Monday, May 9, 2022

The Passing Of Axel Leijonhufvud

 On May 5, Swedish economist Axel Leijonhufvud died at age 88. I only met him once when he attended a seminar I gave in Trento, Italy a decade ago. I always admired his work and felt lots of sympathy with it, and I think he liked what I had to say at least in my seminar that day.  He was someone who stood outside of orthodoxy while not being clearly tied to any particular school of economic thought.  However, he did manage to be respected by many economists, including even by some that to me his views look like they should not like him all that much, such as some of the rational expectations new classical economists like Thomas Sargent.

It may be that I am also someone being taken in by a clever economist who could make himself look like he agreed with one.  Thus, I see many of his most famous ideas as being consistent with Post Keynesian views of macroeconomics that I tend to support, even though I know that he never allied himself at all with any of the branches of that school to my knowledge, and for some reason he was not particularly picked up on by most Post Keynesians either.  Yet his most famous work, his 1968 On Keynesian Economics and the Economics of Keynes looks highly Post Keynesian to me, and actually that book did get some citations by some PKs.  it sharply criticized the by then standard Hicks-Hanson ISLM model as representing Keynes's thought and also criticized the idea that unemployment in Keynes's view is due to downward stickiness of wages. 

So what did Axel say Keynes said was the issue? he accurately focused on Keynes's analysis or information and uncertainty. He emphasized that Keynes saw the economy as not being in equilibrium states but in a constant state of adjustment that involves trying to deal with trying to get correct information. He did not see any convergence to equilibrium out of this, but he would pose in a later article ("Effective Demand Failures") that economies stay within "corridors" most of the time, even if they do not zero in on particular equilibrium points or paths. Again, this all looks way more PostKeynesian than New Classical. Why have the latter liked him more than the former maybe?

A further development from this is that for a period of time while he was at UCLA he became involved with computational economics.  This was tied to the idea of how economies carry out these efforts to process information and go through dynamic adjustment processes. This sort of thing more closely tied to many of my concerns over time involving nonlinear dynamics, an area where I think he thought well of some of my work at least a bit.

BTW, in a 2009 Cambridge Journal of Economics article he followed through on his own work by declaring that the Great Recession in fact was a case of the economy blowing outside of its corridor and linking this to the work of Keynes himself.  I completely agree. Very wise observation, Axel.

I also note his 1973 satirical article, on "The Life of Econ," which is what many economists know him best by, maybe the best satirical article ever written about the economics profession.  It posed itself as an anthropological article about this weird tribe, the "Econ," and their sub-groups and hierarchies.  He ends up mocking the effort to constantly develop new "modls" and how these must pass muster with the "math-econ" priests.  The article remains as relevant today as it was then, as well as being hilarious.

Anyway, RIP, Axel, a very special economist.

Barkley Rosser


Anonymous said...

Great tribute.. the life of the econ is great and I shared it around today.

kevin quinn said...

On Keynesian Economics and the Economics of Keynes is brilliant: the single best critique of mainstream "Sticky-Price" Keynesianism. Too bad it had so little impact! The coordination failure view of recessions, which Lejonhufvud and Clower's work inspired, arguably, remains a small minority view.

Anonymous said...

Great info, great RIP Barkley, thanks!

Wayne B