Economists like Krugman, Wren-Lewis or Stiglitz are nothing but die-hard defenders of mainstream economics.
from Lars Syll
When politically “radical” economists like Krugman, Wren-Lewis or Stiglitz confront the critique of mainstream economics from people like me, they usually have the attitude that if the critique isn’t formulated in a well-specified mathematical model it isn’t worth taking seriously. To me that only shows that, despite all their radical rhetoric, these economists – just like Milton Friedman, Robert Lucas Jr or Greg Mankiw – are nothing but die-hard defenders of mainstream economics. The only economic analysis acceptable to these people is the one that takes place within the analytic-formalistic modelling strategy that makes up the core of mainstream economics. Models and theories that do not live up to the precepts of the mainstream methodological canon are considered “cheap talk”. If you do not follow this particular mathematical-deductive analytical formalism you’re not even considered to be doing economics.
So, even though we, as you formulate it, can identify many “diverse parts” of modern mainstream economics, the “degree of commonality identified” comes from the non-negotiable demand that the proliferation of models has to take place as a kind of axiomatic variation within the standard neoclassical model. But to me, and I guess most other heterodox economists, no matter how many thousands of “technical working papers” or models mainstream economists come up with, as long as they are just “wildly inconsistent” axiomatic variations of the same old mathematical-deductive ilk, they will not take us one single inch closer to giving us relevant and usable means to further our understanding and explanation of real economies.
The kind of “diversity” you asked me about, is perhaps even better to get a perspective on, by considering someone like Dani Rodrik, who a couple of years ago wrote a book on economics and its modelling strategies – Economics Rules (2015) – that attracted much attention among economists in the academic world. Just like Krugman and the other politically “radical” mainstream economists, Rodrik shares the view that there is nothing basically wrong with standard theory. As long as policymakers and economists stick to standard economic analysis everything is fine. Economics is just a method that makes us “think straight” and “reach correct answers”. Similar to Krugman, Rodrik likes to present himself as a kind of pluralist anti-establishment economics iconoclast, but when it really counts, he shows what he is – a mainstream economist fanatically defending the relevance of standard economic modelling strategies. In other words – no heterodoxy where it would really count. In my view, this isn’t pluralism. It’s a methodological reductionist strait-jacket.
To me this also shows – to answer another part of your question – that the relationship between political/ideological views of economists and theory are not of the one-to-one kind. Leon Walras was a socialist. Knut Wicksell a social democrat. Paul Krugman is a political “radical”. But that’s not the point. A lot of my economics teachers at university in the 1970s and 1980s were Left party members, but they still preached neoclassical general equilibrium theory as if it were a gospel that had to be learned without question. To me, the political affiliations of these people were totally uninteresting. I am sure most of them had, as you put it, “good intentions” and looked upon themselves as “scholars”. But I fiercely criticized them then – as I do now – not because of their political/ideological views, but because they taught irrelevant mathematical-formalist theories and models that had nothing to do with real-life. The ideology that I, as an economist focusing on science-theoretical and philosophical aspects of economics, am interested in is not of a political kind, but rather of a methodological kind. And that ideology is pervasive in economics!
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Real-World Economics Review Blog 
But mainstream economics must be defended. It must! Can you even imagine what might happen if it were successfully challenged? If people started to doubt the god-like efficiency of markets, the exquisite perfection of economic equilibria, the flawless functioning of billions of transactions conducted on the basis of full information and rational expectations? If people began to ask, “What is the economy really for? What is it supposed to be doing?” and if the new economists began analyzing it based on its inherent purpose instead of…well, whatever they do now? Why, if more than a handful of people started asking why we continually reproduce a system that leads to greater and greater inequality of wealth and income, facilitates the ruthless exploitation of powerless people everywhere, and that in the long run will undoubtedly be blamed for the near-destruction of civilization through alteration of the planet’s climate system….the mind reels! It could lead to recognition of universal rights to life and dignity, to limitations on profit-seeking and tax avoidance, to (and I shudder at this thought) the possibility that one of the variants of egalitarian socialism might cease to be a bogeyman used to frighten children and become a political possibility. No, this must not be! Mainstream economics, we will defend you to the death, we will worship you, and we will strike down any who dare question your fundamental tenets!
You use too many repetitive wording. To be fair, you have good points but Krugman writes more interesting, so I keep on reading Krugman. I do not think he is radical but neither are you. Are you seriously bringing Walras up? Why not Jean Baptiste Say as well? I am stunned to be given an option to read radical stuff-aaahhmun- that is so flatout boring and not up to date. Good economics is good journalism, as the poor science has no defined object of research.
Oh try again. Krugman has his models, yes. Even so, he believes we can borrow money to prime the pump and grow to infinity while managing inflation so debts becomes worthless.
“….the mind reels! It could lead to recognition of universal rights to life and dignity.”,deshoebox. Period.
“We need only to change ‘TINA to T.A.R.A.’ Go from there is no alternative to there are reallistic alternatives.”, Justaluckyfool.
‘in my new book entitled WHO’S AFRAID OF JOHN MAYNARD KEYNES? page 23 I wrote “Keynes’s theory of the operation of our market oriented, money using economy is that our economic system can be characterized as ….no one should pretend that participants in market oriented, money using capitalist system are perfect or all wise…. We should recognized a free market system may have some serious economic flaws. Nevertheless, despite these faults, our market oriented capitalist system is better than any other form of economic system that has been tried historically….If these faults can be identified then, Keynes believed that human ingenuity can develop policies that eliminate or at least mitigate these faults.”
My book these develops these faults, e.g., unemployment, financial crisis, job outsourcing, globalization , the lack of universal of applicability comparative advantage to mass production manufacturing industries where production can be equally efficient anywhere on the planet. and how Keynes’s theory provides policies to mitigate these faults .
Their is no such thing as a “free” market. All markets operate in some context and one way or the other they are rigged. The only question by whom, for whom, and for the greatest good of the many or the few. Your book, which I bought and read simply accepts the boom/bust cylces of Mainstream Economics (ME) and offers up QE as the backstop of last resort, which in my view is no different than ME or Krugman. It accepts predatory finance as a given. It falls short in my view.
I am often chided for going on and on, but thanks for the constructive criticism. And no, I am not urging anyone to read Walras or Say. What I do advocate for is the development of an entirely new approach to economics, one based on a definition of the economy and a clear statement of what its purpose is. This approach would be based on true premises and use sound logic to develop constructive public policy recommendations, which could be tested as to their contribution to the underlying purpose of the economy. This is radical.
Lars, I write to support you as a critic of the mainstream, and ask you to persist. I read in this blog too many hints that you are a “johnny one-note” and that what we really need is a new economics. Without disagreeing with the latter, I strongly support the role of an articulate and knowledgeable critic and believe such critic has no responsibility whatever for speaking to alternatives to that which is criticized.
You say, “A lot of my economics teachers at university in the 1970s and 1980s were Left party members, but they still preached neoclassical general equilibrium theory as if it were a gospel that had to be learned without question.” This, too, was my experience in the 60s at a major American university with a world-class economics department. Although there are many fine economists who work to build an alternative, in terms of the institutions — the departments of economics at American universities — little has changed. In a recent review of several dozen I could count just a few who present anything like a serious alternative curriculum. Graduates, it seems, still must “bust through” on their own initiative.
In my view, people such as Krugman and Stiglitz labor to save the power of capital from itself, rather than mounting a serious challenge. They and the “liberal” defenders of neoliberalism use such words as “radical” to marginalize their critics.
I say this: such as Lars Syll, Michael Hudson and Steve Keen are shining bright lights on the church of economic scientism, and bravo to them.
“Too many words”? Reminds me of Antonio Salieri’s complaint about Mozart in the movie Amadeus: “Too many notes”.
Krugman is completely present paradigm derivative. As much as I have learned from Hudson and Keen neither of them seems to wiling or able to think in terms of paradigm/pattern. As I have posted here before Keen stared directly at the three aspects that the present paradigm ignores money, debt and banks and still didn’t perceive the new one the primary elements of which are scarcity of individual free and available money/income, the monopolistic present paradigm of Debt Only that allows the private banking/financial charter to foolishly dominate and manipulate nearly everyone and every other actually legitimate business model.
Hudson recognizes the dominance and parasitical nature of finance, but like Keen and every other economist and economic pundit are unconscious of the simple but elemental place and time to craft monetary policy that inverts present paradigm realities.
Paradigm perception is of the same integrative epistemological nature and experience as the levels of consciousness referred to in the world’s major wisdom traditions. In other words it’s not real to one until they actually experience it. How else does one explain the above correct conclusions by Keen and Hudson?
Mainstream Econ is nothing other than part of the cultural war. Initially between Russia and the USA – Now between the rich and the working class.
In 10 minutes this video will show you the false math employed by Econ 101.
The methodological ideology of conventional economics will be destroyed by its failure in the current and ongoing collisions of its recommendations and applications with real systems. This is already happening as Herman Daly illustrates in his paper “Growthism: Its Ecological, Economic and Ethical Limits.”
In turn economics, like science, will progress theoretically and methodologically, or else disappear with humans themselves, “one funeral at a time” as not only current conventional economists die but as millions to hundreds of millions or even billions of other humans die due to ecological and civilizational collapse. The latter catastrophic possibility is what people seldom want to think about. Certainly, we should strive to avoid that outcome if we can. The genuine and imminent fear of ruin and death will certainly motivate people in a new way. Old theories about endless growth economics free from natural limits will be scorned. Those who persist with promulgating such theories will find a metaphorical academic or political “tarring and feathering” could be the mildest of the things that could happen to them.
The current generation of conventional economists will all have to go, by natural senescence and death, into dissolution and their ideas must and will go with them. Currently, science and logic cannot quite yet win the ideological and power war of political economy, at least not against mature devotees of that ideology. These devotees, who are so heavily intellectually and financially invested that they cannot change their minds, will simply have to pass away. Natural processes will achieve that.
However, science and logic do matter for the new minds of young people who are coming up and can be educated in new thinking.With no inherent intellectual investment nor motivated thinking in favor of the current physically and logically refuted ideology ad political economy, they will be open to the new empirical evidence which is constantly arriving even now. Then real change will become possible. People like Lars Syll are torch-bearers of new truths and will be fully vindicated in the long term.
Max Planck said that mathematics [quantum theory] would advance “one funeral at a time”
So it will be with economics. However Lars is on the rational realistic reality that is the system MMT describes. It cannot be disproved as it is not an hypothesis, but a description, an explanation of reality. So all the mainstream are trying to command the tide go out as Knut demonstrated was false. They are on a hiding to nothing; but only eventually, one funeral at a time. As Bill Mitchell said all the schools have to be restaffed with MMT savvy personnel and that will take years.
Reforms, which is what MMT and with the the thrust of which I agree, will guarantee that economics will progress “one funeral at a time”. Perceiving and understanding the new tool and/or discovery that enlightens a new paradigm by definition changes the character and realities of the ENTIRE pattern of the system/area of human endeavor that the paradigm applies to.
If we here are truly serious about change we will focus on analysis from the mentally integrative and ultimately inclusive level of the paradigm. Time in fact is of the essence.
I’m not quite sure what your final paragraph suggests. Actually since AOC linked MMT with the Green New Deal in Congress It has suddenly been seen as an opponent These all came out of the woodwork and therefore must be denigrated. It isn’t going to work but will delay progress.
Economists are stuck in the old paradigm, politicians are there to invalidate and further obfuscate the new one. NEITHER capitalism NOR socialism are the answer…Direct monetary distributism within the new paradigm of Gifting is. And a new monetary authority must be created to distribute the monies required based on the policy strategically implemented at the point of retail sale in order to drive a stake through the heart of private for profit money creation.
Do MMTers think for a minute that the FED won’t raise the FED Funds rate to 18-20% like Volker did under Reagan out of fear of inflation? Do they not think that the banks will try to game and de-stabilize the abundance aligned fiscal deficits they hold up as a solution when it is only a palliative reform?
They will not be able to do this if we have a national non-profit making banking, financial and monetary system with the new paradigm’s policies. Get real, we have to cut off the head and the nuts of the present paradigm’s primary structural impediment to the new paradigm. MMT doesn’t do that. It punts. It is reform.
We don’t need caution. We don’t need reform. We don’t need reactionary responses to false assumptions. We don’t need endless unfruitful debates between capitalists and socialists, and we particularly do not need the disintegrative bashing together of ideas in the vain hope that a more ethical elite will arise out of the ashes of collapse like the erudite dunce Steve Bannon believes and the very stable idiot Donald Trump advocates.
We need paradigm change with the very expression of the new one with the 50% Discount/Rebate policy at the point of retail sale. And we need it yesterday.
Economics is difficult. People produce failing theories not out of perversity but because producing productive ones is difficult. You only have to read this blog to know that. Criticism of mainstream economics is warranted but is often misdirected. A fault of economics is not mathematical formalism but the insistence that theoretical economic models are “solvable”, that is they have unique equilibria that can be deduced analytically. Models that cannot be “solved” but can be explored by computer simulation can be much more realistic but are not taken so seriously. Mathematical expression obliges the theorist to specify the assumptions on which a model is based and its domain of application, things often unclear in literary exposition. A particular vice in economics, however, has been to elaborate theoretical models on very strong assumptions and then apply them in practical situations, where there is no particular reason to suppose they are appropriate. It is also true that economics has focused in the past on “value added” and has taken for granted the material base of the economy, paying rather perfunctory attention to natural resource depletion and pollution. That, however, is a contingent failure and as these things become of ever greater concern there is no reason why they cannot be incorporated better into economic models.
What is the difference between the “natural” sciences and social sciences? It is, in my view, their object of study. To borrow from Newton, natural sciences study what God has made. Social sciences study what humans have made. If social sciences, including economics are supposed to be focusing on “what humans have made,” then why the hell don’t they do that? Economics is the worst offender here, but the other social sciences offend as well. Economics, as Lars frames it should focus on “science-theoretical and philosophical aspects of economics.” I suggest a much simpler, direct, and proper focus for economics, “the economic ways of life and theories humans (all humans) create in relations with all the things around them.” Economists should stop immediately the attempt to substitute their theories, their math, their philosophies, their ways of life in economics for those of the all the non-economists who do the actual creative work. They should also immediately stop advising, consulting, designing economies for those non-economists. Ever heard of a physicist “redesigning” the laws of motion, matter, of space? That’s not their job. So, neither is it the job of economists to “redesign” the economy created by those in the economy. Agreed, reflexivity is a problem faced by social sciences that physical scientists do not face. As social scientists let’s work on holding that problem in check and stop trying “to be” rather than study our object of study.