Necessarily the only way? And everyone will cooperate effectively to achieve it because everyone will agree with you about that even down to all the gritty details?

It seems reasonable for Drezner to look for more consideration of incentives than this. He can’t reasonably expect you to slavishly follow his house style of analysis of incentives, or anything like that: an interesting alternative would be a crushing counterattack against thinking in the shallow Federalist Papers tradition when history has long been understood to show no useful pattern of organizations following analyzable incentives. But whatever argument you choose to make, his point deserves a more serious reply. Even if the exclamation point had been conveniently available for use in the 18th century, it wouldn’t’ve been enough to predict the Constitution going down in flames “because rich and poor and north and south can all see that cooperating effectively against ratification is the only way that they can sustain the type of Confederation that actually benefits them!”

“Something that advances your interest is incentive compatible, no?” I’m no expert, but I will guess that for at least one commonly used definition the answer is “no.” Even just lumping individual interests together through voting mechanisms seems to make questions like that quite tricky. And the real world is complicated by other things, too, like the limited rationality of actors. (You may have noticed that even though now that you have demonstrated that yours the only way to sustain the kind of globalization that benefits them, not everyone has internalized it yet.:-)

Right. As I suggested in response to Henry’s kick-off post, these seminars would generate much better discussions if they were spread out over a week instead of being posted all at once.

It strikes me that Hodgson’s “How Economics Forgot History” and Dennis Wrong’s “The Persistence of the Particular” are relevant here, at least for someone who is less interested in remaining within the orthodoxy.

I don’t think it does – or at least, not to anyone except a neoclassical economist (hence my crack about neoclassical economics as being only useful as a means of communicating with neoclassical economists). As I said in my piece, I think that even thinking about distortions and reforms in terms of shadow prices is potentially misleading, and thinking in terms of those shadow prices as Lagrange multipliers encourages a mental model of the economy that isn’t actually very realistic.

The institutional search for “what we should do in practice” is actually very clear and doesn’t need clarifying. The fact that it needs to be forced into a particular means of expression in order to convince economists who have been trained a certain way, just means that we need to stop training economists that way.