New School Economic Review

Anwar Shaikh vs. Economist

by Benjamin on June 16, 2010

A little over a month ago Wynne Godley passed away. He was a fine economist, and it is not for me to eulogise him, suffice it to say that the great and the good did, and his work will be missed. Among those eulogisers was The Economist. They have spent the last 6 months quietly criticising mainstream economics and its over-simplifying approach to the economy, this was their chance to remember a man who constructed stock-flow consistent empirical models, and did some real analysis of the economy – not economics.  They fluffed it. That is why I was so happy to see Prof. Anwar Shaikh (and others) replying to The Economist in print this week.

SIR – Your obituary of Wynne Godley (May 29th) did an injustice to his considerable intellectual achievements in macroeconomics and his courage in going against the orthodoxy that has ruled the economics profession for the past three decades. That very orthodoxy is now under attack all across the world, its otiose theoretical constructions having been exposed to the harsh light of actual economic events. Godley’s contributions to macroeconomics include his 1978 work on pricing with Kenneth Coutts and William Nordhaus, the textbook written in 1983 with Francis Cripps that inspired the “New Cambridge” group, and his 2006 book on monetary economics, written with Marc Lavoie.

His often-cited success as a macroeconomic forecaster came about precisely because he developed a systematic framework for analysing the impact of potential developments, applied first to the British economy at Cambridge and subsequently to America’s economy at the Levy Economics Institute.

Instead of taking the trouble to address these contributions, your piece settled for personal gossip, ending with a snide comment that “against a background like this, a little waywardness in the world of macroeconomics seems entirely forgivable.”  (The Economist, 11 June 2010 – on-line here)

I agree whole-heartedly, and am happy to see this in print. Wynne Godley should be an inspiration to economists of all colours, a point seemingly forgotten in the original obituary, even if everyone, including The Economist,  is calling for a different approach to our subject.

Hello 2010, goodbye Prof. Samuelson

by Benjamin on January 1, 2010

2010 has just about started across the world. It is 3.30pm in Delhi where I am typing, but it’s only 10pm in 2009 if you are on American Samoa (GMT -12). It is perhaps appropriate that we remember back and look forward at the same time. In the flat I am visiting in Delhi is an old issue of the Economist, which asks – “Where did our 3 Trillion dollars go?”. A special report on the banking systems failure and bail-out from the year that went. Nostalgic. The article suggests that banks will have to renew their social contract and re-think their structure. As we have seen in the last few months, relatively little reflection and none of this has come to fruition. As someone once quipped; “History has only taught us one thing: That no-one learns from History” – Amen.

2009 was also the year when a political scientist got the Nobel remembrance prize. The best quality work in economics again comes from non-economists, and in a crisis it is given to someone outside the ‘mainstream’. When Kahneman got the prize it was for an equally excellent body of work, which was read by more than just economists. When Merton and Scholes got it in 1997, they ruined the financial system. By 2001 the lesson was forgotten, I hope 2010 is not the year when the 2008-09 crisis is forgotten too, but lets see if Fama doesn’t get it next year. Then we’ll know.

Finally 2009 was the year we lost Professor Samuelson. A man who epitomized economics in the 20th century, not always for his theoretical ideas, nor for his (plaudable) approach to mathematics, but for introducing the textbook. Economics post-Samuelson became dominated by textbook instruction which for better or worse has spread economics much beyond a few specialised departments. Whether it needs re-thinking is a question posed in the latest International Review of Economics Education, but for now, lets look forward while remembering the past. In his excellent obituary in The Mint (India’s Wall Street Journal Partner), a fellow New Schooler has provided a good start to to doing just that, by remembering Prof. Samuelson. Happy New Year

Robert McNamara Passes Away

by Benjamin on July 8, 2009

Robert McNamara, Secretary of Defense during the Vietnam War, head of the World Bank until 1981 and the Washington Consensus, President of Ford and WWII strategist passed away on the 6 July 2009. A controversial figure who had an incredible impact on both development economics and economics in general, he will probably always be remembered as the person who first carpet bombed Vietnam only to go back an try to rebuild it. The British Guardian Newspaper have written a very good Obituary for a person who was so influential and so controversial.

On 1 November 1967 he [McNamara] expressed his reservations [about the Vietnam War] in a confidential memorandum to President Johnson. “I never received a reply,” he recalled later. “Four weeks later President Johnson announced my election as president of the World Bank and my departure from the defence department at an unspecified date. I do not know to this day whether I quit or was fired.”