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« Vernon Smith Prize Contest Information | Main | Four on Four Full Court in NYC -- Team Keynes versus Team Hayek »

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Theoretical economists need to show more respect for applied economics. Applied economists need better career paths.

I disagree, and strongly at that. Economists as worldly philosophers is more often than not an invitation to hubris that results in either visions of technocratic control characterized by excess certainty or all-nullifying nihilism that strangely leads to fantasies of utopian anarchy.

Economists who focus on individual questions and attempt to answer them with falsifiable theories and empirical examination, in my opinion, provide the most reliable road forward. Their work may offer them less opportunity for exhilarating prose, but it provides the building blocks for greater truth.

Will there be individuals who, after a lifetime of work, get the opportunity to synthesize broader political philosophies and policy sensibilities from that work? Yes, and they will be broadly known, if few in number. Their role of "worldly philosopher" is an endogenous property of the system. Their existence is most certainly not something that can be sowed in our graduate schools or exogenously created through a group's or individual's will be worldly.

"Dentists" and generalists are having more conversations with one another now, for much is at stake. The languages are different to be sure, but there are ways to integrate the languages and find common solutions.

Mike,

I think you are missing the meaning of "worldly philosophy" -- consider Sen's Ethics and Economics book. He argues that in the production possibility frontier of economic knowledge, we have existed too long in the corner solution of economics as engineering at the cost of understanding the philosophical underpinnings. So the technocrat you are talking about is a consequence of the dentist approach, while the humility of the philosopher is what Adam Smith represents.

So I think you have a decent point to make, but in this instance you are flipping the arguments.

Now there is a challenge that must be met --- but at a more substantive point, are you denying that we can train students to tackle the sort of questions that Jim Buchanan did, or Amartya Sen did, or Albert Hirschman did, or Kenneth Boulding, etc.? What if what is currently being taught as economics has about as much in common with ECONOMICS as day does with night. How would you move to shift perspective among economists except to challenge fundamental philosophical premises and modes of discourse?

And by the way, your prescription is very conventional, but it also means that progress will be stopped in its tracks. Progress in science (if you study the history of science) happens when what is currently conventional gets overturned. Someone has to do that. Of course, the attempt to over turn the conventional is filled with failure and quacks. But the dentists among us are not really doing all that well.

This is Kuhn's essential tension --- an insider makes a radical departure and generates an outsider revolution. Think of someone like Buchanan, or Osstrom, or Coase, or North, etc.

Conventionalism is a recipe for intellectual stagnation, though it is useful for careerism (short run). Again, I recognize that nothing is worse than loose "big think" thinking, so there are very serious dangers as well associated with unleashing the "worldly philosophers". Again think of Sen's discussion in On Ethics and Economics, and the production possibility frontier for economic knowledge and the trade off between economics as engineering science and economics as worldly philosophy. The best worldly philosophers are also acute analytical economists!!!

Pete


"But the dentists among us are not really doing all that well": and they get attacked on both sides, when they stay in their tried and true track, and when they listen to others and perhaps veer outside that path. I just hope that those who attack either way realize that what they are mostly doing is slowing the process itself.

Lets hope the Cowles Foundation can do better than the Cowles Commission.

And the next generation of worldly philosophers can do better than Keynes of the General Theory.

Of course, we are overloaded with wordy philosophers.

Austrian econ offers a lot for the fields of investing and business with its business cycle theory. The ABCT can help investors surf the cycle and businessmen prepare for it. There is no competition from any other school of economics in those fields.

Milton Friedman practiced dentistry and philosophy simultaneously over the years. His dentistry contributed to his philosophizing. His advocacy of school choice exmeplifies pragmatic philosophy.

He was not an education specialist, but he knew liberty worked in all areas. And he devised practical solutions.

Backhouse & Bateman give us a laughably false account of the economics & political economy vision of _Hayek_ and Friedman -- essentially blame them for the economic bust and any & all economic imperfections of the present time.

That's a massive degree of either incompetence or disingenuous malevolence.

Only equally massive self-deception can rationalize that as the simple product of honest, hardworking, judicious scholarly inquiry.

These guys have an ax to grind -- and they don't care how unfair or implausible they must be to reach their predetermined goals.

Backhouse & Bateman write,

"In the 20th century, the main challenge to Keynes’s vision came from economists like Friedrich Hayek and Milton Friedman, who envisioned an ideal economy involving isolated individuals bargaining with one another in free markets. Government, they contended, usually messes things up. Overtaking a Keynesianism that many found inadequate to the task of tackling the stagflation of the 1970s, this vision fueled neoliberal and free-market conservative agendas of governments around the world.

THAT vision has in turn been undermined by the current crisis. It took extensive government action to prevent another Great Depression, while the enormous rewards received by bankers at the heart of the meltdown have led many to ask whether unfettered capitalism produced an equitable distribution of wealth. We clearly need a new, alternative vision of capitalism."

Is that the Hayek you teach, Peter?

This isn't a scholarly disagreement -- this is scholarly malpractice by one side, and one side alone.

Greg,

I urge you to (a) read my post where I point out that I have disagreements with their characterization, and (b) strive to disentangle different arguments made and assess the different arguments made in the network of arguments they make to try to construct their argument. It is not impossible to agree with certain aspects of a constructed argument, while disagreeing with others. And it is also not impossible to appreciate the work of scholars that you still find unpersuasive.

So NO, that is NOT the Hayek I teach, but it is the dilemma of the modern economics profession that I think we must address.

It is possible to take in both Greg's and Pete's comments and to wonder how much misrepresentation and misinterpretation by supposedly serious scholars is acceptable before you start to have doubts about their committment to seeking the truth. These are not beginners, they have had years to read the best explanations and arguments for the thinkers who they disparage in gross terms. What is going on in their heads?

Shillers: “The real imperative for researchers is that efforts need to be redoubled to encourage cross-fertilization and broad-spectrum thinking, driven by the broad moral purpose of improving human welfare.”

The Shillers remind me of Jesus’ complaint against his opposition. To paraphrase, he told them that he had played music for them but they wouldn’t dance, so he mourned for them but they wouldn’t weep. In a similar way, Austrian econ gives the Shillers what they want but they won’t accept it. Are they just ignorant of Austrian econ, biased or what?

When Austrian economists play the part of the worldly philosopher, they’re denounced as ideologues and unscientific.

B&B write in a fashion similar to the Shillers: “However, there are also downsides to approaching economics as a dentist would: above all, the loss of any vision about what the economic system should look like.”

Then: “Overtaking a Keynesianism that many found inadequate to the task of tackling the stagflation of the 1970s, this vision fueled neoliberal and free-market conservative agendas of governments around the world. That vision has in turn been undermined by the current crisis.”

So B&B say they want a worldly philosophy, but not a free-market one. The message of the Shillers and the B&B’s is that they want a return of Keynesian economics because they consider it the only valid worldly philosophy.

Like Greg, I don’t understand how two people can claim to be scholars and get Hayek as wrong as they do. Unlike Greg I don’t think one has to endorse everything someone writes if you agree with a point or two.

BTW, I got B&B’s metaphor of the dentist wrong at first. For them dentists are bad. They want economists to be philosophers, not dentists.
The nation does need worldly philosophers and the econ profession has provided them. Neo-classical econ essentially promoted free market economics as a worldly philosophy. But their poor business cycle theory that prevented them from seeing the crisis coming has undermined their credibility. In the late 90’s some even claimed that they had solved the business cycle problem.
Austrian economists have a solid business cycle theory and saw the crisis coming, and they offer a great worldly philosophy, but it happens to be free market and the Shillers and B&B’s don’t want that. What they want is a return to paleo-Keynesianism. They have that in Krugman and others, though Krugman didn’t see the crisis coming, either. So what is their beef?

Pete, I look at what people do & what they practice, at the same time I listen to what they say.

The is a massive disconnect & incoherence between what B & B are actually doing eve as the officially advocate " worldly philosophy".

What they are doing is tag team cage match caricature and slovenly worse-than-cable-news political food fighting.

If what B & B are up to is an exemplar of what they want from "worldly philosophy" we would do better without it.

Rafe:

" It is possible to take in both Greg's and Pete's comments and to wonder how much misrepresentation and misinterpretation by supposedly serious scholars is acceptable before you start to have doubts about their commitment to seeking the truth."

Thank you Rafe for saying that.

McKinney:

"I don’t understand how two people can claim to be scholars and get Hayek as wrong as they do."

Perhaps they are advocates, as well as (rather than?) scholars.

FWIW, I called out B&B on this on the History of Economics listserv. They've yet to respond. My note read:

Congrats to Roger and Brad for this great hit. And I certainly echo the call for more asking of the big questions and the return of comparative economics to the curriculum. My own experience teaching it a year ago was excellent, and the students enjoyed it tremendously.

That said, I would echo the earlier points James A. made about Roger and Brad's piece and add one more. For all the great work Brad has done in responding to what one might call "vulgar" readings of Keynes, he and Roger commit that exact sin in claiming that Hayek "envisioned an ideal economy involving isolated individuals bargaining with one another in free markets." I won't bother with the textual evidence refuting the notion that Hayek's view of the individual was the atomistic one that the authors imply here, mostly because it's so voluminous that I wouldn't know where to start. The same goes for any description of Hayek's vision of the market as "ideal" if that means something either Hegelian or akin to "perfect." Hayek was very clear about all of the imperfections of the market, many of them due to the imperfections of the individuals, families, and firms that operate in them. He just thought that, despite their many imperfections, markets were better than all the alternatives.

There are weak points in Hayek's worldview, but assuming atomistic individuals and thinking in terms of ideal markets are not among them.

Steve

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