The front page story in The Australian today comes with the title, Economics course is ‘beyond redraft’. The story begins:
THE national economics curriculum is unsalvageable, with errors in key definitions and omissions of fundamental concepts that make it “misleading, unbalanced, too imprecise to be useful and … beyond redrafting”, experts have concluded.
Griffith University economics professor Tony Makin and lecturer Alex Robson, in their advice to the federal government’s curriculum review, say the curriculum incorrectly defines some fundamental concepts including gross domestic product, efficiency and productivity.
They argue that the curriculum omits key concepts, such as the difference between microeconomics and macroeconomics or between recessions and booms.
It also fails to include the great economic thinkers, including the father of economics Adam Smith and his coinage of the term “invisible hand” to describe the forces of the free market.
What can I say, and if you ask me, they may be a little light in their criticism. It is for this reason that I built my own economics course and wrote my own text to go with it, Free Market Economics, now in its second edition. You may think of this as an ad for my book (and my course), but really I am only about to point out the ways in which my own text exactly matches what Makin and Robson are looking for. There is more in the book than just this:
Definitions: The opening is a chapter with the very title “Definitions”. And rather than being at the end of the book as most glossaries are, it is the first thing you come to. Moreover, it is not alphabetic but thematic. If you go through the definitions in order, you are provided with an overview of everything the rest of the book will say but in a condensed form (and not all that condensed since it goes on for 24 pages).
Microeconomics and macroeconomics: I am surprised to find that other texts leave out the micro/macro division, but whatever others may do, I do not. It lays the foundation of the macro side by starting from the most micro of micro concepts, the role of the entrepreneur, a category, I might add, found in virtually no text on economics I am aware of other than perhaps for a sentence or two. If you want a reason to disqualify most courses on economics, leaving out the role of the entrepreneur would be high on my list.
Recessions and booms: My text is the only text anywhere in the world that discusses the classical theory of the cycle. And by being about the cycle, it’s not like that junk Keynesian rubbish which only discusses recessions and what causes them, it discusses why the cycle is actually cyclical. Downturns reach a trough and then economies turn up. Everyone once knew that, but it has been more than three quarters of a century since these have been discussed at any level, never mind within an economics text.
The great economic thinkers: There are two entire chapters on the history of economics which take you from the earliest times through until the Keynesian Revolution. I have written an entire book on how essential studying the history of economic thought is for an economist. It is, but virtually no one does it any more which makes economists less able to think through economic issues. Without a grasp of history, economics has no anchor in anything that truly matters.
The Invisible Hand: In studying Adam Smith, there is, of course, a discussion on the invisible hand. But the book is itself a discussion on the very essence of what a free market is based around the notions of an invisible hand. No economics book that I know of teaches the way a market economy works. The most you get is a bit on supply and demand and from that moment on it is all about how market failures of one kind or another are there at every turn. It is the nature of the way economic theory is presented. To take just one example, I go on myself about how inane calling the one form of market that by definition cannot exist “perfect” competition and how everything after that is described as “imperfect” competition. Not really all that subtle, but the basic point is there is much work for governments and economists to fix.
I am therefore pleased that Tony and Alex have taken on this monster. The failures of the Keynesian stimulus might, you would have thought, started some kind of soul searching within the profession about how badly served we are with the economic theory we now teach. But a billion dollars or more now tied up in textbooks which carry received economic theory into every classroom, wrong though they may be, misleading page after page, they will nevertheless continue onwards. I will merely mention the first of the quotes on the back of my book:
Free Market Economics is virtually a must read for serious economists. . . . Highly recommended.
The book is a synthesis of the economics that existed prior to the Keynesian Revolution. It is where economic theory must go if we are to salvage the study of economics.
Law of Markets 