Ha-Joon Chang is my favourite economist, and one of the chief reasons for this is that he’s a pluralist. He points out that there are at least nine different schools of economic thought, and none of them can claim to be absolutely right about everything. We need those multiple perspectives, as all of them have their own strengths and weaknesses and blind spots. Take a Swiss army knife approach to economics, he suggests, and make use of that breadth of theory to find solutions. I agree, and I’d recommend his book Economics: The User’s Guide as a very accessible way into the subject.
I mention Chang because I noticed that the RSA have recently done one of their signature animations for a short talk of his. It’s well worth ten minutes of your time.
The Earthbound Report 
Not sure about this. It is one of the characteristics of humans that they take the naturally occurring substances of the planet, work on them and exchange them. The whole of economics is about this process. Any school of economics that loses sight of this fundamental is misleading its followers.
The study of economics has, like any science, to begin with the definition of terms. Yet there seems to be no agreement about the meaning of such widely used terms as “wealth” and “capital”, indeed, on the definition of economics itself.
love this!
“Macroeconomics is in a state of great confusion. The profession is deeply divided. Far from there being a body of knowledge which is generally accepted, almost every position is extremely contentious. Public discussion of economics has no coherent rationale, and governments, notwithstanding their emphatic rhetoric, cannot give a credible explanation of how it is that their policies fail to achieve the results they seek.”
Wynne Godley, Professor of Economics, University of Cambridge, writing in the Financial Times in 1983.
Until about 1890, economics was developing in a coherent way along the path that began with the French Physiocrats and continued with Adam Smith, David Ricardo, John Stewart Mill and Henry George. The last named wrote several books, the best known being “Progress and Poverty”. The conclusions he drew were such a threat to the established order that they had to be buried. This could only be done by concealing them with a fog of confusion.
The multiplicity of “schools of economics” is a product of this confusion. We do not see alternative schools of chemistry, one following the phlogiston theory, another the oxygenation theory of combustion. The matter was settled. Where there are apparently conflicting theories such as the particle and wave theories of light, the differences are acknowledged and experiments devised to attempt to settle the question.
How economics came to be what it has become is described in a book called “The corruption of economics” by Mason Gaffney. It was deliberate and succeeded. We end up with nine schools of which at least eight are bogus.
I appreciate Henry George and I think his work is long overdue a reconsideration, but he didn’t cover everything. Other perspectives have focused on different issues, and it’s together that we get the full picture.
The reason that we have multiple schools is that economics is not a natural science.
Have you studied Henry George ie the three books Progress and Poverty, Protection and Free Trade and Science of Political Economy?
What is not covered?
Economics is a social science. It is therefore possible to use the methods of the natural sciences. The subject was been concealed behind under a fog of confusion, primarily to ensure that George’s conclusions did not come to wide attention. George was not the only one to be affected in this way. Thorold Rogers came under open attack.
I haven’t studied them all, no. But if he had a) covered every possible issue of his own time and those of the future, and b) was right about every single one of them, then Henry George would be God.
The Georgist perspective needs to be heard more than most, not least because it has been so deliberately obscured, but it still has no claim to be Gospel truth.
The existence of different schools doesn’t mean there are nine entirely separate ways of understanding economics. Some of them are a matter of focus, often a corrective – feminist or ecological economics for example. Others have a specific purpose that they are working towards, such as developmental economics. Some are out to refute each other, sure, but multiple perspectives can lead to synergy and deeper understanding.
Henry George is at the end of the line of Classical Economists. There have indeed been changes in the way economies operate just as there have been in building technology. But the essentials do not change. Habitable structures still need solid grounding, weather-resistant walls and a watertight roof that will not blow away. This is true regardless of whether the structure is a tent made of skins or a glass skyscraper.
The economic process can be described thus: humans apply their labour to natural resources produce goods which they then exchange with each other. Some of those goods are consumed immediately, others are used to produce more goods. These latter are called Capital. They include the fisherman’s boat and tackle, the huntsman’s spear, etc. This behaviour is one of the characteristics of humans and has been for the past half million years.
There is no difference in principle between taking lumps of silicon dioxide out of the ground and making them into flint knives and axe heads, and making them into silicon chips. Nor is there any difference in principle between scratching marks on a stone and making magnetic impressions on a computer data storage system. Nor is there any difference in principle between the huntsman’s spear and the car factory where the vehicles are assembled by the robots inside.
Any economic theory that does not build on these foundations will lead people astray.
Couldn’t agree more with the sentiment of this post. Economics needs to move on from its physics envy and accept that opinions and subjectivity dominate the field of study. As more data becomes available, it isn’t leading to convergence to a conclusion, but rather divergence.
The contrarian and the heterodox have been emboldened by the failure of the mainstream in recent times. More schools are arising and I’d anticipate this will continue as long as this level of dissatisfaction remains in the developed world.
The classical economists in the tradition of the French Physiocrats, and that includes Smith and Ricardo, put the subject on a sound footing. Their conclusions were a threat to the powers that be, since the prevailing economic system was revealed to be based on systematic robbery. Consequently they had to be buried. This was done very thoroughly in the last decade of the nineteenth century by spreading a thick layer of confusion over the entire subject.
That is why different schools keep on arising. So many people are fumbling in the dark.
The economic process is in essence extremely simple. Man (Labour) fashions natural resources (Land) in to useful commodities (Wealth). Some Wealth is consumed directly, but some consists of items such as tools and machinery which are returned to the productive process to help create further Wealth. This is called Capital. The three factors of production are thus Land, Labour, and Capital.
This is self-evident if you think about it but you will not find this statement at the start of a texbook on the subject.