Paul Krugman’s recent columns, responding in various ways to JM Keynes, Michal Kalecki and Mike Konczal have made interesting reading, signalling a marked shift to the left both on economic theory and on issues of political economy.1 Among the critical points he has made
Endorsement of Kalecki’s argument (which he got via Konczal) that “hatred for Keynesian economics has less to do with the notion that unemployment isn’t a proper subject of policy than about the notion of shifting power over the economy’s destiny away from big business and toward elected officials.”
Rejection of the Hicks-Samuelson synthesis of Keynesian macroeconomics and neoclassical microeconomics and advocacy of (at a minimum) comprehensive financial controls
Abandonment of the idea that the economics profession is engaged in honest intellectual debate, in favor of the conclusion that the rightwing of the profession, including leading economists, is characterized by denialism and bad faith. As he says, while many economists would like to believe otherwise ” you go to economic debates with the profession you have, not the profession you want.”
I accidentally posted this before completing what I meant to write, which anticipates a few comments I already made. So, I’ll add some more points, updating as I go.
First, as with most intellectual shifts, it is hard, and not particularly helpful to assign a precise date. These themes have been evident for a while, but for me at least, this is the first time the points have been made so clearly.
Second, while Kalecki’s article is getting new attention, it’s not all that obscure. Among my first ever publications in the 1970s (in a long-lost magazine) was a piece citing him on the way in which “business confidence” had been restored to pride of place by the abandonment of Keynesian stabilization.
Third, Krugman is certainly going to upset plenty of people in the econ profession with this. But as with most partisan debates in recent decades, it’s a case of sauce for the gander. The public choice school has routinely represented economic arguments for government intervention as the product of rent-seeking by interest groups, and the economists who make such arguments as pawns or hirelings of these groups.
Still, this marks a striking shift in macroeconomics, where only five years ago, the leading figures were congratulating themselves on the convergence between saltwater and freshwater schools, under the banner of dynamic stochastic general equilibrium. As I argued in Zombie Economics, it’s precisely the centre ground of convergence that has been rendered most thoroughly untenable by the crisis. Yet that is still where the majority of academic work being published in journals is grounded.