Critical Thinking and Applied Political Economy: Towards Understanding the Social Construction of Reality

Abstract

This article provides a design template to construct a macroeconomics course using a multiparadigmatic approach using discovery based learning. Students use alternative paradigms–Classical, Keynesian, Institutionalist, Marxist, Monetarist, Schumpterian–to explore forces explaining the business cycle. They access and manipulate primary economic data to evaluate distributional outcomes using applied political economy; the use of alternative paradigms to systematically trace out how economic science is used to support policies directing the distribution of income. The course capstone applies economic paradigms and data analysis to evaluate policy propositions related to contemporary macroeconomic issues.

Keywords:

• applied political economy
• critical thinking
• multiparadigmatic approach to economics

Notes

 1 A review of relevant literature related to what constitutes critical thinking in economics can be found in Knoedler and Underwood (2003), who make a distinction between analytical thinking and critical thinking. This article follows the lines of Underwood (2004) who defines critical thinking as “the application of empirically grounded reason to advance understanding of phenomena of interest.” The definition used in this article but extends that definition to emphasize understanding derived from critical thinking can be used to inform value laden decisions, that is, policy discussion and evaluation.

 2 Several years ago, upon sharing this conceptualization of critical thinking with a senior scientist at Battelle Laboratories, he responded “That sounds like science to me.”

 3 At this point I do not address model building, deductive reasoning, and the importance and role of assumptions. However, there is no reason to avoid doing so at this point. And, if done at the beginning of the term, the basis for one more analytical rejoinder will have been established.

 4 Some students may shun this, but that is why we have academic disciplines that do not employ empirical or quantitative methods, albeit, inferior goods, or so employment and income data indicate. Verification of this proposition is something students empirically evaluate early in the term. Verification of this proposition is something students empirically evaluate early in the term through a human capital investment exercise where they explore educational fields, professional career paths, and expected income and employment trends.

 5 For those interested in the theory of games, even positive sum games have payoff matrices that vary proportionately. Over time, differential relative payoffs change the power structure of society.

 6 Several efforts have been undertaken to create the context for a multiparadigmatic approach to economic education. An effort undertaken by members of the Association for Institutional Thought was ultimately published by Knoedler and Underwood (2003). A similar effort presenting feminist principles can be found in Schneider and Shackelford (2001). The approach is also used in a textbook form (Riddell et al. 2011).

 7 The view advocated here is that economic education is of, for, and about students.

 8 Underwood, 2003, 2007; Knoedler and Underwood, 2003

 9 As will be explained below, one way to reinforce this initial exposure to the Nexus is to follow it up with examples. I immediately introduce them to Say’s law, which is followed by Schumpeter and Marx on the business cycle. With those two latter radically different world views, each explaining the business cycle, in mind, they do “get it,” the Nexus, and that the conceptual framework helps illuminate the social construction of reality.

10 A referee has emphasized that this definition of applied political economy could apply to more than the distribution of income. Indeed, it could, but in this article it is only applied to the distribution of income and employment. Additional applications are welcomed and encouraged!

11 This will be covered in more detail in a subsequent section.

12 It is my experience that the sooner students learn that the class is about their success, that the teacher’s goal is their success, the sooner an atmosphere is created where everyone is willing to work together, learn from errors, and learn from one another. All benefit and all improve.

13 I like to use random team assignments for this. Synergies often result from team work. In addition, the ability to work effectively in teams is increasingly important in the workplace. Lastly, projects using randomly assigned teams help them get to know one another. I explain each of these reasons in class. As they have already discovered, this is about helping them succeed, and when they understand it will help them succeed, they are willing to do so—work in teams—without complaining. Of course, problems do emerge in teams, like the free rider phenomenon. To address this, teams receive a team point score, which they then distribute among individuals. That can be an interesting experiment!

14 As this last assignment creates an essential cognitive rejoinder late in the course, more detail is warranted. First, students find the income thresholds for each quintile, and for the upper 5%. Second, they find mean incomes for each sector. Third, they find median and mean family income. Fourth, they find total family income. Fifth, they do this for two time periods, 1980 and as recent as the data permit, and to do so before and after transfers. Lastly, they find the percent of income allocated to each group, before and after transfers. In addition, they have access to, and work with, definitions of poverty. Lastly, they can correlate this analysis with patterns in the distribution of unemployment by demographic. This plays a critical role late in the course when students discover, for themselves and as a result of their efforts, how applied political economy can expose vested interests.

15 For a series of possible empirical exercises see Hake (2009).

Before exposing students to economists’ visions of the macroeconomy, it can be useful to assist them in developing their own view through empirical analysis. The sooner this is undertaken the better. A virtual visit to the Bureau of Economic Analysis, the Bureau of Labor Statistics, the Department of the Census, and the Office of Management and Budget provides the context to differentiate between primary and secondary data. It is important to demonstrate this data are not produced in a witch’s cauldron; rather, methods are carefully and rigorously defined, those methodologies are transparent, and everyone working to produce that data is accountable. From there, it is important to make a clear distinction between primary data and secondary uses of that data. As the exploratory trip progresses, the teacher should use Excel to construct some timelines of performance indicators. It is useful to demonstrate the simplicity of moving the data into Excel for manipulation, including the power derived from right clicks of a mouse. This will illustrate how simple working with Excel can be and, at the same time, expose students to empirical analysis, as the class seeks patterns in the data. Subsequent assignments can be developed to ensure students can (and do) find their way around these sites, and to create sets of empirical analyses that the teacher can draw from later in the term.13 These include compilation of standard performance indicators (GDP growth, unemployment and its distribution by demographic, inflation, etc.), other variables the teacher thinks important to understand an evolving economy (energy prices, housing starts, military spending, etc.), and income distribution by quintile.14 Having students discuss patterns, in class and in writing, helps advance critical thinking and creates the context for cognitive rejoinders, indicated in the diagram as subsequent student activities.15

16 In applying Smith's “invisible hand” to explain self-correcting markets, Say presents the analysis as a “natural law,” that if fully instituted, would ensure full employment. The policy was laissez faire, with the exception of active government intervention in labor markets to remove combinations. Many economic traditions criticize this Nexus as apologetic in advancing the interests of capitalists.

13 I like to use random team assignments for this. Synergies often result from team work. In addition, the ability to work effectively in teams is increasingly important in the workplace. Lastly, projects using randomly assigned teams help them get to know one another. I explain each of these reasons in class. As they have already discovered, this is about helping them succeed, and when they understand it will help them succeed, they are willing to do so—work in teams—without complaining. Of course, problems do emerge in teams, like the free rider phenomenon. To address this, teams receive a team point score, which they then distribute among individuals. That can be an interesting experiment!

14 As this last assignment creates an essential cognitive rejoinder late in the course, more detail is warranted. First, students find the income thresholds for each quintile, and for the upper 5%. Second, they find mean incomes for each sector. Third, they find median and mean family income. Fourth, they find total family income. Fifth, they do this for two time periods, 1980 and as recent as the data permit, and to do so before and after transfers. Lastly, they find the percent of income allocated to each group, before and after transfers. In addition, they have access to, and work with, definitions of poverty. Lastly, they can correlate this analysis with patterns in the distribution of unemployment by demographic. This plays a critical role late in the course when students discover, for themselves and as a result of their efforts, how applied political economy can expose vested interests.

15 For a series of possible empirical exercises see Hake (2009).

17 Excellent source material for students can be found in Heilbronner (1992).

18 It also will expose and thus discourage free-rider behavior.

19 Galbraith, The Great Crash and Boyer and Morais' Labor’s Untold Story readily come to mine, and are excellent source materials to create “Great Stories” (Colander, 2000).

20 A referee has noted that students will probably want to do both, which is technically correct. But they will do in a non-binary way, that will be of the form, how does Schumpeter help us understand, how does Marx help us understand, and what does this have to do with the Great Recession? And if they don’t the teacher may want to direct discussion accordingly.

21 I just did this in class, and was disappointed that no one completed the timelines. I told the class I was disappointed because they would have discovered something, on their own. They understood that my goal, and thus disappointment, was that they missed a valuable learning opportunity, and that these activities are about their success. I also add that it is up to the readers to determine what indicators they want students to explore.

22 At this point some students will make the leap to the Great Recession and contemporary political debate. A response consistent with a student centered discovery approach that consistently emphasizes the development of critical thinking is the response, “How would you test those ideas?”

23 Of course, this is Keynes’ paradigm. Other explanations also exist, and the instructor should consider inclusions. For instance, the Great Depression could be viewed as the outcome of a Gale of Creative Destruction, an explanation consistent with Dillard’s observation of the tremendous increase in production capacity that, in turn, drove new investment downward initiating an economic contraction. Likewise, the instructor could draw upon Marx and Veblen or Monetarists explanations. All are useful in a multi-paradigmatic approach.

24 A variation of this exercise was presented by Eric Hake at the teaching roundtable, “What’s’ New in Economic Education, Association for Institutional Thought” at the Western Social Science Association’s annual meeting, San Diego, California, April 21–24, 2000.

25 The Great Society of President Johnson was fundamental, and it can be useful, and generate considerable discussion, to trace out the distributional implications.

26 The one most economists cling to, even to exclusivity, is the housing bubble. But there was also the rise in energy prices that drove negative net exports to all-time highs, slowing the macroeconomy. This observation emphasizes a fundamental difference between a paradigmatic and multiparadigmatic economics: the former looks for singular explanations of phenomena; the latter understands reality as a complex interchange of recursive interactive systems better understood using multiple patterns of explanation and understanding.

27 My students are ready for this as they will have already completed a comparative assessment of macroeconomic performance over time using “colored filters,” blue for Democrats, red for Republicans. Specifically, they test the hypothesis that “Everyone with half a brain knows Republicans Presidents are better for the economy than Democratic Presidents; or, Democratic Presidents are better for the economy than Republican Presidents.” I emphasize the direction of the hypothesis is not important; what is important are comparative trends in the data. Aside from discovering economic reality, students will “see” how colored filters of “blue and red” distort understanding the economic process and the business cycle. Often, after completing this assignment, some students will say “How could I have been so wrong?” To this, I can only say to them, “What does this show you about the social construction of reality?”

28 It would be even better to integrate data for the upper one percent, or even upper one-tenth of 1%. However, this data is not readily available from Census. Thus, the teacher would need to provide the data. While this diminishes self-discovery aspect from data searching, tremendous discovery will nevertheless be derived as students paint the big distributive picture.

29 As a referee has emphasized, this example can be viewed as indoctrination of students. This is consistently the greatest challenge of teaching – engaging in advocacy, or the appearance of advocacy of a paradigm or a policy proposition. Using alternative paradigms to explain the same phenomena may not afford sufficient protection. The best I can offer the reader is be cautious; however, this caution exists whether one uses a multiparadigmatic approach or not. Students do ask me “which paradigm do I think is best?” My reply is that which I begin the course with: each of these paradigms tells us something about how the economic system works. They are based on assumptions which direct their logical inquiry. Be aware of their strengths, limitations, and distributive implications.

30 Students use other paradigms as well. One interesting example from last term employed Schumpeter’s Theory of Economic Development, making a link between new products developed during the Great Depression (Nestlé’s instant coffee and Miracle Whip) with new Apple products, with the lead in a quote from Steve Jobs. Another quoted Tom Pawlenty, and used charts from his website as empirical evidence. With respect to the first example, while I was looking for the application of primary data, history is “primary data’ and the student’s approach was creative and satisfied the parameters of the assignment. As to the second example, it was necessary to remind the student of the need to use primary data as a tool of critical thinking. “Packaged” data from the internet, especially from a political campaign platform, was not sufficient. I share these examples that readers might anticipate the sorts of challenges they may confront.

31 I like to use online discussion forums for this assessment activity, and do so not only to address problems but also to learn from successes.