Friday, August 3, 2012

Two types of economists

I was thinking the other day about why it is that while on the one had I know there is a ton of agreement among economists, it seems to some people - particularly based on the blogosphere - that there's a lot of disagreement.

Here's one explanation, and it is based on the fact that there are two types of economists out there.

All economists are impressed with and convinced by the efficiency and desirability of free markets. The field is practically unanimous on this point (which is nice to see in a science!). There are two ways to take this:

  1. One group of economists, because they are impressed and convinced by this, like to spend their time in more informal settings (like the blogosphere or the media) telling people more about this.
  2. Another group of economists, because they think that point is settled scientific fact, think that the more interesting discussions are in the gray areas and the technicalities, so they figure their time is better spent there than belaboring the obvious.

This, I think, helps explain why Don enjoys blogging about how capitalism is great because it gives us dishwashers and Paul Krugman enjoys blogging about fiscal policy at the zero lower bound. Paul Krugman could have posted every single one of Don's "cleaned by capitalism" posts, but it's Don that keeps churning them out. Krugman shows almost no interest in writing posts like that even though he probably agrees with all of them. Why? Because different things attract their attention.

This is not to say there aren't differences in economists' opinions. Of course there are! But I think the way these two attitudes express themselves in the public sphere makes the field look a whole lot more splintered than it actually is.


  1. Does it not bother you that economics takes capitalism as a given in this way, and doesn't explore its history, the institutions required to sustain it, alternatives/previous systems etc?

    Obviously this will be met with 'utopian.' But really it's not about that - if capitalism is the superior system, this will be made apparent by comparing it to others. All I've ever seen in economics are some references to central planning, which generally still take capitalist goals/aims as a given.

    1. The whole field of comparative economics does this, and institutional economics explores the institutions required to sustain capitalism. As for "its history". Yes - I believe that's what economic historians spend their time doing, although I could be wrong on that one.

    2. I'm sure there are fields of economics that do this but I'm talking about more a history-esque introduction, where you build up from history, history of thought etc. rather than THIS IS DEMAND SUPPLY LOOK WORK OUT THE EQUATION!

  2. I think you are comparing apples an oranges here. Krugman doesn't talk a lot about the micro becuase he is focused on the pathology of the macro. I think the real issue is how much economists think that the theoretical efficiency of perfect competition characterize all markets and/or whether it describes the economy as a whole.

  3. You might also want to mention the trade-off an economist would get with regard to blogging...

  4. I have a question about the intellectual history of economics. (I'm a newbie trying to self-teach myself the this might sound stupid). When did the market-based economy become the consensus for academic economists?

    Socialism, Marxism, etc were ideologies that held great sway among many great intellectuals for a long time. But these folks appear to be mostly philosophers and sociologists and various public intellectuals.

    So, was there a time when Keynesian and Classical economists stood tougher on one side of a university's econ department and duked it out with the Socialists and Marxists on the other? If so, when did this end.

    It just seems that modern macro-economics is taught as Keynes v his Right-Wing critics. But what about the left flank? Where do they fit in the mix?

    1. Manju: The left-wing, being that of the Marxists? For the most part, they were moved out of the universities in the McCarthy era. There exist outlets for Marxists like say, the University of California at Riverside and The New School, but there aren't that many.

      However, the Marxists did criticise John Maynard Keynes for being a defender of capitalism. There's a book detailing how officials in the Soviet Union was afraid of John Maynard Keynes and his General Theory, and I don't think the Soviet Union's intellectuals or propaganda machine ever had an adequate theoretical counter to the General Theory.

      John Maynard Keynes himself rejected socialism in the General Theory.

      You can also read Keynes's Essays in Persuasion, which contains an essay showing Keynes's opinion of Marxism, Socialism, and Soviet Union. It's a lucid work of prose that condemns the stupidity and cruelty of the Soviet experiment, but ends with a tinge of optimism that Russia has some hope beneath all of that misery.

    2. Thanks Blue. I was actually looking for that something about Keynes and Socialism/ Communism. Regarding McCarthyism...that does literally answer my question, but that particular removal of Keynes' left-flank was a political, not intellectual, phenomena. After all, we could take a look at European Econ departments I guess.

      I was curious about when economists stopped taking far-left ideologies seriously. If Keynes was engaging them, they must a have been worthy of engagement. But at some point, that stopped. When?

  5. I confess that when I saw "how capitalism is great because it gives us dishwashers" I thought it meant people who wash dishes. ;)

  6. Interestingly, 1990's Paul Krugman reads very differently than the one we know today. At times he sounds like a libertarian flame-thrower. In "Ricardo's Difficult Idea" he compares those who doubt Comparative Advantage and its implications for free trade to those who doubt the Theory of Evolution:

    "At the deepest level, opposition to comparative advantage -- like opposition to the theory of evolution…"

    He goes on to label anti-globalization activists as enemies of the world's poor. From " In Praise of Cheap Labor":

    "The lofty moral tone of the opponents of globalization is possible only because they have chosen not to think their position through. While fat-cat capitalists might benefit from globalization, the biggest beneficiaries are, yes, Third World workers."

    From, "Reckonings; Hearts And Heads":

    "So who are the bad guys? The activists …whatever their intentions, are doing their best to make the poor even poorer."

    In "Capitalism's Mysterious Triumph" he points out:

    " ... we take the triumph of capitalism as something preordained by the superiority of our economic system. After all, it now seems obvious to everyone except North Korea and Cuba that a market economy is vastly more productive than one controlled from the center - and the Cuban economy is imploding, while the North Koreans are quite literally starving to death. Moreover, every time a Communist regime collapses, it turns out that the actual state of the economy it governed was far worse than anyone had imagined. For example, typical estimates of the GDP of East Germany before the old regime collapsed put its real GDP per capita at 70 or 80 percent of the West German level - meaning that East Germany was actually richer than some regions in the West. Yet after the fall of the Berlin Wall, visiting Westerners found something that looked like a Third World economy, with antiquated factories (and disastrous environmental problems) producing consumer goods of ludicrously low quality (like the notorious East German Trabant, an automobile that makes a Honda or Ford seem like a Mercedes). We used to think that the Soviet Union had an economy about half as large as America's, that is, bigger than Japan's; nowadays Russia seems to have less economic power than, say, Italy. We used to think that there was a real technological race between socialism and capitalism; nowadays the symbol of Russian technology is the hapless Mir space station. It seems obvious to many people in retrospect that the productive and technological triumphs that Communists used to claim - all those heroic photgraphs of dams and posters of muscular steelworkers - were mere propaganda; in reality, we think we have learned, socialism is a system that just can't deliver the goods, while capitalism is."

    So at this point in time, Krugman is more like Don is now. He thinks its important to point out the obvious (" now seems obvious to everyone except..."). So I guess my question is, when was the latest date when all this was not obvious (to academic economists)?


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