Neoliberalism was always a global project. (Is there a whole literature on Latin America I am missing?)
Markets are not natural, but a society organized around such must be created by a system of laws, along with instilling a "common sense" in the population so governed.
Neoliberalism must be accompanied by control on or limitations of democracy.
The development of neoliberalism was funded by extremely wealthy individuals around the world, who sought to prevent their project from receiving public scrutiny.
Those academics funded to develop apologetics and guidance were always interdisciplinary, including those specializing in law and international relations, as well as in economics.
The literature also contains disagreements, including what institutions, groups, and individuals to emphasize in telling the story of the project of imposing neoliberalism on the world.
Anthony Giddens, in The Third Way: The Renewal of Social Democracy (1999), advocates a renewed social democracy. He contrasts what he is advocating with neoliberalism,
which he summarizes as, basically, Margaret Thatcher's approach. Giddens recognizes that more flexible labor
markets will not bring full employment and argues that unregulated globalism, including unregulated international
financial markets, is a danger that must be addressed. He stresses the importance of environmental issues, on all
levels from the personal to international. I wish he had something to say about labor unions, which I
thought had an institutionalized role in the Labour Party, before Blair and Brown's "new labour" movement.
Charles Peters had a A Neo-Liberal's Manifesto in 1982. (See also 1983 piece in Washington Monthly.) This was directed
to the Democratic Party in the USA. It argues that they should reject the approach of the New Deal and the Great
Society. Rather, they should put greater reliance on market solutions for progressive ends. I do not think Peters
was aware that the term "neoliberalism" was already taken. Contrasting and comparing other uses with Peters' could
occupy much time.
Anyways, neoliberalism is something more specific than any centrist political philosophy, between socialist central
planning and reactionary ethnic nationalism. George Monbiot has some short,
popularaccounts.
Read Noah Smith
if you want confusion, incoherence, and ignorance, including ignorance of the literature.
I try here to outline certain postmodern1 doctrines that, in a full development, might result in one using obscure terminology. None of this is to say that every postmodern writer using polysyllabic terminology is expressing complicated ideas in the most effective way. Nor do I want to argue that it is impossible to ever write clearly2 about (some subset) of these ideas.
People have a tendency towards reification3, towards talking as if certain abstract ideas are concrete realities. For example, they might tend to confuse relationships between people with relationships between things4. And people tend to think dualistically, or at least to categorize things into pre-existing categories. And with dividing things into two categories, one may tend to elevate one over the other, or to define the inferior in terms of the negation of the properties of the superior5. One might think that these confusions become embedded in our language6. It is not as if we have access to a language appropriate for a "view from nowhere", where nature is carved at its joints7.
Furthermore, current classifications and fundamental ideas embodied in current language have a history; our current language does not reflect how people always thought. In looking at past patterns of language and governance, one should try not to read our current way of thinking into the past8.
One might also think current classifications have a functional relationship to class structure, hegemonic9 ethnicities, patriarchal relationships, or whatever10.
I have deliberately been abstract here. But, I suppose, I might mention some examples. In economics, I think one is confused if one looks at capitalism as catallaxy, that is, purely in terms of market relationships, in which all parties are free. Furthermore, many things have been said to be socially constructed. I think here of money11, race12, gender13, and sex14.
In fully trying to explicate these ideas, one can be expected to struggle with bewitchments brought about by language. One might look for multivocalities in past texts. How have current suppositions been read into them? How might they be read from a subaltern position? How might language be expanded so as not to deny normalcy to currently marginalized groups? So reasons exist why academics thinking along postmodern trends might express themselves obscurely.
The above is not to say that these ideas cannot be criticized15.
Update (21 December 2015):
Am I agreeing or disaggreeing with what Robert Paul Wolff says here?
Noah Smith has a knee-jerk reaction to postmodernism.
The blogger with the pseudonym "Lord Keynes" has oftencomplained about left-leaning postmoderns.
Footnotes
For purposes of this post, I do not distinguish between deconstruction, post structuralism, various trends in the social studies of science, etc.
Richard Rorty is an example of a postmodern philosopher known for clear - but not necessarily easy - writing.
The popularity of the term "reification", in postmodern discourse, comes from Georg Lukás.
This is how Marx defined commodity fetishism.
I am thinking of how Simone de Beauvoir, early in The Second Sex, describes women being defined as the Other.
Here I point to Ludwig Wittgenstein's later work, unpublished in his lifetime.
I guess this relates to Jacques Derrida's claim, "There is no outside the text."
Michel Foucault, in particular, offers provocative studies of changing European thought in the classical age, between the Renaissance and the nineteenth century.
The popularity of the term "hegemony", in postmodern discourse, comes from Antonio Gramsci.
As Marx said, "The ruling ideas are the ideas of the ruling classes."
This is an example of how something can both be socially constructed and real. Obviously, money has quite real effects in modern societies.
Think of the use of the words "Black" and "Colored" in South Africa and in the USA. In the former, they are not synonyms, while among older Americans of a certain sort, they are.
I gather Judith Butler originated the concept of gender as performative.
Judith Butler also questions whether sex is necessarily a biological division. People might be classified based on chromosomes, hormones, genitalia, and secondary sex characteristics. More than two categories exist in many of these classifications, and they do not always line up. Philip Mirowski observes somewhere that, for the International Olympic Committee (and the International Association of Athletics Federations), these classifications are a quite practical issue. After all, they are structured to find exceptional humans.
For explicit references below, I only give critiques. I am sympathetic to the idea that the popularity of postmodernism among academics was connected to an inability to successfully improve material conditions for many.
References
Samir Amin (1998). Spectres of Capitalism: A Critique of Current Intellectual Fashions, Monthly Review Press.
Terry Eagleton (1996). The Illusions of Postmodernism, Blackwell.
I am of the opinion that talk of more or less government intervention in markets is incoherent in, for example, the United States today. It is not as if some configuration of property rights, contract law independent of the state, corporations with limited liability, and markets of various types are all natural constructs, existing prior to all human interventions. I have gone on aboutthisbefore. I might also note Philip Mirowski's view that sophisticated neoliberals recognize that a capitalist market order must be constructed; it does not come about naturally. I do not know that he would now think that all those in, for example, think tanks inhabiting the outer layers of the russian doll structures that neoliberals have build for propagandizing would recognize the role of government in constructing a market order.
Anyways, I have recently stumbled on Antonio Gramsci making a closely related point:
"The ideas of the Free Trade movement are based on a theoretical error whose practical origin is not hard to identify; they are based on a distinction between political society and civil society, which is made into and presented as an organic one, whereas in fact it is merely methodological. Thus it is asserted that economic activity belongs to civil society, and that the State must not intervene to regulate it. But since in actual reality civil society and State are one and the same, it must be made clear that laissez-faire too is a form of state 'regulation', introduced and maintained by legislative and coercive means. It is a deliberate policy, conscious of its own ends, and not the spontaneous, automatic expression of economic facts. Consequently, laissez-faire liberalism is a political programme, designed to change - in so far as it is victorious - a State's leading personnel, and to change the economic programme of the State itself - in other words the distribution of the national income."
-- Antonio Gramsci, Prison Notebooks, "The Modern Prince", Some Theoretical and Practical Aspects of 'Economism'
Given the current conjuncture in, say, the United States, that bit about income distribution is of contemporary relevance. I think a study comparing and contrasting the ideas of Michel Foucault and Antonio Gramsci on how ideas become dominant in society would be interesting to read.
Figure 1: Paul Krugman And Bill O'Reilly Talk To Tim Russert
"My problem was ... to pose the question, 'How is it that at certain moments and in certain orders of knowledge, there are these sudden take-offs, these hastenings of evolution, these transformations which fail to correspond to the calm, continuist image that is normally accredited?' But the important thing here is not that such changes can be rapid and extensive or, rather, it is that this extent and rapidity are only the sign of something else - a modification in the rules of formation of statements which are accepted as scientifically true. Thus, it is not a change of content (refutation of old errors, recovery of old truths), nor is it a change of theoretical form (renewal of a paradigm, modification of systematic ensembles). It is a question of what governs statements, and the way in which they govern each other so as to constitute a set of propositions that are scientifically acceptable and, hence, capable of being verified or falsified by scientific procedures. In short, there is a problem of the regime, the politics of the scientific statement. At this level, it's not so much a matter of knowing what external power imposes itself on science as of what effects of power circulate among scientific statements, what constitutes, as it were, their internal regime of power, and how and why at certain moments that regime undergoes a global modification.
It was these different regimes that I tried to identify in The Order of Things, all the while making it clear that I wasn't trying for the moment to explain them, and that it would be necessary to try to do this in a subsequent work. But what was lacking here was the problem of the 'discursive regime', of the effects of power peculiar to the play of statements. I confused this too much with systematicity, theoretical form, or something like a paradigm. This same central problem of power, which at that time I had not yet properly isolated, emerges in two very different aspects at the point of junction of Madness and Civilization and The Order of Things." -- Michel Foucault, "Truth and Power", reprinted in The Chomsky-Foucault Debate: On Human Nature, The New Press (2006), pp. 144-145.
I do not know that I understand Michel Foucault, and I have not read much that he wrote towards the end of his life. I had thought Foucault's discursive formations were to be grouped with Thomas Kuhn's paradigms and Imre Lakatos's scientific research program. To me, economics is like medicine, psychiatry, and penology. It fits in well with the disciplines that Foucault analyses. Superficially, the epistemic status of these disciplines is more questionable than a hard science. And they have been used to help nation states categorize, partition, and rule their subjects since, say, the eighteenth century. But I want to drop talk of science for now. I look at a concrete example to help me understand what Foucault might mean when he talks about government, power, the political economy of the sign, a discursive regime, and politics. Doubtless, I will miss many, many nuances here.
You can see many commentators and supposed experts in the media, although, for many, I am none too clear in what area they are expert. (I have in mind such people as Rush Limbaugh, Bill O'Reilly, and even Wolf Blitzer and Thomas Friedman.) Many write best-selling books. A book store will classify them, when they come out, in a section labeled "current events". I suppose libraries will put them somewhere in social sciences. People with the sort of media presence I have in mind can be said to benefit from a sort of power for their statements. From an analytical point of view, you might know a drunk at the end of your local bar who is more worth listening to. Yet these commentators react to one another, take each other seriously, and end up having effects on laws that are passed. At least one kind of power circulates among their statements, a power that is not easily available to those taking their own way at your local.
Foucault also writes about power being productive, not solely a matter of prohibitions. How does the above clip illustrate this theme? Those who have power circulating their statements can sometimes dismiss others as living in a "fantasy world". But I think the power we see in right wing commentators in America extends to individuals in communities across the country. You can find many who think they keep informed by watching TV news. And they will have conversations with one another, maybe conversations that you could not participate in without being seen as rude, dismissive, and condescending. Some of these people might even participate in governing your community by participating in, say, the school board, the city council, or state government. Within such groups, you might find an intellectual who has read, for example, Hayek's Road to Serfdom on Glenn Beck's recommendation. So this power I am vaguely pointing at helps form local communities, as well as national discourse.
I consider Krugman to be at a different level of seriousness than the other two people in the above clip. Still these questions arise for him. What power gets his statements listened to and to circulate widely? It would be a mistake to classify his statements solely as part of the academic discipline of economics. For example, his newspaper columns about the Iraq war do not have much to do with economics. And a regime in which he occupies the acceptable left wing of the public face of economics seems quite limiting to me. When Krugman debates Keen through their blogs, it seems clear who is doing the other more of a favor to acknowledge the existence of the other's work, whatever you make think of the outcome of that debate.
I trust that one can see that in merely acknowledging the existence of political power that allows Krugman's statements to circulate, I am not thereby criticizing their content or what Krugman does with this non-personal power. In fact, I think Krugman has quite often acknowledged the power of his platforms and talked about how that influences his topics. As far as I know, he does not read Foucault. (Has not Brad DeLong written a bit on Foucault?) I am not sure what Krugman has said about his willingness to participate in the sort of hurlyburly babble seen in the above clip, other than that he sometimes has a book to promote. I suppose the bit where he leans back and rolls his eyes at the ceiling is comment enough on his particular antagonist there. I think Krugman would even be receptive to claims about the lack of agency of the author. He is rarely as forthright as in the above clip about calling a lie, "a lie". And he knows that his conventions do not allow him to comment on nonsense spouted by his fellow columnists, except very elliptically.
By the way, the video clip above is not directly from a major network. Apparently, it was put on YouTube with annotations added by Jim Gilliam. And, of course, I do not claim the power of those you might see babbling on your television.
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'sFallacy. 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 haveposted 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,
Like D-Squared, I'm dubious about some responses to continential philosophy, cultural criticism as put forth by the Frankfort school, post-structuralism, deconstruction, and other doctrines to which Alan Sokal might object. I feel that there are many blog posts and blogs that show more understanding of this stuff than I can.
I generally get whatever understanding I have of anti-foundationalism from Wittgenstein, analytical philosophers like Goodman, Putnam, American pragmatism, and even Rorty. I am not at all sure that these views are needed to effect social change. Nor do I take them as tied in necessarily with any very radical views. This may because in my random reading, I have read a limited amount of Rorty.
I am amused that this latest go around concentrates on Zizek. I havequotedbits from Zizek here before. My general impression of Zizek is that he is amusing. I feel that I am following along when I read him, but I distrust my ability to summarize what he is saying. Except, strangely enough, I think I can give some impression of his views on Lenin, if I felt like it.
I realize that not all these "post-modern" writers are doing the same thing. I think I'd get more out of my copy of one of Baudrillard's books if I hollowed it out and used it to store valuables.
I don't think I got much out of the extremely limited amount of Derrida that I have read. (I also like some of the Austin and Searle I have read - in the case of Searle, I also attended a guest lecture where he expounded his well-practiced views on strong AI.) I think I'd like to understand Foucault better, even though he can write a long time on sex without it coming close to being a turn-on.
I am interested in the history of ideas. I see the point of telling a history forward. In this case, the participants in the story may both point at measures of what they take to be the outside world as an argument for contending views. I can see the point of bracketing out how we have come to understand the world in trying to understand what participants in the story found convincing. I take this to be the strong program.
And I also understand that divisions between academic subjects, genres, etc. are not given. How some of us might group texts today may be very different from how others elsewhere and elsewhen grouped the same texts. Furthermore, on what time-scale continuity and discontinuity occurs may vary with how you look at texts. I take this to be part of Foucault's point in talking about "discursive formations."
Selected References
Jean Baudrillard (1994). Simulacra and Simulation (Trans. by Sheila Faria Glaser), University of Michigan Press
Fernand Braudel (1967). Capitalism and Material Life: 1400-1800 (Trans. by Miriam Kochan), Harper Colophon
Jacques Derrida (1988). Limited, Inc. (Trans. by Samuel Weber), Northwestern University Press
Michel Foucault (1972). The Archaeology of Knowledge (Trans. by A. M. Sheridan Smith), New York: Pantheon Books
Richard Rorty (1991). Objectivism, Relativism, and Truth: Philosophical Papers, Volume 1, Cambridge University Press
Ricard Rorty (1998). Achieving Our Country: Leftist Thought in Twentieth-Century America, Harvard University Press
"Would you agree with the following statement? '[Economists] should take credit for the deteriorating quality of existence. For it is their philistine notions of personal and national welfare that have helped to ruin the natural world; confused technology with culture; reduced art to money, time to interest, sexual relations to pornography, friendship to advantage, and liberty to shopping, and wasted whole generations who, because they have only been taught to think in categories of money, have, in Schopenhauer's phrase, "missed the purpose of existence".'
If so, you'd have plenty of company...
...What is truly bizarre about this persistent and frequent set of claims - economics ignores or over-simplifies reality, is based on a false conception of human nature, is only about money, thinks the world operates like a machine - is how untrue it is. Those who make the claims haven't been reading any of the economics published since about 1980. The caricature never represented reality all that accurately, but a whole generation of research has made it completely unrecognisable..." -- Diane Coyle (2007). "Economics, the Soulful Science"
What "whole generation of research" is Diane Coyle talking about? Presumably it would include literature making claims like the following:
"One thing we have learned for sure as a consequence of this programme of research is that [Expected Utility Theory] is descriptively false. Mountains of experimental evidence reveal systematic (i.e., predictable, not random) violations of the axioms of EUT, and the more we look, the more we find. This is not good news for the general economist, but there it is." - Chris Starmer (1999). "Experimental Economics: Hard Science or Wasteful Tinkering?", Economic Journal, V. 109, N. 453 (February): F5-F15
Somebody who is concerned to comment on the notion that economists "think the world operates like a machine" and emphasizes literature since, say, 1980 surely has read Philip Mirowski. (I'm fairly sure Deidre McCloskey and Paul Ormerod have, for example.) And I know Mirowski has read, for example, Starmer.
Mirowski is always quotable. Here are some quotations from one Mirowski essay:
"Because I am not a product of a successful socialization into the economics profession, lots of things that economists say strike me as funny. The idea we are paid according to our marginal productivity, for instance, rocks me as risible; the tendency to suggest the economy 'overheats' is a richly wrought satire. The doctrine that the market maximizes the freedom of a set of agents identical in all relevant respects is a joke worthy of Nietzsche...
...Asking me now to write on how I feel about economics journals is like asking a lamppost to write a memoir on dogs...
...when I read a particular economist's advocacy of regarding children as consumer goods, or another insists that Third World countries should be dumping grounds for toxic industrial wastes since life is cheap there, or a third proclaims that no sound economist would oppose NAFTA, or a fourth asserts confidently that some price completely reflects all relevant underlying fundamentals in the market, or a fifth pronounces imperiously that no credible theorist could recommend anything but a Nash equilibrium as the very essence of rationality in a solution concept, I do not view this as an occasion to dispute the validity of the assumptions of their 'models'; rather, for me, it is a clarion call to excavate the archaeology of knowledge which allows such classes of statements to pass muster, as a prelude to understanding what moral presuppositions I must evidently hold, given that I find them deeply disturbing..." - Philip Mirowski (1997). "Confessions of an Aging Enfant Terrible"
Mainstream economists proceed by ignoring that much of what they say has long been shown to be false. A theme of this blog is to point out or to explain some of these demonstrations. This theme raises a question: how is it that "leaders" of economic orthodoxy can just ignore these demonstrations? Perhaps I should be studying up on Friedrich Nietzsche and Michel Foucault.
Part of what prompted me to write this post is the nonsense Greg Mankiw writes. In the (indirectly) linked paper, he writes:
As a result of the three waves of new classical economics, the field of macroeconomics became increasingly rigorous and increasingly tied to the tools of microeconomics. The real business cycle models were specific, dynamic examples of Arrow-Debreu general equilibrium theory. Indeed, this was one of their main selling points.
Why pretend new classical macroeconomists are scientists putting their field on rigorous microfoundations? Doesn't Mankiw know about Alan Kirman's championing of the Sonnenschein-Mantel-Debreu results to point out that representative agent models do not have microfoundations? Or, for that matter, of Hahn's work on the difficulties of introducing money into General Equilibrium theory? Is Mankiw aware that Hahn later teamed up with Solow to write an essay on modern macroeconomics? (Contrary to what one may read in Mankiw, Solow's rebuttal to new classical macroeconomics doesn't consist solely of jokes at Lucas' expense.) These questions don't even get at my favorite literature on the Cambridge Capital Controversy. Does Mankiw, who has written a popular textbook, have the power to have his colleagues just pretend whole literatures do not exist?
Greg Mankiw follows up by illustrating my point with a comment about experimental economics. He cites Vernon Smith's work in experimental economics to assert the scientific nature of economics. Somehow he ignores Smith's fellow "nobel" laureate Daniel Kahneman. And yet experimental economists have shown that Kahneman and Tversky's prospect theory is superior to utility theory in providing a description of how individuals behave.
Not only is the neoclassical theory of the consumer empirically lacking. So is the neoclassical theory of the firm. Steve Keen likes empirical results going back to Hall and Hitch's 1930s work. They show that firms engage in some sort of administrative, full-cost, or markup pricing. Modern industrial corporations do not engage in marginal pricing. So do your microeconomic textbooks teach false theories here too with no indication of alternatives?
Posts
