About that change in the discipline…

This past Tuesday afternoon, the Economics departments at Notre Dame held a panel about the recession. Three from Policy Studies (Dutt, Rakowski, and Wolfson) and two from Econometrics (Mark and Pries), gave brief presentations and fielded questions. None of their comments were particularly notable, although I thought Prof. Wolfson did the best job of emphatically pointing out that free-market capitalism is the problem.

One of the more astute students attending the panel (and reader of this blog), asked the question, will this crisis change the way economics is taught? His question received some blithering from the Econometrics side. Then, either Wolfson or Dutt pointed out that the discipline of economics had forgotten about Keynes, whose work speaks to this crisis.

In any case, this discussion got me thinking about the question, and convenientally, the New York Times had an article in the Arts section today about this very question. The main gist:

Yet prominent economics professors say their academic discipline isn’t shifting nearly as much as some people might think. Free market theory, mathematical models and hostility to government regulation still reign in most economics departments at colleges and universities around the country. True, some new approaches have been explored in recent years, particularly by behavioral economists who argue that human psychology is a crucial element in economic decision making. But the belief that people make rational economic decisions and the market automatically adjusts to respond to them still prevails…

The political undercurrent undoubtedly makes change more difficult. There is a Crayola box full of differently named economic schools that are critical of mainstream free-market theory, but these heterodox — as opposed to orthodox — economists generally tend to fall into the liberal camp.

Given the short time span since the crisis began, no one expects large curriculum changes yet. But in addition to Berkeley and the University of Texas, professors at a number of departments including those at the University of Chicago, Harvard, Yale and Stanford, say they are unaware of any plans to reassess their curriculums and reading lists, or to rethink the way introductory courses are organized.

Not too surprising I suppose. Old orthodoxies die hard. But wait, there is some hope:

A real shift among economists will come only if there is a wholesale collapse, Mr. Wray and Mr. Card agreed. If unemployment is still high three years from now, then you might start to see a paradigm shift, Mr. Card said; economists will “have to say that the market isn’t supposed to work this way.”

Huh. Well, you’d be hard pressed to find a low to middle income American that thinks the market has worked the way it’s “supposed to” over the last 30 years, with stagnant real wages. If this hasn’t convinced more mainstream economists that the discipline is broke, I am not holding my breath any more than Prof. Card is.