Economics is still widely taught and applied as if there were only one legitimate way of understanding how the economy works. That way of thinking is rooted in neoclassical economics, with its emphasis on formal models, equilibrium and mathematical optimisation.
As the economist Ha-Joon Chang has argued, this dominance has fostered the idea that “there is no alternative”. What is striking is how little this has changed despite major economic disruptions, not least the global financial crisis of 2007–08. In its aftermath, students across Europe – including in Denmark – mobilised under the banner of the Rethinking Economics movement, questioning curricula that seemed increasingly detached from economic reality.
Over time, economics teaching has become more focused on models and mathematical techniques, often at the expense of economic history, institutional analysis and competing schools of thought. This marks a significant departure from how economics was taught until the 1980s, when Keynesian, Austrian, Marxian, developmentalist and institutional perspectives coexisted within the discipline, and historical context was seen as essential rather than optional.
Societies need people who understand how real economies function in all their complexity – and how economic systems differ across regions and countries with different economic structures, level of economic complexity and degree of industrialisation. This requires an understanding that markets are not always efficient, and that the more relevant question is often: efficient for what purposes, and for whom?
Pluralist economic thinking equips students and practitioners to engage critically with competing explanations of economic phenomena, rather than treating one framework as universally applicable. It also develops the independent judgement required to draw selectively from different schools of thought when addressing concrete problems.
These capabilities are increasingly important for understanding and debating issues such as the greening of capitalism, geoeconomics and geopolitical rivalry, and the rise of anti-democratic movements linked to long-term economic decline and widening inequality.
What firm-level reality tells us
My own firm-level and industry-level research across markets in Asia, Africa and Europe further underscores the limits of overly abstract economic models. In practice, firms rarely behave in the way neoclassical theory would predict. Decision-making does not typically involve optimising a production function under clearly defined constraints.
Instead, firms operate within historically shaped institutional environments and are embedded in social, political and organisational contexts that shape both what they can do and why they pursue certain strategies. Ignoring these dynamics makes it difficult to explain real-world outcomes – from uneven patterns of industrial development to persistent productivity gaps.
