My views developed and changed substantially over the course of 2011, in no small part thanks to the blogosphere. I thought I’d highlight some of posts that influenced me most, by opening my eyes to previously unknown facts or ways of thinking. Naturally, this list is left-inclined, but I expect most will find the posts interesting.
Delong reveals that, following the crash of 1829, many of the classical economists often appealed to by the anti-Keynes crowd - including Jean-Baptiste Say and John Stuart Mill – came to a somewhat ‘Keynesian’ conclusion about the role of aggregate demand:
Yet Say changed his mind. By 1829, in his analysis of the British financial panic and recession of 1825-6, Jean-Baptiste Say was writing that there could indeed be such a thing as a general glut of commodities after all: “every type of merchandise had sunk below its costs of production, a multitude of workers were without work. Many bankruptcies were declared…”
Apparently the level of 19th century historical revisionism was pretty high.
This is the first example I saw of how selective ‘free market’ proponents are with their logic, and was delivered in excellent satirical form:
Soon after receiving tenure, it occurred to me that we were being profoundly inconsistent. While we had correctly criticized the previous mainstream view that politics involved benevolent efforts to serve the common good, we had failed to apply the same rigor to the community of academic economists. As a result, we were modeling both economic and political actors as self-interested utility-maximizing agents, while continuing to see economics professors as idealistic pursuers of truth. I decided to correct this oversight by developing my theory of Academic Choice, in which economists are theorized as rational agents who continually seek to maximize their future earnings potential.
Peter Dorman sums up how well the ruling class have shifted the intellectual narrative of the crisis, despite losing the battle of ideas:
But Keynes was wrong about the power of “academic scribblers”. Idea-smiths provide language, narratives and tools for those in control, but the broad contours of policy depend on who the controllers happen to be. We are not living through an epoch of intellectual failure, but one in which there is no available mechanism to oust a political-economic elite whose interests have become incompatible with ours.
(This is part of the reason I consider a large amount of public debate to be futile).
Robert Vienneau notes 3 examples of where the conventional wisdom about ‘what economists said’ is completely off: Keynes & sticky wages/prices, the origin of the phrase ‘the dismal science’, and Adam Smith’s ‘invisible hand’. Short and sharp, but both interesting and important.
We are all familiar with ideas said to be ahead of their time, Babbage’s analytical engine and da Vinci’s helicopter are classic examples. We are also familiar with ideas “of their time,” ideas that were “in the air” and thus were often simultaneously discovered such as the telephone, calculus, evolution, and color photography. What is less commented on is the third possibility, ideas that could have been discovered much earlier but which were not, ideas behind their time.
OK, this was late 2010, but let’s ignore that. This is possibly the most interesting question I have ever seen asked on a blog. I’d suggest that Marx was probably ahead of his time, Adam Smith and Keynes were ‘of their time’, but recently economics has seen an intellectual shift to ‘behind its time’.
Steve Keen sums up exactly why neoclassical economists are wrong about debt, money and banking, and how it affects our current predicament. Enough evidence is provided that I’m not sure how anyone could conclude Keen is wrong.
Stephen Williamson gives us a short review of John Quiggin’s Zombie Economics, in which he effectively throws his hands up in the air and declares DSGE and the EMH to be unfalsifiable. John Quiggin has a go, Noahpinion has a more comprehensive go, Paul Krugman notes it, Williamson gets uppity and confused. Later, Williamson writes another, longer review, in which he makes effectively the same mistake, but this time with rationality. The whole debacle is worth looking at, but Noahpinion’s post is the most comprehensive and is all you really need to know.
David Graeber has managed to blow a significant hole in mainstream and Austrian economics by exposing the myth that barter spontaneously arose and that spot exchange is somehow ‘natural’ to man. Murphy, after reading merely two paragraphs of an interview, took exception to this and posted a response. Graeber’s rebuttal contains a paragraph that sums up my experience of many RW bloggers very succinctly:
However, in the blogsphere, the quality or even intention of an argument often doesn’t matter. I have to assume Murphy was aware that all he had to do was to write something—anything really—and claim it rebutted me, and the piece would be instantly snatched up by a right-wing echo chamber, mirrored on half a dozen websites and that followers of those websites would then dutifully begin appearing across the web declaring to everyone willing to listen that my work had been rebutted.
If you were reading blogs at the time, this one should need no introduction. A demonstration of the poverty of mainstream thought and the implicit separation of ‘good’ from ‘bad’ or ‘shock’ times in economics. A few of the best:
With notably rare exceptions, Germany remained largely at peace with its neighbors during the 20th century.
With notably rare exceptions, Mrs. Lincoln enjoyed the play.
With notably rare exceptions, Achilles was invincible.
With notably rare exceptions, the Roman Empire’s crucifixion policy was successful in containing subversive religious movements among the hoi polloi.
With notably rare exceptions, all animals are equal.
With notably rare exceptions, when you wake up in the morning, you know for a fact that you will still be alive by the end of the day.
Hooray for CT commenters! One of whom, incidentally, is responsible for number 1:
All books are going to have their critics. But there’s criticism and then there’s criticism. Tom Slee’s review of Adapt - a book where Tim Harford praises trial and error as always and everywhere an appropriate method – is the latter. The problem:
Tetlock divided his experts into foxes (good at many things) and hedgehogs (good at one thing) and argued that hedgehogs are over-confident because they “reduce the problem to some core theoretical scheme’… and they used that theme over and over, like a template, to stamp out predictions”. And that’s exactly what Harford does here. He sees evolution as a fox-like strategy (trying many things and selecting a few) but doesn’t notice that at the level of individual species, evolution gives us both foxes and hedgehogs, and both do perfectly fine.
Maybe it’s just me, but the whole review seems to reflect an exceptionally high level of thinking – exactly the kind of thing we need in economics. I haven’t yet read Slee’s book, but based on his blog and the Amazon reviews, I certainly plan to.
Some runners up: Bryan Caplan and Scott Sumner both had thought provoking posts, but they’ve internalised too much of the conventional wisdom for me to put them in. David Malone’s comment on the narrative of the crisis was in close competition with Peter Dorman’s, whilst Chris Dillow is always interesting but it’s hard to find a post that stands head and shoulders above the rest. Mike Kimel’s work on his anti-laffer curve is worth a mention, too. Lastly, the D&D section of the SomethingAwful forums is fantastic for countering the standard, capitalism favouring narrative of history – if you go there, prepare to be pulled leftwards.