The econ blogosphere has its fleeting obsessions, and the first of the new year seems to be whether heterodox economists have anything meaningful to say about the mainstream. Simon Wren-Lewis confronted this head on, while Noah Smith broached it as an appeal to symmetry. (The right tries to hijack economics and so does the left; we steer a middle course, etc.)
Well, there is an element of truth here. Lots of heterodox criticisms of the mainstream are rooted in ignorance. An even larger proportion of out-on-the-street leftwing criticism attacks a straw man, not economics as it actually is. A meme can gain currency and no amount of rebuttal seems to do any good. Remember “the problem with trade theory is that it is based on Ricardo, who assumed that capital doesn’t flow across borders”? I still hear this one all the time. You’d think that people might pick up an international trade textbook at some point just to see if it was true.
And many heteros blithely assume a strict correspondence between how much mainstream economics you accept and where you stand on a left-right spectrum. There is a lot of ideology packed into econo-thinking, but it’s not as simple as that. For instance, mainstream econ recognizes lots of market failure (as SW-L points out), and this might be construed as left-friendly. On the other hand, the benchmark against which we measure solutions is how the economy would have performed if this failure hadn’t existed, and markets had been complete and frictionless. That leans in the other direction. If you think rough equality of leaning means objectivity, you are in Noah’s camp. Me, I think ideological significance has to be tracked down in the particular domains where it appears and considered on its own terms. (Yeah, that’s extremely abstract, but a lot of my posts over the years have been about those domains, in econometrics as well as pure theory.)
Meanwhile, what about the mainstreamers—how much do they know about the dissidents they criticize? For instance, it would be hard to find a more sympathetic mainstream economist than Thomas Piketty, but his passages in K21 on the Cambridge controversies are egregiously misinformed. This is not just about one guy: no doubt Piketty passed around the manuscript to many of his colleagues, high-level economists all, and none of them noticed that something was fundamentally amiss. Meanwhile, hardly any mainstream economists pay attention to economic sociology, even though good work has been done on that front for decades.
And I shouldn’t leave this topic without saying that the best heterodox economists know their mainstream stuff backward and forwards—they know it better by honing their criticisms. Consider someone like Lance Taylor, for instance; who is the mainstream LT who gives equivalent attention to the arguments on the other side?
So enough hippie punching already. There is a lot of half-baked or even salmonella-raw argumentation on all sides. Nevertheless, with the distribution of resources being what it is, heterodox types usually have to pay more heed to the mainstream than vice versa. Their arguments may be wrong, but at least they have a clue who they’re arguing with. The reverse is seldom true.
That follows from a mainstream (incentives) analysis, by the way.