One reason: the lack of insights about the market in economics textbooks

At present, the mainstream courses of economics are microeconomics (neo-classical economics) and macroeconomics. Among them, microeconomics emphasises “market failure”, while macroeconomics emphasises “government intervention”. Both believe that the market itself has defects and cannot function well. Therefore, if the teacher only teaches according to economics textbooks, what the students admire is not the spontaneity of the market, but the necessity of government intervention in the market.

In terms of market understanding, neoclassical economics has at least three shortcomings:

One is that neoclassical economics is based on “equilibrium”. The equilibrium method presupposes an ideal world with no monopoly, no externalities, and no information problems, and then uses it to compare reality. When reality does not match it, it is said that there is a “market failure” in reality. Obviously, the real market is a dynamic process driven by entrepreneurs, not a certain “equilibrium” state, and there is no optimal. The second is to understand the market based on the concept of “one-person world”. For the multiplayer world, efficiency comes from exchange, interaction and collaboration, not from the maximisation of an individual. Neoclassical economics simplifies “multiple persons” to “one person”, and equates the maximisation of “one person” (such as a manufacturer or consumer) with the maximisation of the market. This is an inappropriate simplification of the market. Therefore, only by returning to the “exchange paradigm” can we understand the market.

The third is that the “economic man” hypothesis of neoclassical economics has limitations. We say that the “maximisation” hypothesis itself is not a problem, but neoclassical economics equates “maximisation” with maximisation under constraints, and regards human behaviour as a function of constraints. This is not appropriate, because it ignores the purpose of human behaviour. The individual’s behaviour depends first on his purpose, rather than external constraints.

It should be pointed out that this maximisation hypothesis is of little significance, because everyone knows that the pursuit of maximisation under constraints does not require the teaching of economics. On the contrary, this kind of maximal teaching will strengthen “exquisite self-interest.” Compared with “maximum rationality”, “rule rationality” needs to be provided by economics education, which is also what economics education can provide. The rules here refer to the laws that economics reveals that contribute to the improvement of human welfare, especially the laws of the market. When people follow such rules, the public’s interests will increase, so it is rational.

In terms of violating the market, macroeconomics goes further than microeconomics. Macroeconomics basically continues microeconomics in methodology. For example, like microeconomics, macroeconomics is also a maximisation paradigm, not an exchange paradigm, and it is also based on equilibrium thinking. But in addition, macroeconomics does not even have basic economic concepts such as scarcity, capital and currency, and everything focuses on achieving the goal of total optimal. However, we have to ask, does achieving the “total” target mean improving individual welfare? Obviously not. On the contrary, when a certain total amount, such as price stability, full employment or economic growth, is the target, the market price mechanism will be distorted, causing the market’s resource allocation function to fail, resulting in greater welfare losses. There is no solution to macro-control, because every macro-control will inevitably produce new problems. Therefore, instead of this, it is better not to intervene in the market at the beginning, but to follow the rules and let the market itself play a more important role.

In addition, current economics education also pays special attention to measurement and mathematical models. However, measurement and mathematical models are only application tools, which are not very helpful in understanding the market. To be honest, mathematical models may be useful for students who intend to take the academic path within the system, because they need to publish papers in journals within the system. These mathematical models are necessary tools for publishing papers (of course, this is also not good atmosphere). However, it is important to know that most students will not take the academic path within the system. They will leave school and enter society.

For them, they need to know what the market is all about

There are different theories and schools of economics, based on different theories, and different views on the market. Some economists adhere to classical liberalism and oppose government intervention in the market, such as Smith, Mises, and Hayek, while others tend to accept Keynes’s views and advocate government intervention. So, which view is more correct? We say that the view of classical liberalism is logically more self-consistent and therefore more reasonable. As Hayek reveals, the interventionist view implies the “rational arrogance” of the interventionist, which is not logically valid. Unfortunately, interventionist economics education is now dominant, and classical liberalism is marginalized.

Reason two:

There are problems in the recruitment and performance evaluation system of teachers, which makes it difficult to provide teaching services that meet the requirements

If the unique value of economics education lies in the above two aspects, then the ability to provide such services can be used as a criterion for judging whether a teacher is qualified. Therefore, for colleges and universities, the next question is how to discover and train such teachers. However, the current university teacher recruitment and performance appraisal system cannot meet this requirement.

There are two sources of university teachers. The first source is graduates who have just received a doctorate. The courses they accept at the doctoral level are mainly in the above-mentioned microeconomics, macroeconomics, and mathematics. In the phase of writing doctoral dissertations, the ingenious application of measurement and mathematical models is often the main content, because in the current climate, only This will make graduation easier. Another reason is that they have to do scientific research projects for their supervisors at the doctoral level, and most of the scientific research projects are “applied”, that is, to solve a certain problem of the government, such as industrial planning and urban planning. These projects point to It is often how to guide the government, not how to make the market work. This means that they may not have access to classical liberal economics that supports the free market at the doctoral level, let alone learn it systematically. When they enter colleges and universities, will they be able to provide students with the above-mentioned knowledge services? Obviously not. In fact, they need to relearn relevant economics knowledge to be competent. However, after they entered the university, they immediately faced the pressure of publishing papers and applying for projects, which meant that there was no time to learn that knowledge, and more importantly, this kind of knowledge could hardly bring them economic benefits.

The second source is external introduction. The standard for recruiting talents in universities is to see whether there are so-called authoritative publications, national projects and awards. However, “talents” who meet these standards may not be able to create the above-mentioned value for students, and those who can create the above-mentioned value for students may not necessarily meet these standards. This has also caused a very unfair phenomenon, that is, some people have entered various talent programs with a few so-called authoritative journal papers, national projects or awards, put on various hats, and earn much higher than ordinary teachers. Salary. Colleges and universities should think about what is the “outcome” and have their own judgment when introducing talents, rather than simply using objective indicators to evaluate.


There are laws governing the operation of the market. When these laws are violated, people will be punished, just as if they violate the laws of physics. Confronting these laws is a mistake of “man will conquer the sky”. People are punished not because they are willing to be punished, but because they don’t understand the laws of the market. The importance of economics tuition in Singapore is to reveal these laws. As teachers, our responsibility is to tell students these laws and let them know the importance of these laws. When more and more people understand and follow these rules, the development of society will be smoother. Finally, I would like to summarize the full text with a sentence of the economist Mises- “The development of human society depends on two factors: the intelligence of outstanding people to come up with sound socio-economic theories, and these People or other people can convince the public of these ideas.”




I am a senior strategy manager at Econs tuition. We provide services for nearly all course about Economics

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Nuswa Smith

Nuswa Smith

I am a senior strategy manager at Econs tuition. We provide services for nearly all course about Economics

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