The Anxiety of Economics

We live in especially anxious times. The past half-century has seen a decided turn away from public provisioning – a shift known as neoliberalism or the Washington consensus depending on what side of the Tropic of Cancer you live on.

Certainly this shift was primed by the simultaneous experience of the Cold War and decolonization which motivated a model of economic development that relied on private investment over government enterprise. While it would be convenient to tell this story as merely one of corporate rapaciousness seeking ever broader frontiers, it wouldn’t tell the whole story. The full story involves a shifting in the way economists view economic policy itself.

Katherine Moos, a PhD student at the NSSR & lecturer at Sarah Lawrence College, points to the Lucas Critique as the pivotal point in this turn away from policy. In her work-in-progress “The Transvaluation of Values,” Moos argues that this represented not merely a recalibration of fiscal management, but a philosophical anxiety about the possibility of good public policy itself.

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What’s Wrong with Heterodox Economics?

A couple of days ago I was exposed to a piece by Randall Wray discussing some remarkable findings presented in a paper by Leonhard Dobusch and Jakob Kapeller. The paper discusses citation practices and their relationship with the performance of economic journals. Wray’s comments are centered on the following four points made in the article:

  1. Cross-citation between heterodox journals and orthodox journals is largely biased towards the latter. This is due to orthodox journals constantly citing other orthodox journals and heterodox journals mainly citing orthodox journals.
  2. These biased cross-citation practices create perverse incentives. Researchers that want to get tenure send their best work to the highly ranked orthodox journals.
  3. A number of top heterodox journals are biased towards formal and econometric-based research. These articles are more likely to cite orthodox journals.
  4. Heterodox journals restrict the availability of their papers pre and post-publication.

In this piece I want to make some comments regarding the first three points.

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Experimental Evidence of Sunspot Bank Runs

For all the adoration that the gold standard gets from radical libertarians, currency is surely more stable without it. On the gold standard, currency crises were so regular that social scientists and philosophers came up with all sorts of theories to explain them. Some of them were really weird.

Among the weirdest was the sunspot theory of bank runs. Through several blind leaps of conjecture, William Stanley Jevons connected the occurrence of sunspots as having an (unproven) effect on crop yields which, in turn affects farmers’ debt from seed to harvest.

Later Arthur Pigou and later John Maynard Keynes used the phrase to describe sudden shifts in financial markets not based on changes in the fundamentals. A fluke. A panic. A sunspot. A bankrun.

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How to Justify Teaching the Worst of Economics to Non-Economists

miracle-at-blackboardBeing an Economics PhD student in a heterodox department gives me the privilege of taking courses in a range of different schools of thought within the discipline. In the Economics department, most of us take the stance that it is imperative to understand the mainstream in order to criticize them effectively. We go to great lengths to learn about the nuances of Neo-classical Economics, general equilibrium theory, and New-Keynesian Economics. Meanwhile, we also have full courses devoted to non-mainstream approaches, such as Post-Keynesian and Marxian Economics. We are aware of the ideological underpinnings of a lot of mainstream theory, and many of us see this as a motivation to challenge the discipline.

Now, the difficulty arises when we are to teach one introductory course in ‘Economics’ to non-economists and we know that this is likely to shape their outlook on Economics as a discipline. How much time do you then devote to mainstream models, the criticism of mainstream models, and alternative models?  Continue reading “How to Justify Teaching the Worst of Economics to Non-Economists”

Write it Like You Mean it

At a time of grave economic consternation, John Maynard Keynes distractedly found himself defending his own trade proposal to staunchly neoclassical economists who were, naturally, in direct opposition.

Keynes was well aware of the reasoning which supported the free-trade fundamentalists— to a certain extent, he used to be one of them. He was trying to save the economy, but as much as he needed to convince people he was correct in his assessments, he needed to convince people that he fully understood theirs.
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Another Response to the Kick It Over Campaign

Rishabh Kumar, our colleague and friend at The New School’s economics department has written a fascinating take on Adbusters’ Kick It Over campaign. You can read his full response here.

To me, the response is interesting in that it is titled “Why I disagree with the ‘Kick It Over’ Campaign” but goes in a completely different direction than previous critiques of the campaign. Below is a sample:

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5 Annoying Things Economists Write During the Holidays

Call me a Grinch, but I can’t stand when economists get in the holiday spirit. Suffice it to say that the dismal science makes everything dismal with it. Like the exploitation of seasonal labor or the bell-ringing agents of a homophobic army of God, economists roll out the same tired tropes re-gifted from the ideologues of ruling class past.

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No Longer Up For Debate

Over at Joe Francis’ blog the independent scholar has compiled data from JStor demonstrating the death of direct debates within economics journals.

Graph of economics papers on JStor containing the words 'comment', 'rejoinder', or 'reply' from 1920-2013 with a distinct peak in the early 1970s

Although there has been a distinct decline in direct debate on papers since the Cambridge-Cambridge debates, I would argue that some of that debate has been relegated to working papers and blogs. For example, the recent debate around Modern Money Theory has happened almost exclusively in working papers from PERI and the Levy Institute as well as associated blogs.

What this data might indicate is not so much the death of debate with in the discipline so much as journals no longer being the primary venue for this debate.

A Heterodox Take on Inequality

By José Coronado and Ingrid Harvold Kvangraven

A few weeks ago, New School students met with fellow heterodox students in Amherst, Massachusetts for the annual graduate student workshop, a common space for collaboration and mutual exchange of ideas. Students presented in a wide array of fields, ranging from macro modeling to interest rate theory to the eigenvalues of input output tables to Marxian theory (see the full program). The event closed with a student/faculty roundtable titled “Economic Inequality – Challenges for the Economy, Society and Policy”. The debate touched a range of areas, among them the role of the state and methodological individualism.
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Simon, Simone, and the Meaning of Work

Our colleague “Simone” over at Lady Economist has written a deep meditation on the meaning of work. Here’s my favorite part (in no small measure for the nod to Simon):

Arguing that work is inherently unpleasant reinforces one of the more insidious assumptions in mainstream economics and one of the more cynical claims in our culture: that people are merely consumers trying to maximize their pleasure and minimize their pain. That sort of thinking leads managers to assume that workers are bound to shirk responsibility whenever possible, and are only motivated by money. It breeds extremely dysfunctional work environments with high surveillance and competition among co-workers. The polymath Herbert Simon has written about how workers’ sense of identification with the mission of an organization explains why employees actually perform the duties necessary to promote the institution’s goals, and not just pursue their self-interest as economic theory would expect.

Read the whole thing here.