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How the First Edition of Microeconomics in Context Came to be Written for Russia
(From a Fall 1999 talk by Neva Goodwin)

The starting point was a phone call from Wassily Leontief, in the early summer of 1989. He told me that a member of the Soviet Academy of Sciences had contacted him, saying, "We are going to throw out all of our economics textbooks and replace them with Western texts. Which American text should we translate in their place?" Leontief knew that I was interested in economic textbooks, and asked for a recommendation.

In responding to the request for an appropriate textbook for use in Russia during what was obviously about to become a major economic transition (it was not yet obvious quite how great a political transition was also about to take place), I looked for a text that would include a sensitivity to the issues of environment and equity (including intergenerational equity) that are generally lacking in neoclassical texts. What I sought was an approach that would be grounded in the real world, starting with real situations (such as the way markets actually work), and would then generalize to theory. The more usual neoclassical approach is to emphasize the theoretical abstractions -- e.g., the idea of perfect competition in a perfect market. Reality is then brought in as an afterthought, using words that suggest that it may be regarded as an exception, or a special case: e.g., "market failure" "imperfect competition", "disequilibrium", etc. -- when, in fact, it is the "perfect market", "perfect competition" or "equilibrium" that is the exception, rarely if ever found outside of economic writings.

I finally found what I was looking for, in a textbook written by the highly regarded economist, Kelvin Lancaster, with Ronald Dulaney. In addition to the "theory of the second best," Lancaster was also known for his common-sense additions to consumer theory, and for his ability to translate ideas into mathematics. I suppose it was because I was especially aware of Lancaster's strength in mathematics that I was surprised to find that his textbook, Economics, Principles and Practice, had so many of the qualities I was seeking. It may, indeed, have been Lancaster's facility with mathematics that enabled him to use it selectively, relying on mathematical methods only where they genuinely add to the exposition of reality-oriented ideas.

If all of this seems too good to be true, it is: the Lancaster and Dulaney textbook had been out of print in the U.S. since 1979 (although it continued to be used in translation in at least one country in Western Europe until the late 1980s). Meanwhile, by the time I had researched the universe of US economic texts, and had relayed this mixed result to Wassily Leontief, the Berlin wall had come down, the Soviet Academy of Sciences had ceased to exist as such, and the original impetus for the project vanished.

However, as I was able to see for myself when on a World Bank mission to Moscow in 1992, the need did not go away. The Western textbooks (McConnell and Brue, Samuelson, etc.) which have been translated into Russian are a source of frustration to teachers and students, depicting an idealized world, largely unrecognizable to Russians, in which a social optimum will be reached by perfect competition in a smoothly functioning market. Texts that have been developed since 1991 by Russian economists are influenced by the pre-Perestroika tradition, that Western economics could only be studied in the mathematical institutes. The writers coming out of those institutes carry even further the Western tendency to re-frame reality in the sublime abstractions of mathematics. It seemed clear that what was needed was a team of Russian and Western economists who could look with fresh eyes on Western economic theory, selecting the relevant portions to represent within a more realistic understanding of the actual contexts within which markets operate.

Learning of my interest in this project, Sam Bowles introduced me to Thomas Weisskopf, a fluent Russian speaker and distinguished economist who had taught in several former Soviet states since 1989. In 1993 Tom and I attended a Moscow State University conference on "The Present and the Future of Economics Education in Russia," where we encountered a number of Russian economists who had similar concerns to ours, regarding the need in Russia for something other than the standard U.S. textbooks. Drawing on these, and on some of Tom's earlier contacts, we invited a group of Russians to the U.S. in the following spring (after initial funds had been raised from the Eurasia Foundation and other sources) for a workshop to hammer out our approach. It seemed practical to start from a text that represents the best of what is offered in neoclassical economics, but that was written with an awareness of the important issues that lie outside the traditional boundaries of the field. Kelvin Lancaster agreed to allow us to use his text as the starting point for our revisions.

Tom Weisskopf and I, with help from others who contributed pieces of particular chapters, roughed out a first draft of Microeconomics in Context, and then Tom was asked to take a position of large administrative responsibility at the University of Michigan. Fortunately, soon afterwards Frank Ackerman joined the GDAE staff, as senior editor for three of the Frontiers volumes; he has been a major player in moving the textbook to its final form. In the end about one-third of the book is straight Lancaster and Dulaney, while the rest is either wholly new, or has been thoroughly worked over and rearranged.

The job of the authors of the textbook, as we saw it, was to organize the most enduring portions of the Lancaster and Dulaney material within a new framework, stressing, even more than they did, the real-world contexts within which economic activity takes place. Then we filled out that framework with material that we regarded as a major improvement on the neoclassical approach. Much of this material came from institutionalist, political, humanistic, feminist, ecological economists, etc.. These offerings had conflicted in various ways -- assumptions, logic, methods, or ideology -- with the overall structure of the neoclassical paradigm. Our framework has proven to be more hospitable to heterodox material. However, our patchwork could not be complete as long as we used only material that was already available. We have had to supply the thread that sewed it together, and to create new patches, large and small, for a number of places where we knew of nothing ready-made to fill particular gaps. The new paradigm -- contextual economics -- will continue to require creative efforts to improve on what has been done so far.

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