Economics Archive
 

My economics bibliography

Economics and me

What's up with these things I write about economics?

I'm not an economist. I'm a consumer (or sufferer) of economics, and not a producer. Economics has tremendous prestige and is influential in many vitally important areas (notably public policy, legal theory, and public opinion), so I watch economics from the outside and try to figure out what's going on. My studies could be described as a natural history of economics (studying economics as it functions in its environment), or as "science studies", or best of all, as "public philosophy".

(Note: This piece is introductory to everything else here, more or less, and I'll leave it on top until I come up with something better.)

Why am I wrong about economics?

A troubling possibility is that the centrist economists who claim to be liberals think that anyone to the left of them is either insane or a Communist. During the Clinton triangulation administration Krugman and DeLong spoke pretty viciously about the non-centrist Democrats, and you sometimes wonder whether the old liberals (15-20% of the US electorate)  have been disappeared from American life. The appropriation of the "liberal" label by centrists would just be the final ratification of the defeat of old liberalism.

How Economics Forgot History

The questions Hodgson talks about are of very general importance. Theory and universals seems privileged over history and particulars everywhere (even among the decadent dissidents in literary kink studies.) Up until 1950 or so  everyone was thinking about historicity, contingency, and particularity: Dewey, Whitehead, Hayek, Popper, Reichenbach, and later on Donald Campbell, J. H. Hexter, and Stephen Jay Gould. But with the rise of analytic philosophy and neo-classical economics, this theme seems to have disappeared, and the difference between historical and theoretical sciences seems to have been almost forgotten.

Economics 101 as Political Indoctrination

I recently engaged in a long and messy debate at Crooked Timber and Unfogged during which I was repeatedly accused of misunderstanding contemporary economics and overstating its conservative bias. I'm still figuring out what I think about all this, but here are a few speculations about why my opinions are so divergent from those of several others.

Economics and Philosophy of Science

Redman notes that, by contrast to physics, the body of generally agreed-upon economics is not large -- and not only that, economists from different schools do not even read one another's work, so that there can be little dialogue or debate between economists who hold opposing views, and still less the kind of confrontation between opposing theories that might lead to a unified view.

What Does Economic Rationality Do?

One problem with the use of the economic individual as a stand-in for the generic or universal individual is that the economic individual is not a mean but an extreme. The economic individual is not in the middle of a bell-curve, halfway between people who are not rational enough and people who are in some way too rational, and the stipulated economic individual is not even an attempt at a representation of characteristic human behavior. The normative definition of "rationality" never quite disappears, and the economic individual always remains not only an extreme, but surreptitiously (at least to some extent) an ideal

Tyler Cowen on Rationality

Cowen believes that he is defending the economist's idea of economic rationality, but his defense will only be persuasive for someone who is already committed to economics and wants to preserve it. However, he may be correct in thinking that that's the only audience he needs to bother with. Economics is institutionally invulnerable, and everyone in the biz has a stake in the profession's continued dominance. To an outsider it seems that Cowen is running around patching leaks, but insiders are unlikely to be upset by ad hoc epicycles and kludges.

Sen: Rationality and Freedom

My opinion is that Sen has finally returned us to a reasonable position on rationality, distribution, and social choice which could easily have been attained fifty or sixty years ago (and probably was), and that the long detour through formalization has been harmful. Without speculating about Arrow's and Robbins' personal motives, it seems clear that their work became central to economics to the degree that  the profession of economics, especially after 1970, did not want to talk about distribution, but did want to make the best possible case against state intervention in the economy. 

Gintis et al: Moral Sentiments and Material Interests

To me the real story is that there's never been any evidence at all that economics' assumption of individual economic rationality is valid, and a lot of evidence that it isn't. The rationalizations found in Friedman's Positive Economics have allowed economists to rely thoughtlessly on these unproven assumptions for about five decades, and if a few little experiments are required to convince them to drop this inaccurate and unproven default, that's cool with me. But it's a little like someone cherry-picking Bible verses to make their point to the Vatican.

Lazear and Durlauf: Economic Imperialism

Based on my reading, at least five of the six points are highly questionable. The whole issue of "What is really a science?" is terribly confused by now, and strong claims like Lazear's can only be thought of as ideological. The empiricism and testability of much of neoclassical marginalism is very doubtful. The hypothesis of "rational individuals" never was at all well-grounded, and it's now under heavy attack. Equilibrium has turned out to be a false, conservative standard (in the physicist's sense of "conservative) which causes economists to ignore and misunderstand historicity (see Mirowski, 1989, and Mirowski, 2004, pp. 229-271). Finally, economics' incursions into new territory have often been ridiculous and disastrous.

Why is there Economics Rather than Nothing?

The internal criticisms of economics fall roughly into two categories: bad mathematics (notably the laws of general equilibrium), and empirical falsehood. Besides general equilibrium, the economic concepts which Keen says are erroneous include “the representative agent”, the downward-sloping demand curve, the upward-sloping supply curve, diminishing marginal productivity, the use of risk (as in gambling) as a proxy for uncertainty (what Rumsfeld calls the “unknown unknowns”), Say’s Law and its various revisions (which only work in a static economy with no accumulators of wealth, no growth, and no capitalists), and the neoclassical adaptations of Keynes' work.

Gary Becker's Treatise on the Family

The supposed child-commodity marks a major problem with Becker's theory.

Imagine someone raising goats, which are in fact commodities. You put money and time into your goats, and with luck you can sell them for a profit. Or you can kill or eat them. Or if they become a nuisance, you can give them away or have them put to sleep. Commodities don't really cause a big nuisance. Children, on the other hand, are strictly money down the drain. You can never sell them, and you can't eat them or get rid of them. They impose major legal obligations, because you are both responsible for their care and for their behavior -- yet once they become adults, they no longer have any obligation to you.

When the child-commodity turns eighteen, it becomes independent. At that point the little child-commodity (which had been producing "psychic income" -- p. 194) turns into human capital -- i.e., an independent adult selling its labor on the market. At this point the parental unit of human capital has nothing to show for his efforts. The child-commodity upon which he had lavished so much money and time is gone forever, to be replaced by an independent, competing unit of human capital.

Quotations from Chairman Becker

The economics profession's proud and almost total ignorance of history and geography has rarely been better displayed than here. Even in today's world, children are bought and sold (and not only for child prostitution). In much of the pre-modern world, for example China, children of poor families were often adopted by richer families to supplement their labor force, with a cash payment usually given to the poorer family.

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