In a really quite lovely essay, James Galbraith names some of the people who got it right (or at least, less drastically wrong), while pointing out that in many ways, the much-vaunted “freshwater/saltwater” divide is a dialogue between Tweedledum and Tweedledee. I don’t think that’s entirely fair, as with regard to stimulus policy there are clear differences between the New Classicals and the New Keynesians, and it’s clear that Tweedledee is right and Tweddledum is making obviously mathematically inconsistent statements. But the central point is exactly right that an important practical consequence of shutting out heterodoxy was that rather than having a few people to point to who predicted the crisis, the economic profession was left claiming that its true triumph was to be able to explain exactly why economists had been unable to predict it.
And of course, the old Peter Cook line has never been so relevant as it is to the economics profession now (“Sir Arthur, do you feel you have learned from your mistakes?” “Yes, and I’m confident that I could repeat them exactly”). All the people cited in James’ essay are exactly as far away from the mainstream of economics as they were three years ago, and field reports from the American Economic Association meetings suggest that it’s back to business as usual. I asked a while ago in comments to this post whether ” after this experience, can the Berkeley/Princeton/Obama economists ever really go back to a state of polite terms with the people who have done this to them?”, but apparently they can.
As I said in that linked post, the production of more or less mendacious intellectual smokescreens for policies which favour the interests of rich and powerful men isn’t a sort of industrial pollution from the modern economics profession – it’s the product. James finds a quotation from Keynes saying more or less the same thing much more eloquently and explains why it is that “zombie” economic ideas, in the sense of John’s book title, are so difficult to kill:
It must have been due to a complex of suitabilities in the doctrine to the environment into which it was projected. That it reached conclusions quite different from what the ordinary uninstructed person would expect added, I suppose, to its intellectual prestige. That its teaching, translated into practice, was austere and often unpalatable, lent it virtue. That it was adapted to carry a vast and logical superstructure, gave it beauty. That it could explain much social injustice and apparent cruelty as an inevitable incident in the scheme of progress, and the attempt to change such things as likely on the whole to do more harm than good, commended it to authority. That it afforded a measure of justification to the free activities of the individual capitalist, attracted to it the support of the dominant social force behind authority.
Anyway, read the whole thing. Happy New Year.