DENVER – Perhaps this year the event acquired a name that at last will stick. The World Financial Crisis? The Great Recession? Why not call it The Long Slump, said Robert Hall, of Stanford University, in his presidential address at the meeting here of the American Economic Association.
A slump describes the time that passes, once a recession begins, before employment returns to its normal level – an average since 1948 of jobs for 95.5 percent of the labor force aged 25 to 54. This slump, which began in the autumn of 2007, is expected to last most of a decade, he said, before the unemployment rate returns to its post-World War II trend. By no means as deep as the Great Depression, it would be almost as long.
The most interesting sessions at the meetings this year were those concerned with what has been learned about the sources of the crisis, and about measures that might be taken to prevent it from happening again. It has become a commonplace that economics had grown overspecialized, that macroeconomists, monetary theorists and finance experts had paid too little attention to each others’ work. That plenty of progress had been made in the borderlands was clear. That no consensus as yet exists about what happened was equally apparent. That “they are working on it” is about all that can be said with certainty.
Interesting, too, was the undercurrent to be found in many conversations of interest in the history of economics itself. History of economic thought – or history of science, if you prefer – is a subject that has all but disappeared in the last thirty years as a topic of major research interest or as a subject of courses in top graduate schools – precisely the period of economic triumphalism.
I certainly can’t prove a resurgence of interest in economics past as it bears upon the present, or even document it beyond a few suggestive facts. The history of thought sessions in the meetings proceeded in their customary grooves – a retrospective on the rational expectations assumption fifty years after it was introduced, Irving Fisher’s The Purchasing Power of Money at one hundred.
But there were portents of change in at least one session on “rethinking the core” of graduate education. James Heckman, of the University of Chicago, endorsed the possibility of restoring to the graduate curriculum high-level elective courses in the history of economic thought. “People in the past were smart and they made mistakes and had insights,” he said afterwards. “We have sometimes forgotten the insights and we have sometimes repeated the same mistakes.”
David Laidler, of the University of Western Ontario, among the foremost historians of thought of the present day, noted that since ideas periodically disappear and reappear according to the self-estimate of the times, it might be a disservice to give students the impression that all they needed to know was contained in the pages of a current text.
In fact, in a season in which job offers to economists have returned early to their pre-slump high, the single offer that has generated the most interest in the profession – intended to be pre-emptive, since for most young economists the process only began last week with Denver interviews and subsequent invitations to visit campuses to give job talks – is one that the University of Chicago is said to have made to E. Glen Weyl, a Junior Fellow of the Harvard Society of Fellows.
A recent Princeton PhD, Weyl has a reputation as a polymath and promising theorist – the most high-profile entrant to economics in many years. But he spent much of the last three years editing several previously unpublished essays by the late Simon Kuznets, an early Nobel laureate, and writing a lengthy introduction to them.
The Chicago offer is said to be a joint one: join Gary Becker and Kevin Murphy in teaching the famous price theory course devised by the late Milton Friedman; and reorganize the department’s history of thought curriculum formerly overseen by the late George Stigler. Other universities, too, have eagerly courted Weyl. There’s not likely to be a determination before late February, but the Chicago offer is potentially an influential one.
Ironically, the University of Amsterdam has announced it is closing its Program in the History and Methodology of Economics. Professors and students alike in one of the three or four top centers in the world are to be tossed onto the market, chief among them Mary Morgan, who also holds a faculty appointment at the London School of Economics, the doyenne of the field, including, as well, Marcel Boumans, John Bryan Davis, Harro Maas and Tiago Mata. If the history of thought is about to begin a comeback in the better universities, at least it will find some easy pickings from Europe’s leading workshop.