Saturday, March 19, 2016

Post Keynesianism From The Outside

Post Keynesian economics has been under development for about three quarters of a century now. Academics in countries around the world have made contributions to the theory and to its application. And they have participated in many common practices of academics, including economists1.

Post Keynesians have written and published papers in peer-reviewed journals. Over this time-span, such journals include widely referenced mainstream journals, such as the American Economic Review, the Economic Journal, the Journal of Economic Literature, the Journal of Political Economy, and the Quarterly Journal of Economics2. Lately, certain specialized journals have proven more sympathetic to publishing Post Keynesians. Such journals include, for example, the Cambridge Journal of Economics, the Journal of Post Keynesian Economics, Kyklos, and the Review of Political Economy. The list suggests two other activities: the founding and editing of journals. As I understand it, Joan Robinson, among other economists now thought of as Post Keynesian, participated in the founding of the Review of Economic Studies, while the Review of Keynesian Economics is a more recent academic journal with an analogous start. The Banca Nazionale del Lavoro Quarterly Review, the Canadian Journal of Economics, and Metroeconomica are some journals, while not being specifically heterodox, I guess, had Post Keynesians as editors for some time3, 4.

Participation in professional societies, as officers, as organizers of conferences and conference sessions, and as presenters at conferences, provides another typical venue for academic activities. Naturally, Post Keynesians have performed such activities. For example, John Kenneth Galbraith was president of the American Economic Society, and the annual meeting of the Allied Social Sciences Association (ASSA), held in conjunction with the American Economics Association, regularly holds sessions dedicated to Post Keynesian topics. Recently, heterodox economics have become interested in pluralism and how their concerns overlap. These concerns have been reflected in much work in many professional societies relating to heterodox economics.

I began this article with journal publications because economics has become less focused on books and more focused on journal publications during the period in which Post Keynesianism grew. But during this period, Post Keynesians have also made original contributions in books published by prestige university and academic presses. I think, for example, of presses associated with Cambridge, Columbia, and Harvard, to pick some examples at random5.

After decades of work, a need will arise to introduce others to it. And Post Keynesians have addressed this need with anthologies of classic papers, introductory works for other economists, and textbooks. One can also find Post Keynesians editing, or participating in the development, of standard reference works6.

On a more local level, Post Keynesian economists have participated in the governance of economic departments around the world7. And they have provided governments with advice many a time, from within and without8.

I have deliberately not written about substantial Post Keynesian ideas in this post. If one is aware of the history mentioned in this post, even if one had never been exposed to Post Keynesian ideas, one must conclude Post Keynesian theory is much like any other set of academic ideas. One would have difficulty in seeing how academics could justify dismissing these ideas without engaging with them Likewise, one might wonder how, perhaps, those aspiring to be professional economists might not even be exposed to Post Keynesianism in gaining a post graduate degree. Yet, apparently, such a happenstance seems to be not at all rare among mainstream economists.

  1. I recognize my post is biased towards the English language. It is also quite impressionistic and selective. I am taking Sraffians as Post Keynesians for the purposes of this post.
  2. Major contributions to the Cambridge Capital Controversy are to be found in these journals.
  3. For example, Paolo Sylos Labini for the Banca Nazionale del Lavoro Quarterly Review, Athanasios Asimakopulos for the Canadian Journal of Economics, and Neri Salvadori for Metroeconomica.
  4. For what it is worth, I am published in the Manchester School.
  5. How would one characterize Edward Elgar and Routledge, for example?
  6. The first edition of the New Palgrave is an obvious example.
  7. Economics at Cambridge University is an obvious case. Albert Eichner chairing the Rutgers economics department is another case.
  8. Examples include Nicholas Kaldor's work with the Radcliffe Committee, John Kenneth Galbraith giving advice to John F. Kennedy, the advocacy of Tax-based Income Policies (TIPs) in the 1970s to fight stagflation, and policy suggestions associated with Modern Monetary Theory (MMT).

Wednesday, March 02, 2016

Romer And Romer Stumble

A debate has recently arisen about Gerald Friedman's analysis of Bernie Sanders' proposed economic program. In a welcome turn of events, two defenders of the establishment, Christina and David Romer, finally offer some substance, instance of just relying on their authority as Very Serious People.

In this post, I ignore most of the substance of the argument. I want to focus on three errors I find in this passage:

"Potentially more worrisome are the extensive interventions in the labor market. The experiences of many European countries from the 1970s to today show that an overly regulated labor market can have severe consequences for normal unemployment. There are strong arguments for raising the minimum wage; and over the range observed historically in the United States, the short-run employment effects of moderate increases appear negligible. But doubling the minimum wage nationwide, adding new requirements for employer-funded paid vacations and sick leave, and increasing payroll taxes substantially would take us into uncharted waters. Obviously, these changes would not bring the United States all the way to levels of labor market regulation of many European countries in the 1970s. But they are large enough that one can reasonably fear that they could have a noticeable impact on capacity growth." -- Christina D. Romer and David H. Romer, Senator Sander's Proposed Policies and Economic Growth (5 February 2016) p. 10-11.

First, the reference to "interventions in the labor market" and an "overly regulated labor market" imposes a false dichotomy. An unregulated labor market cannot exist. Certainly this is so in an advanced capitalist economy. Possible choices are among sets of regulations and norms, not among intervention or not. Calling one set of regulations an example of government non-intervention is to disguise taking a side under obfuscatory verbiage.

Second, Romer and Romer presuppose a consensus about the empirical effects of different regulations on the labor market in Europe and the United States that I do not think exists. If I wanted to find empirically based arguments countering Romer and Romer's claim, I would look through back issues of the Cambridge Journal of Economics. Perhaps at least one of these articles might be helpful.

Third, Romer and Romer suggest that, given the set of regulations they like to think of as government non-intervention, markets for labor and goods would have a tendency to clear. Otherwise, economic growth would be jeopardized. No theoretical foundation exists for thinking so.

Even the best mainstream economists seem incapable of writing ten pages without spouting ideological claptrap and propagating silly errors exposed more than half a century ago. Something seems terribly wrong with economics profession.