A Role for Heterodox Economists

This is my entry in the discussion of Chris Hayes' article on heterodox economists at TPM Cafe. It should appear early tomorrow. There are currently entries from Chris Hayes, Thomas Palley, Tyler Cowen, James Galbraith, Nathan Newman, Max Sawicky, and James Galbraith with a follow-up, and there are others yet to come. [Update: Here's the link to the post at TPM Cafe]

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Most of the points to be made about Chris Hayes' recent article on heterodox economists and their place  within the economics profession have been made here already, so I am going to take a bit of a different approach and talk about one of the heterodox economists discussed in the essay.

One of the first heterodox economists mentioned  is Michael Perelman:

I strike up a conversation with economist Michael Perelman in the hallway. ... Perelman, who is there for the EPI reception, works at the margins of the discipline; he is one of a few hundred self-described "heterodox" economists at the conference. ... I ask him about how he relates to the so-called mainstream of his profession. "It's a mafia," he says quietly, his eyes roving over to the suits spilling out of the Freedom to Choose room.

I first met Michael in the late 1970s during my undergraduate days at California State University at Chico where he was a faculty member. I never took a class from Michael, and that is part of the story, but I also want to use his example to talk about how heterodox ideas are expressed within economics departments more generally.

Here's what the department website says about him today:

...Michael Perelman, Professor of Economics, is the most prolific author in the Department of Economics at Chico. He enjoys teaching a wide range of courses including [principles of micro and macro], ... Economics of the Future ..., ...U. S. Economic History..., ...Economics of Big Business..., ...History of Economic Thought... and ... Marxist Economic Thought... His classes emphasize critical thinking about the application of economic thought... He likes to publish what is discussed in classes. To date, Professor Perelman has authored fifteen books.

"Although known for his radical views, Professor Perelman is widely respected throughout the campus. Dr. Perelman is a scholar of high productivity--he has a record of scholarly research, writing and presentations that is prodigious. Even more, his level of work has been consistently high since he joined our faculty in Economics in 1971." (Arno J. Rethans, Dean, College of Business)

The term "widely respected" is not one I would have used based upon my experiences while at Chico. Far from it. It seems things may have changed over time, and that would be nice for Michael - he earned it the hard way - but I wonder. I can't say how he is treated  by his colleagues today, but when I was an undergraduate at Chico I was told point blank not to take his upper division classes on Marxism, etc., by another member of the faculty, and I followed that advice. His ideas were not mainstream, not by a long shot, and they were sometimes belittled by other members of the department. I was told I'd be much better off spending my time elsewhere, especially with aspirations of graduate school.

I remember another instance. Chico would occasionally bring in outside speakers and somehow I got put in charge of creating the posters for the events through University printing. One poster I did was for a speaker Michael  brought to campus for a seminar and I didn't know what picture to put on the poster advertising the talk. So I asked another faculty member and was told, laughingly, to just find a hammer and sickle and stick that on there. So I did.

Unfortunately, the Soviet style hammer and sickle on the poster had nothing at all to do with the talk being given and Michael was not happy about the publicity. I felt kind of caught in the middle - I just did what I was told - but the tension between the "mainstream" faculty and Michael was very evident. He had little respect from his colleagues.

But you know what? Looking back, Michael was one of the few faculty who was continuously engaged in doing research, willing to give his time to students, one of the few doing what you expect of faculty. He has fifteen books! I can remember him taking the time to show me a detailed outline for one of his books on the boards in his office, and then I saw him work further on the outline day after day as he wrote each chapter. That was a useful example when I faced similar tasks myself later on.

Chico  doesn't have a graduate program and, though things may have changed over time,  in the late 1970s there wasn't much of a research requirement for faculty. But  Michael did research anyway (notice that he was at the AEA meetings). It's not the kind of research you will find in mainstream journals, and I don't know enough about it to offer an evaluation, but I think he deserves credit for continuing to do his work despite the lack of support from within the Department and from the profession more generally (here's a list of his books in Amazon, and he has a blog as well, Unsettling Economics).

Turning to the influence of heterodox economists more generally, as I look back and think about my days at Chico, I realize Michael had more influence over the Department than I understood at the time, and part of that was his active research effort. He brought in seminar speakers as I just noted and they would present non-traditional ideas. Also, Chico had a visiting faculty member one semester, I can't remember who it was, but I'm pretty sure Michael had something to do with it. I took a class on Comparative Economic Systems from the visitor that turned out to be a very valuable class, one where you stepped outside of capitalism and viewed it from a more philosophic perspective. The course gave me a perspective on economics that I wouldn't have had otherwise. So having heterodox economists on a faculty can shape the curriculum in other subtle ways.

More directly, I see Michael is now teaching the History of Economic Thought, and this is another place where heterodox ideas are expressed. I think of this course as, in part, "standard heterodoxy," as a place where some of these ideas can be preserved and discussed. There are some very fundamental criticisms of economists' approach to capitalism that come out of studying the history of thought. Is capitalism an apologetic for the existing income distribution? Do we eliminate the most important societal questions from our analysis when we push aside questions about the income distribution and focus only on production and exchange? That's just a start - there is lots to be learned from the "standard heterodoxy" that comes out of courses such as these, and heterodox economists can help to ensure that these types of courses remain part of the curriculum. There may be room for the small enclaves of the heterodox Jamie talks about at places like Harvard, but their presence at a typical state school is harder to maintain and history of thought courses are one place to take a stand (I might be biased).

Thus, heterodox economists have an important role to play in keeping these ideas alive within economics departments. As budgets are cut and universities are encouraged to cut the "fat," it is all too easy to see courses such as the history of economic thought as expendable when departments are forced to reduce their course offerings. That's understandable, we have to deliver the core curriculum from the standard paradigm as defined by the profession and that tradeoff works against courses that are the slightest bit out of the mainstream. But being understandable is not the same as being desirable. Too often economics is taught narrowly, as though there are no questions about the basic paradigm, as though there are no alternative views, and students graduate failing to ever ask the bigger questions or even understand that questions exist.

So how do we protect these ideas and keep them alive within economics departments, and how do we allow new ideas to come forward? One way is to try to keep history of thought courses in the curriculum, but that's too narrow, there needs to be other ways for alternative ideas to come forward. Those outside of economics departments can contribute, and they do, but that's not enough either. For all of you aspiring to pursue the heterodox path, to make sure that students hear alternative ideas, here's my advice. Get hired at the best place you can and get tenure first. We need you in economics departments, not just on the outside looking in, and we need you to be respected when you are there. That is going to require you to play the game and establish yourself, to prove that you understand the model you are railing against well enough to make original contributions on the research front.

The neuroeconomics literature has been successful in large part because it played the game within the standard framework. The papers were published in respected journals and, though there is resistance, nobody who reads the research can doubt that these are serious academic efforts. My colleague George Evans provides another example. He is a leader in the learning literature and he has challenged the assumption of rational expectations. But he has done so rigorously and through respected research outlets. Again, there is resistance to the challenge, but the ideas have been able to permeate the inner sanctum and gain a hearing (to some extent - I don't know for sure, but raising questions about rational expectations may be why he is not a member of the NBER despite his impressive research record).

We can complain all we want about how unfair the process is, about the cliques, about how unreceptive mainstream journals are to alternative ideas, and others here have expressed complaints such as these very well and very passionately. But no matter how valid the complaints, it's not going to change. If you want to be part of the discussion, to change things from the inside, you are going to have to earn respect first and that means publishing and getting tenure, at least in the academic world. Positions for heterodox economists are unlikely to suddenly appear, so you will have to start by working within the existing boundaries.

Then, once you've established yourself, once you have the freedom tenure gives you, branch out, push against the edges, fight for new courses in your departments or to preserve old ones, look for interdisciplinary opportunities in new hires, develop new paradigms and ideas, but do it with the intellectual rigor needed to allow the work to appear in journals, books, and to be presented at academic conferences. It won't be easy, and you will likely feel excluded, undervalued, and underappreciated (that's a reason to get tenure first, so you don't have to care), but if you think you are correct, then don't stop trying to find a way to place your work in places where it will get noticed.

If you choose the heterodox path, you will be on the outside, and you need to understand that going in. You might get lucky and gain respect over time, and if you make a really big splash economics departments may then start hiring people in the area, but don't expect that because it's unlikely to happen. At best, you might become part of a small group with common ideas and interests, but larger acceptance will be elusive (though not impossible). It will be harder to publish, your colleagues will wonder why you've drifted so far out of the mainstream, the work you do publish won't get the respect you think it deserves either within your department or in the profession more generally -- it's likely to be a frustrating experience on a lot of fronts. That's how it's going to be.

It's not an easy path, but there's an important role for the heterodox to play in the profession beyond that described above. It's never easy to challenge orthodoxy, but somebody has to ask new questions, look at things from new perspectives, and remind us of older unresolved issues; somebody has to challenge the established model and also challenge the vested interests that seek to preserve it. Most of the time, the existing model can be amended so as to withstand the assault, but even so, the process is valuable because it exposes and shores up weaknesses in the predominant paradigm. And more importantly, every once in awhile the heterodox are right - the existing model won't be able to overcome the challenge - and it is the willingness of the heretics to persevere in the face of so much doubt that helps to move the discipline forward.

Comments

[anne]

Thank you for such an incisive and even moving essay.

[anne]

"Although known for his radical views, Professor ---- is widely respected throughout the campus."

"Although known for his reactionary views, Professor ---- is widely respected throughout the campus."

Although....

[jonfernquest]

Yes, thanks. You convinced me (this morning during my usual contemplative walk to work) to make the economics of information the heart of the next history paper I publish. Information assymetry between the Ming capital in Beijing and the Yunnan-Burma frontier. The Ming actually had a system of tallies to make sure one local ruler wasn't masquerading as another local ruler. I'm sure game theory can be used to model what is going on in detailed historical sources circa 1350-1650, but I'm going to let the data drive the modeling.

This series of articles distributed over several blogs kinds of reminds of the built-in institutional constraints of academia.

[ndd]

Dr. Thoma, as a daily reader but only occasional commenter, I wanted to join Anne in thanking you for this essay, but more than that, I want to thank you for day in and day out publishing what is imho the most open-minded and intellectually critical (in a good sense) economic blog there is. There is a constant stream of brain-food in the articles and in the discussions too, especially when noted economists and writers drop by to defend their positions and critique others'.

For my part, this post is particularly evocative. Once upon a time, after obtaining an undergraduate degree in behavioral psychology, I got accepted to a high-falutin interdisciplinary program associated with a top-flight school of economics that shall remain nameless. There I found that reality didn't matter one whit: all that counted was being able to regurgitate calculus. The solution being sought wasn't a number: it was an equation. And this was the tool with which real policy proposals affecting G*d-knows how many thousands or more people was supposed to be made. Since I already knew that some of the experimental results I had studied as an undergraduate contradicted the gospel I was receiving in class, at one point I challenged the professor - whose name you would probably recognize - outside of the classroom. His response - no proof, mind you, but firmly posited - was that everything I had ever studied "randomized out" and was irrelevant. At the end of the school year, I transferred out of the program.

Needless to say, it is a sweet intellectual event every time I read about neuroeconomics and behavioral economics, whose challenge based on the use of the scientific experimental model is finally of such critical mass that it cannot be defeated or dismissed by the simple-minded assumptions I challenged so long ago.

Once again, thanks very much for the work you do on this blog.

[anne]

Jonfernquest:

"Information assymetry between the Ming capital in Beijing and the Yunnan-Burma frontier. The Ming actually had a system of tallies to make sure one local ruler wasn't masquerading as another local ruler."

Now, there is a history paper I will look forward to. China has always had the problem of administering cohesively what because of vastness cannot be cohesively administered. The history of China could be viewed through the various attempts at resolution.

[anne]

Ndd as on occasion adds a nice comment :)

[wjd123]

This advice was to long. I feel like my uncle wanted to pull-my-coat-tails, put me in the know, and instead put me to sleep with his verbosity.

If Thoma has just said that when you leave the familiar intellectual path into uncharted intellectual topography expect to be misunderstood, I would have stayed awake and remembered his advice.

I'm not sure I agree with him on getting your tenure before giving your unorthodox opinions. People tend to do their most creative thinking when they are young.

I suppose you could write all your heretical books when you're young and spring them on the world once you get tenure. The danger is that in using you time in this manner you wouldn't publish enough to ever get it.

I do think that Thoma is right that if you want respect you had better know the orthodox well before presenting the unorthodox. I never respected Picasso until I say his conventional pictures and was assured he actually knew how to paint.

[ken melvin]

Thanks.

[anne]

Jonfernquest, on which blog[s] will you be printing your Chinese history studies?

[DB]

Thanks for the interesting recollection and tribute to Pereleman-- it suggested to me that heterodox economists teaching history of economic thought might take a page from Bernard Lewis, of all people, and subtitle the course, "What went wrong?" (chuckle)

[evagrius]

Anyone thinking of Kuhn's theory of paradigm shift or is that too unorthodox for people?

[kevin quinn]

Thank you for this, Mark!

[anne]

Picasso, by the way, was among the finest drawers and painters who ever lived, and there is nothing more obvious than just that and in just the most abstract of works. The need at times is for us to learn how to see.

[anne]

http://www.nytimes.com/2006/06/18/arts/design/18camhi.html

June 18, 2006

When Picasso and Klee Were Very Young: The Art of Childhood
By LESLIE CAMHI

WHEN Paul Klee laboriously copied a mountain landscape by his 12-year-old son, Felix, into his own 1920 painting "Untitled (Tent City in the Mountains)," he paid tribute to the vitality and inventiveness of childhood, a source of creativity celebrated at least since Rousseau. His homage put him squarely in a modernist tradition that sought refuge from academic constraints in the somewhat mythical paradise of an untrained eye that sees the world afresh, a childlike hand still unshackled by habit and skill.

Decades earlier, when Klee had just finished his art studies, he discovered a cache of his own childhood drawings. He described them, in a 1902 letter to his fiancée, as "the most significant" ones he had yet made. Three of those drawings are included in "When We Were Young: New Perspectives on the Art of the Child," an exhibition opening this weekend at the Phillips Collection in Washington.

Do childhood works by artists reveal traces of their future genius? What can the drawings of gifted children teach the viewer about the relationship between art and society? These are among the questions posed by this provocative show and its catalog, one of the first contemporary museum exhibitions to approach children's art from an aesthetic perspective.

"I wanted people to ask themselves to what extent the criteria they use to look at children's drawings is the imposition of an adult eye," said Jonathan Fineberg, a scholar of modern and contemporary art who organized the exhibition. "It's not just that Picasso could render well, because you could teach anybody to do that." The catalog has a startlingly lifelike drawing of a dog by the 5-year-old Edwin Landseer; he grew up to become not Picasso, but a maudlin academic painter.

Picasso's childhood drawing "Bullfight and Pigeons," which is in the show, features realistic-looking birds (a specialty of his father, the painter José Ruiz Blasco). But that's not what makes it remarkable, Mr. Fineberg argues; it's the 9-year-old Picasso's confident, playful scribble that defines the crowd in the corrida's background.

"It's not about skill," Mr. Fineberg said. "It's about unique qualities of seeing. That's what makes Picasso a better artist than Andrew Wyeth. Art is about a novel way of looking at the world."

The Klee drawings in the show certainly bear him out. Made when Klee was 4 to 6, "Woman With Parasol" (1883-5), a figure whose dignity is only slightly compromised by her delightfully bent umbrella, anticipates the delicacy and eccentricity of his later drawings, including "Dwarf and Mask" (1926), which hangs nearby.

Is that because, as William Wordsworth wrote, "the child is father of the man," or is it because Klee spent so much of his career striving to recapture the qualities he found in these early works? "Dwarf and Mask" may also be seen as his commentary on adulthood: that is what an adults is, he seems to say, compared with that giant of authenticity, the Child....

[calmo]

Well wjd123 thinks you were too windy Mark and it B true: there are those of us that have attention spans that don't get past "to" in their urgent need to express their shortcomings of staying awake while reading for more than a sentence or 2...esp if it's their own, you know?
Ok, I have my lesser moments too wjd, but I do appreciate your island in this sea of "Thanks".
I do.
I'm going to fasten upon Mark'sI took a class on Comparative Economic Systems from the visitor that turned out to be a very valuable class, one where you stepped outside of capitalism and viewed it from a more philosophic perspective. (and glad that resident philospher eva is commenting here perhaps off of that mention of "paradigms") and think that perspective is so sadly missing in more disciplines than economics.

...rather than this dangerous bit of pragmatism
Then, once you've established yourself, once you have the freedom tenure gives you, branch out, push against the edges, fight for new courses in your departments or to preserve old ones, look for interdisciplinary opportunities in new hires, develop new paradigms and ideas, but do it with the intellectual rigor needed to allow the work to appear in journals, books, and to be presented at academic conferences. which is designed to get that bum Socrates off the street and well fed...and far from those highly distractable youth who have those demanding attention spans...just looking to cause trouble. You know?

[bob mcmanus]

“the rate of profit … naturally low in rich and high in poor countries, and it is always highest in the countries which are going fastest to ruin”

Adam Smith, thanks to Michael Perelman from his blog linked above

Wait a minute, this belongs on the Robert Reich thread!

Thanks, Mark

[anne]

http://matthewyglesias.theatlantic.com/archives/2007/05/when_economists_stop_being_pol.php

May 30, 2007

When Economists Stop Being Polite
By Matthew Yglesias

My three cents on the rumble in the econ department touched off by Chris Hayes' article on heterodox economics. My first thought when I heard the contention that the neoclassical consensus behaves like a mafia was to remember my Thomas Kuhn. One hears tell of mafia-like behavior among purported social scientists and thinks to oneself "this isn't how a real science behaves." Kuhn reminds us that, in fact, that's exactly how a real science behaves -- it's just not what a rational reconstruction of a successful line of research looks like.

Delving deeper into it, though, the main point I'm taking away from this debate is the extent to which heterodox economics doesn't call the neoclassical paradigm into question. Various heterodox sorts cast doubt on various specific contentions of the neoclassical paradigm into question but, as Hayes documents, the neoclassical paradigm is perfectly willing to incorporate such things into the doctrine when they prove convincing over time. What heterodox economists are really challenging isn't neoclassical economics but the political behavior of neoclassical economists.

The recent Alan Blinder fracas is a case in point. He didn't call any of the standard neoliberal case for free trade into question, and, indeed, didn't argue against free trade at all. He just said something that he thought would be helpful in spurring the creation of the sort of social democratic society with an open market that he favors, while many economists saw his statements as giving aide and comfort to people who have a political agenda (blocking new trade agreements) that they don't like. Even people who challenge free trade orthodoxy more directly -- Dean Baker, say, or the guys who write EPI's stuff about why we shouldn't sign new trade agreements unless they have much tougher labor rules -- aren't challenging the economic models underlying the case for free trade. They're having a political disagreement about the desirability of, say, passing CAFTA that has basically nothing to do with any deep disagreements about economic theory.

[kharris]

Our host's post confirms for me what I noticed in the initial "Nation" piece. There is complacency among the orthodox, but it is not all complacency. There is vigorous, small-minded enforcement of orthodoxy in economic, as in most areas. Practitioners of complacent orthodoxy are almost certainly wrong in a significant number of their views, because they are complacent in their orthodoxy. The are fostering error because they insist on their orthodoxy, vigorously. They end friendships with heterodox thinkers, guide the uninitiated away fro heterodox thinkers and urge the uninitiated to slur heterodox thinkers. Neither Stalin nor the Vatican invented this stuff. They just recognized the small-minded side of human nature and raise it to an art form.

Sadly, heterodox thinkers must also be wrong in a substantial number of their views. They do not face enough even-handed criticism to learn where they are in error and where they have landed on a worthwhile path. The most valuable approach intellectually is to bring them into the discussion, push on their ideas and see which break and which hold. Most of us are just not big enough people to do that.

[anne]

"Although known for his strange and wild views, Professor ---- is widely respected throughout the campus."

Sort of a beware of the dog sign that a neighbor has, actually to protect a timid little beagle. Beware of the strange and wild economist. Grooowl....

[wjd123]

Come on Anne, this is pretentious bias:

His homage put him squarely in a modernist tradition that sought refuge from academic constraints in the somewhat mythical paradise of an untrained eye that sees the world afresh, a childlike hand still unshackled by habit and skill....

"It's not about skill," Mr. Fineberg said. "It's about unique qualities of seeing. That's what makes Picasso a better artist than Andrew Wyeth. Art is about a novel way of looking at the world."

I use to spend hours in the Museum of Modern Art. That was before they raised the entrance fee to $25.00. I know what speaks to me, critic or not critic. I like Andrew Wyeth better than Picasso. There, I've said it.

[anne]

Well argued; and the Modern museaum is too expensive for too many but wonderful, and I think the comment on Wyeth especially telling, though Wyeth really does have fine moments.

[anne]

http://www.nytimes.com/2006/04/18/arts/design/18wyet.html?ex=1303012800&en=1c4b7b380639e118&ei=5090&partner=rssuserland&emc=rss

April 18, 2006

'Andrew Wyeth: Memory and Magic' at the Philadelphia Museum of Art
By KEN JOHNSON

PHILADELPHIA — Near the end of "Andrew Wyeth: Memory and Magic," an exhibition at the Philadelphia Museum of Art, hangs a painting unlike any other in the show. It depicts a girl in a thickly padded, leather-upholstered seat of a private airplane, looking down through an oval porthole and a rift in the clouds to a white house and barn on the ground.

A wall label explains that the airplane in the painting is used by the Wyeth family to commute between homes in Pennsylvania and Maine. This reveals something about one of America's most widely beloved painters that his art mostly conceals: that he is a wealthy landowner who lives in a well-insulated world of financial ease and privilege.

The world evoked in the rest of the exhibition is rather different. Finely painted in muted greens and browns with stark contrasts of lights and darks, it is a place stripped bare of the comforts of money and modern convenience, where crusty, hardworking farmers and fishermen endure the hard facts of life and death with stoic grace. Mr. Wyeth's vision of honorable rural deprivation ostensibly runs in opposition to much of what counts as the successful good life in modern America.

More an introduction to Mr. Wyeth's seven-decade career than a full-scale retrospective, the exhibition was organized by Anne Classen Knutson for the High Museum of Art in Atlanta in conjunction with the Philadelphia Museum. Some of Mr. Wyeth's most famous pictures, like "Christina's World," are missing, but the 58 paintings and about 40 watercolors and drawings give a good sense of what he has been about.

Impressive technique and cinematic compositions have a lot to do with the perennially healthy market for reproductions of Mr. Wyeth's paintings. Going through this exhibition, you would have to be a pretty determined Wyeth opponent to resist his Magic Realism and his cannily economical ways of composing scenes and telling stories.

A wonderful 1944 picture of a furtive lobster poacher, hauling a trap on an inky black night by the glow of the phosphorescent water, reminds you that Mr. Wyeth learned his trade from one of America's great illustrators: his father, N. C. Wyeth.

"Groundhog Day," from 1959, shows Andrew Wyeth at the height of his powers. In the foreground is a table set with a white plate, cup and saucer and knife on a flat table. Wintry light spills through a window just behind, and through the window you see brown grass, a barbed-wire fence and a huge log with a jagged end and a chain wrapped around it. A remarkable orchestration of light, space and texture, it is also richly symbolic: outside there is violence and death; inside a sacramental order and the light of an austere divinity. The window, a recurrent motif in Wyeth, both connects and separates the realms of inner culture and outer wildness.

One reason Mr. Wyeth's work may remain popular despite its often foreboding astringency is that it is always elegantly stylish....

[calmo]

Ok, wazthat an orthodox bit from the heterodox kharris?There is complacency among the orthodox, but it is not all complacency. or were the references to "mafia" concealed between the lines?

I have penned (Ok, only typed) remarks about complacency and complicity before...but they sank before your damn complacent witless attentions (forget about "spans" people there are often no anchors on either side of this totally fabricated bridge) or were ignored as Islamo-Fascist and Infectious Commie Propaganda dangerous to your health. [The spirit of Mr Webb and his note about heresy, not heterodoxy, has staged a successful coup (possibly temporary, hopefully temporary, probably not hopefully) on what remains of my brain ...and this could happen to you, people...despite the unfailing devotions of kharris to set you, o promising orthodox candidate..right again.]

[Chuck Roast]

Sawicky, that smirking buggah'...I wish I'd said that!
"...Bowles and Gintis sleep with the fishes."
One of the fun parts of my undergrad days was getting Gintis' latest missive from URPE, giving it to my friends to read, and then watching their heads explode! He made them all want to become economists (I'm sure of it)...they were truly in awe.
With the fishes, indeed.

[kharris]

calmo,

Huh?

[Bruce Webb]

Let me repeat a story.

Berkeley has long been a renowned center of Paleontology, not just in the Anthropology Department with with an independent research institute on Ridge Road. Berkeley also has a reputation of being open to new research. So you would think that when the Alvarez's, both professors at Berkeley, and one a Nobel Prize winner in Physics with his own building named after him, published a theory of mass extinction based on an asteroid strike the result would have been a rational examination of the evidence by the Paleontologists.

Well I was on campus in 1980 and that was not the reaction at all. Instead the lashback was quick and vicious with 'pseudo-science' being freely thrown. Why the venom? Because Paleontologists and Planetologists had just emerged from a successful defense against Velikovkian Catastrophism and the Alvarez theory just seemed like another varient. Absent that earlier debate over Catastrophism this might have played out wholly differently. Because at the end of the day the Alvarez model was incorporated into the standard model.

http://en.wikipedia.org/wiki/Cretaceous-Tertiary_extinction_event

"Anyone thinking of Kuhn's theory of paradigm shift or is that too unorthodox for people?"

Well no I am not thinking paradigm shift. We have a situation here that makes the Alvarez thing a simple squabble. Forces external to economics are in play, not just money itself, though that certainly plays a role, but a whole world view that equates markets with freedom and regulation with dictatorship. This is not too stark, there really are people out there whose views can be reduced to 18 cartoon panels on the straight line from government economic planning to employment termination by firing squad. Note that this literal cartoon version of Road to Serfdom is posted on our 'friend' Don Marek's mother ship: the Mises Institute, this is not parody, not at all.
http://www.mises.org/TRTS.htm

Once you have conceded that a minority has pricing power that it wields in its own self interest there is no longer a logical barrier between a economic system built around Free Markets from a system drawing its roots from Social Democracy. What was once clear as day 'Markets Clear Efficiently' transforms into the much more messy question of 'Selfish Efficiency' vs 'Equity'. This is a big problem for the Economic Right because by most measures the sweet spot for equity for the white middle class was the Eisenhower years, in turn marked with 90% top marginal rates and massive government spending on infrastructure, education and housing subsidies. Not a tax and spending environment they are exactly begging to return to.

So I don't expect the orthodox to simply concede the day here, too much is at stake. I don't think they are ready to toss St. Ronny over the side and embrace FDR.

That would be like conceding the Iraq argument to the DFHs. Which is happening but somehow not something the Right is ready to repeat on Markets.

[calmo]

"your damn complacent witless attentions..."
--not kharris's mindful and stimulating (usually, [might as well confess all]) in particular (lookit those well turned ankles people...you know they're there).

Now what's your problem?

This B good (enough to cutanpaste again)There is complacency among the orthodox, but it is not all complacency. and draws attention to the living, evolving nature of "the orthodox"
This B not so good (so cutanpaste I did not)There is vigorous, small-minded enforcement of orthodoxy in economic, as in most areas. because "vigorous" clashes with "small-minded" and "enforcement" possibly too strong for the meaning I sense behind the broader drift (You figure I should take you literally (orthodoxically?) and ignore my superior channeling?)
Ankles aside, you brainful Beauty, I B ticked with this problem of delineating the orthodox from the heterodox (ok, and Webb's heresy) [Damn there's no hope for me people, I just love bein a heretic!]...doin it fair and square, you know?

[paine]

i find all this a bit slow

who was surprised by any of it ???

some of mark's advice is solid
know your enemy requires knowing his weapons and tactics

and in this case the tricks of
hidden assumption
dazzling formalisms
thin are generality etc....

but my advice
get trained and get out

the university is no place for
most change makers

join a policy butcher shop

or help start up one of your own

where does it all end ??

in PITCHED BATTLE
with
the corporate /foundation funded
think tanks

where third tier hired minds
hack out policy alibis
for wall street fabricated Rxs

hack as in
twisted council
to both
open closed markets
close others
where TNC appropriate
even yelling
at uncle S to keep HIS "hands off "
has a back door to rents

they call themselves economists
only when they are singing open open open
but they ride by night
to aid the rent flows too

but in neither mode do these hacks
" make "
real policy
nor even guide it

as to the honored academic mandarins

they are like witch doctors
and rain dancers
and ...... on a darker note
after receiving their "fees"
they avert their eyes
as the corporate mind thugs move in

as to the ivy ghetto crowd at home ????

by the time they have tenure
like stig and krug

or have had a final brake thru
like vickrey

its way too late to change anything

they're made

they're gentlemen of the discourse

hell after winning the merit kudos after climbing the greasy pole......
they could call for
a blood soaked
over throw of wall street
and
the forcible implantation
of
a dictatorship of the proles
and
so far as the kampus was concerned
it would be indulged with only chuckles and clucks

yes
ivy walls can nurture
their rare tenured rogues
they're few and aged
and easily indulged and ignored
by their own
especially
in a leading academic institution

their early work
will still be cited
and
their later radical work
noticed in gossip only

[calmo]

Speak of The Heterodoc, welcome back Mr paine.

[anne]

http://www.nytimes.com/2006/11/25/us/25beliefs.html?ex=1322110800&en=486930bee3b7e814&ei=5090&partner=rssuserland&emc=rss

November 25, 2006

Economics: The Invisible Hand of the Market
By PETER STEINFELS

Duncan K. Foley could have called his new book simply "A Guide to Economic Theory." The book grew from a course he long taught at Barnard College and elsewhere, with an even more granite-faced title, "Theoretical Foundations of Political Economy."

Instead, for his survey of more than 200 years of economic thought, recently published by the Harvard University Press, he chose the title "Adam's Fallacy: A Guide to Economic Theology."

Adam? Theology? The Adam in question is not the original inhabitant of Eden and biblical founding father of the human race, but the 18th-century inhabitant of Edinburgh and founding father of modern economics, Adam Smith.

So what is "Adam's Fallacy"? (The author, who is the Leo Model professor of economics at the New School for Social Research, always capitalizes the term.)

It is the idea that the economic sphere of life constitutes a separate realm "in which the pursuit of self-interest is guided by objective laws to a socially beneficent outcome," Professor Foley wrote, a realm unlike all the rest of social life, "in which the pursuit of self-interest is morally problematic and has to be weighed against other ends."

"This separation of an economic sphere," he wrote, "with its presumed specific principles of organization, from the much messier, less determinate and morally more problematic issues of politics, social conflict and values, is the foundation of political economy and economics as an intellectual discipline."

Professor Foley's book is simultaneously an introduction to economic theory and a critique of it.

It is his version, as mentioned on his opening page, of the classic introduction for the economically challenged by Robert L. Heilbroner, "The Worldly Philosophers," now in its seventh edition. "Adam's Fallacy" concentrates more on the worldly philosophies rather than philosophers, on economic theory rather than on characters and events.

How "Adam's Fallacy" will serve as an introductory text is for others to decide. What is pertinent here is the author's contention that economists, all along, have been writing theology.

He does not use the word "theology" with disdain, as many writers do when they want to disparage something as doctrinaire or irrational, although he has clearly chosen the word to provoke those who assume that economics is either strictly logical or empirical. On the other hand, he doesn't use it to signal anything about God, either.

What he means, he wrote, is that "at its most abstract and interesting level, economics is a speculative philosophical discourse, not a deductive or inductive science."

Historically, economics has not only shed light on how a capitalist market system works, it has also suggested what attitudes people should take about those workings and about the moral conflicts accompanying them.

"These are discussions, above all, of faith and belief, not of fact, and hence theological," Professor Foley wrote.

"Economics functions in a theological role in our society," he added in an interview in which he paraphrased Milton, "to justify the ways of the market to men." Economists, moreover, are "becoming priestly figures, with arcane knowledge" and special powers, he said.

Economic laws are cast as universal and invariable. They are even presented as natural laws akin to those of mathematical physics or evolutionary biology.

From the bedrock belief that the pursuit of private self-interest will ultimately benefit the whole society stems a willingness to abide harsh economic measures and consequences, ranging from large-scale unemployment to the destruction of traditional cultures.

The danger of these "illusory comforts of Adam's Fallacy," Professor Foley writes, is that they obscure hard truths. Contemporary capitalism, in his view, is a successful, resilient and adaptive system for creating material wealth. But it is not a stable, self-regulating one. Left to its own devices, for example, it will not "solve the problems of poverty and inequality." ...

[Bruce Wilder]

evagrius: "Anyone thinking of Kuhn's theory of paradigm shift or is that too unorthodox for people?"

I was. Matthew Yglesias makes the point that science does fiercely defend the orthodox paradigm. But, then, he wonders, as I do, whether that's what is meant by "heterodox" in this context.

It seems "heterodox" is in the eyes of the beholder. Different writers point to entirely different things.

It is hard to say what the point is, in pointing to Akerlof's work as heterodox. The man was addressing the meeting Hayes reported on, as President of the Association! Hello! He's received a Nobel Memorial Prize! This is not a man operating at the periphery.

As Matthew Yglesias put it, a lot of those labeled "heterodox" are, scientifically, orthodox, but politically not conservative. At the same time, people like Tyler Cowan, who is arguably heterodox, do not seem to feel isolated at all, perhaps because of their reactionary political sentiments.

Atrios of Eschaton, whose secret identity as Duncan Black, recovering economist, qualifies him to comment, had an insight. Atrios said: "that work [like Akerlof's Lemon paper] is rarely incorporated into the dominant narrative of the profession, which quickly reverts back to a simplistic Econ 101 worldview."

I am sure, if you are determined to adopt a far-left personal political point of view, you had better keep it hidden until you get tenure. But, from a Kuhnian perspective, that is not the problem.

The problem is that there's so little feedback on the Econ 101 doctrine, and it is the Econ 101 doctrine, which drives policy prescriptions and the contributions of economics to the public discourse.

And, the Econ 101 doctrine that drives economic contributions to the public discourse is not even particular orthodox, from the standpoint of a scientific paradigm. Most of the most prominent contributions are not even wholly legitimate.

The concept of "trade-offs" is often under-qualified. The "law of diminishing returns" is just a bit of generalized common sense, not a conclusion of economics.

Economic theory does not say that if price goes up, demand goes down; economic theory analyzes the various factors in the relationship between price and demand -- there are elasticities, income effects, substitution, and on and on. But, the effect of an increased price on quantity demanded is purely an empirical question, as far as a scientifically orthodox interpretation of economic theory is concerned. So, why do so many economist declaim authoritatively against the minimum wage? (Clearly, there a whole lot, including leading lights, who are willing to publicly support the minimum wage, which just makes the situation more confusing.) And, why would Card's empirical work on the minimum wage attract so much hostility?

What exactly qualifies as "heterodox" is a bit confusing to me.

[paine]

bruce wilder writes

"it is the Econ 101 doctrine, which drives policy prescriptions and the contributions of economics to the public discourse "

i agree with part two
yes it "drives" the public discourse
as vatican dogma drives pulpit speak

but policy is driven by those who benefit
( today...largely the TNCs )

the econ 101 con
is merely the holy incantationing
bought by the TNCs
to politicall consecrete
their pri-prof max policies

trade theory and wage theory
are my favorites

and yes
one hardly needs a paradigm shift
to undermine
the "science " behind
...say
tolerating
our monstrous trade gap

[dale]

I think its informative to bring Kuhn into this discussion. but in a way Kuhn is too orthodox- too mainsteam now. There is a power problem with the place of economics in our society. This is not just another example of ongoing sociology of changing scientific paradigms. The current status quo is not just the defender of intellectual orthodoxy. It's also the defender of a political-economic system.

[Bruce Wilder]

paine: "but policy is driven by those who benefit"

I'm sorry, but that's a meaningless generalization. Different policy, different beneficiaries.

Policy debates and political struggles are a great deal more complicated than that. I am as inclined as anyone to suspect that the "economists" who whore themselves out to policy brothels like Heritage, AEI and other right-wing Washington acronyms-cum-fax-machines the news media dignifies as "think tanks", are a useless, despicable lot.

But, the economics as marshalled is as much about figuring out who will benefit from a policy as in providing false justification. In real life, people often get into high dudgeon, because they do not understand the economics. Here's Andrew Samwick, not my favorite person, making an orthodox point about a proposal for congestion pricing on vehicles entering Manhatten during the day -- that the truckers, who are adamantly opposed to paying the $21 a day tax are out of their minds, because they will benefit tremendously. Orthodox. Pro-business, I guess, but not an apology for business stupidity.

The political struggle goes on for a sound economic reason -- The sound economic reason -- which is a scarcity of resources, and the conflict that engenders. Better economics is not going to end that struggle; it is just going to leave everyone better informed about their interests and conflicts.

Better information and better understanding will benefit one side in a conflict over another only in a case of assymmetry of information and understanding.

I guess the question is, whether the curious defense of Econ 101 constitutes an organized effort to maintain such an assymmetry.

[calmo]

This is the orthodox methodology (from dale who may still have his heterodox moments) [And I am here to prod him to be absolutely incendiary. No kidding, we fellow heretics gotta stick together.]I think its informative to bring Kuhn into this discussion. but in a way Kuhn is too orthodox- too mainsteam now. We have a history of ideas (Ok, eva and possibly others --not me so much.) --the record of our performance of thinking about how stupid and ignorant we once were...and the radicals (Ok people, what is so charming about bein an ordinary blockheaded orthodox? Admit it, you are craving for Halloween right now and the chance to dress up an B somebody else?) don't care to have it trotted out as exemplary.
No, they are often not even familiar with the historical account/literature and dismiss it out of hand...ignoring the possibility that some of it may well be the very ground they are trying to stake out.
So Mark's advice (sample the orthodoxy, don't merely sniff it) does have some merit if we are interested in progressive rather than regressive 'revolutions', yes?
Now you might think that Kuhn is part of that history but there are others, with many more publications and still writing and not so orthodox in that history. Chomsky for instance...according to Professor DeLong.

[Bruce Wilder]

calmo: "we fellow heretics gotta stick together"

What?! And, organize the new orthodoxy? Neoclassical, neoliberal, neohetero, neohomo, now I'm really confused.

[anne]

http://readbangkokpost.com/business/

Ah, and there we have Jon Fernquest; nice.

[calmo]

Ok dang (apologies to Emmanunel for share dilution) if the message gets to wilder and not dale...didn't you get the decision procedure for identifying the addressee? [Right there on page 12 of the Manual under Orthodox Responses.] or are you exercising a moment of sly heterodoxicity?
Truly, (just an expression people --don't write this down) this forum is a bust for orthodoxity...and of course I love it!
Naturally, I can barely keep on my gleeful track (this B it, people) but fess up people, how many of you get dressed up (white shirt and tie) to post here and pass yerself off as respectable?
Ok, how many at work, who take the tie off and let fly? Shoes off yet? Socks too? Well, I won't go further, I won't.
Webb reminds me that the orthodox call the non-orthodox, "heterodox" and the non-orthodox do not retaliate in kind. (see "mafia") No, they are not so organized and as Wilder points out, not so formal...not so well compensated...sore losers...ok, that wasn't all of it: orthos are not so honest in their defence of their ideas. The arms length independence of their views from their employers is greatly exaggerated.
Ok, somewhat heterdoxically intoxicated and informed...by others sources than employers...this means you fellow bloggers.

[Bruce Webb]

"I guess the question is, whether the curious defense of Econ 101 constitutes an organized effort to maintain such an assymmetry."

Well I suggest it is. We forget at our peril that there really is an identifiable group who want to eliminate the remaining parts of the New Deal and revert back to McKinley era. I am dead serious, the cumulative effect of the entire Right Economic program sends us right back to the golden days of the 1890s. Anti-trust? Not there. Insider training and the SEC? Not there. Income tax and the IRS? Not there. To a lot of these people everything from the election of Teddy Roosevelt to Reagan was a disaster with only periodic pushbacks by Republican Administrations.

We didn't make Grover Norquist up after all, when he says 'smaller government' he means no taxation or regulation of capital. The Chicago School over the last couple of decades has supplied the troops and there is no reason to suspect that they are not self-aware of their continuing role in this ideological struggle to sell Markets to an American people traditionally distrustful of Big Business.

Back in the 1970's the Criminology School at Berkeley was taken over by hard leftists, both faculty and students, and they turned their focus from crime to the police, who they deemed to be the real criminals. Believe me these people were fully conscious of what they were attempting to do. As were the right wing professors who dominated the Poli Sci department and the left wing people who dominated Sociology. There is no reason not to believe that a Chicago Economist is not just as ideologically infused as the typical Marxist professor of anything.

Once you concede that a minority does in fact exercise decisive pricing power, then the defense of unlimited free markets breaks down, at least in a democratic system. (It does continue to work in a political environment where the majority of workers are denied the Right to Vote, as in Britain right through to 1911, but is more problematic in places like America where patterns of land ownership led to a much wider franchise.) Minimum wage laws that prove to work are a profound threat to the Market folks.

So I suspect the Chicago School and related followers are bye and large fully aware of their role as defenders of Capitalism as they define that, just as Marxist professors are fully aware of their ultimate goal. To think otherwise is to underestimate them, something this progressive has no intention of doing. They know there are people out there who want to tax their money and spend it on social goods, I sincerely doubt they will just concede the field to the heterodox however defined and just let Comrade Webb take the money.

[paine]

in a comment on a line of mine
about material benefit
not bad ideas driving
bad policy

bruce wilder
writes

"I'm sorry, but that's a meaningless generalization. Different policy, different beneficiaries"

ah yes but the winners are
usually the big corporations
and rarely u and me

that i think has its implications

btw
your response
has a familiar ring to it
the voice of the man of neutral reason
fair to all walks of life

to me bruce
to blame our policy
on
blindly followed
dogmatic pseudo science
misses the key point

our big corporations
benefit
from the present jobblers purgatory

is that too much of a generalization
to u ???

true or false
is it "meaningless " as well ???

granted its not nuanced enough
clearly it fails to capture
the true social complexity
of each specific winning interest coalition

and yet
is it always
best to see
these struggles
for more earth and light
as between different "trees"
and
not species of trees ?????

[gordon]

Thanks for the eulogy (or was it an obituary?) of Perelman. Some of his blog is good. And as for the rest, it's many years since I learned not to trust economists.

[paine]

bruce wilder again

-----sorry
but you highlight
a class point of view
i very much enjoy-----

"... economics as marshalled is as much about
figuring out who will benefit
from a policy
as in providing false justification"

"figuring out ???"
in the public debate ???

by who ???

by
neutral self appointed
selfless juries
of middle citizens
safely without or above
bending
to a serious material stake
and
armed only with a keen sense
of fair play
and a best for all
categorical imperative ???

ya i'll have to admit
such a jury
might be confused by a lot
of these econ con policy issues

but bruce
do you really think
big stuff
like the trade policy course we're on
is the result
of inadequate
citizen information endowments
in particular among the potential losers
the majority jobbler class ????

do u think/hope
and if only they knew
what you know
about who and by how
they're being screwed
then they'd ....

ya
it all has the smell
of mean ignorant streets
on a hot night to it
i agree

better we sit back
and
imagineer a lengthy dialogue

[ken melvin]

Name your poison pardner, hand tailored in Hong Kong, now available in colors and materials to suit the most discriminating.

[Barkley Rosser]

Mark,

This is my first comment here. Somehow I have never been on your blog before, although I have long heard of it, but this neoclassical mafia stuff has me jumping around the blogosphere. I am not sure I have seen an economics debate go so far across it in quite this way.

Anyway, I also want to thank you for your tale of the travails of michael perelman. He is someone I have known and admired for a long time. I know that he has always had this sort of resigned attitude about his colleagues at Chico State; they tolerate him, but just barely. Maybe it is a bit better now, and also he is getting so senior, well, his days in the department are numbered so...

All of which gets back to your advice about what to do. All I can say is, easier said than done. I am one of those who was definitely a part of the URPE radical heterodox crowd back the University of Wisconsin in the early 1970s. We all used to sit around and think about what we would do. Your idea was out there: play it safe and get infiltrate a good program and then blare forth.

However, my observation is that those who followed that path got sucked in. They may harbor heterodox thoughts and they may occasionally do or say something somewhat heterodox, but basically they conform and play the game. Getting tenure in such places simply puts so much pressure on.

Those who are in some sense still heterodox or radical or whatever, either got themselves into one of the leading heterodox departments, and there is a well-known small list of them, which ironically includes the University of Utah, where this weekend the big heterodox group, ICAPE, is having their conference, or one just did a michael perelman, burrowing into a strictly undergrad program where it was viewed that one was not going to cause any real harm to the profession and the administrators were simply pleased if you published anything at all, as long as one did not scare the horses or the equivalent, spit in the eye of the dean or the biggest alumni donor, or whatever. That is essentially what I did.

Anyway, you have evoked what it is like, and while your suggested solution is noble, I fear that it is too noble/idealistic for this world. The mafia is too strong.

[Andy]

Economic theory certainly does predict that the rise in the relative price of a good will decrease demand for it! That is the whole point of preference orderings... otherwise, one could have bought the preferred bundle of goods when the relative price was lower but didn't!

[calmo]

Thanks for joining us Barkley with that personal and candid anecdote (like that other one for Paul W)...you make me feel like I need empathy lessons...a sure sign of heterdoxity, I bet.

[Winslow R.]

I was reading Paine's comment about how TNC's benefit from economic policy built upon emotion...

I was listening to Gore on CSPAN talk about 'reason' arising from dialogue within a democracy allowing a shift away from a foundation of emotion...

I was thinking how individual greed and Adam Smith's invisible hand is built upon a foundation of emotion...

I was observing how my wife shops for furniture. She resists impulse purchases by shifting away from emotion, instead she tries to reach a consensus just as a politician tries to craft policy with 'reason'.

The foundation of economics is to keep the TNC's in charge of an emotionally charged marketplace where consumers are individuals to be manipulated and gamed, not reasoned with. Eliminate all group decisions, dispense with reasoned debate, buy it now.

Who says this greed emotion based market provides an optimal/efficient/good outcome?

Where is 'reason'? When will we grow up as consumers/economists and base an economic system at least in part on the use of our pre-frontal lobes?

[Lafayette]

MY: One hears tell of mafia-like behavior among purported social scientists and thinks to oneself "this isn't how a real science behaves." Kuhn reminds us that, in fact, that's exactly how a real science behaves

I don't think that anyone who makes such a statement understands how the Mafia works. The Mafia (capital M) is dead-serious about business. If what is meant that the ivory tower of academics is, in fact, a serious of ivory towers fighting amongst one another, then fine. Each profession has its pissing contests.

Krugman is right in his defense of heterodoxy within economics, or any social science for that matter. No one or group has a patent on being right. Given the inexactitude of these sciences, not one can claim absolute truth and therefore acceptance.

Boys will be boys and that, I suggest, is what is happening. Economics is, like many sciences, a highly closed world. More so, its practitioners remain cocooned in that microcosm, rarely setting forth into the turmoil of business or law. Should they do so, they would understand that this real world does not always behave according to the neat theories that they were taught.

Neither shall I denigrate the academics. I feel that if they have sinned, it is out of naiveté. They remain fixated on a universe of economic thought that is impenetrable – it resists any thinking that may challenge its primacy.

The body of economic thought is historically fairly well advanced nonetheless. History has provided us with some good examples of what works and what doesn't. Communism, as economic theory, is impracticable. Who would have thought this at the turn of the 20th century? Unbridled capitalism leads to great income disparity, which is inherently unfair. Who thinks that at the beginning of the 21st century?

We are in the midst of another paradigm shift, that of globalization. It too will change our understanding of economics, from that which prevails in a modern society to that which prevails (and therefore is different) in a world community of nations and markets.

Hollywood employs with great effect an artefact called "The Movie about the Movie". The present ruckus about economic heterodoxy is similar, methinks.

It is time for the economics profession to open itself further to the other social sciences, particularly sociology and, perhaps, even anthropology. What we know about the behaviour of mankind is, after all, really quite limited in scope. Especially, of the variety homo economicus.

[Lafayette]

WR: The foundation of economics is to keep the TNC's in charge of an emotionally charged marketplace where consumers are individuals to be manipulated and gamed, not reasoned with.

Not bad as characterizations go. But, you must admit, if we are "gamed", then we do so by consent.

No one ever forced anyone to buy an iPod. Conspicuous consumption is the culprit. And self-recognition sparks in us the propensity to do so.

We are constructing for ourselves a "blameless society": I was manipulated into a sub-prime loan. My obesity is not an obsessive habit, it's in my genes. I don't rape women, they ask for it by taunting me. My mother/father made me .... (fill in the blank).

All folderol, in the self-belief that our wrong behaviour is excusable regardless of the consequence. But is it?

Of course not. The behaviour of a society is simply the sum of each constituents' comportment. Societies may not have public pillories any longer, but they do need social condemnation for behaviour that is aberrant. Who decides the norm? We do (by means of our laws and our courts).

But, please, without the self-pity of lamentable excuses. A society that degrades its norms is one that loses its bearings.

[paine]

win

i like your formulation

laff
virtue ..eh ?
the back bone of a republic
is formed
from the living virtues of its citizens

[calmo]

But that p formation (so much better than close formation, you pilots)...right here:
"is formed
from the living virtues of its citizens"
is cast for us networked types who increasingly
have this face-to-monitor relationship with
our fellow citizens (I type to them now, those little islands, just waiting for my bottled messages.)
The Information Age: alienation through isolation...not exactly the personal development honk MSFT would have us believe...and no small irony that this company would promote education in the current electoral campaign despite a pitiful performance record.

[anne]

http://www.tpmcafe.com/blog/bookclub/2007/may/30/heterodox_errors

May 30, 2007

Heterodox Errors
By Paul Krugman

I don't have time to weigh in on all the issues here, but I'd like to warn against an error I think both sides tend to fall into: assuming that you have to use heterodox economics to reach conclusions critical of free markets. As I said, both sides tend to fall into that error: the heterodoxishly-minded bash neoclassical economics because they claim that it automatically makes you a defender of capitalism red in tooth and claw, and the free-marketeers reject warnings about markets gone wrong as somehow necessarily reflecting ignorance of economic theory. It just ain't so.

Let me give two cases in point. One is the California electricity crisis of 2000-2001. Those of us who saw it as a crisis produced by market manipulation did so on the basis of pretty standard economics, maximization, equilibrium, and all. I know a lot of people ridiculed the market manipulation story, eventually confirmed by the Enron tapes, with statements that began "Economics 101 says ..." - but that just showed that they didn't know much about economics, and were confusing a set of analytical tools with an ideological mindset those tools often don't support.

The other is the effects of trade on income distribution. Anyone who thinks that neoclassical economics says that everyone gains from free trade, and that you have to reject the assumptions of the field to raise concerns, obviously doesn't know anything about the subject: ever since Stolper-Samuelson 1941 we've known that trade can easily hurt large numbers of people, so the question is always an empirical one. A dozen years ago I thought the effects were small, but that was based on the numbers, not a judgement in principle. Now I've revised my views up, because the numbers are bigger.

My point isn't that neoclassical theory can do anything. But it's perfectly possible to believe in extensive market failure, demand a lot more government intervention in the economy, while still believing that maximization-plus-equilibrium is a nifty way to think about lots of problems.

[anne]

http://delong.typepad.com/sdj/2007/05/tpm_cafe_book_c.html

May 31, 2007

Neoclassical Economics: Threat or Menace?
By Brad DeLong

It's Different for Lefties and Righties | TPMCafe: My view is that the neoclassical economics toolkit can be very, very useful--no, stronger than that, is very useful and necessary--for everybody from the center on left. The methodological individualism of the toolkit forces you to look at real people and how situations help or hurt them. The competitive market benchmark assumed by the toolkit requires you to think carefully and specifically about just where the externalities are that keep you from relying on markets alone to solve whatever problem you are looking at. The equilibrium conditions established by the toolkit force you to check for unanticipated consequences, for blowback due to changes in incentives and so forth.

The result is that the neoclassical economics toolkit makes you a smarter, stronger, more powerful, more effective, more reality-based leftie.

By contrast, the neoclassical toolkit can be absolute poison for people right on center. It functions like a kind of crack, reducing their arguments to empty slogans: "the market takes care of that"; "acts of capitalism between consenting adults"; "they hired the money, didn't they?"; "it's not the government's, it's theirs."

People right-of-center should be exposed to the neoclassical economics toolkit only after posting a $1M bond to cover collateral damage, and only under the supervision of trained professionals.

[dale]

I don't disagree with Winslow so much as want to add some thoughts that emotion is not just a human quality to be purged by reason. there is a positive and necessary place for emotion. Emotion is not just the source of pathologies and errors. One-sided conceptions of reason can be just as pathological as the worst sort of emotional outbursts. And more difficult to understand and counter.

If Gore is adding a strong note of Habermasian discourse theory to the mainstream- I hope he and those who listen to him think through Habermas' strong and important critique of instrumental-functionalist reason as well.

[anne]

Dale:

"If Gore is adding a strong note of Habermasian discourse theory to the mainstream- I hope he and those who listen to him think through Habermas' strong and important critique of instrumental-functionalist reason as well."

No way; this is name dropping and now you have to explain just what you mean because the comment seems too important for meaning to be hinted at.

[dale]

Anne, I seem to remember you dropping Kant and Rawls awhile back:) With no follow up yet!

Habermas is well known (as well as a contemporary German philosopher can be anyway)for his work on the discourse theory of the public sphere. The relationship between the spaces (real or virtual) where people come together to discuss, debate, work through the issues of the day and democratic legitimacy. This runs through his work- from the early Structural Transformation of the Public Sphere to his (probably) last major work, Between Facts and Norms: Contributions to a Discourse Theory of Law and Democracy. I find this to be an important body of work, though I personally wouldn't recommend the early Structural Transformation and would suggest relevent chapts of Facts and Norms.

In essence, he writes about the importance of the political public sphere- the free ranging, informal conversations- the importance of the quality of public discussion feeding into the institutionalized political processes. In part this is a picture of how the real public sphere operates and in part it is an idealized vision by which we can judge where and how illegitimate forces distort the process of public will formation and its transmission to the centers of power. I assume that Gore is picking up on these "Habermasian" themes in his new book. I would add that for Habermas, distortion free communicative processes, in a way, actually define rationality.

In his two volume Theory of Communicative Action Habermas lays down the philosophical and sociological basis of his work. There, building upon the works of Weber, Mead, Durkheim, Marx and previous critical theorists, he works through the concepts of reason and rationality and in particular the ambivalent meanings of rationalization (working from Weber's use of the term). The two subtitiles of this two volume work speak for themselves: Reason and the Rationalization of Society (vol 1) and System and Lifeworld: A Critique of Functionalist Reason (vol 2)

Vol 2 gets at the problem of how one-sided, overly narrow conceptions of reason, which are appropriate in certain circumstances such as academic economic theorizing, can become reified and displace and distort our self understanding.

This plays into his notion of how, in complex and supposedly enlightened modern societies, power and market relationships and methods of integration can displace or colonize the more central and humane sorts of social relationships and forms of integration that human societies rely upon. This becomes, for Habermas, a way to access the pathologies of modernity. Or the way in which our development as individuals and as a society is blocked by certain systemic structures that have assumed too much (illegitimate) power.

[wjd123]

anne, this one is for you. It's the last part of Palley's article on challenging economic orthodoxy

This has relevance for today. If heterodoxy is hip it is not because orthodox economics is opening up. Rather, it is because economic events are shaking economists’ cage. Those events are globalization and the evisceration of the American Dream, and they have unsettled the public and politicians, opening space for alternative theoretical accounts of what is going on.

Economists like David Card, Alan Blinder, Paul Krugman, and Joe Stiglitz are troubled by these events and have written about them. Their writings reinforce and add credibility to the sense that something troubling is afoot. Moreover, their writings implicitly add to the sense that orthodox economics is not up to explaining what is happening, thereby furthering the case for deep intellectual change – which is why they generate such blowback from their orthodox colleagues.

That said, Card, Blinder, and Krugman remain within the orbit of mainstream economics. For instance, Blinder remains an unreconstructed free trader, as I think does Krugman. Why? One reason may be that they all subscribe to the science myth, and ideas like comparative advantage continue to be marketed as truth. Other reasons are to do with the sociology of knowledge. These are leading professional economists that occupy powerful positions, giving rise to personal and strategic reasons to stay within the bounds of the mainstream. A third reason, to paraphrase Keynes, is the difficulty in escaping old ideas. A fourth reason is that alternative ideas have not been given the space and attention needed to flourish – which brings us back to the University of Notre Dame intellectual suppression problem.--Thomas Palley, "Challenging Orthodox Economics--Part I"

[anne]

Thank you Dale and WJD, I will consider your arguments as soon as I can see clearly this morning, and I have not forgotten my promise to further argue ir-rationality and morality, and further promise to try to justify my stance.