1.2.5 Special problems in the presentation and teaching of economics

The academic curricula of economics as well as the teaching methods are the same all over the word. That seems logic at first glance, because the curricula of other subjects like physics, chemistry, math and so on are as well the same all over the world. If there exists some universal laws, valid all over the world, the curricula should be the same all over the world and economists pretend that "economic laws" are as universally valid as natural laws. This even might be true, but is not very helpful anyway.

It is a universal law, to give a simple explanation, that the more money someone has, the more he can spend. That is a universally valid "economic law". The problem is, that this law is only universally valid, because it is very trivial. Most "economic laws", especially in microeconomics, are of this kind.

It is universally true, that the utility of something decreases the more of that something is consumed. Beside the fact the marginal revolution of the neoclassic never took place, because we found the law of the decreasing utility already in the work of Jean Baptiste Say, the reason for this universal validity is the triviality. It is well posible to describe this "economic law" in mathematical way and that it than looks much more scientific, but it is still a triviality.

"Economic laws" tend as well to ofuscate reality or the basic problems behind a phenomena. In every textbook of microeconomics we find the economic law that the remuneration of labour depends on the marginal efficiency of labour. That is obvious at first glance. No entrepreneur will pay 10 dollars an hour for another worker if the benefit he gets in this hour is less than 10 dollars. Therefore the solution for unemployement in the neoclassic theory, neoclassic theory is what nowadays is called microeconomics, is simple. In case of unemployement wages must be reduced.

Actually there is a second possibility to solve this problem, much more complicated to achieve and beyond pure economic thinking. Another solution would be to raise the marginal productivity of labour. We actually don't want to know that the more labour is employed, the less is the marginal efficiency. This might be true, but is not interesting. What we want to know is why the marginal efficiency of labour is 50 dollars an hour in Germany and 10 cents in Bolivia. We want to know how we can organise in a better way the transfer of know how in order to increase the productivitiy in Bolivia.

It is obvious that by reducing the wages we can create jobs. If we reduce wages a lot, that's the idea of David Ricardo, people starve to death and dead persons are not unemployed, that's evident. But in that's not the solution for our problem.

It is obvious that the real problem, the transfer of know how and knowledge, can't be desribed with some simple mathematical equations and therefore is not mentionned in any textbooks about microeconomics. If we talk about transfer of knowledge we talk about complex topics. How to train children in remote regions, how to simplify the access to information, how to reduce the costs of schooling, what role e-learning can play in this topic, which topics has to be taught in the different subjects, which didactical methods are to be used, how to create an environment sufficiently complex to improve the skills and so on. Some simple equations are not helpful talking about real problems.

An "economic law" can be valid in Germany and in Bolivia and at the same time be irrelevant in both countries. Economists believe that for the fact that there are universal economics laws their since is much more respectable than sociology or political science. The problem is, that universal validity is not the same thing as relevance. Trivialities are true all over the world, but irrelevant.

That is the difference between "economic laws" and natural laws. Natural lows are the basis of all kind of technologie, all over the world, and therefore they are at the same time universally valid and relevant.

Neoclassic theory, and therefore microeconomics as well, because microeconomics is only an ecclectic selection of neoclassical concepts, most of them from Alfred Marshall, consists of analizing equilibriums. But actually we don't care about equilibriums. We are not interested in knowing the equilibrium price for rice in India and in the US. We want to know why americans consume rice only in a fashion japanese restaurant in form of sushi and in Burma people die because the equilibrium price is to high for a lot of people.

We will see later on, when talking about the original texts, nowadays textbooks about microeconomics are only simplifications of the concepts of Alfred Marshall that in some contexts these "economics laws" can be useful, but Alfred Marshall is much more cautious concerning the relevance and the universal validity of these laws. Alfred Marshall doesn't call them laws neither, he calls them tendencies.

When talking about teaching and academic curricula, we don't talk only about the relevance of a certain topic, we talk about opportunity costs as well. The question therefore is not only if some topics are relevant or not, but if there are some more relevant ones. In these case the law of decreasing utility can be applied.

To be more precise. This manual covers the essential theory of economics. More is not needed and can be covered easily coverede in two years. In other words, other two years, if we suppose that a study lasts four years, can be dedicated to some kind of especialisation. If someone want for instance to specialise on journalism, a goog understanding of online journalism is much more helpful, than the lagrange function. If someone want to esecialise in accounting, a good knowledge of oracle is more important that calculating the consumer rent through integration. It is neither necessary to explain the elasticity of prices in a verbal, graphic and mathematical way, if someone want to work for a ngo. Some people might be interested to focus on a certain cultural environment, China, South America, Africa whatever. In this case a good knowledge of the respective languages is needed and so on.

The way economic teaching is organised nowadays leads to a situation where million of people have the same useless stuff in their heads.

What is needed are people with different qualifications, but nobody needs people whose "whisdom" consists of universal economic laws which can nowhere applied in practice.

There is no need for persons who includes human capital as a parameter in a model. What we actually need are people with a specific human capital able to resolve concrete problems. If the universities are not able to produce this kind of people it would be better to close them.

It is obvious that only universal problems can be discussed with universal economic laws, but this kind of discussion is never usefull when discussing about a concrete problem.

We will discuss in this manual some basic ideas, which allow us to discuss about certain problems. We will discuss about the advantages of free market and the problems of this economic system, about the function of money and the reason why money is not, as supposed by the classic and neoclassic economy just a veil. We will see that the type of interest doesn't play the role supposed in the classic theory.

We will see, in the chapter about Keynes, that a lot of mistakes characteristic for the classical und neoclassical economic theorie dominates the public debate still today and are the causes for a lot of problems.

Two years discussing the corridor within which is located the truth is enough. After these two years and after having defined this corridor we must dedicate our time in finding solutions for concrete problems and a further discussion about spectres is not needed.

It is important to know this corridor in order to avoid every kind of radicalism and it is important as well that the economists succed in convincing the people that marxism at one side and the chicago boys at the other side won't resolve any problem, but at the finally concrete resolutions for existing problems are needed.

The interest of the faculties of economics is obvious. They want depict economics economics as the queen of social sciences. This is more prestigious than accepting that factors beyond the narrow limits of economics influences the economy and that a purely economic problem doesn't exist.

The public discussion is that there is little difference between the various countries and continents, and is often dominated by prefabricated concepts and a personalisation of the problems. The only progress is the fact that extreme point of views, Marxism and Chicago boys, are nowadays irrelevant.

The public debate focuses more on persons than on economic causal chains. Both tendencies, the prefabricated concepts and the personalisation of conflicts doesn´t fit with the idea of a democracy as a learning process, see The Open Society and his Enemies.

People all over the world get the impression that it doesn't matter what they vote for; the result is always the same, and, therefore, the participation in the elections decreases. This is a logical behaviour if another wrong theory only substitutes one wrong theory. Instead of a learning process which leads to a better understanding of economic issues we have substitution of wrong answers by other wrong answers already tried some years ago.

In order to get better results or to improve the learning process, a qualified electorate is needed. Therefore there is a lot of work for economists, but there is no need for policy advice. In the long run, we need a qualified electorate as opposed to qualified politicians. The quality of democratic decision making depends on a qualified electorate and not on qualified politicians.

The fact that economists focuse on policy advice is the first error. The second error is that economists tend to exclude everything they don`t consider economically relevant. (We will talk about that topic later on, see for example methodological basis.)

For instance, the know-how of economic theory appears as a simple variable, but the economic theory doesn't explain how to produce or how such know-how transfer can be improved. If we talk about producing and transfer of knowledge, we speak of the educational system, about the way research and development is organised, about didactic, etc. We also talk about very concrete issues that have a massive impact on economic development; although economists consider them as something beyond economics. That's not useful and we need a more interdisciplinary approach.

If there is a lack of entrepreneurial personalities in some countries, an analysis of this problem is needed. Furthermore, moving some curves from the right to the left and from the left to the right, as is usually done in most universities is not a serious debate about real-world problems and nobody takes this kind of exercise seriously.

It would be already a big help if people stopped talking about capitalism and socialism as if there were only these two options. (Irrelevant nowadays, although Milton Friedman continues to use these terms because modern economies a are always something similar to what is called in Germany social market economy.)

Most people who use the word capitalism mean a market economy and these two terms refer to two entirely different things. The term capitalism refers to the fact, following the classic theory and Marxism, where the accumulation of capital is essential for the development of an economy. On the other hand, the term market economy refers to an economic system where the processing of information is done in a decentralised way by individuals (households and companies) through prices. If these two different concepts were mixed up, a rational debate is no longer possible. We are going to discuss this topic very often throughout this manual.

Capitalism never existed, don't exist and will never exist. The classic, neoclassic theory and marxism share the same mistake. They believe that capital is the condition for investment, although the condition for investment is money and know how and money is something very different from capital, although Adam Smith and Jean Baptiste Say, as we are going to see later on, see for example labour and accumulation, use the two terms as synonymous.

The accumulation of capital is not a crucial feature of western economies. Capital is destroyed every time a company goes bankrupt and created every day with money if there is someone able to do something useful with that money.

The result of this kind of discussion, a discussion with terms imprecisely defined, is complete confusion. Everything is mixed up with everything and some people confuse as well liberalism with capitalism or neoclassic theory. Liberalism becomes a synonym for unequal distribution of income and socialism for wasting of economic resources due to a lack of incentive or disincentives and inefficient information processing.

We find that kind of confusion not only in the public debate, but we also find that confusion as well in the writing of some well-known economists, for instance in the writings of Friedrich Hayek.

We will see throughout this manual that these vague terms lead nowhere. The reality is almost every time more complicated. Milton Friedman believes that everything can be controlled through the mechanism controlling the market and everything that can't be controlled through this mechanism should not be controlled at all. We will see throughout this manual that through the mechanisms controlling the markets, we can't control the educational system; although Milton Friedman claims the opposite. At the other side, the fervent followers of socialism should explain how to control systems not inherently controlled by market mechanisms. The mere fact that a public employee gets his money independently from the result of his work does not mean that he works altruistically for the benefit of humankind.

The error of Milton Friedman and Friedrich Hayek is not that they doubt the efficiency of public institutions; their error consists in believing that only market mechanism can exercise sufficient control.

We doubt that the way economics is taught nowadays allows people to analyse concrete problems. It is well possible that there may be differences between one country and another although the author doesn't believe it. However, parliaments, in general, are dominated by jurists, although economists, judging from their training, should look at problems from different perspectives and be better at evaluating an economic problem. (And most problems are at least in part economic problems.) It seems that even lay persons, and jurists are lay persons in economic issues, are better prepared for analysing economic problems, at least they are better prepared to convince others that they have a solution.

Mathematical modelization, apart from the fact that the result of this kind of analysis is low, it is not very helpful in improving the quality of the public debate about economic issues. The problem is that economists never learn to explain their ideas in a clear and straightforward way and don't have therefore don’t have any influence on the public debate. Out of the irrelevant academic circle, they simply doesn' t exist.

We are confronted with a problem we observe very often in the public sector. Economists, although they talk a lot in their lectures about the necessity of defining and controlling goals, don't set any goals concerning the objective of the study of economics, and still less, they discuss parameters allowing us to monitor the achievement of these objectives. Not defining goals is a real weapon in the fight for resources. If the goals are not clearly defined, the distribution of resources depends on personal relationships.

The scheme is universal. If there are no clearly defined goals, we have kind of "pudding" hard to nail on a wall.

Due to the fact that parameters are allowing to measure the achievement of predefined goals, if there are any, nobody can say if the study of economics is useful or not in measuring the quality of one university over another. One goal often mentioned is the integration of economics graduates into the labour market. In this case, concrete data to measure the achievement could be easily obtained, even though nobody seems particularly interested in getting this kind of information. By asking the graduates one year after graduation if they had found a job, and how much they earn, and by publishing these data on the website of the faculty, a comparison between different faculties would be easily possible. However, public institutions, as well as companies, try to avoid competition, and the problem with the universities had been already described 150 years ago in Wealth of Nations of Adam Smith, see a purely literal evaluation.

The fact that there are no clear defined goals in the academic curricula is not even the worst problem. If nobody knows what the future will bring, the best thing to do is giving students a choice. Individuals, in general, know what best fits them, what they like to do and what they can do. In the context of insecurity, it doesn't make any sense that people with no working experience and the academic staff, in general, doesn't have any working experience and define the academic curricula. They will include what they know best, and that's not necessarily what is the most important.

We will show throughout this manual that the basic concepts of economics can be taught in four semesters; two years instead of four, and the rest of the time can be used for any kind of specialisation related to economics. For example, more informatics, if someone want to work in a bank, more accounting, if someone wants to work as a tax consultant, more math, if someone wants to focus on statistics and so on. Also, combining economics with law can be a good choice because most laws have an economic impact, and good laws should take this into account. If a company wants to expand to China or Russia, a good knowledge of the respective culture is useful, at least a knowledge of the language spoken. In this case, it is more helpful to specialise in the things one is interested in instead of analysing the same problem in a verbal, graphical and mathematical way. One is enough.

There are two different ways of defining the academic curricula. The first way is that someone defines it in very precise manner. In this case, he or she is responsible if the results are below what have been expected. The other possibility is to give the students the opportunity to choose what they think best fits them. In this case, they are responsible for the results. Students are adults in a market economy everybody is expected to know what he is doing.

The situation is different in subjects like medicine or engineering. In this case, the profile required by the job market is well defined and, therefore, the academic curricula can be easily determined.

It is a curious phenomenon that thousands of lectures warn against the risk of government taking decisions with little information than any these of individuals. However, these same professors who give these lectures decide things about which they have little or no clue at all.

The reasoning above doesn't mean that the author is arguing in favour of an "economization" of the society. Humanities are necessary. Nevertheless, they have to enrich the public debate about "philosophical" problems, telling something amusing, stimulating, enlightening or whatsoever, allowing to see things not seen before, or give a hint to existential problems. However, dead things should be buried.

Even economics and literature can be a good combination if someone wants to run a company who sells literature and multimedia content through the internet. However, in this case, what was said before is valid. More people are needed able to found companies. We don't need more people who got their Ph.D. discussing irrelevant problems of irrelevant individuals in the Middle-Ages or something similar.

There is no need therefore for lectures about the pareto optimum. Without any mathematics, the idea can be understood by seven-year-old children, see Vilfredo Pareto. It is well possible that people in Africa only exchange products. If all participants in this exchange get an advantage of this exchange, they wouldn't do it. However, that is not what we want to know. What we want to know is how the living standard in Africa can be improved and with Pareto, we don't get any hint for a solution.

The faculties of economics are a good example for illustrating this general problem. If reality does not control a system, in other words through clear parameters, it inevitably goes astray. For instance, the markets control the engineering science. If the engineers at the end of their studies are not able, after a certain training period, to produce products ready for the market, it won't be the market who adapts itself to the situation, but the concerned faculties, otherwise the products would be produced elsewhere.

The impact of market mechanisms on costs, turnover, return on investment, etc. is so strong and clear that people react. A market in the sense of a free market society doesn't exist in economics, some strange actually, or properly speaking, a free market exists in economics, but only as an object of study and not as something people are involved in as acting subjects.

250 years ago, Adam Smith said that the decoupling of income and performance, typical for public institutions presents a risk for the economy.

The Faculties of Economics is not controlled by anybody. However, in the explanation of the disincentives and all the typical problems such as discussion of irrelevant problems (welfare economics), bad didactic, wired explanations of trivialities, focusing on the precision of models irrelevant for analysis of reality, subsuming relevant factors under abstract parameters (economic growth <=> know how) and so on, we find the same kind of problems in any system, which is not controlled and where there is no need to adapt itself.

Some may say that investigation and development is a public good. We will talk about that later when talking about Jean Baptiste Say and can therefore not be discussed in the logic of a free market which is obviously true. A science like molecular biology was at the beginning, pure science without any economic impact. Due to the fact that only the state or the government benefits from all the secondary effects, more employment and more taxes, reduction of social transfers and so on, the government is the only actor able to finance this kind of investigation.

However, the task of economists is to promote and improve the public discussion about economic issues. Only by improving the public debate, economic thinking has an impact on democratic decision making. Even the deepest insights are good for nothing if nobody cares about them.

Even in the case that a benevolent dictator puts into practice the wise advice of the economists, there is no guarantee that his follower will do the same. Also, in a democratic decision-making process, the only way to realize a political program is by convincing the voter. The problem is already discussed by John Stuart Mill, as we are going to see later. Most people believe that one can change the world through political parties. The truth is that this is not possible. The only thing that can be obtained is that political parties adapt their program to accepted ideas. The short way of changing society through political parties normally doesn't work. In the long run, a democracy is only stable if people can make a rational choice in democratic elections. Otherwise, they can as well throw dice.

Therefore, we don't need economists who tell us trivialities with sophisiticated math but the things that can be explained in some simple sentences. What we actually need are people able to explain difficult things in a straightforward way.

The same problem can be observed in humanities; a comparison economists fear like the Devil fears Holy Water. The efforts of economists to distance themselves from humanities or other social science are as futile as ridiculous. We will see later on, for instance here methodological bases, that every classical and neoclassical author making a great effort to define the subject of economics were well aware that it is hard to establish a clear demarcation between economics and other phenomena influencing economic growth. The answer given to this question differs from author to author, but at least there is a discussion. Nowadays there is a fixed canon of topics an economic parameter and every problem is discussed under this narrow perspective.

Humanities and economics don't produce anything in the strict sense of the term. Their product is the enlightenment of people. If an engineer produces something, for instance, a smartphone and the enlightenment of people is needed to use it, it is a bad product and hopefully will disappear soon from the market. There is no need to understand why a smartphone works, and very few people understand in detail how it works. The case of humanities, economics or other social sciences is different. Their product is the enlightenment of the people. If they have no impact on the public debate, we don't need them, and we better spend in this case our money on something else.

The mathematical modelization slipped over concepts obtained by mere intuition. The idea of decreasing utility is obtained by intuition, doesn't make it precise (the simple idea), it only makes it look more "scientific". A bunch of trivialities doesn't become science if they were mathematically modelized. We are going to discuss this topic later on when discussing the usefulness of mathematical modelization.

Physics is, as we are going to discuss later on, see methodological basis, is the methodological paradigm of most economists. This is not because there is any similarity between the objects of study, but the fact that the significant advances in physics were possible due to math and exact methods. It made physics ideal for exact science, and this exactness is aspired by economics as well, although this accuracy is only used to present an ideology as science.

The difference between physics and economics is apparent. In physics, the relationship between different parameters, for instance, mass, velocity, and energy is stable and not only a statistical relationship but a very exact one. The influence of certain parameters can be excluded in experiments, simplifying the testing of theories. In economics, there are never stable relationships between one parameter and another that can be described by a mathematical equation system. At best, there are some statistical relationships, but in this kind of relationships, it is never clear what is the cause and what is the effect and above all, these relationships are never stable. We will see later on when discussing about David Ricardo, that statistically stable relationships can be very unstable and the economic theory based on these relationships proves incorrect when this purely statistic relationships change. (What they actually do very often.)

To put it briefly, this manual aims to reach a broad public, students of economics as well as the wider audience and contains all essential ideas and concepts of economics and sometimes more than that. What is vital is only Adam Smith, Alfred Marshall and John Maynard Keynes. Léon Walras, Vilfredo Pareto (both of them included in every textbook about microeconomics) and Carl Menger are as useful as a manure heap in the living room.

The last ones are only included in this manual, because they show up in any textbook.

It is crucial to understand as well, and that becomes quickly evident if we discuss the theory of the different authors of classical and neoclassical theory in more detail, that something like classic or neoclassic economic theory doesn't exist. It is hard to see any similarity between Adam Smith and David Ricardo or between Alfred Marshall and a fool like Vilfredo Pareto. The other authors, Milton Friedman, Friedrich Hayek and the authors of the ordoliberalism tendency or school, a German specialty, are nothing else than some of Adam Smith and Alfred Marshall reloaded. Those who have little time can concentrate therefore on the chapters about Adam Smith, Alfred Marshall and, the most important of all of them, John Maynard Keynes.

Marxism, by the way, is the son of David Ricardo and inherits all the mistakes of classic theory about capital, saving interest and money. It is a strange kind of phenomena that neoclassic economy is regarded as the opponent of Marxism, although they share the same fundamental error; the idea that capital is the condition for investment. The only opponent of Marxism is Keynesianism. For an investment, money is needed, and money is something very different from capital, as we are going to see later when discussing Keynes. Saving equals investing, the most prominent equation of economics which we can found in every textbook about macroeconomics a dozen of times, is only true ex-post, but never ex-ante. In other words, saving is the result of investment, but not the condition. It seems that this is something difficult to understand. Governments tend to give incentives to stimulate saving even when the central banks are flooding the market with money.

There is no need for the proletariat to expropriate the capitalists after a long and painful process. The central banks can do that in one night without any pain. We are going to discuss the topic later on in detail.

It is necessary to reduce the study of economic topics in the narrow sense to two years and that the time saved being two years are used for some specialisation, see above. We will try throughout this manual to show that the study of economics can be more effective.

We included in this manual two German philosophers, Theodor W. Adorno and Ernst Bloch, possibly unknown to most readers, although a lot of information, as well in English, can be found about them through Google. There are several reasons for that.

The first one, Adorno, has been introduced, because he describes what is going to happen if the economy is not considered as an instrument, but dominates the whole society.

The second has been introduced because he describes a problem that can be observed very often not only in economics. People tend to take some things for granted; for instance that the behaviour of a certain ethnic group, of certain people, is stable and invariable and that they possess certain stable characteristics. In the long run, this is never true. The behaviour of the people changes dynamically, and this has an influence as well on the economic activity. Many restrictions, to give another example, which people considered formerly stable, can be overcome by technology and induce a change in the economic structure.

We will see throughout this manual that economic theories are very often based on the unconscious assumption of a stable relationship between cause and effect and become obsolete if these assumptions become obsolete. The only stable thing in the history of humankind is the belief that some things are stable.

The fact that the economy is criticised from a philosophical or sociological perspective is nothing new. The domination of economic calculation in the culture industry is criticised as well by Neil Postman, to mention an author better known in English speaking countries.

We introduced these chapters as well to give a more balanced picture. Tendencies like the neoliberalism, monetarism, ordoliberalism underline the importance of freedom, the title of the most famous book of Milton Friedman is Capitalism and Freedom. The title insinuates, a thesis confirmed by the book, that capitalism, the term used by Milton Friedman for the free market, is a condition and the guarantor of a free society. From a more philosophical and sociological point of view, as expressed by people like Neil Postman or Theodor T. Adorno, this is not so obvious. If the personal choices of people are the product of manipulation, they are not free. To illustrate that with a crude example: The dealer who induced people to take drugs giving them away at the beginning for free can't argue that the addicts are free. We will discuss these topics very often throughout this manual.

The academic curricula and textbooks are the same all over the world. These homogenous curricula strengthens the idea that economics possesses a well-defined canon of universally valid economic laws and is, therefore, a science as consolidated as physics. The problem is that these universally valid laws are only valid in a theoretical context and rarely useful, if changes in technology or social /political circumstances has to be taken into account, what every time we want to analyse a concrete problem is necessary

The author would say that the widely expanded impression that economics is of no use for practical resolution of concrete problems is due to the mathematical modelization. Mathematical modelization is only possible, if we abstract from individual circumstances and, if we suppose that for instance, the relationship between demand and price is as stable as the relationship between mass and gravity in physics.

Due to the fact that economics never leads to concrete results, although it aims to be a science as precise as physics, economists say that economics is so awfully difficult and more research is needed. It is to suppose that with more mathematical modelization and more abstraction, economics will become more and more irrelevant.

The problem of economics is not the theory; the theory is pretty simple in most of the issues and any case much easier than the molecular biology, engineering, chemistry and so on.

In the narrow sense, most economic problems are caused by problems that have nothing to do with economic problems. It is quite obvious, for example, that the unemployment rate would be much lower if it were possible for everybody to become an engineer. More still, if everybody would be sufficiently qualified to run his company, producing and selling highly innovative products, for instance little zeppelins for five people, a family, flying safely and alone at 100 miles per hour from one place to another with three liters of petrol for 100 miles. (At a cost of let's say 8000 dollars.) Unemployment has, therefore, to do with the educational system, with psychology, didactic, entrepreneurship, openness for change, transfer of know-how and so on. In other words with things beyond economic thinking.

The primary goal of a market economy, by the way, is simplification. This is the reason it works better than a planned economy. If a central planning commission fixed the price of bread, it would be hard to find out if the price is correct or not. In theory, it would be possible to call that central planning commission and ask them for the price of flour, yeast, and energy. However, because these prices would have been fixed as well and not the result of competition, we would not know if these are the right prices. We will see throughout this manual a lot of strange results of fixed costs. (In East Germany for instance, before the fall of the wall, bread was cheaper than corn, with the result that pigs were fed with bread and not with corn because bread was cheaper than corn.)

If there were complex mathematical modelization needed to explain how the economy works, it would be necessary to reduce complexity, because if nobody understands how it works it doesn't work.

However, apart from the problems already mentioned, abstraction, supposed stability, unclear relationship between causes and effects, there is a more fundamental problem with taking physics as the methodological paradigm. The main topic of physics is how to predict exactly the result of a process, in this case, mathematical equations are very useful and fit perfectly with stable natural laws. The main topic of the economy is how to deal with insecurity and the unknown future.

That's what market economies are about; how to deal best with insecurity. A market system is more flexible because every individual takes decisions on his own because individuals are always better informed about their alternatives, and can adapt themselves more quickly to changes than a central planning commission who has not even an incentive to change if something unforeseen happens.

That is the fundamental contradiction in neoclassic theory. Léon Walras tries with a lot of mathematical equations, analysing markets where goods are only changed but not produced, what corresponds to a complete abstraction of the real world, to describe a "total equilibriums". If this were possible, there would be no need for market economies. It would be much more efficient if a central planning commission would control the economy. If it is possible to plan something, then it should be planned. The problem is that this is not possible. We are never able to predict the future, not even the next four month. Therefore, we need a system able to deal with insecurity and change.

Mathematical modelization makes a fundamental affirmation. Affirms that economic processes can be predicted. If this is the case, we have to discuss the usefulness of the market, something neoclassic theory never does. That is contradictory.

It is widely assumed that the opponent of Marxism is neoclassic. That is not true. Not at all. There is no significant difference between Marxism and neoclassic theory. Both of them assume that the future is predictable, and there is no need for a somehow "chaotic" system like the market.

The only opponent of Marxism is Keynes. The Keynesian theory focuses on insecurity, how to deal with insecurity and the effects of insecurity. However, it does not question the efficiency of market systems. Marxism and neoclassic theory deny the existence of insecurity but assumes that the future is predictable and can, therefore, be planned.

If one puts the question "Why study economics?" in the search field of YouTube, he gets thousand of videos like this one Why Study Economics? aiming to promote their respective faculty. In this kind of video, we find many affirmations without any proof for their correctness and which do not fit with the public perception of economics. The same is valid for the supposed positive career perspectives, something very easy to underpin with facts. (It would be enough to publish the insertion in the labour market of former generations.)

Students of economics aim to work for public institutions, at a national or international level. They have no intentions to control them. They want to work for them and is something more rewarding and better paid than controlling them. These kind of institutions fit well with the self-assessment of economists, especially if they are young and if they have many teachers who hammered them this message into the brain. They want to work as advisors for big national or international institutions. The idea is that these kind of institutions can change some basic parameters, that is what mathematic modelization suggests, and the economic machine restarts in the case that it was not doing so well. That is what they learn, and that is wrong.

In general, institutions of this kind are part of the problem, not part of the solution. There is no inherent mechanism controlling them. Nobody knows what UNESCO, The European Commission or The WTO do. One may say that we know that either from private companies, but this case is different. There is no need to know it. If a private company is inefficient, it goes bankrupt, and there’s no need to know why it goes bankrupt. There is an inherent control.

Public institutions never go bankrupt, because the taxpayer finances them. We do not say therefore that people like Hayek or Friedman are entirely wrong. What we say is that as a solution, the market has to control everything, and if something cannot be controlled through the market, there is no need to control it, is too simple. Some things cannot be controlled through the mechanism of the market; for example, education. Therefore, we need other methods of control such as being transparent.

The duty of economists is therefore not only to work for these kind of institutions, but to find a way to put them under control, obliging them, for instance, to publish all their data to evaluate their efficiency. .

Economists, in general, stress the "complexity" of the economic relationships. If the economy is complex, then there is a big need to simplify it. A machine which is understood by nobody is not helpful. There are several ways to do that.

The easiest thing to do is not to intervene at all. The intervention of the government during the last financial crises in 2008 complicated the things, although perhaps they avoided a bigger catastrophe. If the government saves banks from going bankrupt, we never know which bank was involved in risky financial transactions or which banks followed a sound policy. If we want to understand what happened, we are obliged to study the balances of the involved banks. We have to explore the construction of strange kindS of financial assets like mortgage-backed security, we have to examine the relationships between the banks and so on. If the bank goes bankrupt, we know which one made a bad policy and the manager of these banks will make the same mistake again. Transparency is a value on its own, and it is even worth a price to pay.

The second way to simplify the economy is to oblige the government to publish all relevant data on the internet, for instance, the general budget and the flow of the money. That does not mean that everybody will study these items on the balance, but for some topics, there are many people out there with a good understanding. For instance, because they work in this business, they can control these items without any further training.

The third way is to attack publicly employees by directly publishing documents illustrating their efficiency. This, for instance, can be helpful in jurisprudence. Judges should not be controlled by anybody, they are not even obliged to know the laws adopted by the parliament. The author of these lines is running a website like that in Germany and it is amusing.

Before we talk about the supposed complexity of the economy or arguing that more mathematical modelization is needed to understand it, we should try to simplify it. The more accessible and free information is, the more people can make a judgment. For the democratic decision-making, more transparency is more needed than more sophisticated mathematical modelization.

We don't need economists telling us that the world is something like a kafkaesque castle, which is too complicated to be understood. That vision doesn't fit with the vision of Karl Popper as a democracy of a learning process. If people are more interested in Princess Diana and his relationship with Prince Charles than in understanding, for instance, the role of the interest rate, perhaps they do not understand what democracy is about.

We are not going to spend, by the way, a hundred pages explaining the difference between scarce commodities and free commodities as Carl Menger does. Those who don't understand that sand is worth nothing in the desert can go on holiday to Morocco. If they don't understand it then, they will never understand it and, therefore, it is useless explaining it.

Last but not the least, the author of these lines runs a company and is, therefore, the subject of the free market and not the object of study. This is what distinguishes him from the academic economists with no working experience in the real world and who earn their money in a planned economy, in other words, in an economy where the income has nothing to do with performance. Some terms which have no meaning at all for academic economists and were mere abstractions have a very clear meaning for the author of these lines. One of these terms is the economic principle.

This principle requires that a predefined goal is obtained with minimal resources (repair a car for instance), or this goal is maximized with given resources (drive as far as possible with a given quantity of petrol).

The reality is much more complex. The people who earn the bread we are all living on have very little time and with their spare time they must try to get as much information as they can This is to make a rational choice in a democratic decision process, in other words, to evaluate the products and packages offered by the different political parties. If it is not possible to assess the products of the political parties, they can as well throw dice. This has an influence on the design of this manual.

We therefore have a very clear vision from what we want to obtain through this manual.

The ideal of the academic economists, although they tell the contrary every day, is the anti-economic principle, which can never be found in any textbook about economics, but nevertheless is as vital and relevant as the economic principle.

The academic economists want to obtain a minimum goal with maximum resources. They do that by investing a tremendous amount of resources trying to resolve inexistent or irrelevant problems. Welfare economics for instance, has attempted to convince us for fifty years that given Pareto efficiency we are living in the best of all worlds. This means that taking away one dollar from a billionaire and giving it to someone with an income of 100 dollars a month is entirely unfair. This theory looks good if presented in the form of mathematical modelization, but for obvious reasons is irrelevant for analysing real-world phenomena.

Besides the economic and anti-economic principle, there is a third principle, the most important of all of them. In this case, there is no goal at all and if there is no goal at all, the question of how much resources should be invested in obtaining the goal is obviously superfluous. It doesn't make any difference if a non-existent goal is obtained with a maximum or minimum of resources.

This principle is usually followed by academic economists and in bureaucracies in the form of always using the maximum of resources for any goal.

Most of academic economists, for instance, are in favour of tuition fees. If we put tuition fees in the search box of YouTube, we will find many videos, for example, this one Tuition fee debate, where academics affirms that tuition fees are necessary without actually explaining how the costs of a study is composed. Due to the fact that most universities don't have a professional controlling system comparable to the systems implemented in private companies, it is assumed that they don't know it.

However, that's not the stunning point in this discussion. The great point is that there is no discussion about the content of the academic curricula, about the possibilities of saving costs, introducing more e-learning, about the payment of the academic staff and so on. The only question is how to get more money, but there is no discussion about what to do with this money.

The reason for this is that we have a similar situation all over the world, and a quick research for videos with a similar topic is enough to see that the questions above would require an answer from the academic stuff. They would be obliged to define clear goals and to show the most efficient way to attain them. That is something they are neither interested in nor able to do. What they want is more money. Their personal situation doesn't improve by specifying the goal of the academic curricula nor by improving the teaching. The only thing that improves their circumstances is more money. It is obvious that the teaching stuff is dominated by the discussion about tuition fees

The discussion about tuition fees is quite straightforward. If the studies are organised in an efficient way and relevant topics taught in an effective way, it doesn't make any difference if the studies are financed by the taxpayer or by tuition fees. In the first case, graduates earn more, pay more taxes and pay the money back. In the second instance, tuition fees should be considered as an investment, deductible therefore as any inversion from the income. In both cases, the relationship between costs must be compensated by the income in the future. Financially speaking, the present value, the discounted future incomes, must be higher than the costs. Otherwise the study, from a purely economic point of view, doesn't make any sense. Therefore, the topic to be discussed is not the tuition fees, but the efficiency of the studies.

In order to discuss efficiency, detailed information is needed about the integration of graduates into the labour market, and it is obvious that the publication of this kind of data would lead to competition between faculties of the same discipline in different universities, and between faculties of various disciplines. If it is financially more interesting to study engineering than economics, people will switch to engineering. In other words. If we talk about tuition fees, many things should be discussed, but not everybody is interested in discussing them.

Annotation: The fact that we link to videos from English speaking countries doesn't mean that there is a difference to other regions of the world. We link to videos, websites, documents in English because this is the English version of the manual. In the Spanish version, www.economics-reloaded.es or the German version, www.economics-reloaded.de, we link to videos, websites or documents in Spanish or German. We don't say that individual circumstances can be ignored, but when discussing problems where the institutional framework is the same, the resulting problems are the same as well.

When reading the international press, in the feedback attached to most of the articles, a general tendency can be observed. People tend to think that in their country politicians are especially corrupt; voters don't have any influence on political decisions, that its only in their country there is a lack of transparency and so on. That's obviously wrong. If there are systemic errors, these errors are the same all over the world. The fact that we link to videos, websites, documents taken from English speaking countries doesn't mean that we think that the problems described exist only in these countries. We could have taken as many examples from any country in any language, but that wouldn't have been so suggestive.

Concerning tuition fees, the reader can find thousands of videos on Youtube in every language, here is another one, University tuition fees - bbc newsnight. We have no intention to discuss the assumptions made in all these videos. (Although the author doubts about the correctness of the data shown in this last video. He financed his studies working as a taxi driver; the money to earn a living, not the tuition fees because in that time there were no tuition fees in Germany. However, obviously with 33, 000 pounds for tuition fees, it would have been impossible to continue, and the author would have been obliged to abandon his studies.)

The real question is not about the tuition fees, but the real question is the efficiency. The author would say that by using the possibilities of the new media and the internet, it is possible to train the double of the students, at half of the costs at a higher level.

The author himself gave lessons online, in informatics, with a special software, the students saw and listened to him, and he was able to push content to their computers and with this kind of system it doesn't make any difference if hundred or thousands of students are listening. Compared to offline lectures, something the author did as well for a long time, there is more feedback, questions, discussions online than offline. In offline lessons, in general, there is no feedback at all because students are too shy to intervene in the lecture.

(We don't mention here all the other advantages of online lectures. The lecture can be recorded and therefore seen several times at any moment from any place, it is possible to give extra information, there can be a discussion board allowing to make questions, there is the possibility to offer multiple choice tests allowing the student to check if the message really passed through and so on. With only lessons, the academic staff can be drastically reduced because it would be enough that one University draws up one time the complete curricula online instead of hundred universities doing the same thing. It is obvious that the academic staff is not interested in this kind of teaching.)

However, even if we don't use the sophisticated versions of e-learning, there is a lot of space for improvement. Textbooks in medicine, molecular biology, for instance, can be very expensive. It would, therefore, be useful that these kinds of books were offered for free as OER (open educational resources). Apparently, the academic staff prefers to produce professional books. If we talk about tuition fees, we have to see that bureaucracies like the universities and the students don't have the same interests. The first one wants to sell something as expensive as possible, and the last one wants to buy something as cheap as possible. This is nothing astonishing because it happens everywhere. However, if the end product, an academic degree, is delivered only by a monopolistically organised institution, the mechanism of the market don't work anymore.

In debates about tuition fees, very often, it is argued that the relationship between teacher and student is crucial to the learning process. This type of argument is helpful to the academic staff, obviously. More academic teachers are needed.

However, there is no evidence for this assumption. A good and clear explanation delivered to 10 000 students is more helpful for each of them than a wired and vague explanation given by 1000 different teachers. The quality makes the difference, not the quantity.

Economists talk a lot about unemployment and how to reduce it. Nowadays, with the dominating "neoclassical" mainstream, we are going to discuss that term later on, then argue in favour of lowering the wages until the marginal product of labour equals the wage. A more intelligent solution would be this one. If it is possible to improve the transfer of know-how, with the methods described above, the marginal product of labour can be raised and, therefore, the wages can be higher as well.

The infos24 GmbH already tried several times to cooperate with universities in the context of our language website, but we are not sure that universities are interested in this kind of solution.

The big argument in favour of tuition fees is that a university should be organised as any market. This argument would be right, if the buyer of the product, were free to buy the product, an academic title, everywhere and if the quality of the different products would be clearly documented. However, that's not the case. With tuition fees, students are made responsible for things they can't change and where they have no choice. There is no real competition between the different universities.

An abstract tuition fees has no impact on the actual allocation of resources. No professor will be fired if he or she is incompetent; no faculty will be closed if the studies are useless. No reallocation of resources, for instance from law or economics to medicine and engineering will happen because of the tuition fees. The only effect is that more money will be poured in and used however it pleases some individuals.

We are not interested in analysing the effect of tuition fees. The discussion is only interesting because it shows a general problem which can equally be found in other sectors where there is no control through the mechanism of the market like jurisprudence, health care, public administration and so on. We don't say therefore that Milton Friedman is completely wrong with his thesis presented in the videos see Milton Friedman PBS Free to Choose 1980 Vol 1 of 10 Power of the Market. The problem is that he assumes that the mechanism of the market is the only way to control economic systems.

Besides the one already mentioned; transparency, there are other ones. The author, for instance, worked some years ago in the controlling of the public administration in Berlin. At that time, the city of Berlin was introducing a new controlling system. The idea was to introduce an artificial market mechanism in the public administration. Therefore, each administration of the different quarters of Berlin calculated the costs of their "products", the cost of caring about one square meter of green space, the costs of loaning a book in a public library, the costs of delivering a business license, the cost of delivering a building permit and so on. At the end of the year, the quarters get the costs multiplied with the amount for each product. However, that was the key issue; they didn't get the actual costs, but the median. Therefore, they had an incentive to reduce the costs of the products where they were more inefficient than others. It is easy to imagine that there was a strong resistance to the implementation of this system. Bureaucracies, in general, don't like to be controlled.

The neoliberalism is not wrong in what concerns its underlying assumptions. He is wrong on what concerns its solutions. Not everything can be controlled through the mechanism of the market, and, therefore, alternative means of controlling are needed.

It is quite easy to control governmental activities, at least if the government wants to be controlled; something that seldom happens, if the product is clearly defined. The problem with public education is that very often the goals are not clearly defined, and different groups have different opinions about the topics and subjects to be taught and the way they should be taught. We are going to discuss this issue when talking about Milton Friedman.

What a graduate in medicine has to know at the end of his studies, to remain in the field of academic studies, is pretty clear and follows an internationally established standard. Therefore, there is a clear "feedback" from the market, and the university has to adapt itself to the requirements of the market.

The case of economics is different. Explicit criteria for what is to be known at the end of the studies does not exist, and nothing and nobody will impede the teaching staff to teach the next two hundred years the Pareto optimum. (You can find 2270 videos only in English about putting Pareto efficiency into the search box. The more people tell it, the more relevant it becomes and the more people will tell it. This rule is far more important than the pareto principle, but never taught in universities.)

It is crystal clear to everybody that the knowledge of another language, programming skills, etc. is far more helpful than, to continue with this example, a mathematical description of the Pareto optimum which can explain in five minutes in simple terms. However, for the academic staff it doesn't make any difference what they teach and how they teach it. They get paid in any case. Concerning the professional career, to know another language of being able to programme in C++ can make a big difference. It is hard to imagine that the Pareto optimum or the comparative costs or the total equilibrium become relevant in practise.

The majority of the economists arguing in favor of tuition fees do that from a neoliberal point of view; the most prominent example being Milton Friedman, see Milton Friedman - Free to Choose (1990) - What's Wrong With Our Schools, assume that tuition fees are like a product that has a market price and has to be paid for. This would perhaps be true if the end product, an academic title, could be obtained as well by distance learning at a cost near to free. In some subjects, for instance, economics, law, informatics, where experiments were needed, this is perfectly possible. In informatics, for example, presently, the stuff learned at the university is irrelevant in a short period and only the internet can keep pace with the technological progress, spreading on thousands of websites, information of any kind for free. That is one reason the universities can' t be compared with companies.

The price, in this case, tuition fees, usually exerts pressure on the producer. This is not, at the moment, the case of universities. Students can't evaluate the quality of the product. For universities to be considered as companies operating in a market economy, many things need to be changed.

One, among many others, that is a difference is the fact that the academic staff can't be fired. A company in a market economy has to adapt itself to any change otherwise it disappears. A university can create new faculties in the case that this is needed, but there is no need to shut down the dead ones, and the costs to maintain them will be part of the tuition fees.

It is, by the way completely, unbelievable that the actual costs of one year of computer science or history is 9000 pounds or 11500 euros. The author is, among other things, graduated in history. He took on average something like 200 hours of classes a year with at least 15 other students. If we pay the professor 150 euros an hour, let's pay him very well, then we get 2000 euros a year, but never, never, never 11500 euros. (This data, by the way, fits with other data published by the German Statistisches Bundesamt.) The author seriously doubts that English historians are so much more brilliant than German historians and even if this is the case, it is not worth the money.

The problem is that there is no professional controlling at the universities. There is a lot of evidence that under market conditions, the tuition fees would be very, very low, even in expensive subjects like medicine. Private universities of medicine in Hungary, for instance, can offer the same studies, recognized in Germany, for half the price they cost in Germany. The transfer of know-how can be realised at very low costs.

The author is not sure that the neoliberal professors of economics would continue to argue in favour of tuition fees as a market solution if the free market philosophy is introduced at the universities. We assume that in the long run, they will suffer the same fate as the press, the publishers, the news industry. They will not resist against the internet.

If the government intervenes, we are always between Skylla and Charbydis. At one side, there are problems that only the state, in other words, the society as a whole can resolve, or that are better resolved by the society as a whole. A public school is, concerning the content of the curricula, a compromise between different groups of the society and, therefore, more balanced. Allowing or even preferring, like Milton Friedman, private schools, would lead, for example, as in Berlin, to the creation of Islamic schools in radical opposition to fundamental values of modern societies. In practice, things are much more complicated than Milton Friedman supposed them to be. At the other side, it 's hard to control governmental intervention.

To illustrate the failure with another example, outside the public educational system and the universities and some "scientific" institutions there are no jobs for a philologist, philosophers, musicians specialised in classic music, painters, etc. (In other words, if universities were companies, the respective faculties would have little customers if the studies are considered as an investment.) Nevertheless, there is a significant demand for their products. People are interested in foreign cultures and languages, they discuss the whole day about "philosophical" issues, millions of people visit museums and so on. The problem is that they don't care about academic humanities. Nobody needs them. They have no influence on public debates and, therefore, there are no jobs for them outside subsidized public institutions.

To give a stunning example. Very few people were interested in operas before Carlos Saura made a film about Carmen of Bizet. Overnight, the opera became famous. This movie alone did more for the promotion of operas than all the subsidized opera houses of the world together

The advances in technology and the internet offers a new method to reach the public, provided the skills needed to use this new channels have been taught at the universities. What obviously doesn't happen and will not occur, is because it requires commitment, interest, creativity and public employees. However, they are seldom characterised by this virtue, and it is not even sure, that public employees rarely consider these characteristics as virtues.

Nowadays, for instance, it is possible to record music without expensive hardware. Everybody able to use Cubase can do it. The life of students and graduates from music schools would be easier if they were able to record their music themselves, for promotional reason or because they want to sell them. It would, therefore, useful, if these skills were part of the curricula, at least as an optional choice. (Together with related subjects like web programming, design, etc.)

Philologist can write the thousandth thesis about the significance of the term honour in the Spanish golden age theatre comparing the works of Lope de Vega and Calderon de la Barca, but both of them are dead and buried. Nobody cares about it. What eventually can work is the production of audio books of classic literature together with a comment, illustrations and so on. Producing this kind of products requires the cooperation between different faculties and cooperation is another thing public employees find difficult.

The only "customers" philologist will have therefore are pupils, in other words, forced consumers. A fascinating example for that is the Divina Commedia from Dante Alighieri. This work, written in the 14th century, is studied for three years in every Italian school. Nobody cares about it, but bureaucracies don't care about reality.

Later on, when talking about Adorno and Dialectic of Enlightenment, we will discuss this topic more in detail.

In humanities, philosophy, philology and other cultural studies like art, theater, music and so on it would be better to hire more people with real working experience. Actually, on these topics, there is very little need for "scientific" studies published in "scientific journals. Nowadays the academic career of the academic personnel depends on this kind of publication, although they are completely irrelevant, and nobody read them. What is needed are people able to fascinate or interest a broad public for these topics. Students can profit from people who have already done that successfully, having organised festivals, exhibitions, cultural events and so on.

We, therefore, have false incentives. With the actual system, we get the wrong people. There is no need for people who have dedicated their whole live studying irrelevant topics.

The difference between a company operating in a market and a university is apparent. The first one has to adapt itself to changes; the second one does not.

It is an error to believe that there has been any progress in economics in the last seventy years. A big part of what is taught in economics is useless. We will talk again about this topic again when we talk about Léon Walras, Vilfredo Pareto and Carl Menger. It would be a big progress to bury them.

The last big development, this one immense, was the publication of the General Theory of Employment, Interest and Money of Keynes in 1936.

Nowadays, microeconomics is lectured the same way all over the world lectured and is nothing else than a simplified version of Principles of Economics of Alfred Marshall. Macroeconomics is nothing else than a simplified version of the Keynesian theory mixed up sometimes with microeconomic concepts interpreted in a macroeconomic way. This is called neoclassic theory, although it has little to do with the original theory and is wrong, as we will see throughout this manual. The basic assumption of neoclassic, in its original form, is that a rational individual behaviour is rational as well for the entire economy. The basic assumption of macroeconomic is that a rational behaviour on an individual level can be irrational if the effects, on the whole, economy are taken into account.

The fact that tons of "scientific" papers are produced and published in thousand of "scientific" newspapers does not mean that there is any progress. That only means that there are false incentives. What is useful in economics can be taught in two years, but after that a specialisation is required. There are three different definitions of equilibrium, see Vilfredo Pareto. There is no need for the fourth one. We don't need another definition of economic equilibrium. We need a way to get the equilibrium at a higher living standard. Therefore, we need to know, for instance, how the transfer of know-how can be improved.

Only in the case that clear parameters control an academic subject, for instance, because there is a clear feedback from the market this subject will adapt itself to changes. If this is not the case, the adaptation depends on the personal integrity of the involved staff, and a system that depends on the personal integrity and honesty of the affected individuals ends up inevitability on the wrong path.

Universities can't resolve these problems alone. Professors will choose as their successors, people who share their opinions and interests, but never someone who questions the system that grants them their living standard.

To be brief: Some things only can be resolved by the society as a whole. Jurisdiction belongs to this kind of things. There are other things that could be resolved privately, but there is no clear evidence that a private solution would be better. This kind of things belong to public education. (We will discuss the topic later on in the chapter about Milton Friedman.)

In both cases, we have to accept that such a strong and objective control as exerted by the market mechanism is not possible. In all this kind of sectors, we see the same problems arising as in planned economies like Cuba.

However, that doesn't mean that the only way to bring these sectors under control is the privatisation of these sectors as suggested by Milton Friedman and Friedrich Hayek and neoliberalism in general.

If the public administration produces a concrete product like passports, fines, license plates, etc., the costs of one administration can be compared to the costs of the same product in other administrations. In this case, it is only a problem of controlling, in other words, the only thing to be done is to adapt the well-known monitoring systems used by private companies to the public administration. Experience shows that public employees are not happy if controlling systems are installed and in most cases, it turns out that they are less efficient than employees working in private companies, but intense public debate will lead to controlling systems if it becomes attractive for politicians implementing them.

Things get more complicated, if the product, as in public education, is not clearly defined. If the product is more or less well defined as in engineering, chemistry, physics or medicine, there is a control through the needs of the market. Obsolete topics will be deleted from the academic curricula. In no medical school, blood letting will be taught as an effective therapy. In economics, we will find many textbooks even today where money and capital are considered more or less the same thing. Basic errors of 150 years old theories, like the confusion between capital and money, a fundamental error of classic theory, are still not eliminated and continue to wander like ghosts through textbooks already in use. Obsolete topics are not automatically substituted by relevant ones.

A medical graduate who thinks that open wounds should be treated with red-hot iron would never find a job. However, it is well possible that an economists specialised in welfare economics is employed in a "research" institution if he successfully publishes an article in "scientific" journals.

In this kind of situation, change depends on the moral integrity of the actors and if a system relies entirely on the hope that the actors do the right thing the situation is desperate. To give a simple example: For a university professor, it is much more interesting to publish a discussion paper in a scientific journal which nobody will read, that' s what his academic career depends on than to publish a textbook of macroeconomics online for free read by millions of students.

For a university professor, it is much more rewarding to publish an article about the substitution elasticity of capital in Guatemala than to try to resolve the problem of the immigration of children from this country to the United States, see Why so many migrant kids are coming to the U.S. alone. The fundamental question to be answered before writing a discussion paper is how much it costs writing it and if this money couldn't be spent in a more useful way otherwise. University professors lecture a lot about opportunity costs, but only in theory.

To avoid misunderstandings, we take examples from English speaking countries because this manual is the English version. The author has no problem to find in five minutes examples from Spanish, French or German speaking countries. The problem is the same all over the world. Theoretical discussion papers are more rewarding than the solution of concrete problems. At the other side, resolving real problems requires, in general, some working experience that normally a university professor doesn't have.

A free market economy, in general, promotes creativity, restructuration of processes, changes in the distribution of goods, the creation of new goods and requires that things that don't work anymore are abandoned because it rewards the success and punishes the inability to adapt oneself to new circumstances.

Concerning universities, apart the cases mentioned before, the goals are well defined; there is no reward and no punishment. There is no reward for innovation, and, therefore, they don't happen. At the other side, inertia is not punished, and, therefore, the academic curricula can remain unchanged for ages. An entrepreneur in a market economy is obliged to adapt himself, or herself. A university professor is not.

Nevertheless, there are several ways to improve the situation. The first thing that could be done is to introduce more transparency; that is something that always works. Public discussion can oblige the public administration to publish more details, the amount of the budget of the universities and for what it is used, concrete data about the integration in the labour market of the graduates, more information about the relevant criteria in the selection of the teaching staff and so on. A public debate can lead to the publication of the whole academic curricula on the internet.

At the university level, there should be more concrete projects, where students can learn to think more like an entrepreneur and not as a public employee. There is no unemployment if there are not enough entrepreneurs. Courses like this, Tina Seelig: Teaching Creativity and Entrepreneurship, go in the right direction, although she sounds a bit like a scientist. Teaching entrepreneurship can be more concrete and in practice, it is not very helpful to know that the bigger the problems, the greater the opportunities.

Some very concrete things can be done through more cooperation at an international level. Very often in some parts of the world, there is a problem and at the other side of the world, there is the solution to that problem. However, if the problem knows nothing about the solution and the solution nothing about the problem, both of them will not earn any money. To give a stupid example, the wool of Alpacas is similar in quality as the wool of Angora o Mohair but less expensive. At the other side, the alpaca breeders in Peru or Bolivia don't have the expertise to treat and process this wool, with this result, there is no real market for them. Specialised companies who produce this kind of clothes, similar problem with the cashmere wool, is another problem. Their clothes are too expensive. If you bring them together, something new could be created. Another stupid example. (Stupid because not very sophisticated, but efficient.) In many countries, there is a problem with erosion of the soil. Spain addresses this issue by cultivating almond trees; something that could be done as well in Afghanistan. (The author knows someone who did that in the seventies in a very successful way.) Stupid examples are easy to find. Cuba, for instance, doesn't use coconuts, although they have a lot of them. They only drink the coconut milk. At the other side of the planet, in Sri Lanka, they use it for more or less everything, for soaps, cooking, cosmetics, etc. It is not difficult to find more sophisticated examples. We will rediscuss about the topic in the chapter of Alfred Marshall.

In putting the statement mentioned earlier; the bigger the problem, the bigger the opportunities right, in perspective, it is better to say that the bigger the problem, the more co-operation is needed because the amount of necessary knowledge grows. This is because it does not require a lot of skill to cross the ocean with a sailing ship. On the other hand, a lot of knowledge is needed, from very different fields, to send a space probe to the Mars. In other words, the approach of economists of discussing economic problems abstracting completely from non-economic factors in the narrow sense or taking them into account as merely fixed parameters or, still worse, arguing with the ceteris paribus clause, leads nowhere.

The other way to exert control is the establishment of some parallel "universities", something that already happened in informatics. Almost every topic about economics and any information can be found on the internet, at all levels and explained with different didactical approaches. From the moment that universities have to compete with informal but very efficient structures, they will be obliged to justify themselves and to reflect on what they are doing.

In respecting economics, there is at least a public debate, which is due to the fact that people ingenuously believe that economics gives some answers to economic problems. The public expects that economics explains the causes of economic crises and how to resolve the problem. We have learnt in 2002 and 2008 that this is not the case, and we can take for granted that the next crisis will be unforeseen as well by economists, although everybody knows that the financial system remains unstable.

The case of humanities is still worse. In this case, there is not even a public debate. In referring economics, people still believe that there is something they don't understand and that economists can give them an answer. Nobody expects a concrete answer from a philosopher or a philologist. People discuss moral, aesthetical, religious and so, on the whole, but they don't expect from, for instance, academic philosophers an interesting, enlightenment or amusing contribution to this debate. Humanities has become just irrelevant; we are going to discuss this topic again in the chapter about Adorno. The case of humanities is somehow strange. They interpret the lack of interest of the Society for Humanities as a lack of interest for the question posed by humanities, sense of living, the existence of good, linguistic questions and so on. That's obviously not the case. The case is that nobody cares about academic humanities. They have nothing new to say, and they never learnt to reach their public. Nobody would notice if all the faculties of humanities were shut down tomorrow. They have to learn to convince the public that they have interesting or at least amusing things to tell. Right now they bore the people.

The only refuge for a graduate in humanities is the public education system. There, the public is obliged to attend the performance. It doesn't matter if the performance is interesting or boring. Due to the close relationship between the academic world and the different bureaucracies of public education, obsolete contents survive in this system for ages. It is, for instance, curious phenomena that every country has its national heroes, Goethe in Germany, Cervantes in Spain, Shakespeare in England, Molière in France, Dante in Italy and so on. If it is assumed that these authors are very important, and they obviously are very important, it would be more logical to consider these authors as belonging to the humanities, in general, and to substitute the national literature for the most important one. There is nothing typically British in the works of James Joyce or Virgina Wolf and The American Tragedy describe by Theodore Dreiser can happen all over the world.

We will talk about this topic again when talking about Adorno. We will see that there is only a little difference between one society and another. The fundamental problem is that teaching literature requires a high level of creativity and the capacity to interact with the public whatever it is. Authenticity is required as well. It is hard to convince someone of the relevance of something not when oneself is not convinced. All that can't be granted in a systematic way and can't be controlled by certain parameters. Therefore, it is more or less impossible to teach the teachers. If people were asked about the impact of their classes in literature.

aprenderemos que las sociedades se distinguen poco de un país a otro. El problema de base es el hecho que enseñar literatura, o otras cosas cuyo fin y meta no está claramente definido, requiere un alto nivel de creatividad, de una capacidad de interactuar con el público sea este quién sea, requiere autenticidad porque es difícil fascinar a alguien si uno mismo no está fascinado etc. etc.. Todo esto no se puede asegurar de manera sistémica, controlando determinados parámetros y por lo tanto la enseñanza pública no tiene casi ningún impacto sobre el debate público. Si se preguntara la gente si las clases de literatura en el colegio han cambiado su actitud frente a la literatura, filosofía etc. la respuesta sería casi unánimemente no.



There is no control through market mechanisms over the faculties of economics

The goals of studies on economics is undefined and therefore there are no parameters allowing to control if the goals were attained

Undefined goals are a weapon in the struggle for financial ressources


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