JOBNAME: EE3 Hodgson PAGE: 1 SESS: 5 OUTPUT: Thu Jun 27 12:20:19 2019 Introduction The Theory of Economics does not furnish a body of settled conclusions immediately applicable to policy. It is a method rather than a doctrine, an apparatus of the mind, a technique of thinking, which helps its possessor to draw correct conclusions. John Maynard Keynes (1922) The Great Financial Crash of 2008 had several effects, not only on the global economy, but also on global politics and economic policy. Post-crash austerity policies in several countries widened economic inequality and undermined welfare provision. Subsequent disillusionment with established politicians and parties fuelled populist movements of the right and left – all promoting relatively simple solutions to complex problems. In several countries the established political framework was challenged or even overturned. But few prominent economists budged in their opinions as a result of the Crash. A typical response was to defend the abstract model-building of mainstream economics but to explain the failure to predict the Crash in terms of losing ‘sight of the bigger picture’ and ‘a failure of the collective imagination of many bright people’ (Besley and Hennessy, 2009). The self-questioning rarely went any deeper than that. The preoccupation with technique over substance persisted. The consequences of this fixation include the overly-narrow and unrounded training of economists.1 Yet despite the inertia of their teachers, students objected in their thousands to the formalistic unreality of much teaching in mainstream economics. They formed organizations, mounted demonstrations, pushed for alternative curricula and published books (Moran et al., 2017; Fischer 1 The letter by Besley and Hennessy (2009) was a response to a question posed by Queen Elizabeth when she visited the London School of Economics in November 2008. She asked why no economist had predicted the Great Crash. The present author and nine other prominent economists sent a second letter to the Queen. It argued that the response by Besley and Hennessy had failed to note that economists are now largely trained in techniques and model building, and often lack the broader skills to deal with real world problems. ‘What has been scarce is a professional wisdom informed by a rich knowledge of psychology, institutional structures and historical precedents’ (Dow et al., 2009; Earl, 2010). 1 Geoffrey M. Hodgson - 9781789901597 Downloaded from Elgar Online at 09/30/2021 07:46:36AM via free access Columns Design XML Ltd / Job: Hodgson2-Is_there_a_future_for_heterodox_economics / Division: 00d-Introduction_GH /Pg. Position: 1 / Date: 13/6 JOBNAME: EE3 Hodgson PAGE: 2 SESS: 4 OUTPUT: Thu Jun 27 12:20:19 2019 2 Is there a future for heterodox economics? et al., 2018; Tielman et al., 2018). There were previous student revolts against mainstream economics (Fullbrook, 2003), but this one was bigger, globally-networked and more sustained. The dissident students turned to heterodox economics. Much heterodox thinking seems considerably more relevant than dry mathematics: it often engages with real-world problems. Networks of ageing heterodox econo- mists had survived since the 1970s, but they were fragmented and had been increasingly excluded from positions of influence. Frederic Lee, who was one of the foremost organizers of heterodoxy and its leading chronicler and historian, had shown that the heterodox movement had been in sustained retreat (Lee and Harley, 1997, 1998; Lee, 2009).2 The post-crash influx of students brought extra numbers and energy to heterodox economics. But there is no sign that its influence over economics as a whole, or its power within the academic discipline, have increased. Heterodoxy lacks a clear identity. Among the few things on which the heterodox community agree is the need for more pluralism in economics. It is widely argued that perspectives in addition to the reigning neoclassical approach should be taught on economics degrees. APPRAISING HETERODOX ECONOMICS AS A SCIENTIFIC COMMUNITY This book considers the future of heterodox economics. But it is not principally a dissection of ideas. This book is an appraisal of neither Cambridge economics, post-Keynesian economics nor heterodox eco- nomics as bodies of thought. These streams of enquiry have made major contributions in several areas of the discipline, and often they have received too little recognition. For example, there are major insights in the areas of money and finance, in the methodology of economics, and in evolutionary economics. Yet these achievements have been insufficiently acknowledged by the mainstream. This shortfall cannot be explained by simply focusing on any theoret- ical or empirical flaws. The sources of limited success in these cases are to do with the social structures of science, as well as any ideological resistance. It is an often-repeated but inadequately-appreciated mantra 2 See Heise and Thieme (2016) for the decline of heterodox economics in Germany since the 1980s. For broader reflections see Backhouse (2000) and Coats (2001). Mearman et al. (2018) argued that the reform of the economics curriculum has made little progress after the 2008 Crash and it remains narrow and lacking in pluralism. Geoffrey M. Hodgson - 9781789901597 Downloaded from Elgar Online at 09/30/2021 07:46:36AM via free access Columns Design XML Ltd / Job: Hodgson2-Is_there_a_future_for_heterodox_economics / Division: 00d-Introduction_GH /Pg. Position: 2 / Date: 16/5 JOBNAME: EE3 Hodgson PAGE: 3 SESS: 4 OUTPUT: Thu Jun 27 12:20:19 2019 Introduction 3 that science is a social process. It consists of habits and practices that are structured within, and facilitated by, institutions (Dequech, 2017). It creates habits of thought and relations of power that help to determine its course of development. This book is about the institutions, culture and habits of thought that can enable or disable the forces of change within economics. It addresses the institutional contexts and drivers of scientific development in eco- nomics as an organized discipline. This book is about academic power and powerlessness. To understand academic power and inertia, philosophy and social science has been applied to the scientific study of science itself. There is the famous work by Thomas Kuhn (1970) and the massive sociological study by Randall Collins (1998). Some have argued that pluralism is insufficient for progress in science and it can even be pushed to excess (Polanyi, 1962; Kitcher, 1993). While some pluralism is vital, a degree of consensus is also required, to enable cumulative advance and to avoid endless, repeated discussion of everything. Such an accord, based on positions of authority and power within academia, is also necessary (while insufficient) for quality control – to limit the permeation of low-quality research. Despite major achievements in some areas, inadequate quality control has created severe reputational problems for heterodox scholarship. Poor quality control has cumulative effects. As well as lowering the bar for additional entrants, it diminishes reputation-based incentives to cite work or to take it seriously. In turn, this weakens mechanisms for cumulative advance on previous scholarship. Good publications are swamped by others of inferior quality. Bad quality demeans and drives out the good. Quality is also worsened by over-politicization of economics research. For example, if authors or referees are chosen or excluded because of their ideological alignments, rather than on the grounds of their expertise and scientific quality, then the calibre of published output suffers. In academic conversation, political tolerance and ideological pluralism are just as important as theoretical pluralism. A viewpoint diversity that engages varied political standpoints and promotes constructive dialogue is essential for the social sciences.3 3 The Heterodox Academy has been set up to promote viewpoint diversity (Hetero- dox Academy, 2019). Geoffrey M. Hodgson - 9781789901597 Downloaded from Elgar Online at 09/30/2021 07:46:36AM via free access Columns Design XML Ltd / Job: Hodgson2-Is_there_a_future_for_heterodox_economics / Division: 00d-Introduction_GH /Pg. Position: 3 / Date: 16/5 JOBNAME: EE3 Hodgson PAGE: 4 SESS: 6 OUTPUT: Thu Jun 27 12:20:19 2019 4 Is there a future for heterodox economics? This book addresses the failure of the heterodox community to establish sufficient consensus over core issues and to develop alternative positions of power within academia, especially after the loss of heterodox control of the Faculty of Economics and Politics in the University of Cambridge in the 1980s. The reasons for this failure are varied, and they involve external factors as well as intrinsic limitations. Whatever the reasons, Cambridge was a global high point of influence from which heterodoxy has never recovered, despite its increased number of adher- ents worldwide. Because of current global economic problems and the manifest limita- tions of mainstream economics, young scholars are attracted to hetero- doxy. But what reputational or other incentives are there for young economists to study heterodox economics, or for established economists to address and build upon heterodox insights? If we start asking such questions, then we set off on a track of enquiry that is different from the typical debates about the virtues and limitations of particular theories. Heterodox achievements have received insufficient attention and constructive development, largely