Claims that mainstream economics is changing radically are far-fetched — Bill Mitchell

by
Mike Norman
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I have received several E-mails over the last few weeks that suggest that the economics discipline is finally changing course to redress the major flaws in the curricula that is taught around the world and that perhaps Modern Monetary Theory (MMT) can take some credit for some of that. There has been a tendency for some time for those who are attracted to MMT to become somewhat celebratory, even to the point of declaring ‘victory’. This tendency is not limited to the MMT public who comment on social media and the like. My response is that we are probably further away from seeing fundamental change in the economics profession than perhaps where we were some years ago – after the GFC and in the early years of the pandemic (which continues). My answer reflects the incontestable fact that the make up of faculties within our higher education systems has not changed much, if at all, and the dominant publishing and grant awarding bodies still reflect that mainstream dominance. There is still a lot of work to be done and a lot of ‘funerals’ to attend (à la Max Planck)....

Summary: Nothing is going to change while the same clique remains in power and controls the educational and publishing process. Same in politics, although it is much more difficult to control the narrative that serves as an instrument of control than the narrative in terms of which the public understands economics. Heterodox economics has a long way to go in disrupting and eventually replacing this "Econ 101" narrative that firmly rules the collective mindset.

There is much more in this post than the title and lede paragraph would suggest.

Here is an example.

[Angus] Deaton then admits that “I have recently found myself changing my mind, a discomfiting process for someone who has been a practicing economist for more than half a century.”

How so?

Well,

1. He now says that the dominance of the “virtues of free, competitive markets” has meant that mainstream economics has ignored corporate power.

He wrote: “Without an analysis of power, it is hard to understand inequality or much else in modern capitalism.”

That is, without beginning with class conflict, an analyst has zero chance of gaining an understanding of the dynamics of capitalism, where capital seeks to influence outcomes in any way that advances their cause to retain their hegemony.

But if we introduced that into economic analysis there would be no mainstream elements worth retaining.

The dominance unit of analysis in mainstream economics is the individual.

Society is not considered.

Collectives are not considered.

Conflict is played down.

And when power does come up in mainstream economics the focus has been of trade unions as perverting the free workings of the labour contracting process.