044-068-4. https://books.google.com/books?id=6OOFAwAAQBAJ. 
• Bougrine, H.; Seccareccia, M. (2010). Introducing Macroeconomic Analysis: Issues, Questions, and Competing Views. Toronto, Canada: Emond Montgomery Publications. ISBN 978-1-55239-313-0. 
• Cato, M.S. (2013). The Bioregional Economy: Land, Liberty and the Pursuit of Happiness. Earthscan from Routledge. Routledge. ISBN 978-0-415-50082-1. https://books.google.com/books?id=dycaFm3F-jsC&pg=PA42. 
• Cohn, S.M. (2007). Reintroducing Macroeconomics: A Critical Approach. M.E. Sharpe. ISBN 978-0-7656-1450-6. https://books.google.com/books?id=SH6CgaLrsncC. 
• Earl, P.E. (1995). Microeconomics for Business and Marketing: Lectures, Cases, and Worked Essays. Edward Elgar Pub. ISBN 978-1-85278-861-2. https://books.google.com/books?id=t-LrAAAAMAAJ. 
• Earl, P.E.; Wakeley, T. (2005). Business Economics: A Contemporary Approach. UK Higher Education Business Economics. McGraw-Hill Education. ISBN 978-0-07-710392-7. 
• Goodwin, N.R.; Nelson, J.A.; Ackerman, F.; Weisskopf, T. (2009). Microeconomics in Context. M.E. Sharpe. ISBN 978-0-7656-2301-0. https://books.google.com/books?id=FOTtAAAAMAAJ. 
• Dolar, Veronika (16 March 2016). "Are We Teaching Outside the Box? A National Survey on Teaching the Minimum Wage in Undergraduate Economics Classes". Forum for Social Economics (Informa UK Limited) 49: 51–74. doi:10.1080/07360932.2015.1103769. ISSN 0736-0932. 
• Gowdy, J.M. (2009). Microeconomic Theory Old and New: A Student's Guide. Stanford University Press. ISBN 978-0-8047-7285-3. https://books.google.com/books?id=axv4-OGDH8AC. 
• Green, Tom L. (2013). "Teaching (un)sustainability? University sustainability commitments and student experiences of introductory economics". Ecological Economics (Elsevier BV) 94: 135–142. doi:10.1016/j.ecolecon.2013.08.003. ISSN 0921-8009. 
• Hill, R.; Myatt, P.T. (2010). The Economics Anti-Textbook: A Critical Thinker's Guide to Microeconomics. Zed Books. ISBN 978-1-84813-829-2. https://books.google.com/books?id=dhljDgAAQBAJ. 
• Keen, S. (2001). Debunking Economics: The Naked Emperor of the Social Sciences. Zed Books. ISBN 978-1-85649-992-7. https://books.google.com/books?id=KdITT4ukfhoC. 
• Lee, F.S.; Lavoie, M. (2012). In Defense of Post-Keynesian and Heterodox Economics: Responses to Their Critics. Routledge Advances in Heterodo. Routledge. ISBN 978-0-415-69436-0. https://books.google.com/books?id=YAb3nMDoK8wC&pg=PA26. 
• Marien, Michael (2012). "New and Appropriate Economics for the 21st Century: A Survey of Critical Books, 1978–2013". Cadmus 1 (5): 86-102. http://www.cadmusjournal.org/article/issue-5/new-and-appropriate-economics-21st-century-survey-critical-books-1978-2013. 
• Mills, Chloe Persian (2014). "Trade Book Collections to Support Teaching Economics Undergraduates: Notes, Suggestions, and Bibliography". Journal of Business & Finance Librarianship (Informa UK Limited) 19 (3): 256–274. doi:10.1080/08963568.2014.916558. ISSN 0896-3568. 
• Nelson, J.A.; Harris, J. (2009). Macroeconomics in Context. Unknown Publisher. ISBN 978-0-7656-2814-5. https://books.google.com/books?id=rplrt9VONKgC. 
• Nouri, Heidar (2013). Neo classical Economics and Development: A critical review of the convergence hypothesis (BS). Sweden: Lund University.
• Ormerod, P. (1994). The Death of Economics. St. Martins Press. ISBN 978-0-312-13464-8. https://books.google.com/books?id=LsWzQgAACAAJ. 
• Ozanne, A. (2016). Power and Neoclassical Economics: A Return to Political Economy in the Teaching of Economics. Palgrave pivot. Palgrave Macmillan UK. ISBN 978-1-137-55373-7. https://books.google.com/books?id=vZ3mCgAAQBAJ&pg=PP1. 
• Reardon, Jack (2012). "A radical reformation of economics education: Educating real world economists". Real-World Economics Review 62: 2- 19. http://www.paecon.net/PAEReview/issue62/Reardon62.pdf.  Also from The economics curriculum: Towards a radical reformation, a World Economics Association conference
• Reardon, Jack (2013). "How to Establish Pluralism at the Department Level". Economía Informa (Elsevier) 383: 5–22. doi:10.1016/s0185-0849(13)71339-2. ISSN 0185-0849. 
• Stanford, Jim (2011). "Book review: The Economics Anti-Textbook: A Critical Thinker's Guide to Micro-Economics by Rod Hill, Tony Myatt". Labour / Le Travail 68: 249-252. https://muse.jhu.edu/article/458815. 
• Stretton, H. (1999). Economics: A New Introduction. Pluto Press. ISBN 978-0-7453-1531-7. https://books.google.com/books?id=OKuEMvvHpvUC. 
• Victor, P.A.; Dolter, B. (2017). Handbook on Growth and Sustainability. Edward Elgar books. Edward Elgar Publishing Limited. ISBN 978-1-78347-356-4. https://books.google.com/books?id=m7EnDwAAQBAJ&pg=PA412. 
• Wicks, Rick (29 June 2011). "Markets, Governments—and Communities!". Challenge (Informa UK Limited) 54 (4): 65–96. doi:10.2753/0577-5132540404. ISSN 0577-5132. 

Further reading

• Dolar, Veronika (2013). "The treatment of minimum wage in undergraduate economics textbooks revisited". International Journal of Pluralism and Economics Education (Inderscience Publishers) 4 (2): 157. doi:10.1504/ijpee.2013.055446. RePEc:ids:ijplur:v:4:y:2013:i:2:p:157-182. ISSN 1757-5648. 
• Hill, Rod; Myatt, Tony (2012). "Text and anti-text in teaching the economics of the firm". International Journal of Pluralism and Economics Education (Inderscience Publishers) 3 (2): 144. doi:10.1504/ijpee.2012.049182. ISSN 1757-5648. 
• Lavoie, Marc (2015). "Should heterodox economics be taught in or outside of economics departments?". International Journal of Pluralism and Economics Education (Inderscience Publishers) 6 (2): 134. doi:10.1504/ijpee.2015.072598. ISSN 1757-5648.