Archive for November 16th, 2010

I’m not much in the mood to rip on the economics profession right now (unusual, right?) However, the above comic (h/t MR) reminded me to revisit this Krugman post from this morning. Krugman lashes out at David Brooks, who (hamhandedly) criticizes neoclassical economics. First, here’s Brooks:

The economic approach embraced by the most prominent liberals over the past few years is mostly mechanical. The economy is treated like a big machine; the people in it like rational, utility maximizing cogs. The performance of the economic machine can be predicted with quantitative macroeconomic models.

Krugman rightly points out that this is most true of conservative, non-Keynesian economists. On this point, I have no quibble wih him:

First, it’s conservative economists who insist that people are always rational and utility-maximizing; liberal economists are the ones willing to invoke bounded rationality, animal spirits, etc.. The whole salt-water fresh-water split was about which you were going to believe: the assumption of perfect maximization, or your own lying eyes. And the Keynesians were the ones who preferred to believe their eyes.

However, Krugman could go further, by pointing out that there are yet other economists who go beyond these psych-applied innovations. Thus, Brooks is right to probe the disconnect between even liberal mainstream/neo-classical economics and reality. Like Krugman, he doesn’t put any stock in more radical critiques of economics, like post-Keynesian, feminist, and Marxian critiques.

So, Brooks fingers the wrong economists for simplisticly saying, “there’s an equation for that.” Krugman deludes himself into thinking that mainstream critiques of MaxU et al. go far enough. Meanwhile, the heterodox folks (like Irene Staveren) are rightly looking at other perspectives to strengthen their narrative of the economy:

I have identified the concepts of gender, the household, and unpaid work/caring as three key feminist economic concepts that would help post-Keynesian economics to deepen its analysis.

This sort of cross-pollination is what economics should strive for. However, heterodox perspectives often produce models in which there isn’t always an equation for that. Not all worthy questions have clean data and easily mathematized models. Folks as smart as Krugman, when they take off their policy hat and put on their paradigm hat, should be willing to entertain more of these messy, heterodox questions.

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