UVM flacks for Wall Street by pushing “free market” economics

Margaret Thatcher, one of the early pushers of neoliberalism (along with US President Reagan), free-market capitalism and  associated ultra laissez-faire economic theories.

I came across an interesting article recently that was written for the Stowe Reporter by a former UVM student who laments the “calcification” of economic education as embodied in the economics core curriculum at UVM and in most colleges and universities. The points made in the opinion piece reminded me of arguments I make in my popular course, History of Economic Thought. This course is no longer offered at UVM as a result of my removal from UVM’s Dept. of Economics in what amounts to an ideological purge.  I have taught this course at UVM for the last eight years (during which I proposed and had accepted two honors college courses, one of which was Alt Econ:Rethinking Homo Economicus), and elsewhere for nearly 30 years.

A little history goes a long way. That is, teaching history of economic thought and sociology of economics is a powerful way to get students interested in the subject (epistemology and ontology are the fancy words to partially describe this approach), which usually only happens when students finally get what economics is all about. Freed from math blocking the acquisition of deep insights, students are exposed to a heretical tradition in economics – and the long standing fight over ideas about capitalism as a social system, and its origins — a fight over ideas that rages today. But you’d never know it in the standard classroom.

As the late historian of economic thought (and my former professor) Robert Heilbroner would often say, “the best kept secret in the economics classroom is that economics is really about the study of capitalism” (my emphasis in paraphrasing). Math obfuscates, especially at the undergraduate level. But history empowers. No surprise that history is not valued nor hardly ever taught in economics classrooms today.

Sadly, very view economics departments teach history of economic thought or serious economic history anymore (when is the last time you saw US labor movement history taught?). I remember when the late Ross Thomson, one of the great economic historians (and a former professor of mine who became my colleague at UVM before passing away in 2015),  corrected my comment that “finally we are seeing history of capitalism courses appear following the 2008 financial collapse”.  Ross quipped, “yes, but alas not in economics departments.” He was correct. As I investigated this, it was in history, geography, and political science departments where you saw history of capitalism courses appear. Not in economics. I mentioned to Ross that my course designed for the Honors College and taught there following the 2008 global financial crisis was therefore a welcome exception (History of US Financial Crises). He agreed, but like my history of economic thought course, it is no longer available to students at UVM.

History matters, despite what your economics professor wants you to believe.

The study of economics, however, will not make any real sense to students until they learn this history and facts about the battle lines inside the profession, which you only get by studying economic history and its consequences, the related subject — history of economic thought. But the profession places next to zero value on these areas. Now let’s see why this is relevant to Tamara Burke’s opinion piece.

Back to the wonderful Stowe Reporter opinion piece, penned by Tamara Burke, and titled “My alma mater isn’t interested in receiving sheep.” This a witty and thoughtful rant on the failure of economics education and its links to money. “To teach economic myth and theory circa 1776 in 2016 suggests a calcification of scholarship that is sadly uninformed and depressingly uninspired, ” she concludes.

Tamara had received a fundraising letter for new UVM “professorship.” She writes: “They’ve chosen a professorship in the economics department,”  [Jane Knodell, professor of economics at UVM, “was awarded the Mark J. Zwynenburg Green and Gold Professorship for her dedication and hard work at UVM,” writes The Vermont Cynic], but the “enclosure” she received from UVM’s fundraising appeal related to the above mentioned “Professorship,” stated the following: “The core intellectual content of the undergraduate economics major is conveyed by presenting the free-market economy as a stable, self-correcting system.” Yes, and this is exactly the problem, as students are not getting history but instead being force fed  free-market economic models that are supposed to produce stable and self correcting outcomes (debunked analytically and empirically decades ago). While this is good for Wall Street, which is opposed to social or government meddling with markets, it is not good for the rest of us. Being asked to fund a Professorship linked to such a core curriculum was just too much to stomach, it appears. A professorship, as we will see below, that is linked to Wall Street.

Tamara then quotes from the enclosure again: “The free-market system allocates labor, capital and growth and growing prosperity both in the U.S. and globally. Armed with these insights, most undergraduates proceed to pursue careers as managers and professionals working for the companies that constitute the productive core of the free-market system.” Right, the core curriculum sets them up to believe (“insights”) the system they work for is the best of all possible worlds (“free-market system” producing “growing prosperity”). You might as well have Wall Street writing the advertising copy for the Professorship. This kind of talk after 2008’s global financial crisis seems delusional. But UVM is pushing this line.

This highly ideological fundraising message is shocking, but makes perfect sense  given that some or possibly most (it is not clear) of the Professorship money is apparently arriving from Wall Street. Fidelity, one the largest Wall Street brokerages (which benefits from the message in the enclosure), is backing the Professorhip: As UVM Foundation wrote to me in response to my query about the Fidelity money arriving to UVM in boatloads:

To clarify, the Fidelity Charitable Gift Fund has given a total of $43,000 to the UVM Department of Economics (see “Giving Summary for Schwab and Fidelity” sent on 4/18). That total consists of six transactions made between 9/2014 and 3/2016 (see “Fidelity Details – Economics and Grossman School of Business” sent on 5/1). Those six transactions benefited only two funds in the department: the Economics Fund and the Mark J. Zwynenburg Professorship [emphasis added] (see “Fidelity Details – Economics and Grossman School of Business” sent on 5/1) – with two transactions totaling $2,000 to the Economics Fund and four transactions totaling $41,000 to the Mark J. Zwynenburg Professorship.” It is described as a $400,000 Professorship by The Vermont Cynic, by the way, so it appears we have Wall Street funding it, which Jane Knodell claims is a “grass roots” funding effort. Got to be the first time anybody has called Wall Street “grass roots.”

See how much other money Fidelity and Schwab are doling out to UVM by clicking here. These leading Wall Street firms and a raft of others, including Goldman Sachs, Merrill-Lynch (now owned by Bank of America), State Street, Bank of Boston have been donating to UVM’s Dept of Economics, UVM has revealed in response to my public records requests. Even Exxon-Mobil has given money to the Dept. of Economics, and recently to UVM’s general fund.

This made me think of last summer’s Dept of Economics retreat, when the Chair of the Department (Sara Solnick) stated “we have received a large sum of money that is purposed to promoting free market economics.” Yep, this makes perfect sense now. First, I thought, upon hearing this, seeing that this did not provoke even a raised eyebrow from the faculty attending, that this will probably mean getting rid of people like me, a known critic of Wall Street.

Capitalism: a self-correcting system?

In Tamara’s words: “The premise — to wit, the selfish behavior of individuals participating in the free-market creates a positive, self-correcting system that tends to a rational distribution of resources and market equilibrium — was disputed in the 1980s, when Mark [Zwynenburg] and I were at the university. But its failures, for society as a whole, are, at this point, so far beyond question as to make it unethical to continue promoting this mythology as the primary focus of an undergraduate education.” [my emphasis]. Right, and removing teachers who argue Tamara’s point, too.

But UVM’s Department of Economics refuses to remove the straitjacket of this neoclassical mythology that is so instrumental ideologically for legitimization of the class system we are living in — and for giving Wall Street a pass. Red herring statements like “criticism of the standard model is encouraged and appreciated” but the model must be criticized “fully and fairly first” before criticizing it (Chair comments) at UVM just provides cover for the removal of those who provide real alternatives (to a fully and fairly taught standard model) and show how the standard model is a calcified body of thought that many of its own practitioners have abandoned. There are some great alternative approaches students want to hear about.

Here is Tamara again using analogy to make the same point: “It is the equivalent of an undergraduate in biology spending three and a half years on the role of the humors as metabolic agents, their properties in regulating bodily health, and bloodletting as a means to health and well-being, then spending the last semester briefly going over germ theory.”

The Professorship  was described like this by UVM: “The Mark J. Zwynenburg Green & Gold Professorship of Financial History was established in 2013 to assist the Department of Economics in its efforts to recruit and retain exceptionally qualified new faculty members actively engaged in teaching and research investigating financial history issues.

Right, “investigating financial history issues”, oh, and don’t forget, promoting free market economics, or you are out for teaching “bad economics”!