Sunday, January 11, 2015

To Kick Off 2015: Hippie Punching

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.


Sandwichman said...

Of course "mainstream" is a metaphor and a deliciously ambiguous one at that. Does the metaphor refer to the "current" or to the flotsam and jetsam borne along by it?

Heterodox is similarly slippery. Other than or different from which orthodoxy? The supposed "orthodox" mainstream economics is far more ad hoc, undisciplined and opportunist than the notion of an orthodoxy or a mainstream would suggest.

I think it boils down to power and not ideas. There is an establishment that believes whatever is expedient at the moment to designate as "canonical" regardless of how incoherent, contradictory or incongruous it may be. And then there is a fringe to the establishment that really needs the establishment to be there to joust with.

Please prove you're not a robot.

I'm not a robot.

Thornton Hall said...

There's a version of High-Broderism where the truth is always the "more-nuanced" analysis and it's always wrong to describe binary oppositions.

But there is a binary opposition at work here. It's not orthodox vs heterodox. It's academics vs reality.

Most heterodox econ has a reality problem, just like all of orthodox.

The question is not: what is the most true (or most nuanced) way to describe the debate. The question is: how do we frame the arrogance of SWL and PK in a way that ends the reality problem.

Because, as PK always says, reality has a well known liberal bias. When econ reflects reality we won't have to listen to PK's nonsense claim that ad hoc models can't produce austerity policy recommendations.

Sandwichman said...

"When econ reflects reality..."

When Hell freezes over.

Economics can only reflect reality by acknowledging the non-dominance of its models. J.M. Clark and colleagues did exactly that in their report on water-use secondary benefits.

"We therefore suggest that these [qualitative] matters are worth increased attention and study, including sociological aspects."

The budget bureaucrats peremptorily overruled such interdisciplinary pluralism and subsequent generations of economists have simply given passive assent to this unanalytical edict of quantitative omniscience.

Something about "he who pays the piper..." said...

It is sort of funny that several left-leaning but essentially mainstream econobloggers are going bonkers right now over heterodoxy, even as there are these posts about how these left-leaners are supposedly the top dogs, and there is no new Milton Friedman on the right, with Krugman and Noah Smith and Simon Wren-Lewis doing the loudest of this whining. My guess is that this is a reaction mostly to the sort of half-baked demonstrations at the ASSA meetings, which certainly came from the left heterodox.

Regarding Piketty, it is easy to forget that while he is based in France now, he is out of MIT, and his main coauthor, Saez, won the JBC award. His theory is indeed very conventional, if in the end somewhat questionable, with a lot of loose ends open to picking at from both the left (Galbraith on Cambridge capital issues), the right (Krusell and Smith on depreciation), and somewhere in between (Stiglitz on land and rent). There is even a renewed poking at his empirics coming from the left-right punchers of Auerback and Hassett. That said, his vague invocations of Marx without being actually Marxist and his general thrust, have certainly pushed left, and many think that the current left lean of the newly dominant is due as much as anything else to this increasing inequality of income that Piketty has done so much to document and publicize.

Curiously, the one of the supposedly newly dominant who seems not to be into this hetero bashing and even pretty friendly with a lot of heterodox economists and ideas is Stiglitz, who may be the smartest (and most productive) of the bunch. The guy is really impressive, I have got to say. said...

That should have read "Auerbach" not "Auerback," as in Alan, not Marshall. Of course, both Alan Auerback and Kevin Hassett are reasonably mainstream and centrist, if on the left and right sides of centrism and of differing political party persuasions. said...

Darn! Alan Auerbach.

Peter Dorman said...

Keep at it, Barkley. Aren't we rated by the number of comments we get? said...