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May 27, 2007
David Warsh, Proprietor


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Outside, Inside

The world’s largest association of heterodox economists meets next weekend in Salt Lake City. The International Confederation of Associations for Pluralism in Economics describes itself as committed to “the idea that pluralism and intellectual progress are complements. This is not to say ‘anything goes,’ but that each tradition of thought (Austrian, feminist, old and new institutionalist, Marxian, neoclassical, Post Keynesian, social economics, Sraffian, etc.) adds something unique and valuable to economic scholarship.” The program can be found here.

Drafting that mission statement can’t have been easy.  Fifty organizations are associated in ICAPE, from the Association for Georgist Studies and the International Joseph A. Schumpeter Society to Agent-based Computational Economics and the International Society for New Institutional Economics.  Finding ways to talk productively across such boundaries is a challenge, to put it mildly. That’s why the group meets only every three or four years. “We’re expecting about 220 registrants,” says association secretary Rob Garnett, of Texas Christian University.  The program includes 61 sessions (3 of them plenaries) and about 180 papers.

The world of non-standard economics is a complicated place. Christopher Hayes gives an interesting account of it in The Nation this week. “So extreme is the marginalization of heterodox economists,” he writes, “most people don’t even know they exist. Despite the fact that as many as one in five professional economists belongs to a professional association that might be described as heterodox, the phrase ‘heterodox economics’ has appeared exactly once in the New York Times since 1981. During that same period ‘intelligent design,’ a theory endorsed by not a single published, peer-reviewed piece of scholarship, has appeared 367 times.”

Hayes made the tour:  he notes the existence of  the Heterodox Economics Newsletter Heterodox Economics Newsletter and the Post-Autistic Economics Network, the little concentrations of scholars in the United States at the University of Utah, the University of Massachusetts, the University of Missouri (Kansas City); the New School; the University of Notre Dame. In the end, Hayes finds himself more charmed by the new “shoots of spring” in the mainstream than by the demurrers of those who felt left out. When he attended the American Economic Association meetings in January, he writes, “John Davis, a professor of economics at Marquette, gave a talk that laid out a conception of human economic agents not as simple unified selves but as ‘diverse and heterogeneous.’ After Davis’s talk I went upstairs to catch a talk from a friend of mine, a bright young mainstream economist named Jesse Shapiro [of the University of Chicago]. The room was far easier to find and significantly more populated.

“Shapiro’s co-author was presenting an experiment they’d just done to investigate how people evaluated the trade-offs between getting a certain amount of money immediately and waiting a short time (a week) for more money. In attempting to understand the different preferences, they used a model of agents with two distinct selves: a long-run self and short-run self, and posited that those with more developed “long-run selves” were the ones who’d wait the week for the extra money.

“Here were economists with impeccable mainstream credentials, up-and-comers in the field offering an account of human agents with ‘multiple selves.’ And while the methodology was quite different from Davis’s, the fundamental concept at the heart of both papers was the same: The human economic agent is not the unified entity neoclassical theory has held her to be. Downstairs, there had been no one around to hear Davis deliver his small bit of heresy; two floors above, it seemed to cause no stir at all. Shapiro didn’t find this surprising. ‘The field is getting much more empirical,’ he tells me matter-of-factly.”

A considerably more ambitious exploration of the nature of heterodoxy and the case for it is offered in Speaking of Economics: How to Get in the Conversation, by the affable Arjo Klamer, Professor of Cultural Economics at Erasmus University, in Rotterdam. Klamer is best known for Conversations with Economists, a book of ethnographic interviews with leading economists that appeared in the aftermath of the great controversy of the 1970s, documenting the collision between the “new classicals” and “new Keynesians.” That book was organized around the question “Can the government help to stabilize the economy through active, interventionist policies?” 

Few such attempts to solve the problems of the world come up in the new book, and those that do are quickly dismissed. The options-pricing formula as a pillar of financial markets? Game theory and auction design?  Trade theory and the repeal of the British Corn Laws? Keynesian stimulus and the end of the Great Depression? The Kennedy tax cuts and economic growth? Monetary theory and the control of inflation after 1981?  “[A]ll these are anecdotes and most likely do not stand up to scientific scrutiny,” writes Klamer.  But if he has little patience for economic triumphalism, neither does he expect this discipline to enter a “postmodern” phase, as predicted by David Ruccio and Jack Ameriglio, any time soon.

So what happens next? “What do I know?” he writes. “I know only that the current situation won’t last and that changes are imminent. That is easy to say, for no current situation lasts.” (So much for trends!) “[M]aybe the future will be with complexity and chaos. Maybe econometrics will turn obsolete as advanced computer programs do the empirical work for us. Maybe behavioral economics will kill off Max U. and its obsession with constrained optimization. Maybe history will make a re-appearance.  Who knows?” His hopes ride on the last possibility.

I am among those who, near the end of his book, Klamer recognizes will have come away disappointed.  I wanted more serious talk about why we prefer some conversations to others, why some thrive and others fail. “I am sorry to disappoint…,” he writes, “but there are no criteria that can be firmly established outside a conversation. Truthfulness, for one, fails as a criterion, as do all the other norms and rules that methodologists and practicing scientists have suggested.  There is no absolute way to say that one theory or conversation is right and another is wrong.”

Absolute?  Maybe not.  I routinely settle for less — for “soundness,” for instance, in John Dewey’s phrase, a standard which Klamer himself seems prepared to accept. He is right.  Differing conversations about economics exist side by side as inevitably as, say, differing spectator sports vie for our attention. “Heterodox economics” is among them. There is no single best sport.

Long before I was finished with it, however, I lost patience with this cheerful little book, whose tether to the events of the past quarter century is expressed only in a few sentences near the end of the book. “The world wants to know what is going on:  Will greater Europe work? Is globalization about to change the world? Will the digital revolution revolutionize science and the way it is organized (such that universities become virtual?) Will China be the great economic power? Does culture matter? Does privatization work?… The new Keynes, the next Hayek, Friedman, Marx or Smith, please stand up.”

It’s back to “hard-headed economics” for me!

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