The New Interventionist Economics

|Peter Boettke|

Roger Koppl has an interesting post on the future of macroeconomics.

I agree with much of what Roger says.  But I don't consider this trend progress in economic science.  Instead, I think we have moved far away from the analytical agenda of coordination macroeconomics (Hayek to Leijonhufvud) and the wisdom of classical political economy (Smith to Say to Hayek to Buchanan).  So we better "BRACE" ourselves for another round in "the battle for the soul of economics".

Comments

[DG Lesvic]

There is no micro and macro economics, just economics and non economics. All economics is both micro and macro, the macro effects of micro actions, cause and effect, premises and conclusions, not two different kinds but simply two different stages of economics, necessarily consistent with one another.

The dichotomy between “micro and macro economics” followed from Keynesian “economics.” If thrift was a private virtue and public vice, and there was a conflict between the economics of the individual and of the nation, there were two different kinds of economics.

But, if thrift is seen as a public as much as private virtue, there is no more conflict between the economics of the individual and of the nation, and economics is whole again.

[Roger Koppl]

Thanks for posting that, Pete. I wonder if I should add a clarifying comment. You say, "*But* I don't consider this trend progress in economic science." Me neither! My paper was more warning than celebration. There are, of course, appealing aspects to BRACE. We're talking about the work of smart interesting people and so on. But the I don't care for the general thrust of it, which is to diagnose the Great Recession as a failure of capitalism and prescribe interventionist therapies. Wrong on both counts IMHO. I don't think you missed the point, but your wording might have thrown some readers off. Your closing remark is perfect. We must indeed BRACE ourselves for another round in an old struggle.

[Barkley Rosser]

On his post I asked Roger the following: Is it true that regarding BRACE, you like the R and the C, are lukewarm to negative on the B and even more negative on the A, and totally negative on the E?

[DG Lesvic]

Barkley,

I'm totally negative on the whole damned alphabet!

[Roger Koppl]

And here is what I said, though with the link edited:

I suppose that’s about right for such a quick summary, Barkely, though details can matter. It’s not that I don’t think markets bubble, for example. They do! But they are more bubbly when governments do wicked things like inflate the currency and exercise Big Player influence. I’d say something similar about animal spirits.

I want a comparative institutional analysis that tells me when markets bubble more and when less and what policy might really be able to do about it. I don’t care for the “Fix it!” theory of economic policy.

http://www.youtube.com/watch?v=fRu5ojRDNqA

Okay, okay, I admit that’s no fair to BRACEians, but it’s pretty funny IMHO.

[Barkley Rosser]

DG,

But you believe in "F," as in "Free Banking," right?

[Roger Koppl]

DG,

Oh sure, I'm a Yeager-Greenfield-Woolsey free banking guy. Absolutely.