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Economic rebellion

from Lars Syll

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Listen to the program here.

Mainstream economists like Paul Krugman and Simon Wren-Lewis think that yours truly and other heterodox economists are wrong in blaming mainstream economics for not being real-world relevant and pluralist. To Krugman there is nothing wrong with ‘standard theory’ and ‘economics textbooks.’ If only policy makers and economists stick to ‘standard economic analysis’ everything would be just fine.

I’ll be dipped! If there’s anything the last decade has shown us, it is that economists have gone astray in their tool shed. Krugman’s ‘standard theory’ — mainstream neoclassical economics — has contributed to causing today’s economic crisis rather than to solving it.

Rethinking econ_0
  1. April 24, 2016 at 2:21 pm

    The USSR was a real world test of neoclassical economics. Its planners set prices as close to marginal cost as they could, treated capital as scarce, and successfully achieved an equilibrium state. The memory of the USSR should be a great warning against believing that adhering to the neoclassical model can produce anything better than cruises separated by periods of stagnation and decline.

  2. April 25, 2016 at 4:30 am

    Loved the goals and attitudes of the students. But they are typical of students. Students are just that because they are not yet fully invested (excuse the pun) in the discipline and really don’t have enough background in anything to have the “good sense) to keep their mouths shut in order to favor their future prosperity. The naïveté of the students’ remarks is refreshing. 1) … it is difficult because these people have spent their whole lives studying economics …. A wrong assumption in my view. Most of their teachers have spent their whole lives (if you will) defending the discipline of economics. 2) “…consider a two period economy” is a direct lift from physics before the right after WW2, e.g., consider a universe in which all the vectors are linear. Such “problems” can be interesting to solve and certainly can help one develop skills in linear algebra or set theory. And if such a universe comes along (doubtful) the solutions developed can be applied. Other than that it’s just a dumb exam question and a gate keeper one at that. 3) Employers – concerned about the quality of graduates coming out of economics departments – best skill sets for economists include economic history, explaining economics, and how previous economists have dealt with problems in the past. 4) Teachers. Tie what economics’ departments teach to actual work, more focus on writing and arguments about economics, more critical thinking opportunities. 5) Pluralism is not the answer. As Chairman Mao proved (not intentionally) having a thousand flowers bloom solves no problems. It just make the disputes livelier. Theories, even multiple ones don’t change the inclination of economists to ignore the world made by non-economists – the actual actors who make and remake economies. 6) Is economics a “hard” science like physics? Not really possible but that is the “wet” dream of just about every neoclassical and quantitative economist in the word. The “cult” of mathematics is an old one, dating back to the Pythagoreans. And like most cults it prefers converts rather than scholars. And like most cults its claims are expansive and untinged with doubt or uncertainty. 7) Among many others economics is the extreme example of the numerous negative consequences of the “publish or perish” orthodoxy that dominates academia today, particularly in the United States. Based on this current criteria Einstein’s special and general theories of relativity would not have been accepted for publication. We should devote a great deal more time considering the consequences of such historical counterfactuals as this. Our best potential academics end up driving taxis because of the insanity (I mean that literally) of academic life today.

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