Presumably alex is referring to work surveyed in such articles as:

Colin F. Camerer (2007). “Neuroeconomics: Using Neuroscience to Make Economic Predictions”, Economic Journal, V. 117 (Mar): C26-C42.

Chris Starmer (1999). “Experimental Economics: Hard Science or Wasteful Tinkering?, Economic Journal, V. 109, N. 453 (Feb): F5-F15

Similarly, I have great difficulty imagining a feasible set of experiments in cognitive neuroscience (which is actually a proper natural science with all experiments an stuff) which could pretty conclusively demonstrate that the rational expectations hypothesis is berserkly stupid. It’s certainly true that impressive individual irrationalities exist and don’t necessarily average out into something more nearly rational. They can even perversely end up blowing up into big irrationalities like speculative bubbles. And the properties of individual minds, and of the collective behavior of interacting actors, are enormously important, so this sounds like vitally important work, and not just in economics. And if someone has pretty conclusively demonstrated that the perversities must consistently dominate overwhelmingly in real-world economic situations, that seems like incredibly great work, unbelievably far beyond the state of the art of psychological understanding of the individual brain, of understanding of economics in general and the flow of information in particular, and of understanding of the mathematics of stability of systems. So could you elaborate? It’s not reasonable to expect any of us to be such supergeniuses we can fill in the technical details by ourselves, and now that publication lags for amazing stories have become so much shorter, presumably unlike Harold Hill you haven’t forgotten the technical contact details of your high-powered scientific buddies before publication.

Yes, but that’s because after Hayek and Von Mises they got… Rothbard. So it’s not like it’s entirely undeserved in this case.

It’s as if physicists were to discover that in fact, the speed of light is variable, but continue to maintain that the rest of the standard model is just as good as it ever was.

There’s a specter haunting neoclassical economics. Not the specter of Communism, but the specter of Ptolemy. Stiglitz seems to have begun to realize this. The Ptolemaic theory and (more broadly) scholasticism were solidly institutionalized, and scholasticism hung on well into the sisteenth century—three centuries after it quit producing anything of much interest. (Here’s Wiki’s scholastics 1350—1650: Gregory of Rimini, Thomas Cardinal Cajetan, Francisco de Vitoria, Francisco Suarez, Leonardus Lessius, Cesare Cremonini.)

This is not to say that the late scholastics wrote nothing of any interest or value at all. Suarez was the theoretician of Guy Fawkes’ “Gunpowder Plot”, and performed a great service for future anarchists and assassins.

Ah well, there’s your problem. If you’re only looking at mild dissidents, it’s hardly surprising that they are pretty timid. :)

There is a polarising tendency in debate. To maintain a naunced position I find takes serious energy and attention to detail. For example I once set about arguing in a debate on a Jane Austen-dedicated board, that Willoughby did really care for Marianne, he wasn’t just faking it. I had to devote massive amounts of space and time to specifying that I was not arguing that Willoughby loved Marianne, and that I was not arguing that his feelings were worthy of being called love in any philosophical sense. People, in arguments, have a tendency to fill in the other person’s side based on some caricature, I know I tend to do it myself if I’m not extremely careful. To resist this and to insist on being read as having a more nuanced view than the most wild-eyed lunatic your debating opponent has ever encountered means spending a lot of time saying that you are not arguing whatever the wild-eyed lunatics argue.

It’s easy to be nice to the big names of the previous age; the trick is to venerate them as wise but essentially (and sadly) irrelevant predecessors while slagging off the modern-day inheritors of their tradition as kooks, dead-enders and unable to cope with the rigor of “real” economics (the Austrians can of course tell you all about this; the combination of venerating Hayek and vilifying Hayekians is pretty much par for the course, Krugman in the 90s being a particularly egregious case).

It’s also hard to square this nicey-nicey version of history with the facts about the institutional survival rate of development economics departments and programs. Somebody was certainly going around saying that development economics wasn’t real economics and that its grant money ought to be switched to something else, and the “follow the money” rule certainly points toward rational expectations theorists.

Ok, don’t do it again.

And Chicago was never as monolithic ideologically or methodologically as people made/make it out to be. I guess I see Lucas’ “departure” as less of a departure. It was good economics and that’s what mattered.

Also, if you read the original Lucas speech – the whole “the implications of growth are staggering” bit – you see him pay ample homage to the predecessors. Even the model associated with him is known as the Uzawa-Lucas model. Uzawa published in 1965 and good part of the reason his name is in there is because Lucas has always been very good about acknowledging the predecessors (same applies with Muth and Rational Expectations).

Hence it was somewhat of a setting of a bold new direction for Lucas to have built a theory of growth build on market failure and external returns to scale. Chicago’s Kevin Murphy shortly after joined Shleifer and Vishny to formalize Rodenstein-Rodan. So no doubt the ideas of high-development theorists were making a comeback.

I’m not interested in re-hashing a version of the debate over whether ‘heterodox’ economists are tolerated or not (smart heterodox economists who can formalize ideas in models have always been tolerated and often celebrated—even though I’m quite certain Chicago was not the place they went to camp out).
My point was mainly that Lucas’ contribution to this field was not so much one of seminal ideas (as suggested by this essay), as much as those of formalizing, popularizing and hence making the topic interesting and hot for a new PhD to work in (e.g. Paul Romer was a Chicago PhD).

Can you give an example where a prominent “mainstream economist” belittled and ridiculed Rosenstein-Rodan, Hirschman, Scitovsky or any others? The general feeling – before IO got really underway in early 80’s – was “it may be true but it’s hard to model”. Which means that perhaps it was ignored, but it doesn’t mean it was ridiculed.

Austrians aren’t economists—they’ve been expelled. Neither are Marxists. Sorry, guys.

I was talking only about “mildly dissident economists” within the profession, who aren’t devout neo-classicals but want to introduce some changes. They’re pretty timid. I didn’t express myself clearly.