Welt am Sonntag, 16 October 2016:
Revolution in the lecture hall (Revolution im Hösaal)
Revolution in the lecture hall. For years, economists at universities have been pretending the financial
crisis never happened. A new teaching method is now supposed to change that. Of all people,
professional speculator George Soros supports the project.
First-year students at the Humboldt University of Berlin: Paula Thu and Florian Schumann study
economics using the new CORE method.
Students quickly raise their hands in the air. A representative of the Economics Faculty has just
finished his presentation. He told over 200 first-year students about their future study plan and
advised them to consult the study advice department. A student asks: “You have talked a lot about
theoretical approaches and mathematics. Is this course also about economic content and economic
history? Or are we only dealing with models?”
It is a tough question, summarising the current criticism of economics: too much maths, too
removed from reality and full of dogmas. The link to the big picture is lost, economists say. This
narrow mathematical perspective is one of the most important reasons for surprise among
economists when the financial crisis hit in 2007 and brought the financial system to the brink of
collapse. Long-term change in economics must begin at universities - this is what reformers have
been demanding ever since. This is exactly where the next generation of economists is being
educated - just like here at the Humboldt University.
The students sitting in a lecture hall not far away from the centre of Berlin cannot yet tell that they
will be part of a small revolution in the coming months: they are the first students in Germany and
among the first worldwide that will be educated in a completely new way. And, supposedly, the firstyear students do not know either that the billionaire George Soros is responsible for it. Heart and
soul of the new CORE method is an online textbook that was created last year as a cooperation of
many scientists - without payment and on a voluntary basis. The history of CORE starts in April 2010,
one and a half years after the collapse of Lehman Brothers, which had not only caused chaos in the
world economy but also led the science of economics into a deep identity crisis that it has not found
a way out of to this very day.
At the time, Soros invited some of the most renowned economists to come to the historical King's
College at Cambridge University. The location was a deliberate choice: it was here that John
Maynard Keynes, one of the greatest economists of the 20th century, had researched, and so now
this became the birthplace for a movement against the current mainstream. In the pseudo middle
age dining hall of the College, George Soros shared his plans with the invited economists, among
them Joseph Stiglitz: the billionaire had founded a think tank, the Institute for New Economic
Thinking. The gathered economists were now supposed to discuss how economics should be
brought out of its crisis. "Why didn’t you see the financial crisis coming?", Queen Elizabeth II had
asked high ranking economists just a few months ago and had thus summed up the wide-spread lack
of understanding.
"At the time, many students of economics were unable to explain to their parents and friends what
had happened in the financial crisis and how it all came about" says Wendy Carlin, Professor at
University College London (UCL). "Economics had become so abstract that it was completely
detached from the real world." Back then, Carlin was part of the circle of economists in Cambridge
to whom Soros had addressed his thoughts: economics is too confident in market forces, he said.
Therefore, it would have to reform itself in order to recognize future dangerous developments and
ring the alarm bell early enough. Something like the financial crisis should never happen again. That
Soros of all people is now pursuing this aim, he who almost destroyed the European exchange rate
system in the 90s by speculating against the pound, might seem ironic to some. Nonetheless: 50
million euros were made available to finance conferences and research projects - and a new
textbook that UCL Professor Carlin oversees. A second meeting in Cambridge, the suburb of Boston
this time, was the start of the CORE Project. This time it was a smaller group, only two handfuls of
economists gathered not far away from MIT and Harvard - among them a professor that was going
to develop the first economics curriculum for the university in Bangalore, India and economists from
Chile, where hundreds of thousands of students went into the streets to demand reform of schools
and universities.
"At that time, none of us had that one big idea", says Carlin. "We knew that we wanted to teach
freshmen in economics differently than previously but we had no clue what the result of our
discussions should be." The group decided to search for an economics professor whose teaching was
considered very good. They found Martha Olney at Berkeley University. The economist with the long
grey-black curly hair has been teaching first-year students for decades and enjoys an almost
legendary reputation among her graduates. "Students have to use their hands and mouth, otherwise
they do not learn anything", she explains to the circle of economists. "Martha taught us to use as
many methods as possible to inspire students to be engaged and to not only see them as passive
containers that knowledge gets poured into", says Carlin. The decision to create a new kind of online
course for freshmen had already been made at that point. Universities and professors around the
globe were going to be able to use it freely. Around two dozen economists started working
voluntarily on the chapters of the book. More than 200 scientists made current research results and
data available to the authors. "It was the most difficult project that I have ever worked on",
concludes Carlin.
The result is a remarkable textbook that comes across very differently compared to previous
textbooks. CORE uses economic history as an introduction to economics - with stories of pirates,
with online videos and guessing games. "The textbook is colourful and vivid, takes beginners by the
hand and the app and all the folderol around it are simply fun", says Nikolaus Wolf, who will use the
ebook at Humboldt University. Students can use the app on their smartphone, for example, to take
part in voting procedures and thus in experiments. In one section, Wolf will adopt a suggestion by
CORE authors and split his students into teams that build paper planes to time while competing
against each other. They should then see that they produce faster when every team member takes
over only a single part of the production process - this principle of the division of labour is seen as
imperative for the great wealth of today’s societies. Wolf believes that those introduced to
economics in such a way stick with it for longer. "Often economics lectures start with models and
formulas without explaining to students why they are learning all of this", says Wolf in his office on
the highest floor of the economics faculty. "That often scares away the wrong students in the first
few years - namely, those who are highly motivated to understand the big problems and contribute
to their solution. It is often the case that after a few months only those that accidentally like
mathematics are left.”
Florian Schumann could fall into that category. "Maths is my biggest strength", says the 17-year old
student from Brunswick who is waiting for the next introductory lecture. Although he wants to work
at a company later, he decided to study economics and not business studies. "That was a deliberate
decision - I want to understand the big picture", he says. That is exactly the CORE approach. "The
study of economics remains theoretically hard and mathematical formulas are part of it", says
Professor Wolf. "However, it is crucial to explain to students why economics works with models and
mathematics, which should motivate them to struggle through all the theoretical models". Students
like the 22-years old Paula Thu from China, who is just beginning her studies of economics and hopes
to gain more of an understanding of how the world works by studying the subject. "I want to know
how the economy works", she says. That must be delightful to hear for the CORE authors. The
standard and wide-spread introductory textbooks take a different approach, by taking students from
model to model.
In the US, expensive economics textbooks are big business. When a publishing house develops a new
introductory textbook, it has to invest around one to two million euros. CORE was almost a bargain
compared to that: Carlin works out for us that it cost roughly £240,000 each year to create the
course - around €266,000. First and foremost, the money was used for the interactive elements such
as web design, videos, but also project managers and research assistants. Although the project was
financed by INET, there have been no attempts made to influence the authors, says Carlin. The think
tank even criticised the book because it did not seem progressive enough to the donors. In the
meantime, the Soros Institute has also stopped its funding. Now, other foundations donate money,
like the British Treasury, the International Economic Association and leading universities. In fact, the
content of the teaching material is seen as very balanced; that it is being criticised from very
different corners every now and then seems to be the best proof for that. Some left-wing
economists claim, for example, that the book glorifies capitalism. Indeed, the first heading says:
"How capitalism revolutionised the way we live, and how economics attempts to understand this".
Conservative economists on the other hand sometimes criticise that the text book deals too much
with topics like inequality and a lack of fairness in the economy.
However, all in all the work has received an enthusiastic response: CORE was just presented in
Germany on the annual summit of the German Economic Association, the biggest association of
economists in the country. Since the conference, 200 professors and lecturers from Germany have
registered for CORE. Still, whether CORE actually changes economics is yet to be seen. Currently,
26,000 students and more than 2,000 lecturers are registered on the website of the project, but it is
still a small elite that is using the textbook. German students that are seeking reform of the subject
complain that new thinking can rarely be seen in lecture halls and seminars in their country. Nikolaus
Wolf is thus the first and only professor in Germany that built his course around the online course.
However, neither he nor Wendy Carlin are completely sure about this since anyone can use the
online material for free.
That also results in some surprises. For example, French economists from the renowned Sciences Po
University in Paris that were working on a French translation were astonished when they saw that a
French version already existed: on the volcanic island of La Réunion in the Indian Ocean. Lecturers
there had discovered the online course and were amazed by it, so they translated it into French on
their own. 2,000 students are already studying economics there now with the help of CORE. Maybe
one of them, one day, will contribute a decisive idea for protecting the world economy from bad
crises. It would be necessary: how fast a society forgets is shown by a conversation with an
economics first-year student about the financial crisis. He wants to know which crisis is meant: "The
problems with Deutsche Bank?" Financial crisis, Lehman Brothers - those keywords are given an
empty look by the 22-year old. His fellow student is also shaking her head; she would never have
heard of it. "I will have to look at my documents from high school again", says the embarrassed
student. Let's hope that the lessons of the crisis stick with us longer.