{"id":4474,"date":"2016-04-01T15:02:29","date_gmt":"2016-04-01T14:02:29","guid":{"rendered":"http:\/\/www.erasmusmagazine.nl\/en\/2016\/04\/01\/als-we-stoffige-economen-hadden-gelezen-was-de-crisis-voorkomen\/"},"modified":"2025-12-19T11:22:16","modified_gmt":"2025-12-19T10:22:16","slug":"als-we-stoffige-economen-hadden-gelezen-was-de-crisis-voorkomen","status":"publish","type":"post","link":"https:\/\/www.erasmusmagazine.nl\/en\/2016\/04\/01\/als-we-stoffige-economen-hadden-gelezen-was-de-crisis-voorkomen\/","title":{"rendered":"\u2018If we\u2019d read those stuffy economists, the crisis could have been prevented\u2019"},"content":{"rendered":"
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\n\t\n\n<\/svg>\n<\/span>\n\tImage by:<\/span>\n\n\t\t\t\n\t\t\t\t\t\t\tLevien Willemse<\/a>\t\t\t\t\t<\/span>\n\t<\/p>\n<\/figcaption><\/figure>

Education and science are also responsible for the financial crisis of 2008, believes Irene van Staveren. She appeals for more diversity in teaching economics and in the top journals. Reread those old stuffy economists and look beyond the neoclassics.<\/p>\n

It\u2019s probably the most frequently asked question to economists after the crisis: why didn\u2019t you see it coming?<\/p>\n

Irene van Staveren, Professor of Pluralistic Development Economics at the International Institute of Social Studies (ISS), part of Erasmus University in The Hague, has an answer. \u201cMost economists assume that we have efficient markets. In financial markets in particular, the risks which all parties take separately should keep each other in balance, so that the net risk is zero. Then you don\u2019t expect a crisis. Furthermore, many economists think that crisis situations are caused by an external factor. It\u2019s not in the model, so as an economist you cannot explain or predict a crisis.\u201d<\/p>\n

Yet the question isn\u2019t entirely fair, because some economists did see the crisis coming, says Van Staveren. One problem: these were not neoclassical economists and neoclassical economists are the ones who are mainly published in top journals and taught in economics degrees at universities.<\/p>\n\t

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Since 2010, Irene van Staveren (1963) has been Professor of Pluralistic Development Economics at the International Institute of Social Studies (ISS), part of Erasmus University in The Hague. In the 1980s, she studied economics at Erasmus University, obtaining her PhD in 1999 with a thesis on an Aristotelian view of economics. Since then, she has been associated with the ISS. As a board member, Van Staveren is involved in the Sustainable Finance Lab<\/em>, a think tank which wants to promote a more sustainable financial sector. At the end of last year, she was appointed vice chair of the Dutch branch of Rethinking Economics<\/em>, an international network of students and citizens working together to transform economics education for the better. At the end of February, her book was published by Uitgeverij Boom entitled Wat wij kunnen leren van economen die (bijna) niemand meer leest. <\/em>[What we can learn from economists who (nearly) no one reads any more]<\/p>\n

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Old answers to modern problems<\/h3>
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\n\t\n\n<\/svg>\n<\/span>\n\tImage by:<\/span>\n\n\t\t\t\n\t\t\t\t\t\t\tLevien Willemse<\/a>\t\t\t\t\t<\/span>\n\t<\/p>\n<\/figcaption><\/figure><\/div>

Last month, her new book was published entitled Wat wij kunnen leren van economen die (bijna) niemand meer leest<\/em>. In this book, Van Staveren discusses the ideas of her ten favourite economists in relation to modern economic problems.<\/p>\n

She wrote it out of frustration with the scope of the economic debate and the economic policy. \u201cTake the rising costs in healthcare. That\u2019s a big problem, but people always come up with the one solution: privatization and the operation of market forces. And then everyone\u2019s surprised when so many mergers take place and monopolies are created. You should have seen that coming, because someone like the British economist Joan Robinson predicted that ages ago.\u201d Through her book, Van Staveren wants to offer tips to (future) policy makers. Not by regurgitating \u2018those old stuffy economists\u2019, but by providing old answers to modern problems and with modern examples of solutions which those old stuffy economists could have thought up.<\/p>\n

Policy makers could have learned more from Frank Knight, for example, who got his PhD a hundred years ago with a thesis in which he made a distinction between risk and uncertainty. Or from Hyman Minsky, who explained that risks strengthen each other by optimism, says Van Staveren. \u201cIf economists had devoted more attention to them in their education and if policy makers had remembered and used their wisdom, then monitoring in the financial sector might have been different, the risk models of the banks would have been different and we would not have had to go through the crisis to this extent.\u201d<\/p>\n

Melting economics book<\/h3>
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De cover van The Economist in juli 2009.<\/span><\/p><\/figcaption><\/figure><\/div>

In the summer of 2009, the leading magazine The Economist <\/em>had already blamed university economics programmes as one of the reasons for the crisis. On the cover, a melting book \u2013Modern Economic Theory. <\/em>The message: limitations in the economics education have contributed to the crisis, so we need new economics teaching. \u201cIf a magazine like that issues such a message, you\u2019d expect something to change. But the book didn\u2019t materialise.\u201d So Van Staveren decided to write it herself. That resulted last year in Economics After the Crisis<\/em>, an introductory economics book that presents various schools of thought in parallel.<\/p>\n

\u201cThere is no other economics book that addresses different theories next to each other,\u201d Van Staveren explains. \u201cYet every other science starts by doing that. Open any introduction to sociology and you\u2019ll find a list of the main thinkers and how they still influence modern thinking on the subject.\u201d Introductions to economics mainly address neoclassical concepts and models, not Veblen\u2019s institutional approach or Minsky\u2019s instability theory.<\/p>\n

More relevant form of economics<\/h3>
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\n\t\n\n<\/svg>\n<\/span>\n\tImage by:<\/span>\n\n\t\t\t\n\t\t\t\t\t\t\tLevien Willemse<\/a>\t\t\t\t\t<\/span>\n\t<\/p>\n<\/figcaption><\/figure><\/div>

That was something that annoyed Van Staveren back in the 1980s, when she was studying economics in Rotterdam. \u201cI couldn\u2019t swallow the concept of mankind being taught at the time.\u201d<\/p>\n

And she had questions to which no satisfactory answers were forthcoming, either in lectures or in books. Take the wage differences between men and women, for example: why is there so much difference? Why do so many women work part time in the Netherlands? \u201cVery little attention was devoted to these subjects in Labour economics, for example.\u201d<\/p>\n

When she was studying the History of Economic Ideas, she had to skip the chapter about Karl Marx. But tell a curious young adult not to do something and they will do exactly that. \u201cI naturally went straight to De Slegte for a second hand copy of Das Kapital<\/em>.\u201d<\/p>\n

She was strongly tempted to switch to another discipline, says Van Staveren. \u201cFriends asked me: \u2018Irene, why make life so difficult for yourself by continuing with such a subject? But gradually I came across more economists who engaged in the type of economics which I feel is a more relevant form of economics, one which is closer to economic reality and which has a more realistic concept of mankind.\u201d This only encouraged her to continue, because she wanted these economists to be highlighted and discussed as well.<\/p>\n

After finishing her studies, Van Staveren spent a year working on a research proposal for a PhD place about an Aristotelian perspective on economics, based on Amartya Sen and the feminist economics which was just emerging at the end of the 1980s. \u201cI got no response from professors at the economic faculty. They didn\u2019t feel it was economics. They told me to try sociology, women\u2019s studies or philosophy.\u201d<\/p>\n

In the meantime, she had a partner and two children and another job, because she had to earn a living, but her hankering for research continued. Eventually, eight years later, Arjo Klamer returned to the Netherlands and Van Staveren was immediately able to embark on her research under his supervision.<\/p>\n

Value of rationality<\/h3>

Now, some twenty years later, Van Staveren is Professor of Pluralistic Development Economics, member of the Sustainable Finance Lab <\/em>and was recently appointed vice chair of the Dutch branch of Rethinking Economics<\/em>, an international network of critical economics students who want to see more pluralism in economics education. She also sees that little has changed. The neoclassical theory is still dominant.<\/p>\n

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