Introduction
Richard Murphy believes that the way in which accountancy and economics are currently taught is fundamentally flawed since it is based on a false premise—that markets are perfect and investors rational. A graduate in economics and accountancy from Southampton University, Murphy was articled to Peat Marwick Mitchell & Co., a forerunner of KPMG in London. Since 2003 he has been researching and campaigning on economic and taxation policy issues. He founded the Tax Justice Network and is director of Tax Research LLP, which undertakes work on taxation policy for aid agencies, unions, NGOs, and others in the United Kingdom and abroad.
Murphy has helped to reshape the debate on international tax policy, for example through the creation of country-by-country reporting. As principal researcher of the Tax Justice Network until 2009, he helped to put tax havens on the international agenda. He is a coauthor of Tax Havens: How Globalization Really Works (2009) and the author of The Courageous State: Rethinking Economics, Society and the Role of Government (2011).
Is there one overarching flaw in how economics, finance, and accountancy are taught?
Yes. There is a hegemony of ideas. Anyone who wants to teach economics or accountancy these days has to subscribe to neoliberal economic thinking. There was a time when you didn’t have to be a mathematician to become an economist. However, that changed in the 1970s. Economics—and as a consequence accounting—moved on to a different plane, with everything becoming “rational.” Everything had to be reduced to something that could be measured—and if it couldn’t be measured, then it didn’t really matter. A. J. Ayer’s logical positivism became orthodox thinking, giving rise to a mathematically-based, value-free approach that led to some extraordinary assumptions being made.
Who else was instrumental in ensuring that this sort of thinking became mainstream?
Milton Friedman and the Chicago School came to dominate economic thinking from the 1970s. Going back a little earlier, immediately after the Second World War, Paul Samuelson built a model of what he called “Keynesian” economics around mathematical analysis. This was very useful for educationalists since it became possible to set exams with right and wrong answers, which are considerably easier to mark than answers to open-ended questions. That drove the educational agenda in a fundamentally wrong direction.
When economics is taught in this way, it’s easier to exclude anyone who lacks the required technical skill and to rubbish anything that interferes with the models as “not economics.” This undermines the truth and validity of the entire system.
One of the more surprising aspects of the system for teaching economics and accountancy is the navel-gazing. About one-third of research undertaken by UK accountancy faculties is into the performance of UK accountancy faculties. That is a terrible waste of resources when you think of the areas that could do with analysis and study.
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