Saturday, June 21, 2008

Brouhaha Over Marglin

I have been thinking about whether I want to read Stephen Marglin's new book, The Dismal Science: How Thinking Like an Economist Undermines Community. It sounds to me too much like Duncan Foley's recent book, Adam's Fallacy. A couple of reviews of Marglin's book are now available. Deirdre McCloskey has a generally positive review in the 27 March issue of the Times Higher Education. E. Roy Weintraub has a negative review in Science.

A couple of bloggers have posted on Weintraub's review. I find these posts fairly useless for clarifying either Marglin or Weintraub's perspective.

Brad DeLong comments on Weintraub's review, too. DeLong uses a German term that is not in my vocabulary:
"The gemeinschaft that is the professional community of Ivy League economists in which Marglin has been embedded for the past forty years has not treated him with 'reciprocity, altruism, and mutual obligation' but has--rather--in a very gemeinschaftlich way done what gemeinschaften traditionally do to corral their deviant members and to discourage others from imitating them. It has not been pretty.

But it seems to have had no effect on Marglin's thinking, none at all, for reasons I do not understand." -- Brad DeLong
I've had something to say about the ugliness in Harvard's economics department. Some highlights: Harvard denied tenure to those among Marglin's colleagues who could provide useful feedback on his ideas. I doubt very few in the Harvard department have anything useful to say about Marglin's ideas on unemployment and inflation, some of which he developed in collaboration with Amit Bhaduri. More recently, Harvard has refused to let Marglin to teach a section of the intro course for credit as a prerequisite and as a counter to Mankiw's lies.

Weintraub is part of a trend in the history of ideas that tends to see more discontinuities and at a lower level than previously:
"in the disciplines that we call the history of ideas, the history of science, the history of philosophy the history of thought, and the history of literature (we can ignore their specificity for the moment), in those disciplines which, despite their names, evade very largely the work and methods of the historian, attention has been turned, on the contrary, away from vast unities like 'periods' or 'centuries' to the phenomena of rupture, of discontinuity. Beneath the great continuities of thought, beneath the solid, homogeneous manifestations of a single mind or of a collective mentality, beneath the stubborn development of a science striving to exist and to reach completion at the very outset, beneath the persistence of a particular genre, form, discipline, or theoretical activity, one is now trying to detect the incidence of interruptions. Interruptions whose status and nature vary considerably. There are the epistemological acts and thresholds described by Bachelard: they suspend the continuous accumulation of knowledge, interrupt its slow development, cut it off from its empirical origin and its original motivations, cleanse it of its imaginary complicities; they direct historical analysis away from the search for silent beginnings, and the never-ending tracing-back to the original precursors, towards the search for a new type of rationality and its various effects. There are the displacements and transformations of concepts: the analyses of G. Canguilhem may serve as models; they show that the history of a concept is not wholly and entirely that of its progressive refinement, its continuously increasing rationality, its abstraction gradient, but that of its various fields of constitution and validity, that of its successive rules of use, that of the many theoretical contexts in which it developed and matured..." -- Michel Foucault (1972) The Archaeology of Knowledge, Pantheon Books.
I do not know the historians of ideas Foucault references, but his descriptions could perhaps characterize aspects of "thick histories".

Along with embracing these standards, Weintraub thinks they should be professionalized. Historians of economics should be writing for and to the standards of historians of science. The history of economics should not to be done by dilettantes in history taking a break from their professional work as modern economists. History is not to be done by hopping from one great book to another, ignoring all the minor thinkers of the time that contextualizes the contents of each book. And the story should be told forward, without imposing on the actors in the story a desire to get to where they ended up after much stumbling. One should look for what standards evolved in the protangonists' milieus. Historians of economics should not be in the business of rating past economists by current ideas and current standards of argument.

Weintraub also doesn't like the classification of the history of economic thought as heterodox economics. For him, history is not supposed to be a morality tale. Weintraub non-judgemental approach to history raises some questions. What is the usefulness of history? Why should economists, as part of their professional training, receive any information about the history of their discipline? Should university economics departments devote any resources to studying that history? I am not providing answers to these questions here. Obviously I find Weintraub's writings of enough interest to think I can assign views to him without giving any specific citations.

Without having read Marglin's book, let me finally turn to a substantial point in Weintraub's review. I can see how one might doubt that the ideas Weintraub says are engaged by Marglin were all grown up in the nineteenth century. But I have noted how some are in embryo in J. S. Mill.

I am disappointed that Weintraub cites Coleman's book positively.

For reference, here is Weintraub's review:
"ECONOMICS: First, Kill the Economists",

"The prophet Jeremiah is alive and well and teaching economics at Harvard. It is not often that a scholar with no particular historical or philosophical expertise trashes the Western enlightenment in order to stomp on the discipline of economics as a manifestation of all that was lost in creating the modern world. Stephen A. Marglin's argument in The Dismal Science is that economics--with its focus on an individual's preferences, the freedom to engage in activities to promote his or her well-being, and the pursuit of self-interest variously construed--perverts a natural moral order: 'the foundational assumptions of economics are in my view simply the tacit assumptions of modernity. The centerpiece in both is the rational, calculating, self-interested individual with unlimited wants for whom society is the nation-state.' And what modernity shunned was 'community.'

His main line is that 'The market undermines community because it replaces personal ties of economic necessity by impersonal market transactions.... The ambivalent relationship between noneconomists and economics reflects the ambivalence with which modernity is regarded.' To be sure, sociologists deal with community, as do anthropologists, as do political scientists, and so on. But economics, for Marglin, is different: 'Economics is not only descriptive; it is not only evaluative; it is at the same time constructive--economists seek to fashion a world in the image of economic theory.' Economics and thinking like an economist are bad for the health of the world. Indeed, he closes his volume stating that 'There are many ways of resolving the tensions between individualism and holism, between self-interest and obligation to others, between algorithm and experience, between the claims of various communities on our allegiance, between material prosperity and spiritual health. Economics offers one way, but as presently constituted, economics is hobbled by an ideology in which these tensions are replaced by a set of pseudo-universals about human nature. A dismal science indeed.' The argument about the proper way to do economics is an old one. An 1832 complaint in The Eclectic Review charged the work of Thomas Malthus and David Ricardo with leading the public far from 'the true path of inquiry' and making political economy 'a hideous chain of paradoxes at apparent war with religion and humanity.' In the past century or two, we have heard this lamentation from time to time from both secular and religious figures.

In much of Europe, what we now call economics developed in order to understand various matters of business law, contracts, taxation, international trade, and project management. Issues like tariff policy and currency management were discussed by individuals who were variously lawyers, engineers, politicians, managers, and business people, and training in such expertise developed pari passu.

The professionalization of economics was a late 19th century phenomenon. Cambridge's Alfred Marshall, in attempting to construct a scientific economics, was not able to establish economics as a separate discipline until the death of Henry Sidgwick, the university's professor of moral philosophy, under whose direction lectures in political economy had been organized. In the United States at that time, economics was growing from different sources. One stream followed from individuals who had obtained Ph.D.'s in Germany, where social policy issues--labor unions, socialism, the nascent welfare state, etc.--were galvanizing the universities. But a second stream nurturing the American progressive economists grew from the social gospel movement, which sought to promote the kingdom of God on Earth through enlightened social policy and the kind of market interventions that Adam Smith in fact quite welcomed.

The kind of economics from which Marglin recoils is, however, not of the sort that was present in writings of individuals (e.g., Smith, Ricardo, John Stuart Mill, Marshall, and John Commons) who have been claimed as ancestors by modern economists. It is instead what developed in the post-World War II stabilization of economic discourse and the final professionalization of the discipline. It was during that postwar period, not in the Enlightenment, that economic science became normal in Thomas Kuhn's sense.

Marglin's account appears confused by this history. Moreover, he appears to believe that the ideas he engages and then casts aside (ideas about the economic agent, preferences, equilibrium, models, and markets) all grew up not in the 20th century but hundreds of years earlier--and that those ideas have had stable meanings ever since: 'For four hundred years, economists have been active in the enterprise of constructing the modern economy and society, both by legitimizing the market and by promoting the values, attitudes, and behaviors that make for economic success. No apology is due for this--except for the pretense of scientific detachment and neutrality and the unwillingness to confront the ideological beam in our collective eye.' The ahistoricity of such a statement is startling; for instance, it assumes wrongly that there were individuals called economists 400 years ago and that science in 1600 meant the same thing as it does in 2008.

In his critique, Marglin moves back and forth between moralizing about the loss of community and contempt for the economists' tools and models. He claims, 'By promoting market relationships, economics undermines reciprocity, altruism, and mutual obligation, and therewith the necessity of community. The very foundations of economics, by justifying the expansion of markets, lead inexorably to the weakening of community.' He complains that 'it is difficult to tell a plausible story of how individuals acquire meaningful preferences between consumption today and consumption a decade or two hence, in the way one can imagine learning about peaches today and pears today.' But is not Marglin's Harvard College teaching an instruction of the young designed to shape their preferences, especially preferences about long-term versus short-term goals?

From the first times economic arguments were parsed and markets described, there were those who found both contemptible, and this was well before the Enlightenment. Attacks on money lending at interest go back even earlier than Jesus on the temple steps. Recall Aquinas's ideas about the 'just price.' One mustn't forget Shakespeare's Shylock, either. Tax collecting for kings and emperors requires economic management skills, but no one likes to pay taxes. In a prize-winning book (1), William Coleman showed how over the centuries the very idea of economics has been loathed by left, right, and center; Christian, Jew, and anti-Semite; pope and communist dictator; lawyer and business mogul; and scientist and humanist.

In this same tradition of anti-economics, Marglin sees the future of the field as bleak, with the current generation of economics students avoiding large questions in their search for career advancement. And the problems that economics creates will only get worse, he claims, because globalization will make the national community as obsolete as the market has made the local community.

I note in closing that the lead dust-jacket blurb for this volume was provided by the noted economist and social theorist Bianca Jagger (sic). Whatever was Harvard University Press thinking?" -- E. Roy Weintraub,

11 comments:

Michael Greinecker said...

"Gemeinschaft" means something like community or confraternity.

taavi said...

Indeed. It is counterposed to gesselschaft which is a bureacratic rational corporate, logical rule-governed method of organising a group of people. DeLong is making a fairly subtle joke I think.

Robert Vienneau said...

Thanks for the explanations.

Anonymous said...

I've been dipping into the book and it is interesting. It is different from Folley's and well worth reading. It covers a lot of ground.

Last night I was reading his critique of comparative advantage, which is illustrated by suggesting a different model which takes into account that classes exist in different countries and that these will be affected differently by trade. He, rightly, notes that the standard perspective assumes that the producers in "Portugal" and "England" are self-employed when, obviously, under capitalism that is not the case.

I would probably have read more of it if I were not concentrating in writing an introduction to Kropotkin's Mutual Aid.

Iain
An Anarchist FAQ

Robert Vienneau said...

Maybe I'll eventually read Marglin's book, Iain. I happen to know that the orthodox theory of international trade is logically invalid. But it sounds like Marglin's critique is different.

Michael Greinecker said...

Why is a theory logically invalid if it works only under very specific assumptions? The theory may be empirically invalid, but that´s something else.

Anonymous said...

"Why is a theory logically invalid if it works only under very specific assumptions? The theory may be empirically invalid, but that´s something else."

What is the point of developing a theory whose very specific assumptions are utterly unrealistic? And, even worse, making policy recommendations based on a theory which does not describe reality nor could ever work in reality?

Economics seems to be little more than nice little "just-so" stories, whose conclusions, by staggering coincidence, usually happen to be exactly what the ruling elite wants to hear.

Has any (mainstream) economist ever developed a model which would explain which economic theories would survive in the marketplace of ideas, based on the supply and demand principles?

Given the evolution of economic ideas, reality often seems to reflect the most obvious conclusion -- that economists will supply theories which have utility to those with effective demand...

Iain
An Anarchist FAQ

Robert Vienneau said...

What "very specific assumptions" is Michael talking about?

One can set out HOS theory under the assumption that no capital goods are used as input into production. Then the theory is valid. But it does not have countries like China and India in its scope, let alone more developed economies.

Or one can pretend, as frequently is done, that one of the factors of production in HOS theory is capital. Then the conclusions of the theory do not follow from its assumptions. One can demonstrate this logical invalidity of the theory by setting out numerical examples. These examples should be consistent with the assumptions of the theory, but have the negation of the conclusions.

Why do mainstream economists instead of repeat mathematical mistakes exposed generations ago? Iain has an answer.

Robert Vienneau said...

Should be:

"Why do mainstream economists insist on repeating mathematical mistakes exposed generations ago? Iain has an answer."

Anonymous said...

Iain said:"whose conclusions, by staggering coincidence, usually happen to be exactly what the ruling elite wants to hear."

I am baffled by that assertion. If anything the "ruling elites" would love for more interventionist theories (or total interventionism i.e. socialism) to carry the day.

The success of neoclassical economics in acquiring adherents isn't based on self-interest. It occurred because of the failures of the alternatives to neoclassicism.

Take Brad DeLong for example. His politics are clearly quite leftist. But, why does he not believe in a more leftist economics? I sincerely doubt that is because of some deep love of methodological individualism and markets. Nor is because he hopes to service the Koch brothers.

Robert Vienneau said...

That must be a new usage of "clearly". Brad DeLong's politics are not leftist.

And (some of) my commentators are more radical than me.