Plural Economy

Battling the market ideology

A new school in the Moselle wine region is harvesting ripe ideas in economics. Picture source: Reuters

Wine aficionados flocking to the Middle Moselle Wine Festival this weekend will doubtless be too busy with wine-tasting, a vintner parade, a festival queen and fireworks to take notice of a quiet economic revolution in their midst. Nestled among the steep vineyards of Moselle River valley, the site of the festival, Bernkastel-Kues, is best known for its wine labels. For that matter, Germany itself is much better known for its wine than for any innovations in economic thought.

And yet some new ideas on how to humanize the market economics that dominate Western societies are quietly fermenting in a new college that earned its first accreditation just two years ago. While the concepts of a “plural economy” are new, they draw their inspiration from the humanist teachings of Bernkastel’s most famous son – Nicolaus Cusanus, a 15th-century polymath who defined what a Renaissance man was.

The objective of the Cusanus Hochschule is to liberate classical economics from its reliance on abstract models and formulas and relate it to the real world. The seven professors and 56 students at the small academy approach economics not through these sterile models but through the disciplines of philosophy, theology and cultural studies.

“We’re not changing the fact that two plus two equals four. But we take a step back and ask whether or under which conditions this addition reflects reality.”

Silja Graupe, founder, Cusanus Hochschule

According to founder Silja Graupe, the school considers mainstream economics the reason why normal German citizens don’t see themselves in economic statistics; why politicians don’t follow the advice of so-called economic “wise men”; and why a financial crisis can erupt without being noticed by economists. Ms. Graupe herself has just published a study that finds the world’s two most popular textbooks in economics – those by co-authors Paul Samuelson and William Nordhaus and by Gregory Mankiw – to be “emotional” and unscientific despite their claims to objectivity.

“The books suggest that with the market we stand automatically on the side of the good, of prosperity, of democracy,” Ms. Graupe told Handelsblatt sister publication Wirtschaftswoche. “That is a political message before any empirical evidence.”

In short, she says, it is manipulation. “Students rely on objectivity,” Ms. Graupe said. “In fact, science is being exploited to appeal to authorities and to manifest a hidden worldview.”

This may sound like a typical leftwing, anti-capitalist, even closet communist rant, but Ms. Graupe’s critique is based on her own experience in business. She comes from a family that operated a small metalworking business, manufacturing housing for medical equipment. Ms. Graupe studied engineering to work in the family business, but by the time she graduated in the 1990s, much of the metalworking sector had migrated to the Czech Republic.

That was her aha moment. “I stood there with my degree and realized that I couldn’t help along at all,” Ms. Graupe said. “I asked myself: Why am I so helpless with my scientific education? And then I realized my science is part of the problem.”

The brutal Darwinism of market economics, when applied to a small company like her family’s, turned workers into competitors struggling for survival instead of colleagues helping out each other to build the business. This realization led Ms. Graupe to studies in philosophy and comparative cultures and then to a teaching job at a small institute outside Bonn, before she networked with other academics who were moving in the same direction and together founded the new Cusanus school.

Classes are not lectures drawing on those classic texts, but roundtable discussions of such questions as: Do we need growth in order to prosper? Why is it so hard to earn money as an artist? How can a farmer grow things ecologically and keep up with organic discounters?

“We’re not changing the fact that two plus two equals four,” Ms. Graupe explained. “But we take a step back and ask whether or under which conditions this addition reflects reality.”

The arrival of the school in Bernkastel-Kues provides another example of how this real-life economics works. When the professors and students came to the sleepy provincial village, bringing their urban tastes with them, the small local supermarket started stocking tofu sausage, organic cookies and humus along with the standard fare of canned goods and packaged meat. But it was no invisible hand that brought the additional products to the shelves, a long process of supply and demand shifting the range of goods. Rather, the students went to the store management, explained what they wanted and guaranteed they would buy it.

“Communication didn’t take place via price,” Ms. Graupe said. “Rather, the price was the result of a dialogue. Such effects aren’t portrayed in mainstream economics.”

In a country where the simplistic notions of “ordoliberalism” dominate economic thinking, founding a school to explore revolutionary notions in economics is not a way to fame or fortune, and the Cusanus school remains largely on the margins. Nonetheless, other schools of plural economy are springing up, in places like Siegen and even conservative Bayreuth. The movement has begun to draw the ire of mainstream economists and one recently accused plural economists of profiling themselves at the cost of mainstream economics without engaging in any real constructive dialogue.

Ms. Graupe hopes to counter that impression by attending a conference in Vienna this fall that brings German-speaking economists together, even though no representative of the plural economy has been invited to speak. But even on the sidelines of such a conference, it is possible to engage and make an impression.

In the meantime, however, these revolutionaries can sit back, sip a glass of Moselle wine and watch the fireworks.

Katharina Matheis is a writer and editor for Wirtschaftswoche. Darrell Delamaide, an editor for Handelsblatt Global based in Washington, DC, adapted this to English.

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