For me three economists stand out historically as having been the most effective at building resistance to the dominance of scientism in economics. Keynes of course is one, and the other two are Bernard Guerrien and Tony Lawson, Guerrien because he was the intellectual and moral force behind Autisme Economie which, among other things, gave rise to the RWER; and Lawson because his papers, books and seminars have inspired, joined and intellectually fortified thousands.RWER Blog
It is notable that all three of these economists were or were on their way to becoming professional mathematicians before switching to economics. When still in his twenties, Keynes’ mathematical genius was already publicly celebrated, most notably by Whitehead and Russell, and he had already published what was to become for his first discipline a classic work. Guerrien’s first PhD was in mathematics, and Lawson was doing a PhD in mathematics at Cambridge when its economics department lured him over in an attempt to boost its mathematical competence.
The significance for me of Keynes, Guerrien and Lawson being mathematicians first and economists second is that it meant that they were not even for an hour taken in or intimidated by the aggressive scientism of neoclassical economists, and this has enabled them to write analytically about the dominant scientism with a quiet straightforwardness that is beyond the reach of most of us.
“Is there anything worth keeping in standard microeconomics?”
Edward Fulbrook
16 comments:
When I took courses in dynamical systems at university, on occasion economics and finance would come up.
Professors of mathematics who would moonlight as consultants to investment banks and the like would almost be crying with laughter as they wrote quantitative finance and mathematical economics equations on the board.
Every single professor and guest talker was dismissive to various degrees. But one guest talker was so dismissive he would say things like: "It's all total shit, obviously. But I get paid such staggering amounts of money that I keep my mouth shut and just churn this nonsense out whenever they want. And soon you'll make lots of money too."
Even before the likes of Steve Keen and others became famous for shining a light on the unrealistic and fanciful assumptions required to make neoclassical models neat and simple(minded), here were these mathematicians teaching dynamical systems saying pretty much everything in microeconomics, macroeconomics and especially finance was "total shit".
I couldn't appreciate it at the time, but you'd get plenty of warnings that derivatives are "extremely dangerous" and risk management techniques are "primitive at best".
It turned me off economics and finance completely. And unlike nearly all my classmates, I never entered the lucrative world of finance!
To Fulbrook's question, dynamical systems theorists at least made up their minds long ago.
I forgot to add that all these dynamical systems theorists considered the use of the word "equilibrium" in economics as a sure sign of mental deficiency.
By the way, can anyone recommend an introductory PK book on microeconomics?
As an applied mathematician, I can say I was supremely unimpressed with "economist mathematics". It's essentially gobbledy-gook, to use the technical mathematics term.
John - it's expensive (unless you can get the paperback), but the Lavoie text "Post-Keynesian Economics: New foundations" is excellent, and it has some microeconomics in it. (It is somewhat advanced, but it should be readable if you skip over advanced section). Lavoie has an "Introduction to PK economics", but I do not know how much it has on the micro side (did not read it).
John, look at Brady's comment at Amazon on Steve Pressman's article on PK micro for a discussion of the math and various sources, including the GT.
http://www.amazon.com/Microeconomics-after-Keynes-Keynesian-economics/product-reviews/B0052QMZSM/ref=cm_cr_dp_qt_hist_two?ie=UTF8&filterBy=addTwoStar&showViewpoints=0
Brian: As an applied mathematician, I can say I was supremely unimpressed with "economist mathematics". It's essentially gobbledy-gook, to use the technical mathematics term
That what philosophers call it too, and as a philosopher that's what I would call what passes for foundations of mainstream econ. Some the assumptions aren't even wrong. They are technically unspecified and use language sophistically.
It's ideologically based rather than the objective science it is represented as and the ideology isn't even very good, being based on third rate thinkers like Jeremy Bentham's utility "calculus." Adam Smith and John Locke grounded their argument in discredited myths about the "natural" origin of markets and property. The medieval scholastics had much better arguments.
It's a transparent rationale for bourgeois rule, as Marx recognized and for which is now damned based on a perversion of his ideas.
There's lot's of great stuff in micro. That's where most of the market failure literature comes from. It's macro that is a blight on the intellectual scene.
I started studying economics a few years ago. After a couple years I realized that I didn't want to spend a single bit of my limited human cognitive capacity on any of that shit. Avoided a big mistake even if it took me a couple years. I think I've forgot most of it, except the common sense or what I've self-studied (like some practical finance, functional finance, studying credit flows etc. and MMT). When done trading I've mostly written my own models and algorithms and I ignore most economic papers.
There is actual interesting economics research, but the mainstream and 90% of it is religion and a joke. I'm a science guy and sceptical by training, though, most economists (specially academics) are a disgrace in general.
Tom,
I like this Brady fellow. I see his reviews all over the show. His reviews essentially consist of pompously stating that every economist, other than himself, is intellectually shallow, completely misunderstands Keynes and that PK economics is anti-Keynesian drivel, as if Keynes's writings are some sort of stone tablets and 1930s Cambridge was Mount Sinai.
How about some humility? Even Newton, Darwin and Einstein got things wrong!
I heard an interesting comment once, which, given how back to front everything in economics is, made me think. Instead of micro foundations of macro, how about macro foundations of micro.
The PK community is doing itself a great disservice. It'll never beat back the various wacky neoclassical schools if every book they write is geared to postgraduates and/or other PKers.
At least Mitchell and Wray are attempting to do something about that.
But until there's a thousand page Mankiw-style introductory PK textbook, it's the intellectual version of a circle jerk.
We may sneer at the meatheaded Austrians, but they're way ahead of all other heterodox schools in terms of education. If you wanted to "learn" Austrian economics it would be relatively straightforward to do so: Rothbard's books will do it, from micro to macro, from money and banking to international trade. And we wonder why Austrian economics is making inroads!
Of the millions of economics graduates, how many even know that other schools exist? And when they do find out, where can they find an introductory book that will educate them?
Brian, thanks for that. I contacted you last week and you were kind enough to reply with detailed recommendations.
"Instead of micro foundations of macro, how about macro foundations of micro. "
How about dropping the whole lot and starting again,, but this time using the sort of information modelling approach we use in systems work.
Steve Keen's approach is progress, but it is still wedded to mathematical equations and therefore lacks the dimension that relates to real people interacting with each other.
You need to understand how people interact, the variation of how people interact and then do a mass simulation so you can create the emergent behaviour from the chaotic process of those interations.
Trying to do it with high school mathematics is just curve fitting wild ideas to the data.
Neil but then economics would resemble more a social science (which is what it really is and should be).
Social sciences are not 'hard sciences' and won't be any time soon, if ever. And economists don't want that, because they cannot make absolute claims about reality and 'laws'.
That is the real problem that needs tackling. PK and even 'austrians' are much more grounded than bullshit-economics of mainstream because they recognize this.
But making a serious discipline of something that is so ingrained in the shaping of the social fabric and power structures may prove to be the ultimate challenge, as there is a lot of space for elite capture of it, much more than other sciences and/or disciplines (and every discipline always suffer from this, even maths or physics).
@ John
I'm pointing you toward Brady because as you already realize he is very well read in PKE and has extensively criticized PK economists for misunderstanding Keynes's math in his estimation.
Brady's criticism is too far from my field for me to comment intelligently. Interestingly, PK economists don't seem to take him seriously enough to respond to. Maybe they think he is a crank?
I thought you might in interested in his comment from the math POV in relation to the PKE micro POV that Pressman summarizes in his paper. His extensive comments ar Amazon are an easy entry point for a math person to accumulate references on PKE and its relationship with Keynes, and especially his math approach.
I'd be interested in hearing your appraisal of Brady's PKE criticism if you look into it.
I agree about the state of PKE and MMT wrt to both neoclassical and Austrian economics. One big reason they are not making inroads since they are just not accessible to most people outside the field.
PKE is light on micro since people attracted to PKE tend to be either macro or public policy oriented. Keynes really founded macro as a separate discipline from micro in contrast to neoclassical economists that view macro as scaled up micro.
Neil,
"How about dropping the whole lot and starting again,, but this time using the sort of information modelling approach we use in systems work.
"You need to understand how people interact, the variation of how people interact and then do a mass simulation so you can create the emergent behaviour from the chaotic process of those iterations."
Can't see anything wrong with that. In fact, it sounds eminently reasonable.
But I would hazard a guess that once you modelled all this behaviour and looked into the emergent properties that came out of this complex system, you'd essentially get models of aggregate social class behaviour, which can't be all too difficult to model as we speak. People are of course individuals, but their behaviour is highly influenced by spending power, inequality, and all the kind of stuff that used to be called class.
Just as you wouldn't model, say, a fluid by looking at its atomic and molecular structure, modelling an economy on the individual level is probably overkill. More is different, as a classic paper by Anderson put it.
Anyway, that would be my suspicion: the emergent behaviour would simply be class behaviour.
Social systems boil down to
1) social structure, e.g., dominance-submission,
2) political structure (distribution of power), and
3) economic structure (distribution of access).
In human systems this manifests as
1) culture, e.g., convention, ritual, custom, tradition,
2) institutional arrangements that are determined by social, political and economic structure, and
3) ideology, which gives normative justification to the positive and shapes boundaries of what is acceptable, as well as influencing system relationships.
Mainstream economics seeks to ignore this based on ideology, even though it is common knowledge in the other social sciences and is taken into consideration by system designers who have to deal with real conditions.
Instead, mainstream economists base their methodological assumptions on methodological individualism as a correlate of physical atomism, with predictable results given actual conditions.
Social systems, especially large human ones, are complex adaptive systems that exhibit reflexivity and emergence.
Modeling complex adaptive systems using simple systems, however complicated and dynamic, is therefore going to exclude relevant material that shapes outcomes and miss significant turning points.
Uncertainty means that the future doesn't always resemble the past.
Synergy implies that the whole is greater than the parts, hence then whole cannot be understood by investigating the parts alone. A system cannot be understood by understanding the elements independently of relationships.
This is basically the difference between so-called orthodox and heterodox economics, as well as summarizing insights of Keynes about the shortcomings of neoclassical economics.
The very fact that we are discussing this shows the relevance of asymmetrical social and political structure in the field of economics. And it is pretty clearly ideologically based to people who study this kind of thing. It's promotion of a bourgeois ideology that underlies the existing social, political and economic structure of certain developed countries that enjoy asymmetrical advantages based on it.
Tom,
Thanks for that. Apologies for the late reply.
I am, or was, a pretty damn good mathematician, if I can remember all that stuff. At the moment, and I suspect for some time to come, I'm trying to get my head around economics and finance. But it seems to me that it's going to be a long haul. For a novice, there doesn't seem an easy way of entering the subject and catching up quickly.
I'm very suspicious, even dismissive, of any economics that is overly mathematical, not historical and social. And that's putting aside an economics that has more in common with religious ideology than social science.
To be fair to Brady, he may well be right. I have no idea. Maybe all the poor reviews he dishes out are fair, and that too many PKers do not understand Keynes's mathematics. In any case, it'll take me a while before I get round to appreciating his criticisms. I'll bear it in mind to tell you what I think once I'm competent to read Brady. What I object to is Brady holding Keynes up as some sort of infallible deity.
In any case, as I said earlier, it doesn't really matter what Keynes said or meant by such and such. All that matters is whether his insights have merit today, and it seems to me that because he never broke away entirely from classical economics his analysis will break down.
Your criticism that PKers are attracted to macro or policy seems correct.
The Austrians are wiping the floor with us, and it's our own fault. As I said, if you want to learn Austrian economics, head over to the Mises Institute and they'll educate you for free. Everything from introductory books aimed at schoolchildren to thousand page textbooks, they're all available for downloaded in seconds.
I just don't believe that PKE is incapable of doing something similar. You really have to wonder why in seventy years not one introductory PKE book has been written. Astonishing!
In my view Keynes is the Newton of economics. Newton is, of course, not the last word in physics. His stature is foremost because he brought previous thinking to a head and established a platform for future thinking on the subject. I think that Keynes can be viewed in the same way. The reversion of mainstream economics after Keynes to a platform based on what preceded him is truly folly.
There would be no quantum mechanics or relativity without Newton. The platform that Newton erected enabled physicists to ask questions in the future that resulted in great advances over Newton, but Newton's work still stand as the basis for classical physics.
I think that Keynes could be viewed similarly. Importantly, Keynes was a transitional figure between fixed rate and floating rate systems, and pre-nuclear and digital technology. The world has entered new territory that presents new questions and challenges, but Keynes work still stands as the platform for future thinking about economics and public policy.
Interestingly, Keynes realized that economics is not Newtonian and approaching it as such was the wrong angle to take. Many economists today are stuck in that mistaken view, regardless of Keynes pointing out its deficiencies.
One of Keynes' major criticisms was they had the applied math wrong. To put it simple, economics is not a formal (pure math) issue but a complex word problem where the challenge is to apply math correctly and above all to avoid applying it incorrectly. Keynes thought that the conventional approaches to econometrics were ill-conceived. They had the word problem wrong.
But then the question becomes what were the solutions to word problems that Keynes proposed. Brady claims that most followers of Keynes don't have this right either. Unfortunately there hasn't been much responds as far as I can determine.
The Brady's POV is that Keynes was a mathematician that applied his view of math to econ and that this view is found in The Theory of Probability. The nub of Brady's position is his paper Keynes, Mathematics and Probability-A Reappraisal
Abstract:
I will argue that when Keynes states that, in general, probabilities are not susceptible to numerical estimation, he is arguing that the probabilities, in general, can’t be represented by single number answers or point estimates. But they can be represented by intervals. Keynes’s general approach to probability is an interval estimate approach..
The Austrians are wiping the floor with us, and it's our own fault. As I said, if you want to learn Austrian economics, head over to the Mises Institute and they'll educate you for free. Everything from introductory books aimed at schoolchildren to thousand page textbooks, they're all available for downloaded in seconds.
Generous funding by Libertarian donors is a big reason that Austrian econ is so widely accessible. And they are also have an agenda.
PKE, not so much.
I just don't believe that PKE is incapable of doing something similar. You really have to wonder why in seventy years not one introductory PKE book has been written. Astonishing!
Well, Joan Robinson and John Eatwell did publish An Introduction to Modern Economics in 1973. It's out of print but available on the used market.
Here's a short comment on it by Cameron Murray.
http://www.nakedcapitalism.com/2014/04/robinson-introduction-modern-economics.html
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