Hip Orthodoxy

Tyler Cowen at Marginal Revolution posts this link (http://www.amazon.com/gp/cdp/member-reviews/A2U0XHQB7MMH0E/002-1827497-3917607; scroll down, at least to the second review) to Herb Gintis’s review of a collection of essays on heterodox economics. Gintis is, as many readers of Crooked Timer will know, hardly a staunch advocate of neoclassical economics. He is, in my opinion, quite correct about the problems with most of what passes for heterodox economics today.

and of course Hnery too

Economics is the political behaviour of economists. Bring back the phrase “political economy”, I say.

Regarding: “why is it that economists who step beyond a certain policy consensus are perceived as breaking the club rules?”

Umm, because that’s where the money is?

There’s no need to create a “priesthood” argument, which verges on the unfalsifiable. In fact, standard neo-classic economics of rational actor maximizing self-interest works very well (no smiley, I’m quite serious).

Post-autistic economics ignores the innovative work of Ernst Fehr, Abijit Banerjee and Esther Duflo, Colin Camerer, Samuel Bowles, George Loewenstein, Daniel Kahneman, Benoit Mandelbrot, Edward Glaeser, David Laibson, Matthew Rabin, Bruno Frey, Elinor Ostrom, Armin Falk, Simon Gaechter, Jean Tirole, Aldo Rustichini, and many others. It ignores neuroeconomics, econophysics, and the notion of the economy as a complex system, with its stress on agent-based modeling. These researchers transform analytical economics to meet the empirical challenges posed by new data. Unlike leaders of the post-autistic school, they do not urge a retreat to philosophy or some some defunct 20th century doctrine.

On target? As someone unfamiliar with the state of economics today, Gintis’s review reads like a farcical piece dreamed up by post-modern satirist. What next? Econorobotics or Pre-Dementia Economics?

I think a good bit of why “mainstream economists” don’t pay much attention to heterodox view is simply that the signal extraction problem is so severe. The signal to noise ratio ain’t that high. There’s good heterodox folks who have important things to say but the group, being heterodox, also tends to attract a lot of cranks, folks with axes to grind, bruised egos and just plain ideologous who have no clue as to what they’re talking about. In those circumstances it just becomes really costly for your average mainstream economist to weigh through all that to in order to seperate the wheat from the shaff. So most stick to what they know works decently well.

This is also part of the reason why I’m so harsh on Keen all the time. I really resent the time I wasted reading that book. There’s nothing more annoying and frustrating then spending a lot of time to work your way through what looks like a legit mathematical argument only to realize after some time that it’s all nonsense, either out of incompetence or just plain lyin’.

Re: 9

I’m waiting…ready to pounce.

radek

why is it that economists who step beyond a certain policy consensus are perceived as breaking the club rules?

Part of the reason is that many social sciences (not just economics) seem to have a norm of “Don’t make, in public, arguments that will be misused to justify really bad policies.” That applies to most research on biological differences between the races; to a good bit of research on male-female differences; and so forth. (I can’t imagine any academic publishing a popular article on “hereditary criminality” and remaining well-regarded, for example.)

Beyond a certain point of discussion there’s the problem that “orthodoxy” is hard to pin down and that “heterodoxy” as its opposite is also a floating signifier, but even looser because it contains so many things. Is Akerlof heterodox? And what’s at stake in the answer?

Herb Gintis understands the theory well enough to spot bad arguments, and, yes, the effort by some PAE folks to seize the ground of “realism” is at best question-begging and at worst cheap rhetoric. But I would be much more careful than Donald (#1) in seeing the book he criticizes as all contemporary heterodoxy rolled into a neat little ball, nor would I sneer about “what passes for” without doing a little more reading. And Gintis (I was a grad student at UMass Amherst while he was staking out this position) has a particular take on how economic theory ought to work which rules a lot of heterodoxy out from the start.

One of the better results of the PAE moment, though, was that it got people talking who normally wouldn’t. There’s more interaction today among Austrian, Post Keynesian, Feminist, Marxian, Institutionalist, and Evolutionary economists. Feminist economics has become a particularly interesting space in which no one school is hegemonic.

The other useful thing is slowly getting past bitching about “the failings of the neo-classical model.” Not only is there no one such model, but neoclassical econ, however defined, is really good for thinking about certain questions, as I think most of us heterodox types will agree. Whether it is complete and adequate is another matter, but I’m happy to have neoclassicals, including neo-neo-classicals like the always-interesting Herb G, do what they do and, hopefully, join a larger conversation.

Oh gosh, memories of futile hours spent in high school trying to read about the capital reswitching controversy, the difference between American and Cambridge Post Keynesians, etc. for my senior project on Keynes are flooding back. I would like to revisit economics, but it looks like I’m taking the long route through doctoral study in statistical physics..

Now I understand the difference between philosophers and (orthodox) economists: we both operate a priori but THEY think they can get practical, empirical results out of it.

Institutionalism or Austrianism as orthodoxy definetly foundered.
To be honest I don’t know which Keynesianism he is referring to. I’m guessing IS/LM as orthdoxy. Which also foundered.
Then there’s the phrase “developed strongly”. I know that this ain’t my area but I don’t think that many new, novel and interesting results have been produced by (Old) Institutionalists or Austrians in the past 40 years. It’s just repeating old themes.
Same may be true about PKs too though. After showing in the 1950’s that one can construct counterexamples to many neoclassical claims they … did what exactly? It’s not a rhetorical question, I’m certainly curious how PKism of today differs from PKism of say 1972. Are there PKian models of price discrimination? Of technological innovation? Of markets with assymetric information? From what I understand more recently there’s been actual empirical work done which looks for Wicksell effects in real world data. That’s definetly welcome and perhaps the PKs will rise and rule once again.

“Notsneaky,” Peter Boettke’s blog is nice place to get a sense of current Austrian discussions; he also edited the Elgar Companion To Austrian Economics. There’s a companion Elgar volume for PK edited by John King, and check out this one edited by Randall Wray and Mat Forstater. The Routledge “Economics as Social Theory” series is worth a look. You want journals?

Take a nap, Alex.

I’m not going to start in again, but economists really should be more attentive to the way their profession is perceived. And they really shouldn’t say that it’s a misperception, simply because leading researchers and various dissidents deviate from the orthodoxy. I think that most non-economists, based on their experience and observation of economics in undergraduate education, political administration, and the political dialogue, rightly come to the conclusion that the political opinions of actual flesh-and-blood economists ranges from neoliberal to hardcore Pinochet right wing, with the center of gravity in the area represented by the less-crazy, more libertarian conservative Republicans.

If it is true, as people tell me, that the best work of the sharpest people is not represented in undergrad education or in the generalist press, that’s a serious problem and a black spot on the profession as a whole.

If it’s also true, and I think that it is, that the typical econ grad student in the most successful departments finds himself being pushed politically to the right, that’s another black spot.

There are plenty of straws in the wind making it seem that the economics cartel is enforcing orthodoxy. I keep being told that this is my error, but I really doubt that it is.

I was never convinced that the defeat of the institutionalists and the political economists by the neoclassicists was anything more than a coup. The neoclassicists said “let’s talk about this and not that” and gained control, and people who talked about “that” gradually disappeared. I think that if economics hadn’t narrowed so much the world would be a better place now.

I’m really as tired of you guys as you are of me, though. You are free to go on believing that your profession is perfectly fine and has only the normal problems, and that its right-wing reputation is false and would be no big deal anyway because economics is science, not politics, and that the post-autistic people are stupid, and that the heterodox economists are interesting but not really very good economists, and that no orthodoxy is imposed on grad students who want to enter the profession, and that undergrad econ ed is not rightwing indoctrination.

And I’ll try to shut up now, so you can meditate joyfully on science without someone stinking up the place.

“The apparent fact that orthodoxy involves applying the rules of game theory [in No-One Makes You Shop at Walmart] makes one wish to bash one’s head against a wall for a prolonged period. If only in theory.”

The idea of collective action problems really strikes you as that abstract and unhelpful ehj?

As the Gintis review suggests, a lot of people seem to have a sophisticated and well-developed critique of a straw man dressed up as game theory.

The only thing I learned following this discussion is that the term heterodox, by itself tells you almost nothing about an economist and her work. I think some of these guys are right to feel excluded from the cool kid table. Others, seem like they are on the margins for good reason.

Seriously though, as Robert Vienneau notes Greg Mankiw is happy to say in public that “The neoclassical theory of distribution teaches us that a person’s earnings depend on his or her productivity”, and nobody seems really particularly eager to correct him. If Greg Mankiw isn’t thoroughly and reprehensibly confused about what neoclassical economics says about earnings, then there is a serious problem here with neoclassical economics. If Greg Mankiw is confused about what neoclassical economics really says about earnings, then at the very least it’s hard to argue that the strawman was entirely constructed by the heterodox crowd.

I mean seriously. The marginal productivity theory of distribution was definitively one of the casualties of the CCC. It’s gone, stick a fork in it, it’s done. If there isn’t a very serious problem with neoclassical economics as a social phenomenon in American universities, why is Greg Mankiw (who is pretty much the paradigm example of a neoclassical economist) saying something that’s both theoretically based on a logical inconsistency and empirically falsified? I really don’t think that the marginal productivity theory can be defended as a “first approximation” to anything, and even if it can, that ought to be admitted.

There is probably a lot of sense to the general concept of endogenous money, but the amount of hot air expended over the subject in the PK community was, in my opinion, wildly disproportionate and wasted a lot of energy.

but the specific way

And what way is that? Again, I’m not being snarky, just asking.

I’d agree with John Emmerson that part of the problem with neo-classical economics (or, part of the problem with people’s perception of neo-classical economics) is that the sophistication that may exist in journals appears to be long lost by the time it makes it to public policy debates.

Notsneaky,

I like the idea; I’m not so sure about your fashion sense though.

But is the proposition that factor payments are related to productivity (properly defined – independent of K for example) that crazy?

Related sure, but how strongly given that labour markets operate in far from perfect competition?

“There’s nothing wrong with collective action problems, but the specific way in which they’re modelled in a lot of game theory is one which nobody who understands the subject is really happy with.”

I’m aware of JQ’s version of this critique Daniel, and it’s not a sufficiently fundamental objection to the whole idea of modelling strategic interaction to justify an attack of the vapours any time anyone mentions “game theory”, which is basically what we got at #8 above.

The failure of the marginal productivity theory of distribution isn’t dependent on reswitchings. Also:

But is the proposition that factor payments are related to productivity (properly defined – independent of K for example) that crazy?

Not crazy, just unsupported by evidence.

And hey, factor income shares have stayed really constant for really long time (now we’re seeing a blip).

Well this is surely ambiguous evidence at best; one could equally well argue that there isn’t “enough” volatility in factor shares for them to have been driven by productivity, given what we know about technological change.

I did check the quote and you may wish to do the same. Although the passage on which I commented was a comment on Slee’s book, the descriptions which I questioned were not Slee’s: they were Henry’s, though it does not follow that Henry was using them as a mark of approval. Or indeed disapproval – he was saying that “this is the orthodoxy”, which fact I lamented. Slee don’t come into it.

It follows that you are objecting to people using game theory

No it doesn’t.

It follows that you are objecting to people using game theory

No it doesn’t.

Maybe you should work on communicating your ideas more clearly, because thats exactly the impression I got of your statement as well. Rereading it several times I still can’t find a way to interpret your statement that does not amount to the same conclusion.

There’s a lively literature on the whole “removed from real life experience” point, and it’s not the knock-down argument many people seem to imagine when they first make it.

There is also a large literature in epistemology and sociology on the standard of evidence admissible in different science, and economics does come out as singularly uninterested in high standards of correlation with actual experimental results. For experts, this quote is very pertinent in my opinion:

Third, the production of theories in which social units appear comparable (Meyer 1994; Strang and Meyer 1994), or of organizational designs and policies that hold “universal” validity, has a neutralizing effect that helps rationalize a post-hoc consensus among economists and makes it appear as the outcome of the cumulative progress of science—hence legitimating isomorphic diffusion as a positive, rather than normative phenomenon and concealing its hegemonic origins (Bourdieu and Wacquant 1998).

Frédéric Lebaron and Marion Fourcade-Gourinchas are interesting reads on the subject. And this is how I try to usurp Kieran’s indentity.

Rereading it several times I still can’t find a way to interpret your statement that does not amount to the same conclusion.

Can I recommend that you try “appreciating the difference between employing a technique and elevating it to the benchmark of orthodoxy”?

Apart from the word “human”, all this would apply to geometry, say, and many other scientific fields.

Mmmm, but the word “human” is of a certain central importance here, is it not? And economics isn’t really on the same level of theoretical abstraction as geometry, is it? Perhaps it may aspire to be – and perhaps that may be part of the problem.

that’s disappointing.

and weird.

The failure of the marginal productivity theory of distribution isn’t dependent on reswitchings.

Nope. But it’s a part of it. And note the above quote refers to “perverse labour substitution” – not just reswitching.

Not crazy, just unsupported by evidence.

Ok, like? Over the long term wages track productivity (or did until early 00’s), real rates of return are constant and factor shares are constant. The Kaldor facts. That looks like Solow, even if the world really isn’t Solow.

Well this is surely ambiguous evidence at best; one could equally well argue that there isn’t “enough” volatility in factor shares for them to have been driven by productivity, given what we know about technological change.

Over the short run, sure. But we’re talking about long run trends.

The Gintis review is here.

It was seized upon by Tyler Cowen and a few lesser mortals but it is really less than on-point. The post-autistics, God love ’em, are but one of multiple currents of heterodoxy. Danby’s link to journals points to many others.

One thing worth noting: some heterodox scholars don’t own up to being heterodox, hence discount the issue, since they are trying to gain acceptance to the club. They don’t want to single themselves out as different, and especially not as any sort of political opponent to the profession. One can hardly blame them, but it can confuse the issue by downplaying the extent and quality of dissent. Gintis (and Tyler Cowen, for that matter) are good examples.

Perhaps Franz Fanon could have explained this better.

I’ll just link again to this

Since so many homes were destroyed, the natural inclination is to build safer or perhaps impregnable structures. But that is the wrong response. No one should or will rebuild or insure expensive homes on vulnerable ground, such as the devastated Ninth Ward. And it is impossible to make homes perfectly safe against every conceivable act of nature.
Instead, the city should help create cheap housing by reducing legal restrictions on building quality, building safety, and required insurance. This means the Ninth Ward need not remain empty. Once the current ruined structures are razed, governmental authorities should make it possible for entrepreneurs to put up less-expensive buildings. Many of these will be serviceable, but not all will be pretty. We could call them structures with expected lives of less than 50 years. Or we could call them shacks.
…To be sure, the shantytowns could bring socioeconomic costs. Yet crime, lack of safety, and racial tension were all features of New Orleans ex ante. The city has long thrived as more dangerous than average, more multicultural than average, and more precarious than average for the United States. And people who decide the cheap housing isn’t safe enough will be free to look elsewhere—or remain in Utah with their insurance checks.
Shantytowns might well be more creative than a dead city core. Some of the best Brazilian music came from the favelas of Salvador and Rio. The slums of Kingston, Jamaica, bred reggae. New Orleans experienced its greatest cultural blossoming in the early 20th century, when it was full of shanties. Low rents make it possible to live on a shoestring, while the population density blends cultural influences. Cheap real estate could make the city a desirable place for struggling artists to live. The cultural heyday of New Orleans lies in the past. Katrina rebuilding gives the city a chance to become an innovator once again.

And I’ll add something I didn’t at E.Klein’s post. And this is that throughout recorded history the life of the mind was seen to be in conflict with the search for gelt, perhaps a necessary productive conflict but a conflict nonetheless. The pathetic stupidy of Cowen and others like him is to in an act of will, twist a realist understanding of human behavior into a utopian one. It’s not only that his recipe for a new New Orleans shows a ridiculously simplistic understanding of human behavior, it’s that even assuming otherwise, the cruelty his program requires is elided (if that’s even the word) with happy talk. Tyler Cowen’s is truly Autistic Economics

This of course goes back to this recent discussion of “reason” and society.

Over the long term wages track productivity (or did until early 00’s), real rates of return are constant and factor shares are constant

but “real rates of return are constant” is close to a tautology here; rates of return on what?!??!

Darryl Pinkney in this weeks NYRB:
“Art is what black people had instead of freedom, Ellison once said”

If I don’t trust Panglossian logic, I don’t trust Malthusian logic either. And what am I to say of those who sell the later as the former? As with Franco Moretti, who would also like to think that his asocial analysis of social activity has some sort of “universal” value, as if his own writings were not themselves “social activity” and therefore bounded by contemporary forms of language. This is where the modernist dream of the irrelevance of history ends up: John Holbo writing about Zizek while lounging in Singapore.
It’s a joke.
Pretending you’re in control, when history has made you irrelevant.

I wonder (and I do so consistently) at the ability of people to respond to complex ethical and moral questions with claims of technical proficiency. In Tyler Cowen such claims result in a sensibility that is almost Eichmanesque.

The moral seriousness of political realism comes not from the understanding that idealism is wrong in any absolute sense but that it is mistaken in a temporal one. It’s not a question therefore of keeping your hands clean but of knowing how and when they become dirty. Realism is not a technical philosophy: one can be a realist and wish that it were not necessary. A classical economist could teach his or her children that the acquisition of wealth was less than noble, but that you need to protect yourself. This again is not technical, only the ideology of optimism, (another temporal rather than absolute category) has made it so. The discussion of John Quiggin’s post on heterodoxy are interesting.

You consider my non-technical comments personal, “meta” and therefore uninteresting, but all I’m doing is contexualizing what others have said. If you don’t like the context you should take it up with them.

I supppose we can end this up here.
But if no one responded to my comments on Cowen, I’d like to think that’s because there isn’t one to make.

Another person who conflates realism and idealism. It’s the realist in you that hates Chomsky, Mr DeLong, and the idealist who’s left to find an explanation.
Life is conflict.

If you’re going to play the wise-ass here then you should at least back it up with something. Talk me about the brilliance of Tyler Cowen.

I think you mean Jon Elster, not David.

Actually, no I was thinking of Buddy Roemer, or Randy Cohen.

Actually I found your point a little bizarre, which maybe why my response was a little weak.

Okay, I’ll have to remember use that one next time I say something silly.

Not more simply, differently.

Not true. They are both simpler and different, as I’m sure you would agree if you thought about it for a second. For the last time, it really isn’t a powerful criticism, nor is it news, merely to point out that idealised economic agents “behave very differently to real human beings”.

Engels, I think you’re missing the point. There are many paths to truth and hey, we don’t even know if some possible paths aren’t dead ends. It takes considerable amount of time and effort just to keep up with all the newest research in one’s field. Nothing about stupidity or laziness there.

Notsneaky engages with heterodox ideas about 100 times more than his fellow economists.