Sunday, February 9, 2014

Peter Boettke responds

Regular readers know that when I present a criticism of someone's position and they respond in the comments, I like to pull it up to a main post. The other day I raised some concerns about the Mercatus Center in general and the way a recent Templeton grant to the Hayek Program in particular was framed by Boettke. He responded:
"Daniel -- I assure you, this is about science and scholarship even when you don't like the conclusions. The only economics that is economics is microeconomics and in particular the economics of relative price adjustments. That isn't as outlier a position in the history of the discipline as you might want to believe. Also, I'd encourage you to read VERY closely F. A. Hayek's Nobel Prize address -- "The Pretense of Knowledge" -- and contemplate the challenge it represents to the entire macroeconomics project of the neo-classical synthesis. It is not a food fight to discus the logical coherence of a position, and its place in the sciences of man."
The comment is frustrating to me, but in a way that provides a nice illustration of the initial issues I raised. Take this whole issue (and it's not the first time Boettke has said this to me) that relative price economics is something foreign to either my position or the Keynesian position. It makes no sense. I don't know why anyone would think I, personally, "might want to believe" that it is an outlier position, but beyond what Boettke apparently thinks of me he clearly thinks the status of relative price economics is something that's questioned.

And if you read Boettke regularly you know that he particularly thinks it comes under fire from Keynes. To me this demonstrates a lack of the familiarity with the Keynesian position - both Keynes himself and modern Keynesians - and it provides an example of these artificial food fights that get ginned up between Keynes and Hayek. This is not science, in my opinion. I don't know what it is. It's like a pseudo-intellectual history that I don't think contributes to economic science. Obviously there are gradations of Keynes-skepticism. I am not saying that anyone that comes to the conclusion that there were problems with Keynes doesn't count as science. There is just a point where I get tired of this fight about how Keynesians or the left or fill-in-the-blank don't understand how markets or prices work.

It would be akin to Peter spending time discussing the intricacies of the arguments of people who thought that Austrians think everyone is a greedy atomistic individual. If Peter decided he did not want to spend his time on that and that it was more of a food fight than a serious scientific discussion of the Austrian position would anyone accuse him of just not liking their conclusions? Would I begrudge him that response? Of course I wouldn't.

I like to discuss economics with Austrians like Bob Murphy. He hasn't taken a traditionally academic career path like Peter (not that I'm currently planning to take one - this isn't judgement), but when you talk economics with him there is a common understanding that:

1. We are both on the same page on relative prices.
2. We are both on the same page on how markets work.
3. We are both on the same page on empirical work - its importance, its functioning, the sorts of claims it can and can't make.

And any number of other common denominators.

Our extensive back-and-forth recently on the minimum wage is only one example, but I can talk with him about Hayek and Keynes too and not have to deal with the constant instruction in mutually agreeable points (relative price economics) or the blowing out of proportion of very different ways of talking about what are fundamentally mutually agreeable points (market process).

When I compare Hayek and Keynes, for example, as I have recently in the pages of Critical Review, I want to talk about:

1. The main thrust of their models,
2. How the models worked,
3. How they are similar and different,
4. The theoretical merit of their models, and
5. The empirical work on their models.

And then I want to come to a conclusion.

I don't want to expound on the point that all economics is relative price economics and I certainly don't want to waste time defending Keynes on that point.

As I said in concluding my last post on this, I hope I'm wrong and the $2 million is not going to fund a lot of food fight economics of the sort we've seen in spades in the last five years. There are a lot of people doing good science at GMU - again as I had said in the last post. I want to see, for example, some GMU economists taking up the challenge offered by Luther and Cohen (2013) to Lester and Wolff's empirical work on ABCT. It's a point I had not thought of in writing my article up (which reviewed Lester and Wolff). It's a good point. It's a valid criticism of their empirical test. Does it mean Lester and Wolff were wrong? It's hard to say until we do some further analysis.

That would be awesome work on Hayek's macro work.

Hopefully that sort of thing will get done.

But when the program gets promoted with a line about how Keynesianism is a failure, I worry that that's not the sort of orientation of the program. First and foremost because that line presents Hayek not as a theoretician that is being tested by the likes of Lester and Wolff (and Callahan and Garrison and Mulligan and Carilli and Dempster and Schnabl and Hoffmann and Bismans and Mougeot and Wainhouse and Butos and Hughes and Powell and le Roux and Ismail and Young and Cachanosky and Whittle and Keeler and Weber and in a very tiny smidgen of an analysis, Kuehn) - he is instead presented as some kind of opposing figure to Keynes. But I also admittedly worry a little because a statement about Keynesianism being a failure should lead to a little bit of healthy skepticism just as in any science odd out of sync claims should be greeted with a healthy skepticism. "Don't reject it because of its conclusions" is true within reason. It's an extreme example, but we don't give flying spaghetti monsters a seat at the table. So we are at least entitled to some skepticism at certain conclusions. A little skepticism is not too much to ask for - certainly not in a science.


  1. I assume the only economics is microeconomics means the only analysis is partial equilibrium analysis. Good grief!

    1. This is certainly not what that means.
      For example, look at Buchanan (1989): "First, there is no place for macroeconomics, either as a part of our positive science, or as a realm for policy action. Second, the appropriate mathematics is game theory rather than maximization of objective functions subject to constraints. These apparently unrelated criticisms emerge from understanding and interpreting the economy nonteleologically, as an order, rather than understanding and interpreting the economy teleologically, as an institutional arrangement that is to be evaluated in terms of relative success or failure to achieve assigned, system-defined objectives."

  2. Not to beat a dead horse, Daniel, but I think you give far too much credit to Peter "9-to-5 economists" Boettke. I don't know what you expect!

  3. "It's like a pseudo-intellectual history that I don't think contributes to economic science."

    Exactly. Boettke's comment reads like someone who is wholly uninterested in appreciating the common ground (indeed, universality) between his research programme and virtually every other economics programme out there. Similarly, I have yet to come across a school of thought that is more insistent on denying the successes of their preferred thinkers within the mainstream than the Austrians.

    1. I think that we're putting a little too much stock in internet comments. His comment was a little moody and snippy, but I very much doubt that even Daniel would agree with your characterization of Peter.


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