“How Did Economists Get It So Wrong?
(Paul Krugman, cited by Brad DeLong)
How flawed is economics? How deep does the problem go? I can’t prove anything, but we need to consider the possibility that the problem goes all the way down. Everyone except Eugene Fama knows that there’s a serious problem, but they’re mostly trying small tweaks and trying to make sure that their faction comes out on top. I’m suggesting that the larger claims of the science of economics are fundamentally unjustified.
One comparison is with alchemy and astrology. There was a great deal of truth in those sciences and they provided the foundations for chemistry and astronomy, but their largest claims were flatly wrong. The link they saw between their data and their empirical predictions and practical claims (the transformation of metals, eternal life, the prediction of the future) was nonexistent. The grand claims were bogus.
The second problem with economics is related to the first. Even within the orthodox schools (after excluding Austrians, Marxists, and other alleged fossils) there’s incredibly wide disagreement about critically important questions. You can always get an economist to say what you want them to say. (No, this is not true of climatologists). They don’t have to be fake economists — they can be from the best schools, and none of them will ever be disbarred, defrocked, or expelled. When economics is being taught in college there are definite right and wrong answers, and economics is made to seem like a coherent system. But the minute that something important and real is discussed, economists start mumbling around and arguing. In a science you have a large area of agreement and small areas in dispute, mostly at the frontiers of the discipline. But in economics almost everything is up for grabs. It’s like the days when naturopaths, homeopaths, osteopaths, chiropractors, herbalists, allopaths, and Christian Scientists all contended on equal terms.
Economics is too ill-formed, inconsistent, and incomplete to be the rigorous formal science it pretends to be. What it is instead is a bag of tricks, many of which work most of the time. Economics functions as a form of expert advocacy, like law. No one says lawyers don’t know anything. They’re very bright and knowledgeable and, in the context of our society, necessary and powerful. They do know a lot, but no one calls them scientists. If economics isn’t alchemy (or unscience), it’s law. Economists are highly skilled mercenary advocates within an sloppy, open system which is always in the process of redefining itself. And like most mercenaries, economists are most sympathetic to those who can afford them. (“The Magnificent Seven” was a myth. The samurai never protected the peasants, any more than economists or lawyers work for you and me).
That’s as far as I can go. I’m an outside observer of economics, motivated by the power that economics has over my life, and I can’t get down to the nuts and bolts level. Only an economist could do that, and why would they? Economics is their bread and butter.
(One installment of an intermittent series called “Trying to quit”.)
Trollblog 
February 22, 2010 at 5:19 pm
This is terrific, John.
February 22, 2010 at 7:41 pm
“Everyone except Eugene Fama knows that there’s a serious problem, but they’re mostly trying small tweaks and trying to make sure that their faction comes out on top.”
But this is an excellent development. Of course most are going to try small tweaks (that are unlikely to work). But the big rewards are going to come to the upstarts who start rethinking the foundations.
Just breaking the stranglehold of the Chicago School over economic academia is an epoch-changing event. The New Right for the past 45 years has, at it’s core, relied upon Chicago School economics. The success of the Chicago School meant that the New Right was uncontrovertible by anybody at all in terms of economics (which meant that gradually all of the social sciences by the 1990s were becoming based on the Chicago School).
And since the academy so strongly and basically uniformly supported Chicago School economics, that meant anyone left of the New Right had to entirely redesign their central economic policies on the Chicago School’s foundations (especially since liberalism so heavily relies upon expertise, liberals 1975-2000 couldn’t claim that the economic experts of the era were uniformly wrong). The success of the Chicago School also meant that the worldwide business class universally had one single theory that they would push at all times and places (as opposed to previously, when business elites often disagreed amongst themselves). That’s how the worldwide business elites were moved politically from the center far to the right.
Now that’s all gone. What that means in practical terms is that we return to a chaotic economic academia. What that in turn means is that the entire foundation of the New Right becomes unstable – in 1995, any political debate would be ended when someone brought out the strong form EMH. From now on, not only do New Right debaters use strong form EMH much less, there is now a lot of controversy about strong form EMH within economics that political debaters can easily turn against the New Right.
Personal anecdote: Debreu-Sonneschein-Mantel already made the Chicago School conclusions very dubious by 1974. I would often use DSM in debates and people would simply be unable to (or refuse to) understand the implications of DSM. Now, not only do people readily understand the implications of DSM when it’s explained to them, some very advanced debaters will bring up DSM without my prompting. By the next two years, people with graduate degrees will commonly know DSM (or, at least, it’s general implications).
There are already major figures in the business elite who are promoting behavorialism and neo-Keynesianism. The New Right’s epoch will be over within 5 years, if they don’t simply blow everything up in the next 2 – which is, so far as I can deduce, is their current plan.
February 22, 2010 at 8:02 pm
I applaud the return to chaos and the decline of the Chicago school. I think that economics should be predominantly historical and applied, and a lot of eclecticism would come from that.
However, if this is framed as a debate between “freshwater” and “saltwater”, (Chicago v. Harvard) or just as a revival of Keynes, that doesn’t strike me as enough. There are a lot of other balls in the air.
Mirowski’s “Road from Mont Pelerin” talks about the political origins of neo-liberalism and the Chicago School. One of the undeveloped ideas in that book, of special interest to me, is that the Mont Pelerin founders put it under the auspices of Walter Liberalism, who was one of the big names in New Republic liberalism as far back as WWI.
Anti-populism was one fo Lippmann’s central ideas, and the liberals starting around 1915 were hostile to progressives, who at that time mostly had a populist streak. The progressives (who were often formally Republicans) started leaving or being expelled from the New Deal coalition around 1938, and then in 1948 the radicals were purged, and increasingly since then the Democrats have been a “trust me” administrative party unwilling and unable to make a populist appeal under any circumstance.
February 22, 2010 at 9:13 pm
“However, if this is framed as a debate between “freshwater” and “saltwater”, (Chicago v. Harvard) or just as a revival of Keynes, that doesn’t strike me as enough. There are a lot of other balls in the air.”
1. The behavorialists are coming on very strong and so far, they have challenged both the Chicago School and the Keynesians very strongly on many fundamental points. The behavorialists actually have a goodly amount of similarities to the American institutionalists of the early twentieth century.
2. The economic sociologists are doing incredibly interesting stuff.
2a. Numbers 1 and 2 mean that the study of institutions and organizations are likely to come back in a huge way.
3. Keynesianism is a lot more flexible theory, so simply a defeat of the Chicago School and a return to mathematical Keynesianism is a vast improvement (and immensely helpful to liberals – it now means the New Right will probably return to paleoconservatism, i.e. arguing from culture and not economics).
4. “Mirowski’s “Road from Mont Pelerin” talks about the political origins of neo-liberalism and the Chicago School.”
Great book, reading it right now.
5. We shouldn’t overfocus on the American part of the Chicago School equation as described in Mirowski. Remember, the most prominent figure at the time by far at Mont Pelerin was Lionel Robbins, head of the LSE (the American participants were mostly junior professors at the time). The LSE had as much impact on British economics as the Chicago School did on American economics – the two schools were extremely closely linked.
6. A lot of interest has recently appeared in such figures as Minsky. Once there’s an opening to such a heterodox figure like Minsky, people will likely start looking at Sraffa and others.
February 22, 2010 at 9:18 pm
Amartya Sen zeroes in on Lionel Robbins in “Rationality and Freedom”, possibly in his Nobel lecture.
As far as I can tell, Sen’s criticism of Robbins could have been made right off at the beginning, 70 years ago, and they probably were. The way academic disputes are decided….
February 22, 2010 at 9:30 pm
My understanding is that the Chicago School gained dominance during the 70s when the various other economists couldn’t explain stagflation. Their other issue was the managed econmy vs. free markets with respect to economic growth. I remember Walter Heller working for LBJ talking about how the economy should be “fine-tuned” with constant little governmental tweaks for maximum efficiency and growth. Heller’s idea probably was wrong.
But because of what the liberal economists shared with the Chicago School, which was a lot, after they lost these two arguments they apparently just surrendered. And the CS economists cleaned up on a lot of other issues which weren’t part of the original argument that they’d won.
This is all just my reconstruction based on the little I know. But it seems to me that the whole economics profession, with honorable individual exceptions, actively enabled the CS.
February 22, 2010 at 9:58 pm
“That’s how the worldwide business elites were moved politically from the center far to the right. […] Now that’s all gone.”
No, I don’t think so. That viewpoint assumes that argument, and rationality in general, is important within economics. On the contrary, I think that now that economists have produced a winning public relations formula for powerful interests, no amount of contradiction by events will ever serve to displace it. There will be just enough Keynesianism to keep the system barely running, and everything else will go hang.
Eventually people will go to some form of what’s now described as environmental economics, because that’s the only thing that makes sense. But they’ll only do this when forced to, just as Keynesianism was adopted only under the pressure of economic failure. After that, the same interests will promptly greenwash whatever they can, and the next generation of economists will find a good living telling people why a trading system of permits is far preferable to that bad old command-and-control.
In short, economics only progresses when the only other choice is extreme failure. Rationality has nothing to do with it.
February 22, 2010 at 10:00 pm
I disagree completely that the orthodox schools don’t have very much different to say, or that they all agree– they don’t and they say things very much in opposition to one another. I’ve spent time with post-Keynesians, post-post-Keynesians, post-Austrians, and post-Marxists, trust me, I think.
February 22, 2010 at 10:14 pm
“Saying things in opposition to each other” is meaningless when they’re all very similar in comparison to what’s actually true. It’s how DeLong could tell everyone that the Obama economic team was great, because after all it wasn’t like Bush’s.
But I’d guess that under a hypothetical Bush III, we would have ended up almost exactly where we are now: 10% unemployment and a huge giveaway to the banks, absent any re-regulation, to tide things over.
February 22, 2010 at 10:17 pm
Well, what I said is that even within the orthodox camp there are big disagreements on major issues, and that these disagreements are large enough that I doubt that you can call economics a science. But this doesn’t preclude the possibility that they all have shared blind spots too.
February 22, 2010 at 10:26 pm
“There will be just enough Keynesianism to keep the system barely running, and everything else will go hang.”
But that was not our experience with the Chicago School – once the method war of the 1970s was over, the Chicago School (and it’s supporters) was not content to merely fixing things around the edges. There were ideological things that the Chicago School pushed for(and sometimes got)that were not in existing businesses’ particular best interests.
Second, your narrative wouldn’t explain the following:
1. Why did the American institutionalists have such great success in the early twentieth century?
2. Why did the marginalists come to dominate economic theory when the Historical Schools were more supportive of the economic status quos of the moment? (ex: the German Historical School was more supportive of Germany’s actually existing economy than the German Marginalists were)
February 22, 2010 at 10:38 pm
Between 1896 and 1938 dissident groups of various sorts brought a lot of leftward political pressure on the two major parties. Theodore Roosevelt, Woodrow Wilson, and FDR made major concessions to these movements, and this made room for the instituionalists and Keynesians. After 1938 war became the big issue and the left coalition disintegrated. After WWII Truman kept a little of that spirit alive, but mostly it was the transition to managerial liberalism and win-win “rising tide raises all the boats” politics and economics.
February 22, 2010 at 10:41 pm
Back to Lionel Robins: his behaviorism and non-normativity seemed scientific and progressive. My bet is that the historical school had a musty, old-fashioned, reactionary air about them. Even in my youth (1965) behaviorism still could be made to seem like The Future.
February 23, 2010 at 1:12 am
I feel ambivalent at best about Krugman. He’s really only halfway there, and I doubt that he’ll ever get any closer. Apparently he learned about reality entirely from scratch starting in 2001, after spending his life up until then being a genius and explaining things to people he thought were idiots:
http://www.newyorker.com/reporting/2010/03/01/100301fa_fact_macfarquhar?currentPage=all
February 23, 2010 at 2:17 am
burritoboy, you’re treating “existing businesses” as if they are monolithic. In both the cases of the replacement of historical schools by the marginalists, and the coming-to-prominence of the Chicago School, the common factor was greater support for looting. Existing businesses that did old-fashioned and boring things, like employ people, were supposed to be swept away, while the forward-thinking more predatory interests were the ones naturally aligned with the economists.
Really, I think that John is right that economics is in such a deep hole that I don’t expect it to ever emerge in my lifetime. Even the most readable and reasonable-seeming people, like John Quiggin, still seem to think that e.g. a permit-trading system for CO2 would work. Why? Well, because trading systems are more efficient, I guess. The complete vulnerability of trading systems to cheating (as always happens when there is a “transaction” with only one person in it) and political failure (if a tradable permit system ever starts to actually bind, then the permits are declared to be too expensive and more are created, because unlike taxes no one directly loses out in the short term if they are subverted) are just some of those real-world things that economics doesn’t have time for.
February 23, 2010 at 2:35 am
The complete vulnerability of trading systems to cheating….
By the privatizers’ own arguments, that’s the Achilles heel of all government-business negotiations.
If government workers are generally inept and lacking in incentives, as privatizers claim, obviously they’ll always be swindled by business people with something to lose. So contracting out, for example, can’t work, because the government party will always overpay, etc. (even if they’re not bribed with revolving door contracts.)
February 23, 2010 at 2:59 am
I’m convinced that the general support for trading systems over taxation of CO2 is because all of the highest-level decision makers understand how much easier it is to cheat a trading system. If you’re taxing CO2, it’s quite possible to tax CO2-bearing fuels as they are generated. That means that you need to keep track of, oh, maybe a couple of thousand of entities, because there is no such thing as a mom-and-pop oil company or coal mining concern with major reach. If you’re trading permits to emit CO2, there’s plenty of room for everything to vanish into the morass, and for compliance to be voluntary because no one can inspect everyone who burns some significant amount of fuel.
So it’s not just a general problem of government-business negotiations — it’s purposefully shifted over from an easier area to track to a more difficult one.
February 23, 2010 at 4:06 am
“Existing businesses that did old-fashioned and boring things, like employ people”
But that’s precisely the point. It was not the currently existing economies of those historical moments that was critical (the German Marginalists strongly opposed the foundations of the First Reich’s economic success). Instead, it was an ideological argument: if we do this [set of policies that X school of economic theory recommends] we will become richer than we are now. “We will become richer” means that the new economic theory is claiming to understand economic life more fully than the previous economic theories.
Saying that the new economic theories were really designed only to benefit certain economic classes or interest groups doesn’t advance us in understanding. The Keynesians of 1936 onwards were not particularly better suited to business interests of 1936 (indeed, business interests were quite opposed to Keynes), yet much of economics academia was quickly converted to Keynesianism within a very short timeframe.
February 23, 2010 at 4:30 pm
I don’t think that class interest decides which particular economic school supporting the propertied class wins, but only that the winner will be one of the supporters of the propertied class.
The institutionalists and Keynesians both were reformist and believed that capitalism had to be fixed for its own good. There were strict limits of the radicalness of their views.
Economics was still an amateur activity up to about the end of the 19th century. Some of the early economists were quite radical, but as the field became established and professionalize, I think it moved right. From the 1890s on there was a lot of pressure on faculty who went so far as to openly support labor strikes, for example. (Faculty at my alma mater have been told that they will be fired if they identify themselves as faculty members of the school when engaging in controversial political action. “Neutrality” is enforced.)
As I said above and elsewhere, my belief is that between 1938 and 1946 the Democratic Party and the United States were irreversibly changed by a move to a technocratic, anti-popular, pluralist form of liberalism, and that at the same time the university was transformed in somewhat the same yechnocratic, specialist, neutral direction. Schesinger, Galbraith, and Hofstadter were part of the political side of that (which coincided with the purging of Wallace Progressives), and one of their doctrines was win-win industrial peace, the renunciation of populist appeals, and the cooptation of unions. (Truman didn’t quite get the word and Hofstadter thought very poorly of him for that reason.)
Oddly, Schlesinger, Hofstadter, and Galbraith belonged more to the prewar university than to postwar professionalized university, and their kind got gradually squeezed out. I’m not sure that any of them realized the real consequences of what they’d done, they were transitional figures and may have had some regrets.
February 23, 2010 at 5:35 pm
burritoboy, I’m not really sure what you’re arguing against. “We will become richer” is the promise of all new economic theories, yes. But that “we” elides exactly who is going to get richer. (And who is going to get poorer — regrettable, yes, but as economists always say, as long as the overall trend is up, who cares etc. etc.) The ones getting richer are those interests who support the economists.
And given that part of my argument is that 1936 was exceptional — that, in fact, elites were forced to accept the amount of Keynesianism needed to get us out of Depression and no more — I don’t see what the problem is there.
Krugman shows the same kind of problem in the original article that this blog post links to — the “where did economists go wrong” one. He thinks that both saltwater and freshwater economists were seduced by mathematics, and that explains why the first were only mostly wrong because they shared the same core elements with the second, who were completely wrong. “Seduced by mathematics” sounds a lot better than “seduced by money”.
February 23, 2010 at 6:02 pm
By and large, I don’t think that many American economists are seduced or venal. Most of them have a rather limited experience of the world, an upper-middle-class background (or higher), upper-middle-class expectations (or higher), and gravitate toward politically cleansed abstractions. This may be true at the levels of politics and jounralism, too: maybe the professions by now recruit so much from a narrow well-off slice of the population that neoliberal politics is just tacitly assumed as the background to everything.
Aspirants from below would presumably have a Horatio Alger ideology, which includes both upwards aspirations and gratitude toward benefactors.
February 23, 2010 at 6:53 pm
Well, I don’t think that a sneering villain turns up with a big bag of money and plops it on each aspiring economist’s desk while twirling his moustache. But people quickly learn to go along to get along. Only certain kinds of investigations and certain kinds of results are awarded with tenure, important jobs, etc.
I think that it’s instructive that (according to burritoboy) the oncoming schools are behaviorism and economic sociology. As far as I can tell, those have basically the same assumptions about economics, except that they also think that most people are fools rather than rational supermen. Closer to reality, yes, but hardly any more challenging to the same economic order.
The people who I think basically have it right, or at least closer to right, are the sustainability and environmental economics people. DeLong is fond of those charts where he shows how much richer ordinary people have gotten, going all the way back to the Roman Empire. I haven’t seen much about whether the last half-century has been, in effect, one huge economic bubble.
February 23, 2010 at 7:11 pm
Except for Herman Daly I’m not familiar with environmental economics, but he impressed me. Amartya Sen has also worked to introduce measures of human welfare into economics, getting rid of the enforced fake value-neutrality.
For either school to amount to anything you’d need massive political changes, but having worked-out economic theories might help the political people.
I’m convinced that in the US the biggest impediment to a more humane society is this widespread conviction:
Some people deserve to suffer, and if they don’t suffer something’s wrong, and we should be willing to make sacrifices ourselves to make sure that they suffer enough.
This principle can actually be valid — it’s called “the altruistic punishment of free riders” — but it’s way out of hand in this country. It has a lot to do with race, but not only that. And it’s connected to the idea that life is a competition, with winners and losers, and losers should just take their lumps and not expect sympathy.
February 23, 2010 at 10:19 pm
Twenty years ago a young economics professor, one with a background in economic history, told me that his alma mater, a very good school was basically abandoning economic history; it was all math now, he said. in fact it was so extreme that his old department was looking for recruits not among its best undergraduates, but in the math department. They figured that if they got good enough mathematician, they could turn him into an economist.
Seduced by math, indeed. Another discipline trying to remodel itself on Newtonian physics. Note that even physics doesn’t model itself on Newtonian physics anymore.
The world is a complicated place, even if economists disagree. There is no reason why seduced by math and seduced by money can’t both be true, at least in some cases.
February 23, 2010 at 10:38 pm
“The ones getting richer are those interests who support the economists.”
Leaving aside the Keynesian experience, this doesn’t explain the American institutionalists or that Japanese economics academia is predominantly Marxist, among other potential anomalies. Also, the increasing interest in behavorial economics does not seem to me to be particularly motivated by business interests – the behavioralists started appearing in the early 1990s, when the Chicago School was either at or near it’s greatest reputation.
February 23, 2010 at 10:52 pm
“I think that it’s instructive that (according to burritoboy) the oncoming schools are behaviorism and economic sociology. As far as I can tell, those have basically the same assumptions about economics, except that they also think that most people are fools rather than rational supermen. Closer to reality, yes, but hardly any more challenging to the same economic order.”
If most people are fools (which is not an accurate depiction of those theories), then the Socialist Calculation Debate must be revisited (or, at the very least, could be revisited). There could be a re-opening to even socialism. I admit that’s probably not where American economics academia is likely to go en mass, but it does mean that if (some) academics do turn in that direction, they will not be quickly quashed as they were especially at the height of the Chicago School era.
Second, moving closer to reality is obviously an incredibly positive thing!
Third, just merely having an economics landscape that’s more diverse than any we’ve seen since the late 1940’s means that there’s a lot more opportunity for heterodox economists to do all sorts of unexpected things under the cover of the current chaos within the field.
Fourth, behavioralism and economic sociology are in an infant stage. We can’t really predict what they’ll look like 20 years from now. (And behavioralism and economic sociology are merely my personal favorites. There are plenty of other things going on as well that may prove even more fruitful.)
February 23, 2010 at 11:27 pm
I agree that there has been some improvement recently and that there are various promising signs. What I have not seen is any break in the power, or weakening of the will of the orthodoxy. The so-called saltwater economists are attacking the freshwater economists, but the latter have enormous institution power and have conceded nothing so far. [Edit: Furthermore, I’m completely convinced that the problem goes much deeper than that and hits almost everyone in the field.]
I tend to think in terms of institutional power. It’s the same with the news — people in journalism have enough information readily available to them to convince them intllectually that they’re on the wrong track (fake neutrality, stenographic reporting, fluffines, rightward bias) but they themselves are acreerists, and none of the big media powers (Murdoch, Graham, Sulzberger, and the various anonymous powers) have conceded an inch.
February 24, 2010 at 12:25 am
I don’t think that institutional power by itself is quite all of it. What permits institutions to not concede an inch is a breakdown of rationality itself. There’s no longer any way for institutions to be confronted, other than the pressure of actual social breakdown. It’s fine for whoever owns the relevant part of the system to just make an assertion contrary to known fact and go on.
What’s going to happen with the heterodox economists going in all sorts of directions that burritoboy describes as if it’s new is what has already happened to them. OK, some people will go in various directions. And no one will care. At the next crisis the policy conflict will still be between the people arguing straight Hooverism and the people arguing that we need to save the banks.
February 24, 2010 at 12:35 am
“The so-called saltwater economists are attacking the freshwater economists, but the latter have enormous institution power and have conceded nothing so far.”
The Chicago School has already clearly passed it’s heyday – when the University of Chicago itself employs numerous luminaries of behavorialism (my professors Thaler, Hsee and others) as well as the greatest luminary of economic sociology (Ron Burt) you know the ground’s shifted. The individuals themselves will never concede anything – there were old-style marginalists in academia five or six decades after the marginalist heyday.
The question is always about the new hires, who’s training the most exciting new PhD’s, who’s getting the new research institutes, who is being recognized as the rising stars, etc. The last undisputably Chicago School economist to win the Clark Medal was probably Kevin Murphy in 1997. Of course, there had been Keynesians all along who were also Clark Medal winners (Krugman in 1991, Stiglitz in 1979, etc) but there was no period from the late 1960s to the late 1980s when identifiable Chicago School economists wouldn’t win at least every other Clark Medal. From the 1950s to the mid 1990s, nobody outside mathematical Keynesianism or the Chicago School had ever won a Clark Medal with the sole exception of Ken Boulding. From the mid 1990s on, Clark Medal winners have included multiple different schools, with behavioralists being the most prominent group (and a noticeable geographic shift from the previous axis of Harvard/MIT/University of Chicago to Cal Berkeley).
February 24, 2010 at 12:43 am
“OK, some people will go in various directions. And no one will care. At the next crisis the policy conflict will still be between the people arguing straight Hooverism and the people arguing that we need to save the banks.”
The question is not solely what people will be arguing in the next policy crisis. I presume there will be some straight Hooverites during the next crisis. But Hooverites DID win the initial confrontation in 1929-1930, and would have won in any crisis from 1973-2000. The Hooverites didn’t win in 2007-2009 and 1932-1945. The difference between 1929 and 1987 on one hand, and 1933 and 2008-2009 on the other was precisely that economics academia was a unified field in 1929 and 1987 (and it was a chaotic field in 1933 and 2008-2009).
February 24, 2010 at 1:18 am
As I said, I think that external forces such as political movements and the state of the nation played a big role after 1930. Everything I see tells me that we aren’t half way through our problems yet. What the political response will be I don’t know, but I’m very pessimistic because all of the energy is on the right and far right. The Democratic Party and most rank and file seem to have incapacitated themselves for making a political response, and the leading lights of the Democratic Party absolutely hate their core constituency. (This goes back to Kennedy’s ghosted book, among other things, which was dedicated to the praise of elected leaders who bravely defied the people who voted for them).
I’m skeptical about behavioral economics. The rational actor was always a fiction. The theiory was that the market itself would reward and punish economic players, and the smarter ones would win and the dumb ones lose. You didn’t really need much psychology if the market was functional.
Furthermore, the difference I see in the last 20 years isn’t in individual psychology but in group psychology, the breakdown of the fiction of pure independence, but it seems that a lot of behavior economists are still working with individual actors. But when you bring in “group psychology” then you get all the things that econ tried to bracket out — culture, and communities, and families, and so on.
February 24, 2010 at 1:22 pm
Adding to the above, I’ve felt for two decades that the US is in a giddy emotional bubble of ungrounded optimism, a sort of cargo cult. (This would be social psychology, mediated by media and a lot of institutional forces.) Maybe it’s a spinoff of Morning in America 30 years back. I’ve seen this in the lives of individuals in lower half of the economic demographic, but reading what economists, journalists and business leaders say leads me to believe that they’ve been in the cult too. Chicago School economics is the scientific development of this.
February 24, 2010 at 4:08 pm
“but it seems that a lot of behavior economists are still working with individual actors.”
I don’t think that’s really true. Thaler specifically highlighted group psychology in his courses. Reed Hastie focuses on groups.
February 24, 2010 at 4:49 pm
All the stuff that Sen, the behavioral economists, and the environmental economists are doing is fine with me, but all of that stuff really sabotages some of the main principles and purposes of economics during the last 70 years or so. Do they realize that? For example, Sen has a personal sensible definition of rationality that is utterly useless for modeling purposes. I don’t know how deep he goes with it.
“Groups” is sort of a psychologist’s kludge for things like “society” and “culture” and “family” and “community”. None of these are collections of individuals; all the particular individuals in these social units can change while the unit continues on. (And a unit including X number of individuals can have existed before the time when any of those individuals joined it.
This all involves accepting some kind of non-individualist ontology, and I doubt that either economists or psychologists ar willing or able to do that.
February 24, 2010 at 5:36 pm
I probably said this earlier somewhere, but anyway:
The most interesting thing that’s come out of this for me is Haidt’s Five Foundations of Morality. I forget his exact expressions but I remember them as Utilitarianism (benefit and harm), Hierarchy (respect), Fairness, Solidarity, and Purity.
One reason I like it is that you can describe various societies in terms of their ways of prioritizing these. For example, Hindu society as described by Dumont is organized in terms of hierarchies of purity. (These are basically DuMont’s words.) Our society prioritized utilitarianism and fairness, gives lip service to solidarity, has a narrow economic definition of hierarchy, and reduces purity to almost nothing, to the point that it’s hard to talk about it in English.
In economics the rational man was always obviously a crappy description and just as obviously slanted toward the market,property owners, and capitalism. But it was asserted as the default positions for reason relating to power. The burden of proof was on others to refute it. Now with Haidt (and Gintis) we have a refutation that can be described as scientific. Since I welcome the refutation, I’ll keep quiet about the scientific status. But it’sjyst the same as when, in a Christian society, all ideas have to be justified with Bible verses.
As far as I knwo there’s no meta-principle ordering the five principles. But the fact that a moral response is natural does not make it right at all. Two examples are revenge killing (solidarity) and honor killing (solidarity, hierarchy and purity). These are natural, moral, and strictly forbidden in our society.
So not only do the natural lusts and emotions have to be controlled, but so does natural morality.
February 24, 2010 at 7:47 pm
My skepticism about economics (if anyone cares) comes from a slightly different direction. Even though economics is supposedly about scarce resources, when it comes down to predictions of and planning for the future on a large scale, I don’t think that economists really understand that we live in a physical universe, much less a biologically bounded ecosphere. The numbers are supposed to just keep going up forever. Sure, there’s some hand-waving about substitution, which really means insofar as it’s taken seriously that economists are planning for physical and biological scientists to be much smarter than the economists are.
Putting all of that into some dimly regarded and unimportant sub-branch of economics — not to be calculated when the really important things about budgets etc. come up — empowers a massive looting from the future that dwarfs the looting from the present. There’s a lot more future than present to loot.
February 24, 2010 at 8:12 pm
I once made of list of things economics bracketed out as being fundamentally unimportant. The physical world, the family, the fate of the unemployed and the unemployable, the state, local community, equality, political participation and democracy, the experienced lives of the populace…. it’s a target-rich environment.
When the physical world is one of the things you bracket out, you’ve got a problem.
February 24, 2010 at 10:01 pm
“all of that stuff really sabotages some of the main principles and purposes of economics during the last 70 years or so. Do they realize that?”
Thaler’s course (so far as I could determine) was precisely about taking neoclassical economics’ assumptions one after another and blowing them up. It’s fairly explicit. Hsee seemed pretty happy about my paper that flat out argued that neoclassical price theory was wrong.
February 25, 2010 at 3:51 am
Y’all nigga’s still goin’? Economics has always been the distorted and ambiguously connected consequence of the work of the mother fuckin’ invisible hand, as good ole’ Smith would put it. You’re all going back to something personal, on whatever level, and vomiting it on my goddamn computer screen. Dude who wrote this article was right.
February 25, 2010 at 12:15 pm
Whatever that means.
February 25, 2010 at 5:31 pm
I’m more than slightly confused myself.
February 26, 2010 at 1:32 am
The problem with economics as a science isn’t that it’s useless. It’s that it’s corrupt. I have no problem with Krugman.
Economics isn’t relevant to a lot of really important questions – which is no doubt one reason that Krugman-the-columnist branched out. But hey, physics doesn’t tell me much about whom I should vote for in the next election. It’s still useful, though.
Behavioral economics, meanwhile, has some nifty and useful ideas, and has advanced economics as a scientific field – but I don’t care much. I’m not yet persuaded that it speaks to any of the big issues of the day – even the big economic issues.
February 26, 2010 at 1:33 am
Rich, I’m curious: The common narrative is that acid rain was effectively mitigated by cap-and-trade. Is that narrative incorrect?
February 26, 2010 at 3:38 am
“I’m not yet persuaded that it speaks to any of the big issues of the day – even the big economic issues.”
It’s micro, which is precisely where the classicals, neoclassicals and the Chicago School all started. If you can knock out Chicago School microeconomics, they have nothing left – their macro is entirely derived from their micro. (Their macro never actually worked very well, and was proven to largely be a chimera by Debreu-Sonneschein-Mantel back in 1974).
February 26, 2010 at 4:06 am
The fact that the Chicago School was already destroyed in 1974 tells us that this is not primarily an intellectual debate. It was only in 1969 that I found out that the Chicago School had taken over economics, but it remains powerful 36 years after its destruction.
Mirowski’s political analysis in “The road from Mont Pelerin” is much more relevant than any intellectual analysis.
{updated comment}
February 26, 2010 at 4:30 pm
“The fact that the Chicago School was already destroyed in 1974 tells us that this is not primarily an intellectual debate. It was only in 1969 that I found out that the Chicago School had taken over economics, but it remains powerful 36 years after its destruction.”
DSM tells us that expansion of neoclassical (and Chicago) microeconomics into macroeconomics is very difficult (but not precisely impossible with some kludges that I personally find fairly dubious). It doesn’t tell us that Chicago School microeconomics is wrong. Chicago always had trouble taking micro into macro. Most (or all) theories that start with micro find it difficult to get to a satisfactory macro. Conversely, the theories that start with macro (Keynes generally, institutionalism, the historical schools) have problems going from macro to micro.
February 26, 2010 at 5:48 pm
Chicago school is highly politicized and even has a propaganda arm. Macro is where the political action is; micro doesn’t guide policy. If Chicago macro was a chimera, Chicago economics was a chimera for political purposes, which is the place where it’s important.
My guess is that all attempts to move from micro to macro are fundamentally bad, and are comparable to attempts to describe turbulence in fluids in terms of the molecular level.
February 26, 2010 at 5:53 pm
The Chicago school may have been wiped out in economics, as you say, but it’s still strong in law. In fact, it’s a huge factor for many judges making powerful and far reaching legislation from the bench. Sounds politically relevant to me.
February 26, 2010 at 6:57 pm
“My guess is that all attempts to move from micro to macro are fundamentally bad”
You ultimately have to have both a satisfactory micro and macro – while Chicago’s macro was problematic, Keynes’ micro was also always problematic and hadn’t had much success in taking their macro to micro for 40+ years. Then, when macro events began appearing that the Keynesians had trouble dealing with in the 1970s, it makes sense to go with the Chicago School, who at least have what seems to be a very solid micro. And the Chicago School has some (limited, but some) evidence that they could understand the macro events of the time (which the Keynesians were not able to do).
We shouldn’t underestimate the fact that the Chicago School is very intellectually compelling. Remember that the mainstream of economics (the marginalists of the late nineteenth century) points to something like the Chicago School. I don’t think the Chicago School’s claim to be the rightful successors to Marshall, Pareto, Pigou and so on is incorrect.
February 26, 2010 at 9:18 pm
“Rich, I’m curious: The common narrative is that acid rain was effectively mitigated by cap-and-trade. Is that narrative incorrect?”
Yes, it’s completely incorrect. If you look at why facilities actually emitted less acid rain precursors, it was because of requirements of the Clean Air Act — in other words, because of command-and-control regulation. As a result, industry had so much excess pollution capacity that the acid rain permits have never gotten expensive enough to actually change anyone’s decision about how much to pollute.
Here’s a question for you, politicalfootball: over on Edge of the West, were you at all discomfited when silbey turned out to not in fact be arguing for censorship or editing, as you were? That he was arguing that because the retired naval officer was writing on a group blog, his opinion was semi-official, even though silbey was also saying that there was in fact nothing the people who ran the group blog could or should have done about it? Has this started to make you think about how perhaps the reason you get along over there is that you don’t disagree with them much?
February 27, 2010 at 4:11 am
You ultimately have to have both a satisfactory micro and macro
Fine, but attempts to do both have turned out horribly. And as I said, there are similar difficulties in physics (micro v. macro, with entropy intervening).
A. Their macro never actually worked very well, and was proven to largely be a chimera by Debreu-Sonneschein-Mantel back in 1974).
B. DSM ….doesn’t tell us that Chicago School microeconomics is wrong.
C. We shouldn’t underestimate the fact that the Chicago School is very intellectually compelling.
All signed by the same person.
It seems that when Chicago School replaced Keynesian economics when Keynsian economics failed, this was based on the tacit and false assumption that one or another of the schools of economics had the answer, whether or not the argument was coherent or not.
Economics in some form had already been institutionalized, so once the intellectual argument had been ruled upon by disciplinary consensus, the winner could move into the power seat. The possibility that neither had the answer was not considered.
And by an amazing coincidence, the triumphant scientific tendency enabled a contemporaneous political transformation.
February 27, 2010 at 7:12 am
50: Rich, you are correct that I ended that thread puzzled over silbey’s position, which I didn’t share, and which surprised me when he/she articulated it.
But Jesus, I thought the whole “semi-official” tangent was entirely trivial and unhelpful. Silbey’s use of that phrase was imprecise – and okay, a bit tendentious – but not wrong in any sense that I care about.
Has this started to make you think about how perhaps the reason you get along over there is that you don’t disagree with them much?
This seems self-evidently correct.
I dunno. I’ve come close to being declared persona non grata in some venues, but I think it’s best to remove myself from those situations, rather than waiting for somone else to do it.
February 28, 2010 at 4:01 am
You fuckheads need to just shut the fuck up. You’re all broke ass little bitches without a job or a clue. Economics in a vacuum… When you pull your heads out of your asses maybe you’ll stop contemplating how many angels you can fit on the end of a fucking pin and take a look at what is actually going on. Dumb mother fucking retards. Fucking idiots, god damnit.
February 28, 2010 at 6:19 am
That was really eloquent, Poonstalker. I was going to delete it but I decided to leave it up for the sake of posterity.
February 28, 2010 at 5:32 pm
“It seems that when Chicago School replaced Keynesian economics when Keynsian economics failed, this was based on the tacit and false assumption that one or another of the schools of economics had the answer, whether or not the argument was coherent or not.”
Well, yeah. You have to have an economics – we note that Plato, Aristotle and Xenophon all have writings about economics (Plato’s Eryxias, Xenophon’s Oeconomicus, Aristotle’s writings about economics in his Politics). All other economic schools had largely been knocked out by the late 1960s. Were they properly knocked out? Maybe not, but they were not knocked out for random reasons (Marxism didn’t survive the Socialist Calculation Debate, the historical schools had no micro and were hard to test, etc.) It’s not precisely weird that the inheritors of marginalism would be prominent – marginalism has been the mainstream of economics for over 150 years!
The possibility that neither were correct is not really an option. To govern you need some sort of economics. You simply can’t act if you don’t have an economic theory. This isn’t just true in modernity, but true of all other possible governments as well. The problem is that the heterodox folks from 1945 to 1970 couldn’t come up with anything they agreed upon. (Note: this was not true historically after Aristotle – economists all agreed that Aristotle’s economic theory was the proper basis for theorizing until Enlightenment economics appeared). They couldn’t convince even each other and their theories were all over the map. It’s hard to see how a self-contradictory mess was going to be useful especially at a timepoint when economic action had to be taken very quickly.
February 28, 2010 at 5:37 pm
“Economics in some form had already been institutionalized”
It’s always institutionalized. Since human beings live in societies, they need governance and economics is a necessary part of governance.
February 28, 2010 at 6:55 pm
I wrote “institutionalized” when I meant “established”. We lived under Greenspanian economics the way people lived under Catholic theology during the Middle Ages. A very limited set of tools is allowed, and science isn’t the decider.
You don’t have to have a scientific economics. You have a bag of tricks economics, which is what I’m proposing. Economics makes specific claims to be scientific where the craft knowledge of government finance isn’t, and it claims to be systematic the way physics is, and it claims to be more powerful and more scientific than the other social sciences (and history) because it uses more math, and in the political arena economists claim that their advice must be followed because it’s a true description of the basic fundamentals of society. I doubt or deny all these claims.
The problems with Keynesianism in the 70s did not make the Chicago School a good guide to policy. But they were the loudest team on the bench and had powerful supporters of their agenda, and they shoved in and took over, and as far as I’m concerned it turned out badly even before the most recent three crashes (counting the 1987 crash.)
Three different orthodox sources tell me that economists won’t even listen to anyone who doesn’t use mathematical models. At the same time, they’re untroubled by models which do not actually apply to reality. That’s madness. (And at the same time, economists are untroubled by mathematical errors in their models).
You don’t have to switch from one orthodoxy to another. Economics is a historical science (not a formal or systematic science), it’s incomplete and will probably always be incomplete, and it can be a useful guide to policy, but not if it’s used dogmatically, rather than eclectically as part of a mix of approaches.
This does bring you up to the real, rather Straussian problem: if you’re making big choices with big consequences, people want you to seem sure of yourself, and in general the most self-assured contender is favored. But this can lead to disaster.
That’s why I compared scientific groundign to bible grounding. In a Christian society, when people are making hard and uncertain choices, someone can win the argument with a Bible verse. In our society, it’s science that you use, and you can’t be too picky about whether the science is real.
When I overhear economists talking about anything actual, either they’re arguing about fundamentals or they’re trying to figure out which tool will work best. It doesn’t sound like scientists talking, it sounds like craftsmen deciding which rule of theumb to go by. And of course every science has its research frontier, but it seems that almost every practical question is on the research frontier of economics.
March 1, 2010 at 2:58 am
Thank you, thank you, thank you, thank you. What do you do with a “science” whose premises and conclusions are wrong?
There are pockets of economics research which are empirical enough to be useful, but they don’t get called for soundbites when the DOW drops 300pts. I spent some time studying Network Analysis, which is really just a branch of applied mathematics but is housed in econ and finance depts because it has consequences for real world consumer prices and stuff like that. The science was based on a mathematical model that could be connected to easily tested empirical claims that did not rely on discredited or scratch-your-ass assumptions about human needs or behavior. Actually, it doesn’t make too many assumptions about human behavior at all (and starts to break down when it does). This is completely distinct from mainstream macroeconomic bullshit.
The field of psychology has finally discovered the magic of rigorously testing your hypotheses. Guess what, they found out that a lot of the orthodoxy on how human beings make decisions is wrong. Macroeconomics depends on a decision-model that is rooted in fundamentally false assumptions about human nature. It shouldn’t be at all surprising that it repeatedly fails all over itself in modelling the real world. This isn’t to say that there has been some interesting data gathered and examined from Adam Smith on. But “the model” is a hunka junk.
Kinda like osteopathy, naturopathy, chiropractic, etc.
March 1, 2010 at 4:15 am
I’ve always argued, though, that psychology is somewhat irrelevant, because economics is about aggregated outcomes, not individual choices, even though it pretends to be about individual choices. And second, that economics is fully normative about devising economic systems that do certain things, and description is subordinate to that. So while psychology is of some relevance, it’s of much less relevance than it would be if economic were really a descriptive science, or if economics really were about individual behavior.
March 1, 2010 at 4:30 pm
“You don’t have to have a scientific economics.”
Actually, under the Enlightenment you absolutely require a political science and an economic science. Not a political philosophy and an economic philosophy, but political science and economic science explicitly.
All Enlightenment regimes derive their legitimacy from science. Remember that the way Aristotlean political philosophy was displaced was through an attack on Aristotlean natural philosophy. That is, Enlightenment thought is a whole – if there cannot be an economic science, then Enlightenment science does not (and literally cannot) understand the whole. Even worse, if Enlightenment science cannot understand the whole, that implies that Aristotlean natural science might be superior. An argument could be made that Aristotlean philosophy understands the whole (or, at least, could understand the whole); while Enlightenment science CANNOT (even potentially) understand the whole.
March 1, 2010 at 5:36 pm
burritoboy, all that you’re saying is that since we don’t have a scientific economics, then economists find it expedient to pretend that we do.
The whole thing that you’re posting reminds me of why a good number of liberals distrust even liberal economists (for the U.S. meaning of “liberal”) like DeLong and Krugman. They seem to think that since their heart is in the right place that they’re doing nothing wrong. But they are still propping up a fraudulent, harmful system. DeLong’s defenses of Obama’s economic team probably did more damage than all the good that his other blogging did.
March 1, 2010 at 6:19 pm
At some point I should have referred people to Toulmin’s Cosmopolis and others of his works, as well as Michel Meyer’s books (“Rhetoric, Language, and Reason” is where to start.)
I wouldn’t object to economics calling itself a science in the pragmatist sense. In a way, I’m calling for a pragmatic, more modest economic science which doesn’t oversell its truths, does respect other sciences studying non-economic topics, and recognizes that it’s more practical and historical than theoretical, ontological, and timeless. But since the real problem is power and institutional establishment, temperate criticism will be futile. Malign interests have to be opposed and defeated, not reasoned with.
“Science” has come to have a transcendent metaphysical meaning inviting overreach and immodesty, and the quality of scientificity has come to be first identified with the scientific surplus (the difference between folk physics and scientific physics, for example), and then next, by opportunistic sleight of hand, awarded to areas of study which haven’t really attained that power.
March 1, 2010 at 6:43 pm
I basically distinguish between hard sciences abotu relatively easy topics like quarks, about which it is possible to be exact and true, and the softer sciences about more difficult things. It’s a continuum, actually, not a binary distinction, but the higher the level of emergence, the softer.
One of the thresholds is just entropy and multiplicity. Heisenberg said somehwere that quantum physics is hard but not too hard, but turbulence in fluids is impossible.
So anyway, I have very limited interest in reviving Aristotelean physics or biology.
March 1, 2010 at 6:45 pm
The whole thing that you’re posting reminds me of why a good number of liberals distrust even liberal economists (for the U.S. meaning of “liberal”) like DeLong and Krugman.
I’d add that this is the modern US conception of liberalism. Krugman’s opinions haven’t changed much from 20 years ago – when he barely qualified as center-left.
Delong and Krugman just endorsed Bernanke’s reappointment – though Krugman did so with some misgivings. And Bernanke is nobody’s liberal.
I think the discussion of economics as a science should properly involve the dividing line between science and polemics – or, more crudely, science and bullshit; between subjects that can be debated by reasonable people, and rhetoric that is properly considered beyond the pale. Science must draw such lines, and economics practioners have largely failed in this.
Krugman, regardless of his liberalism or lack thereof, is a scientist (I argue). I’m open to the idea that Fama was a scientist once (I don’t know), but certainly his modern role is as a bullshitter.
March 1, 2010 at 7:11 pm
A lot of what I say about economics is directed against the present profession of economics as a whole, with its hierarchies of schools, its Nobelists, its spokesmen, etc. The range of opinions on significant questions by important figures (Fama, Becker, whoever) is too great for the science to be worth taking seriously. If economists only did pure theoretical work and didn’t intervene in policy, it might be possible to maintain the pretense, but without applications there wouldn’t be any data, and furthermore no one would care much about unapplied economics, and economists would be paid less well.
Others of my criticisms are valid even with out the corruption and ideological skewing, and would be true of any gorup of economists making overstated economic claims.
Daniel Dsquared Davies thinks that economics can be whittled down to a nice little science of management, ie a practical science. (Practical sciences have to be not seriously false, but they can’t really claim to be True.) I wish he would write a book. He works in the business world and finds economics annoying and unconvincing, but he actually does respect the validity of significant parts of it.
March 1, 2010 at 9:25 pm
“burritoboy, all that you’re saying is that since we don’t have a scientific economics, then economists find it expedient to pretend that we do.”
No, we (and we being literally everybody) all find it expedient to pretend that we have an economic science. Otherwise, all Enlightenment regimes would be far less legitimate. Are you ready to contemplate what that might mean?
March 1, 2010 at 10:27 pm
Legitimacy is an functional or necessary illusion, sort of like God. The legitimacy of most regimes is the contrast to civil war.
March 1, 2010 at 10:59 pm
Why misuse “literally” in that way? John Emerson and I and many other people do not find it expedient to pretend that we have an economic science. (At least, not a science in the way that you seem to mean it.) And sure, I’m ready to contemplate what that would mean. The current U.S. regime, for one, is illegitimate in a number of ways, and I’m not talking about birtherist fantasies about Obama or anything stupid like that. The only purpose of economics that I can see is to legitimate behavior that otherwise would be seen as unethical or immoral, like purposefully keeping a number of people unemployed but doing little to support them as they supposedly prop up the system for everyone else.
March 1, 2010 at 11:07 pm
I actually grant pragmatist rule of thumb economics considerable value. I’m not even opposed to the economists’ goal of prioritizing economic growth, though not as much so as they do. But the belief that econ is a complete, consistent system, which it isn’t, and all the exclusions they make (family and childraising, community, median welfare, distribution, the physical environment, subjective individual experience, shared goods, common goods, contingency) makes it disastrously flawed in its present form.
As for the enlightenment, most modern forms have enlightenment roots as well as others, but the idea that they are dependent on the enlightenment’s legitimacy or truth for their own legitimacy strikes me as excessive.
March 2, 2010 at 1:54 am
The whole idea of justification through legitimacy seems silly enough so that I’m now wondering whether it’s a deliberate put-on. Let’s say that a global warming denialist went up to a climatologist and said “I don’t believe that climatology is really a science.” The climatologist would then answer with the whole panoply of science: observations, testable predictions, well-tested theories. In short, the climatologist would say that climatology is a science because it embodies our best understanding of reality. The idea of the climatologist saying “Without climatology, there would be no legitimacy to our understanding of that part of the universe!” is ridiculous. Legitimacy in science is earned, not assumed.
March 2, 2010 at 2:29 am
Actually, B-B was saying that modern forms of government are grounded on scientific enlightenment ideas, including the science of economics, and would lose their legitimacy if the validity of economics were not believed.
I’d ut that much more weakly and say that liberal, neoliberal, and socialist politics become much less persuasive for someone who doubts the conclusions of economics or questions its primacy.
March 2, 2010 at 2:48 am
If that’s what’s being said, then I just disagree. I’ve read most of the major U.S. Founding Fathers documents that were important sources of what became the U.S. political system (Locke, etc.) Nowhere in there did I see anything about the important grounding implicit in economics being a science. Instead, there was a lot about rights, justice, and fairness. The idea that government was supposed to be technocratic was added much later, within the lifetimes of living people, and nothing in our system really depends on it. Nor do, as far as I know, other democratic systems outside the U.S.
March 2, 2010 at 2:58 am
There are enlightenment ideas in the US founding documents, including an enormous emphasis on property, but the scientific status of economics, or utilitarianism, doesn’t seem to me to have been assumed.
I’m not a constitutionalist by affiliation or conviction, except that I grant that the constitution is in effect her and arguments of any kind must me expressed in constitutional terms. There’s plenty of things I would change, including some that I think were wrong from the beginning.
In particular, the checks and balances seem to serve mostly to provide large numbers of veto points which serve as tollbooths for grafting Congressmen, etc. And the idea of protecting The Minority against The Majority is senseless; there are a lot of majorities, variously defined, and a much larger number of minorities, and you do nothing good by giving power to one of the minorities (notably, Southern Whites before the civil war).
I do accept that any system of government is full of kludges and bricolage, and to me that’s what the Constitution is.
March 2, 2010 at 3:16 am
Oh, yeah, I didn’t mean to express general approval for the Constitution — it’s telling that (to my knowledge) no other major country has adopted a similar one. But in the U.S., legitimacy is commonly defined in Constitutional terms, and I just think it’s factually wrong to state that that particular version of Enlightenment ideas was or is important to it.
March 2, 2010 at 3:22 am
Having serious doubts about the Constitution fairly well disqualifies you from holding office or even for being a respectable political spokesman. I was already disqualified for other reasons, but I only ditched the Constitution recently.
I’m even less of a civil libertarian than I used to be, but I think a concept of individual right, less dominated by property rights, is something to preserve. But once you start arguing individual rights, you usually get stuck with the Constitution.
March 2, 2010 at 5:58 pm
“Legitimacy is an functional or necessary illusion, sort of like God. The legitimacy of most regimes is the contrast to civil war.”
Precisely. We cannot be blase about the possibility of world-wide civil wars. The possibility that a leading economic theoretic school is misguided (something that can be fixed in time) pales in comparison to the possibility of extinguishing civil society.
March 2, 2010 at 6:01 pm
“Having serious doubts about the Constitution fairly well disqualifies you from holding office or even for being a respectable political spokesman.”
And now you are seeing why the wise man must be circumspect in what he says……
March 2, 2010 at 7:55 pm
Oh, please, bb. I’ve heard some really foolish Straussian things said about why nothing can be done, but this really takes the cake. World-wide civil wars?
But I suppose that trolling Trollblog is situationally approriate.
March 2, 2010 at 11:33 pm
Rick, I’m totally cool with B-B. I only have about ten serious readers, including you, and I can’t have them fighting duels with one another.
On the civil war thing, I’m on the alarmist end. The moderate Republicans and sane conservative Republicans are almost extinct, and there are large populations of angry, confused citizens, and many of them are well-armed. Furthermore, something weird and frightening has happened to the secular center-left which makes it incapable of doing anything whatsoever.
The respectable center-left has relied on process, institutional leverage, compromise, wonkery and gimmicks, and the winger boogey-man for so long that no one (including themselves) really knows what they stand for anymore, and they seem to be incapable of making the simplest sot of popular appeal.
March 3, 2010 at 12:03 am
B-b: The circumspection par doesn’t bother me. Everyone does it, liberals, Communists, everyone. It’s the difference between the politics of consent and the politics of governance that they teach college freshmen about. That’s a cliche of mush political journalism by now.
It’s true that in recentt decades the Democratic Party has separated the politics of consent from governance entirely, and has redefined it simply as the politics of winning election, with no emphasis on message development, persuasion, or building support for policies, and still less emphasis on policy goals. The elctoral wonks have taken over politics entirely.
What I object to in the Straussian formulat is his concept of True Philosophers who are Wise and understand the Truth and who, if they were in power, would do everything right.* This is an imaginary (on the sense of impossible), self-serving concept. And in general, I don’t think that Strauss and the Straussians value citizen participation at all; they’re willing to accept some of it, it’s not the worst thing ever, but I don’t believe that they give it a positive value.
*Bloom ironizes this and other such Straussian concepts and makes them into teaching devices not to be taken literally, but I don’t believe him.
March 3, 2010 at 4:43 pm
“World-wide civil wars?”
What else should we call such events as the Spanish Civil War, the Russian Civil War, the Cold War, the Chinese Civil War of 44-48, the Korean War, the wars between North and South Vietnam, the contra movement, FARC and so many others? Of course, some of these are only partially about economics, but all have substantial economic ideology components. Again, I don’t think we can afford to be blase about this.
March 3, 2010 at 4:52 pm
“On the civil war thing, I’m on the alarmist end. The moderate Republicans and sane conservative Republicans are almost extinct, and there are large populations of angry, confused citizens, and many of them are well-armed. Furthermore, something weird and frightening has happened to the secular center-left which makes it incapable of doing anything whatsoever.”
Precisely. Essentially, we are at Weimar 1930 or so. It would have been much better for the German SPD to anticipate Keynesianism (as the Swedish SAP did) rather than to hold onto it’s more Orthodox version of Marxism.
March 3, 2010 at 5:23 pm
No duel is necessary, no, but still. “What else should we call such events as the Spanish Civil War, the Russian Civil War, the Cold War, the Chinese Civil War of 44-48, the Korean War, the wars between North and South Vietnam, the contra movement, FARC and so many others?” Well, some of them weren’t world-wide, and some of them weren’t civil. Some were very typical great power confrontations, and ideology around economics served as excuse rather than motivator.
But let’s say for the sake of argument that what you say is true. If the choice is between freezing a corrupt and dysfunctional system forever and between risking conflict, then put me down as being willing to risk conflict. That’s not to say that I’d choose war if war was certain. But the risk of war, which I think is a good deal smaller than you do, is one I’d run, because I don’t believe in the end of history anyways. You can’t remove the risk of conflict by trying to keep everything the same. If we continue on our current course, there are going to be world-wide wars around ecological failure anyways.
March 3, 2010 at 5:38 pm
I used to agree, Rich. But at the moment, in the US “the best lack all conviction, while the worst are full of passionate intensity.” I’ve spent hundreds of hours trying to jump start internet liberals, and they’re the most engaged liberals. Except for the crazy branch of the Republican hard corps, everyone’s passive. And the tea party crazies, from what I’ve seen, are just dupes of the Republicans who have wised up some but still are hard core wingers.
March 3, 2010 at 8:20 pm
“If the choice is between freezing a corrupt and dysfunctional system forever and between risking conflict, then put me down as being willing to risk conflict. That’s not to say that I’d choose war if war was certain. But the risk of war, which I think is a good deal smaller than you do, is one I’d run, because I don’t believe in the end of history anyways.”
But there’s absolutely no certainty that the side you or I want to prevail would prevail. I would assert that, conversely, there’s only a small likelihood that “our side” would prevail for the foreseeable future – we need to admit to ourselves that “our side” doesn’t exist in reality yet and is very far from existing at the moment. And that very bad, extremely malevolent forces control absolutely critical resources that we would need to win the conflict.
It’s much better to have Chicago School economics like we did in the 1980’s or 1990’s than to lose a civil war. The KPD never controlled Germany, and their imprudent behavior under Weimar made it far less likely they were going to succeed, rather than more likely (if Weimar had survived, they could have been a major player going well into a much better future). The abolition of slavery in the US was accomplished by a fairly moderate wing of the Republicans and not by John Brown.
It’s much better that, if we can, we focus on changing economic thought. It’s clear to me that, leaving aside it’s many faults, that Keynesianism is an enormous improvement over our status quo. And with the current chaos within economics, certainly we can hope for (and work towards) even more favorable things. If this change could happen on the level of thought, we see from history that this is far better than war: the countries where the Left adopted Keynes in 1936 (or proto-Keynesian policies earlier), their futures were (in general) quite excellent. Those countries and political parties who opted for war rather than theory and moderation usually managed to become some of the worst regimes ever known.
March 3, 2010 at 8:26 pm
No, we (and we being literally everybody) all find it expedient to pretend that we have an economic science. Otherwise, all Enlightenment regimes would be far less legitimate. Are you ready to contemplate what that might mean?
I went back to satisfy myself that I understood what the current debate is about, and I found bb’s original statement.
Y’all are more scholarly than I am, but wasn’t the whole point of the Enlightenment to encourage valid observation of the world around us? Obeisance to an inaccurate economic science is not the glue that holds societies together, but even if it were, it would do so in direct conflict with Enlightenment values.
March 3, 2010 at 9:26 pm
I can (and do) agree with the statement “Keynesianism is an enormous improvement over our status quo” without also agreeing that economics is scientific. I can also agree with it without agreeing with “the admission that economics isn’t scientific would likely lead to a civil war.”
March 4, 2010 at 12:08 am
The abolition of slavery in the US was accomplished by a fairly moderate wing of the Republicans and not by John Brown.
This is quite misleading. The fairly moderate wing of the Republican party was willing to fight a remarkably bloody civil war. On a per capita basis Brown probably did more than any other individual to free the slaves. What he did was push the situation to crisis, which is the kind of thing we’re talking about. In retrospect, sometimes civil wars do good, but at the moment I don’t feel that I’d have a side if one broke out today.
I tend to think that the radical interpretation of the Civil War is best. I don’t find the various revisionist versions very convincing. I think that the radical interpretation of Reconstruction is right too.
March 4, 2010 at 12:11 am
Keynesianism be a key trick in the bag-of-tricks economics I would support.
Keynes himself was pretty aware of contingency, the limitations of formalization, etc., but neo-Keynesians stripped out some of his main insights when they formalized Keynes.
March 4, 2010 at 3:00 am
“The fairly moderate wing of the Republican party was willing to fight a remarkably bloody civil war.”
After the other side had left them no choice because the Confederacy had elevated the dispute into secession and military attacks upon the Union. Again, those who were prudent (Lincoln) were the eventual victors, and those who were immoderate (the Confederacy) were the vanquished.
“On a per capita basis Brown probably did more than any other individual to free the slaves.”
More than Lincoln? More than Grant? More than Salmon Chase? Are you serious?
March 4, 2010 at 5:42 am
I’m not really getting your drift in your Civil War foray, either in terms of the previous discussion or intrinsically. Describing the Civil War as a war between prudence and imprudence strikes me as missing whole swarms of points.
As for “any single person”, the Civil War was fought by a million men on the Union side, not by single persons. But mostly I just was responding to your sentence “The abolition of slavery in the US was accomplished by a fairly moderate wing of the Republicans and not by John Brown”, which strikes me as misrepresenting the Republican Party, and an apples and oranges comparison between the Union Army and John Brown.
March 5, 2010 at 8:15 pm
“As for “any single person”, the Civil War was fought by a million men on the Union side, not by single persons. But mostly I just was responding to your sentence “The abolition of slavery in the US was accomplished by a fairly moderate wing of the Republicans and not by John Brown”, which strikes me as misrepresenting the Republican Party, and an apples and oranges comparison between the Union Army and John Brown.”
We can look at what it actually did take to end slavery: massive organization, a high level of statesmanship, high levels of generalship, a most prudent President, a great deal of planning and so on. What part of this did John Brown do? What part of this did he assist others in doing?
March 5, 2010 at 8:32 pm
I thought your original comparison between John Brown and Lincoln was inane, and perhaps my response to it was not optimal. It’s like saying that the spark plugs and the carburetor are more or less important than one another. Yes, agitators and Presidents play far different roles.
As far as the moderate wing of the Republican Party, they’re the ones who sabotaged reconstruction. The radical Republicans gave it a shot, but between 1877 and 1900 a lot of the gains of the Civil War were erased.
March 10, 2010 at 4:17 pm
“Y’all are more scholarly than I am, but wasn’t the whole point of the Enlightenment to encourage valid observation of the world around us?”
The whole point of Aristotlean philosophy is to encourage valid observation of the world around us. (This is pretty much the point of most philosophies, period). The resulting questions are:
1. what is valid observation?
2. how is the work of observation theorized and constructed in practical terms?
3. how does the work of observation get supported and funded?
4. how is the work of observation viewed by those who are not observers (i.e., not philosopher or scientists)?
August 1, 2010 at 4:49 am
This is awfully belated, John, but take a look at who set up the original economics departments, and in what kind of universities they first appeared. The common thread in both cases is monopoly, and what economics has been about since it became “neo-classical” is shoring up monopoly by any means necessary.
March 23, 2011 at 12:22 pm
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