New School Economic Review

Back from holidays, with orthodox neoclassicism

by Benjamin on September 6, 2010

This blog, like many others has been quiet over the summer months. But now school’s in, and so is Peter Radford’s (2010: 112) term “orthodox neoclassicism.” We used to speak of the economic orthodoxy and that was the neoclassical school of economics… But with a crisis and the amazing adaptability of neoclassicism, we now have orthodox neoclassicism. So there must be some heterodox neoclassicism out there as well? Of course there is. Behavioural economics, imperfect information analysis and feminist economics could all – I think – fall into the category of micro-based analysis from one or two utility maximizing agents representing the world. The danger with all this, is that any dissent towards this type of model will be lost in what is becoming a theoretical debate between one type of neoclassical economics and another, as Hugh Goodacre points out, in reference to Stiglitz’s 20 August FT article:

The attempt by Joseph Stiglitz to portray himself as an intellectual underdog is unconvincing. He represents the “mainstream” paradigm against which he claims to be rebelling in caricature terms as the crudest possible version of the “efficient markets hypothesis”… Prof. Stiglitz’s “new paradigm” is in fact just an updated version of the market fundamentalism it claims to replace: have faith in markets – if they break down, you can fix them. (Goodacre, 23 Aug. 2010, in the Financial Times)

There is a danger here: Just like the perfectly informed rational agent was replaced by a ‘revolutionary’ backward looking agent – changing little of substance in the theory. We may now be watching a change from one neoclassical doctrine to another. One that will be more informative and interesting I am sure, but one which will continue to propagate the same old myths, with the same old disdain for empirical investigation and fieldwork. I could be wrong. I hope so. Welcome back  :)

Free copy of Adbusters upcoming Economics Issue

by Benjamin on June 24, 2009

Adbusters Sept/Oct magazine is completely focussed on economic theory, and especially on the alternatives to the Neo-Classical paradigm. it will feature interviews with Herman Daly, Robert Nadeau, Lourdes Beneria and Joseph Stiglitz as well as papers, short articles and a lot more.

There’s more information and you can request a free copy here if you are a econ student, faculty member, student rep, etc etc by snail mail (offer expires 26 June – that’s friday). I’m looking forward to seeing what’s in the issue :)

Our Ivory Tower is Made of Dirt

by Jeanne aka JStor on March 10, 2009

You’d think this was an innocent article:
Ivory Tower Unswayed by Crashing Economy

Here’s my complaint in a nutshell: I got upset when I saw that THE Heterodox program (ours, at the New School) wasn’t mentioned and immediately thought: WTF? (and then) What do we do about this? And I started a fury of emails on our dept’s email list. Which led some great debating and brainstorming:

• Facebook profile
• Video
• Conference
• Update the HET website & start an Econ Dept website
• Write a letter to the NY Times to express our discontent

The debate went even further: Was it better to mentor the next generation of economists that can impact the world or do we put in the efforts to make our school, students, & faculty known publicly?

And my first thought: This is great! I love it when we all work together! Here’s what we moved forward on:

• Facebook page: check.
• A number of emails sent to the NY Times: check.
• Next: ?

And then second thoughts creeped in:
Who will take the lead on this? Who will volunteer to coordinate a conference? Who can expand the HET website that we all fell in love in our first semesters? Who will dedicate the human-hours to make this all work out? Where is our army of love?

The Answer: No one and no where. Students think the faculty should initiate it, while the faculty think the opposite. Students and faculty alike are stretched to the max, between classes, working, and writing. No one is motivated or pro-active enough to make change and progress. Instead we’ll all sit back, whinge, & refresh our emails for the 100th time today.

So over 25 emails (not to mention the nasty ones I got off-list), a slew of great ideas, some action, one blog post, and no real action. So maybe it’s raining & our Ivory Tower is dissolving.

PS: Yeah, I know, you’re thinking: What about Jeanne? What the eff does she do? Well, I volunteer for this blog & for the New School Economics Review, & I cause fury on email lists. And not to mention I organized the 2006 ESU Conference. That said, I will volunteer some time for a conference. Continue Reading…

Where do us Post-Keynesians fit in?

by Jeanne aka JStor on February 25, 2009

As a kid, I rode my bike all around Brooklyn, on the streets, through the parks, against traffic–sans helmet. Coming home one day, down my own block, I stuck my foot into the front wheel spokes. The wheel came to a complete stop and I flipped over my bike. Ended up pretty bruised, but no broken bones.
————————————————

My only friend at work sent me this:
Taking the Name of Lord Keynes in Vain

We both laughed at the article. I call Tennessee (not his real name, but it’ll do) my only friend cause he’s the only person at the office I’ll drink with regularly (and not out of work obligation). Tennessee is a libertarian economist and there aren’t any logical reasons why we’re friends. I mean seriously:

• His econhero is Milton Friedman. Mine is Hyman Minsky.
• He’s a conservative. I make liberals look conservative.
• He once emailed me an article on some “crazy” professor who wanted to reform Social Security and 401Ks. That professor was my mentor & thesis adviser.

You get the picture. Oddly enough, we both hate EVERYTHING Freakanomics related. With a passion (another post–someday). And neither of us can believe the entire Econonerd world thinks they are now a Keynesian.

We’re both pretty staunch in our beliefs (him: free trade & no government; me: regulation & all government). But what neither of us gets is: how does one stop believing in everything they embraced in grad school? How do all the business executives, financial analysts/economists just stop in their tracks and do a complete 360 without falling off their bike? Why was it so easy for them to dump their neoclassical training and beliefs, and become a Keynesian (possibly again, if they jumped off and on the boat in the 70s and 80s, respectively as well)?

And it leaves me a little bit more confused and out of place. Where does that leave me and my fellow heterodox economists? Why hasn’t anyone in the mainstream community say “Hey maybe those crazy Post-Keynesians who stuck by their guns all these years are right?” Where do us Post-Keynesians fit in?

PS: Oh, Tennessee and I both like bourbon and beer. Maybe that’s why we’re friends.

Seduced by Milton yet?

by Benjamin on January 16, 2009

It seems the more I keep reading Milton Friedman’s “Methodology of Positive Economics” (1966) the more his arguments make sense, and the more I find myself agreeing that theory can and should come from unrealistic assumptions. I only arrive at this exact terminology after an hour arguing that clearly and precisely stated assumptions serve as good starting points because we can avoid all the politics and ambiguity of old theoreticians who hid their assumptions – which is Milton’s point. By using logic we can then go from the assumptions to the conclusion, and we leave ourselves open to scientific debate (not ideological fights) and can debate either our clearly stated assumptions, or some fault in our logic. I grant that fixing illogical faults can be called progress, but what can you do with an assumption? Nothing.

You can try a different assumption and maybe get a different outcome. Then what? If the assumptions are unassailable, our scientific progress is reduced to fixing the logic. But fixing the logic in models of Martian space invasion models may be a very redundant form of progress…

Jokes aside once the door to other sciences is open, I find solace in the fact that the positive method might not be the only way forward… And for every argument we as economists make for the positive method there seems to be an answer and a way out. “Economist’s don’t have a controlled environment for experiments”; neither do astronomers but they are doing rather well with empirics and realistic assumptions. “We can’t do empirics independent of theory and assumptions”; but large control group experiments, devoid of theory, seems to be working for medicine and chemistry, and is making inroads in development economics… “We can’t directly observe some of the things we are interested in” (e.g. utility, preference); Psychology and physics still manage amazing things with that problem, despite no positivism. “Field work is not practical and can give you skewed results”; and yet the anthropologists and linguists keep going into the field, and do science. “The data series is too small / sporadic for empirical work”; Biologists (particularly evolutionary ones) have that problem, but seem to be coping – of course financial economists are spoiled on data, as are most economists. “Without the positive method and axioms, economics is not scientific”; … So what is all the above people doing then?

Creating a Heterodox economics program?

by NSER Editorial Board on January 13, 2009

The last few years have witnessed a welcome questioning of the way economics is taught at the undergraduate and graduate level. The publication of the French student manifest against economics as an “autistic science” in 2000 triggered subsequent calls for more realism in economic models, rejection of the use of math as an end in itself, and respect for a plurality of approaches to economic science.

The move against neoclassical ideas and methods in the teaching of economics has coincided, however, with increasing problems for heterodox economics departments in many parts of the world. The clearest example of the difficulty they have had surviving is the institutional reform that the University of Notre Dame undertook last year. Claiming that the economics department did not meet minimum standards of quality, administrators at Notre Dame divided the department into two separate departments, the Economics and Econometrics program and the Economic and Social Policy program. They also
announced that most new hires will be for the Department of Economics and Econometrics, which will also be the sole organizer of the Ph.D. program in the future.

In the next few pages I try to sketch some preliminary answers to these questions, using the current situation of heterodox departments in general and the New School Economics Department in particular as the starting point. I make three central arguments. First, building a heterodox graduate program in economics is particularly difficult because of the existence of a unique set of constraints. Second, getting beyond these constraints requires imagination and the willingness to build a coherent, focused program oriented toward political economy. Third, being heterodox requires a commitment to “positive
social transformation”; finding the areas where young heterodox economists can contribute to such transformation is essential for improving our chances for long-term survival.

Download the whole paper

Ancochea, Diego Sanchez. 2004. “Building a Successful Heterodox Graduate Program in Economics: An Impossible Task?” New School Economic Review 1(1): 9-14