User:Daask/sandbox/The Economics Anti-Textbook

The Economics Anti-Textbook is both an introduction to, and critique of the typical approaches to economics teaching, written by Roderick Hill and Tony Myatt in 2010. The main thrust of the authors' argument is that basic economics courses, being centered on models of perfect competition, are biased towards the support of free market or laissez-faire ideologies, and neglect to mention conflicting evidence or give sufficient coverage of alternative descriptive models.

Structure
The book primarily discusses major topics of microeconomics, including consumer behavior, firm behavior, market structure, externalities, income distribution, government, and international trade. An appendix discusses the financial crisis of 2007–2008 in light of the earlier discussions of markets.

Each chapter begins with a summary of common neoclassical economic textbook teaching on the chapter's topic, and then proceeds to discuss the limitations of these teachings and their public policy implications. Throughout the text are suggested "Questions for  Your  Professor" designed "to reveal the ignorance of neoclassical economics professors of their own discipline, their lack of understanding of alternative theories and their wilful neglect of conflicting evidence."

Topics
Follows Polanyi in seeing markets as embedded in societies and responsive to socio-cultural pressures.

It points out that the neoclassical economics taught in most introductory economics courses assumes unlikely scenarios and questions these assumptions. Hill and Myatt observe that while mainstream economics textbooks often acknowledge information contrary to neoclassical economic assumptions in passing, they proceed with these assumptions throughout the vast majority of their work. Hill and Myatt refer to this rhetorical strategy as "note then ignore".

The book follows in asserting that most current businesses set prices are not significantly set by supply and demand empirical studies show that firms mostly change output levels in response to demand with little change in price, and are unlikely (given that almost all firms in advanced economies have some market power to set prices) to fully “pass through” cost changes to consumers.

Seeks to both teach economic material and also to unlearn what is written in other economics texts.

mainstream economics is markedly individualistic; reading mainstream economics textbooks makes the community invisible to economist’s eye This book, along with another introductory heterodox economic text,, are much more conscious of social goods and community consequences of economic decisions.

Introductory economics works largely ignore the social impacts of their work, which leads to ignorance of systematic negative consequences, and especially the disproportionate distribution of these consequences.

Point out the absence of discussions of power in economics textbooks, and that this leads to obvious inadequacies in classical economic theories in explaining notable features of the economy such as executive pay.

Example
An example of the book's approach is the theories surrounding minimum wage. Classical micro-economic theory dictates that in a perfectly competitive market, raising the legal minimum wage will increase unemployment, as it prevents the hire of workers whose market value falls below the legal minimum. Society therefore loses from the imposition of a minimum wage due to the loss of allocative efficiency. While real markets may not be perfectly competitive, the model of perfect competition provides a good approximation to real market behaviour. A number of counterarguments to this are given.
 * 1) The classical model, while neat, is only a hypothesis which should be experimentally verified before being accepted as fact.
 * 2) Over 30 years of econometric studies have failed to conclusively prove or disprove the hypothesis that raising minimum wage will increase unemployment.  The theory is surrounded by a `protective belt of assumptions' which makes conducting such studies near impossible.
 * 3) The existence of market friction, asymmetric information and search costs all violate the assumptions of perfect competition.  The authors argue that monopolistic price theories may depict reality better than the perfectly competitive model.  In this case it can be shown that raising a minimum wage can in some circumstances, lead to a decrease in unemployment.
 * 4) The existence of multiple equilibria in a supply/demand system may mean that imposition of a minimum wage forces the system over a tipping point from a less efficient to a more efficient equilibrium.
 * 5) Arguments in favour of increasing allocative efficiency were in any case constructed in an era where society was less wealthy than it is today.  Recent studies have shown that for well-off societies, the happiness of a population has little correlation with its absolute wealth.  Therefore, efficiency may not necessarily be an important goal of resource allocation in any case.  In any case, efficient markets can have morally undesirable outcomes.

Other areas
Later chapters explore the concept of bounded rationality and how it confounds classical arguments in favour of laissez faire; in particular it is noted that the very existence of an advertising industry disproves rational behaviour. Arguments from the field of game theory explain limited rationality and the balance of power of corporations over the individual.

Conclusion
Overall, the authors argue – with reference to Thomas Kuhn's Structure of Scientific Revolutions – that the existing economic paradigm is due for a change. The book presents their own paradigm for interpreting economic behaviour.

Context
The authors are heterodox economists in a mainstream economics university department.

The book seeks to encourage its readers to become skeptics, urging critical thinking against the hegemony of rigid free market ideology.

It is intended to challenge not economics as a field, which has come to include a much more diverse set of perspectives, but mainstream economic textbooks and introductory courses, which continue to portray a simplistic perspective of absolute trust in markets.

The critiques in this book are mostly not innovative, but the authors present it in an accessible style which directly engages introductory economics textbooks. The book advocates for empiricism in economics and demonstrates the abundance of un-empirical free-market ideology in undergraduate economics classes. Many authors have since repeated similar concerns about economics education.

The book is one of several textbooks comparing mainstream and heterodox perspectives on economics, along with and. Other similar textbooks offering alternative perspectives to mainstream economics include and. None of these have yet achieved widespread adoption. A thorough review of critical economics books relevant to 21st century economies recommended this book as a textbook in real-world economics which supports a broad view of economic perspectives, along with, , and It is one of the most popular works critiquing neoclassical economics, along with  and.

The book was part of a movement of economists attempting to offer explanations of economic theory to the general public in the wake of the Great Recession.

Reviews
Despite not yet being reviewed in mainstream journals, as of February 2011 the introductory chapter has received 13,000 views on stumbleupon and the book has attracted positive comment on various blogs.

The Huffington Post especially recommended the last chapter on trade and globalization.