History of Economics Playground

After removing all the historians of economics (and pluralist economists) from the economics department in 2003, Notre Dame University are now planning to shut down the department which they were all placed in. This at a time when the mainstream is ‘officially’ re-thinking its stance to pluralism seems like further indication that there is no such re-think going on. This has sparked comment from a previous faculty member, Teresa Ghilarducci and others like Fred Lee, the open economics blog and The Observer.

The original argument (if we ignore the in-fighting, politics, and bad feelings towards the pluralists-slash-historians) was that the Mainstream people were publishing in ‘better’ journals. Despite the fact that the pluralists and historians were more productive (in terms of research), their work did not go into certain star ranked journals. So the classification and ranking systems comes back to haunt us. We have already discussed the attempts to re-classify HET in Australia, and there has been some changes to classifications in Europe and Australia despite this (I seem to recall). But this is where the battle lines have been drawn. Not by us, but by economics departments who wish to appear to be doing ’serious’ work, and appear to be doing so to outsiders. The public debate on the value of mainstream economics will (eventually) die down again. Just as it did after the 1998 Financial Crash (which supposedly discredited the Scholes-Merton work), and after the 2001 bubble. When it does, we will be left with mainstream economists who are patting each other’s back for getting us ‘out of the crisis’, a public which evaluates the discipline on ranking metrics and a repeat of history once more. Or maybe there is something which can be done?

The current crisis questioned the extent to which economics has produced “useful” knowledge, in particular the areas of macroeconomics and financial economics. There has been another round of criticisms and of defenses that may interest historians and economists alike.

The Economist, Jul. 18th 2009, Cover

The July 18th edition of The Economist had in its cover a melting wax-like book titled “Modern Economic Theory”. In it there are two interesting articles appraising the developments in macroeconomics and in financial economics (and the hypothesis of efficient markets) and the problems these economists have had in dealing with the crisis.

After that, the Nobel Laureate Professor of Chicago, Robert Lucas, has written an article to the magazine noting that:

both pieces were dominated by the views of people who have seized on the crisis as an opportunity to restate criticisms they had voiced long before 2008. Macroeconomists in particular were caricatured as a lost generation educated in the use of valueless, even harmful, mathematical models, an education that made them incapable of conducting sensible economic policy. I think this caricature is nonsense and of no value in thinking about the larger questions: What can the public reasonably expect of specialists in these areas, and how well has it been served by them in the current crisis?

Lucas goes on to defend Fama and the efficient hypothesis market and to argue against the “caricatures” in The Economist’s briefings (in the macro piece, mainstream macroeconomics is referred to as “dark age of macroeconomics”). He recasts his view that the crisis is an adverse shock that has being dealt with by many macroeconomists over the last two years. In doing so, these economists have “drawn on recently developed theoretical models when they judged them to have something to contribute. They have drawn on the ideas and research of Keynes from the 1930s, of Friedman and Schwartz in the 1960s, and of many others.”

More recently, a new round of criticisms has started in the United Kingdom. The Queen has visited the London School of Economics on November 5th last year and has asked there why had no economists noticed the crisis that was on its way? On July 22nd, 2009, Professors Tim Besley (LSE and external member of the Bank of England monetary policy committee) and Peter Hennessy (Department of History, Queen Mary, University of London), on the behalf of the British Academy, wrote a letter to the Queen giving the consensus view that emerged during a forum promoted by the British Academy a few days earlier, whose theme was “The Global Financial Crisis: Why Didn’t Anybody Notice?” They summarize this view as following:

So in summary, Your Majesty, the failure to foresee the timing, extent and severity of the crisis and to head it off, while it had many causes, was principally a failure of the collective imagination of many bright people, both in this country and internationally, to understand the risks to the system as a whole.

A group of ten dissident British economists felt that Besley and Hennessy’s letter did not address the heart of the issue: “that in recent years economics has turned virtually into a branch of applied mathematics, and has been become detached from realworld institutions and events.”  They wrote another letter to the Queen explaining their position. Among them, one finds Sheila Dow (University of Stirling), Geoffrey Harcourt (Emeritus, University of Cambridge, University of Adelaide), Geoffrey Hodgson (University of Hertfordshire), and Malcolm C. Sawyer (University of Leeds).

Let’s see what comes next.

Following up on Loic’s previous entry, what to do with the most brilliant idea for which you find absolutely no proof or information? It starts with those mildly annoying frantic searches for secondary literature on an issue related to your topic which you don’t want to discuss, but want to refer to in a footnote nevertheless. It includes questions such as Was Adam Smith homosexual? (he must have been – I’m absolutely sure). But above all, it encompasses all those daily questions regarding your topic you simply cannot answer because there is absolutely nothing to answer it with. What to do with them?

And PS: What’s  the ratio answerable/non-answerable questions?

These last days, I have received – like some of you I guess – two guidelines about how to do a master or a Phd Thesis in history of economics. That is too bad that I completed mine 10 years ago! Anyway, I am not sure that these pieces are really useful for it very much depends on what is the conception of history of economics you have and you intend to convey in your work. The best advice I can give – and that is the way I proceeded myself – is to look a recent Phd Thesis from someone you respect as a scholar and whom you feel shares your general methodological outlook, and use it as a kind of reference document.  Receiving these guidelines made me wonder about the fact that in the blog, which is made by if not made for young (and not so young anymore) scholars there is, indeed, very little information about one organizes his research work.

There was a time, not so long ago, when the would-be historian of economics can safely go on the first day of his research the university library, inquire the librarian about where the complete works of Ricardo (by Sraffa) or the complete work of Marx (or Keynes or Hayek) were and very much sit here for the rest of his Phd Thesis. This is not the case anymore and it is now common and almost an obligatory requirement for a Phd student to have done some archival work. However, doing the Archives can be a very different – sometime nice, sometime quite painful – experience depending on which Archives you go. A few looks like that:

But quite often, you end up like this nice looking young researcher on the left. This image might look scary, but you may have gotten the wrong idea. Because for all the reassuring neatness and geometrical perfection of the archive below, the archivist may have done a very lousy job in cataloging it, meaning that you probably would have to open half of the drawers and go thoroughly through their content to get anywhere. Whereas, on the other hand, the half-smiling women might very well be the curator who knows in detail the content of the folders she is actually browsing for preparing the new catalog and you would get what you want in less than an hour!

More seriously, when looking forward to do an archive, it is very important to understand that the easier you get the information – by browsing on a digitallized catalog for example – the less chance you have to find something really new and unexpected. On the other hand, when you are inquiring about an archive on which you have very little information it is most important to keep a very open mind and to be a little stubborn even when the odds seems against you. Moreover, keep in mind that curators or archivists made mistakes and have limited knowledge of the content of their own archives. When one has been working for a long time in a specific archive, one often knows it better than its own curator.

Let me share a recent – last week in fact – experience I had in the Archives of the Museum of Science and Industry in Chicago.  In the context of a research project we are conducting with Yann on the visualization in US economics, we became interested in the Vienna economist and philosopher Otto Neurath and its possible connections on the other side of the Atlantic. As one of the former directors of the MSI was cousin to the economist and philosopher Otto Neurath, we inquired about the possible existence of a correspondence between the two cousins. We were told by an assistant curator that there was no correspondence. Indeed, as I discovered last week, the same assistant curator had been already sollicited, two years ago, by another researcher for the same piece and after working on it for a few days was unable to find it. The same researcher who was preparing a book on Neurath e-mailed the MSI  again a few months later because he would go to Chicago for a conference, asking if it was worthwhile passing by the Museum archives to give a try about the correspondence. As the assistant curator repeated to him that he was unable to find anything, the researcher decided not to come. Hence, when he answered to our query, the assistant curator was pretty sure that there was nothing to find.

Being in Chicago for another project, I decided to give it a try anyway and spend a few days, at least one, in the MSI archives. The first day, I came with my sole computer not knowing if there was anything worthy. Looking through the inventory (made by the same competent assistant curator mentioned above) I did find a few things, enough to spend the whole day there and too decide to come back two days later with a digital camera to save my findings. I did not find the correspondence though: at the letter “N”, there was no folder “Neurath”. However, I found a mention to a letter the former MSI Director received from Neurath in one of the documents I read. It was enough to convince that there might be something that have been missed. On the second day and after digitallizing what I had found , I decided to go ‘fishing’. What I did was fairly simple and obvious, instead of looking  at the name of the person, I looked at the name of the institution he was in charge at the time (the Vienna Museum of Economy and Society). And, indeed, I found the correspondence: dozens of letters and a few important documents that were supposed not to exist. Later on (I came for a third day), I tried to force my luck and repeat the same procedure with another individual. But this time I end up in a dead endd: the box I wanted to look at was nowhere to be found (I was looking for the box with the letter P, but the boxes between M and R were missing). We looked with the assistant curator in the premisses, but nothing! However, instead of calling it a day I asked for another kind of documents (pictures) to spend the two hours that were left for my last day at the archives. The assistant curator took me to the location where the pictures were archived but we were unable to find any of interest for me. Out of sheer curiosity, I browsed the shelves and look at the name on the boxes that were around, just to find the correspondence box I was looking after a few hours before. Inside was indeed the piece of correspondence I expected and a few valuable documents.

To sum up this very long post:

- When there might be a chance you can get an important piece of information or documentation in an archive, but you are told that there is nothing by the archivist. Try to verify it by yourself and take the necessary few days to do it properly. If you find nothing, which happens quite often, you may have lose a few hours or a few days, but if you find something unexpected you may have gain an easy and good article or a chapter from your forthcoming Phd thesis, which may in turn launch or speed up your career.

- When you plan to do an archive, use all the time you have even if the odds are that you ain’t gonna get anything more.

- Keep an open mind, if you do not find something at the obvious location it does not mean it is not there, it might have been placed somewhere else because the archivist does not have the same logic as you (you are thinking names of individuals and he sees names of institutions, or the reverse) or because it have been misplaced (shit happens).

- Do not lose heart. Especially when working on a archive that has not been properly catalogued or arranged. Quite often, the first hours or even the first days are not very useful: you do not know how to begin, what you are really looking for, you do not understand the logic of classification (which is almost always different in each archive). You may have the impression that it is like finding a needle in a haystack, there is however one big difference: when the archives are classified and most of them are, it means that there is a logic to it, you just have to find it! – Needless to say that it is easier say than done.

You can call it scandalous; you can call it Mickey Mouse; you can even call it fried chicken, if you want. But the session titled “From History of Economics to Histories about Economics” at the last HES meeting in Denver was just a thrilling experience. Let me explain in a few words what its purpose was. The last few years have witnessed the development of a literature about the history of economics outside of our field. Historians of science, economic historians and journalists (among others) have begun to write about the same issues we are (supposed to be) interested in and most of the time, they do not quote historians of economics. How did it happen? It is very simple, actually, and could be summed up in Stanley Fish’s terms: 1) Do your job, 2) Don’t try to do someone else’s job, 3) Don’t let anyone else do your job. Historians of economics have tried to act as economists, using the past to build alternative economic models or criticizing mainstream economics on its own terms. By doing so, they have created a “What If” History of Economics, one that builds parallel stories that can be understood only within the community, but offers virtually no insight on its recent developments, its status as a science or its cultural influence. On the other hand, you have another kind of accounts, such as Naomi Klein’s Shock Doctrine. They provide a more caricatural view of the economist as a torturer, mass-murderer and conspirator. Historians of economics may find them shocking (that’s the word, indeed), misinformed, misleading and dangerous, but those accounts have a significant appeal beyond our small community, and by refusing to address them in some ways, considering them as popular rubbish, we choose to remain in self-referentiality.

During this session, Loïc Charles, Harro Maas and Tiago Mata presented a perspective on the future developments of our field, not by restating previous positions, but by looking at possible new ways of doing the history of economics. Looking at recent developments in other fields such as history of science, economic history and political science, Loïc observed that non-disciplinary histories of economics are currently being written, offering a new intellectual space of trade between these various communities. Harro, by resorting to the metaphor of the historian as a curator, showed that we can build new narratives on the history of economics if we try to go beyond the text, arranging economics as a series of objects. For someone like me who studies the place of visual representation in economics, this metaphor has a strong appeal. I look at the large amount of visual materials I collected over the years (books, digital pictures and scans) and realize I use them in a very conservative way in comparison to the vast possibilities that are open if I think of them as pieces of art which would have to be curated in an exhibition. Would it provide a different kind of history? Last but not least, Tiago used Fish’s concept of interpretive communities to construct a picture of the public imagination of economics in recent works, without distinction between works intended for an audience of specialists and those intended for a larger audience. In Tiago’s account, indeed, there is no “audience” understood as this abstract mass of people out there, there are only anonymous individuals, internet users and bloggers, all contributing to create some understanding of economics.

I would not assert that these papers are perfect. They were intended for discussion rather than for immediate publication and I should say that the presentation itself seemed to me better than the actual papers. The presentation, actually, was quite spectacular. It had a kind of restrained violence toward the audience – the violence became less retrained during Tiago’s presentation when spectators were exposed to Klein’s striking rhetorics by way of graphic images – and the tension was palpable. In the same way art history has gradually given way to visual studies and visual culture, these papers may be viewed as an attempt to get rid of the “old” history of economics and to replace it by “economics studies” or “economic culture”. This is not a mere question of wording, it is a deeper transformation of our field. The skepticism of many attendants, explicit or implicit, makes sense.

(if the persons pictured would like to see their portrait removed, please send me simply a note).
HISRECO: Annual conference in HIStory of RECent ECOnomic thought, taking place in Europe.
HES: History of Economics Society, gathering in the US or Canada.

The same album, but quicker to browse (smaller-sized pictures), is available here: http://www.facebook.com/album.php?aid=121531&id=522296095&l=14fd88058c

This generous, albeit unoriginal, assessment met my presentation at the 2009 HES meetings. It came from a prominent member of our profession. We share a profession. We don’t share a craft. We work on similar subjects and materials but we make of them different artifacts. After laborious cutting, assembling, and tinkering, I get an argument on how ideas co-produce society and culture, some of my colleagues conclude on the rightness of economic interpretation.

My folly?

Politeness does not come with seniority and there is no reason why it should. Tenure is after all full dominion over self. However, lack of seminar manners towards an initiate, like me, seems to contradict the rhetoric of “nurturing” young scholars. It may be that contributions of the young are welcomed provided they remain within the fold of the old. It would be a strange reversal of the world if the established had to listen, or even consider, the arguments of the junior staff.

Despite my bitterness, and after all has been said, “Mickey Mouse” is not a bad label for someone trying to make sense of popular culture and economics’ part in it. And, I do have big ears…

Mild and cozy are the attributes of most conferences I go to these days. My peer group is deficient in Messianism: historians of economics generally do not proclaim themselves world saviors. You don’t get big speeches or melodrama, or wolfish competitiveness. The faces repeat and so too the conversations. Then, what you lose in novelty you get back in friendly admiration.

Exceptions to the rule come by design. For some years, the History of Political Economy Group at Duke University has run annual conferences, where by invitation, open call or a cocktail of the two, they have brought historians and practitioners to converse with our tribe. This year the topic was “The Unsocial Social Science? Economics and the Neighboring Disciplines since 1945″, organized by Philippe Fontaine and Roger Backhouse. Doubling as whistleblower and anthropologist I don’t want to rerun the good fare of the meeting (buy the book when it comes out, or rent the DVD).

Here is some stage setting. The meeting was held in the Terry Sanford Institute of Public Policy. The building resembles a closed courtyard with the meeting rooms and offices squaring an inner core, whithin a set of stairs level with sofas and tables halfway between floors. To me it evokes the Hanging Gardens of Babylon. (I once saw it full, all the way up, into the corridors, as people crowded to hear Paul Krugman.) In the conference meeting room were about 20 conference participants, discussants and observers. The attendance was made up of historians of economics and historians of social science. The proposition of the meeting was that everyone would speak authoritatively about the social sciences with special attention to economics’ place in post World War II dynamics.

Here is what happened. They danced. (Ok, i am writing this late while listening to remixes of Shakira!) That is the best analogy I can find to describe the mood in the room. The historians of social science were careful not to step on the economics, mostly they avoided making any moves that direction, waiting for historians of economics to lead and fill in. The historians of economics were equally prone to immobility in swinging into other social science histories. This conference opened up the realization that “neighboring” historians need to practice the dance. In the politeness hid a deeper estrangement. What held them up was a sort of Orientalism. Historians of social science from their historiographic vantage point saw economics as the other, monolithic, right leaning, authoritative, isolationist and imperialist; the Other. Historians of economics saw it as a Self: diverse, layered, complex, alive.

In the twentieth century, the social sciences have scraped, overlapped, intersected, in think tanks, in government offices, in rhetorical scripts and cultural imperialism. Historians look at snapshots of contact and contrast. The questions tend to be ones of difference. Why this won and that lost? Why this is turquoise and that one pink? My suggestion is to divert our gaze from the boundaries parsing economics, psychology, sociology. Abandon the case studies. Look at the social sciences in narratives as a cultural force shaping public life. The identity game is expelled, projected out. We are left with science and society.

This Thursday and Friday I observed attendance to a workshop organized by my colleague at the University of Amsterdam, Harro Maas. The workshop was the first major event of a 4 to 5 year project considering methodologically and historically the practices of observation in economics. Following the “house rules” the project will draw comparisons between the social and the natural sciences. In attendance of the workshop were a number of big names (and brains) in the history of science and economics, and I felt this strange weight on my shoulders as I awaited my turn to speak. The presentation was about how Leonard Silk used drama to communicate with economists and his readers, and was itself tragic. No one was really sure what my paper had to say about observation.

I had not thought hard enough about what I knew about observation and what I wanted to say about it. In studying economic journalism I try to consider it as a an observational practice, but it is hard to follow journalists as they skim through a sea of sources, interests, pressures, conventions. I have tended to leave that part of my story for a later date. Instead, I have studied how, between 1950 and 1970, stories about economics changed, and how the status and place of economic journalism has evolved in the publishing business. Yet, as I follow journalists in conversation with economists, with readers, with editors, can I say that they are only producing content and not collecting it? Can I say that there is no observation in communicating?

Considering other papers in the workshop among my favorites was Tom Stapleford’s story of how “field agents” from the Bureau of Labor Statistics turned from “experts” with a intuitive knowledge of communication, into “operatives” following well designed data collection scripts. The BLS was disciplining its employees. This kind of “panoptic” observation seems to be the rule of modern bureaucracies. The observer is himself observed by an architecture of procedures. The observer observes the other to gather data and himself to enforce rules of objectivity.

This takes me to the relationship between the observed and the observer and how many combinations one might have. Ted Porter’s story of Le Play noted how class and ideological membership separated the social scientist from his subject, requiring the intermediation of town mayors. The same problem was manifest in Anne Secord’s account of studies of the condition of the Manchester poor (F. Engels gained access through his Irish lover). It may be that natural science observation has contently employed various forms of eye holes, while social sciences, people studying people, has required a different kind of optical/social technology. Although at times social scientists will remain behind the door, looking in silence, they will often engage their subject. In this sense, journalists ad my story seem less exceptional. Journalists communicate, and they observe while communicating, and they develop strategies to construct identity and difference from their subjects: the economists and the public. They do it to seduce and provoke. They do so to initiate a conversation and a relationship without which there is nothing to observe.

Sometimes, we tend to focus so much on the decline of our discipline that finding names like Keynes and Hayek quoted by a newspaper’s columnist appears as a very exotic discovery. Historical arguments might not be used anymore by members of the economics profession but, obviously, some (Republican) media pundits think they’re still useful, especially when a financial crisis seems to unblock the road to socialism (or serfdom, depending on your opinion on current issues).

So here is reproduced, without further comment, Dick Armey’s column published on Feburary, 4th by the Wall Street Journal:

“In the long run, we are all dead,” John Maynard Keynes once quipped. An influential British economist, Keynes used the line to dodge the problematic long-term implications of his policy proposals. His analysis of the Great Depression redefined economics in the 1930s and asserted that increased government spending during a downturn could revive the economy.

President Barack Obama and congressional Democrats (very few of whom likely have read Keynes’s 1936 book “The General Theory of Employment, Interest and Money”) have dug up the dead economist’s convenient justification for deficit spending in defense of their bloated stimulus legislation. But none ask the most important question: Was Keynes right?

According to Nobel economist Friedrich Hayek, a contemporary of Keynes and perhaps his greatest critic, Keynes “was guided by one central idea . . . that general employment was always positively correlated with the aggregate demand for consumer goods.” Keynes argued that government should intervene in the economy to maintain aggregate demand and full employment, with the goal of smoothing out business cycles. During recessions, he asserted, government should borrow money and spend it.

Keynes’s thinking was a decisive departure from classical economics, because arbitrary “macro” constructs like aggregate demand had no basis in the microeconomic science of human action. As Hayek observed, “some of the most orthodox disciples of Keynes appear consistently to have thrown overboard all the traditional theory of price determination and of distribution, all that used to be the backbone of economic theory, and in consequence, in my opinion, to have ceased to understand any economics.”

Classical economists up to that time had emphasized a balanced budget and government restraint as the primary goals of fiscal policy. The simplistic notion that “aggregate demand” drove investment and employment threw all of that out the window, but it had one particular convenience for policy makers. Government spending is, according to Keynes’s construct, a key component in determining aggregate demand, so more spending, even to resod the Capitol Mall or distribute free contraception, drives the economy in the short run.

A father of public choice economics, Nobel laureate James Buchanan, argues that the great flaw in Keynesianism is that it ignores the obvious, self-interested incentives of government actors implementing fiscal policy and creates intellectual cover for what would otherwise be viewed as self-serving and irresponsible behavior by politicians. It is also very difficult to turn off the spigot in better economic times, and Keynes blithely ignored the long-term effects of financing an expanded deficit.

It’s clear why Keynes’s popularity endures in Congress. Intellectual cover for a spending spree will always be appreciated there. But it’s harder to see any justification for the perverse form of fiscal child abuse that heaps massive debts on future generations.

Today, one problem with manipulating the economy through “discretionary” spending — that part of the budget not mandated by one entitlement or another — is that entitlements have grown large enough to influence the economy, a phenomenon unheard of when Keynes was alive. Medicaid, Medicare, Social Security and other entitlements are becoming larger factors in economic decision making than what Congress spends on, say, roads. Discretionary spending is becoming irrelevant as a fiscal tool.

Of course, despite Mr. Obama’s campaign promises to adhere to “Pay As You Go” budgeting, no one seems terribly worried about paying for what will likely be a trillion-dollar stimulus package. What everyone should agree on is that the money has to come from somewhere, either through higher taxes, borrowing or printing.

If the government borrows the money for the stimulus, then it will either have to print money later or raise taxes to pay it back. If the government raises taxes to pay for the stimulus, it will, in effect, be robbing Peter to pay Paul. If the government prints the money, it will increase inflation, which will decrease the value of the dollar. That would, in effect, rob Paul to pay Paul back with devalued currency.

Taking money out of the private economy — either through taxes or inflation — and spending it in a way that doesn’t offset the loss of money with real economic gains is worse than doing nothing.

Years ago I developed the “Armey Curve” to explain the negative burden government has on prosperity. The idea, borrowing liberally from Arthur Laffer’s curve (which demonstrates that tax revenues fall when the tax burden gets so high that it no longer pays to work), is that at some point the burden of government spending exceeds the private economy’s ability to carry it. “Stimulus” spending often does more harm than good, because it takes more money out of the system than it creates and thereby destroys jobs and leads to stagnation and diminished prosperity for all.

Hayek, who famously debated Keynes in a series of articles after the release of “General Theory,” gave what I believe to be the most devastating critique of government action to stimulate “aggregate demand.” Hayek viewed the boom and bust of the business cycle as primarily a monetary phenomenon created by governments’ artificial inflation of money and credit.

Sound money policy, conversely, allowed the disparate knowledge of millions of economic actors to be conveyed through the price system, rationally allocating capital and labor through relative prices. The problem with government attempts to manipulate the economy through fiscal policy — spending that takes resources away from those who are productive and redistributes it to politically favored interests — is that it is audacious. It assumes that government knows better how to spend and invest than individuals acting in their families’ best interest.

“The real question,” according to Hayek, “is not whether man is, or ought to be, guided by selfish motives but whether we can allow him to be guided in his actions by those immediate consequences which we can know and care for or whether he ought to be made to do what seems appropriate to somebody else who is supposed to possess a fuller comprehension of the significance of these actions to society as a whole.”

In reality, no one spends someone else’s money better than they spend their own. The charade of the current stimulus package, chockablock with earmarks to favored pet constituencies and virtually devoid of national policy considerations, is the logical consequence of Keynesianism in action. It is about politics and power, not sound economics, and I believe that the American people will reject it.

And because, it is even more unlikely to encounter the signature of a historian of economics in the popular press, here is Kevin Hoover’s response, published as a letter in the February 10th issue of the WSJ:

Regarding Dick Armey’s “Washington Could Use Less Keynes and More Hayek,” (Feb. 4): A wholly justified admiration for Friedrich von Hayek should not encourage Mr. Armey to quote John Maynard Keynes out of context. His most famous quotation comes from his “Tract on Monetary Reform” (1923) — perhaps his most orthodox economic work and a favorite of Milton Friedman. It is offered not as a justification for ignoring the ultimate consequences of the policies thought to follow from his more famous “General Theory” (1936), but as an observation that monetary policy is not neutral but has real effects (for example, on output and employment) in the short run — a point fully supported by Friedman. Rendered more fully, it says: “But this long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past, the ocean is flat again.”

It’s a fact: We live in the short run. Keynes’s point, to which Mr. Armey surely assents, is that what matters about a hurricane is whether the house collapses on the family. Mr. Armey could be right that some future short runs will be worse if we follow Keynesian demand-management policies. Houses will collapse in future hurricanes, but the issue is still what happens in some short run.

I must say that I feel slightly uneasy about giving an account of the workshop since I organized the meeting.  I will try however to be as honest as possible.

There were six papers presented (the full program can be viewed here: http://economix.u-paris10.fr/fr/activites/ws/?id=81&page=programme) – 2 in the morning, the others in the two afternoon sessions.  The Q&A was reasonably interesting and I think most of the presenters would benefit from it. The first paper was from Regis Boulat, a young French historian, on Jean Fourastié – author of several popularization essays on economic topics from the 1940s to the 1970s. The second paper was on Haavelmo and presented by Eric Chancellier.

In the afternoon, Evelyn Forget from Manitoba University (re)opened fire with a paper which discusses XVIIIth and XIXth century practices of translating scientific and economic texts in interaction with the problem of authorship and gender. She was followed by a very nice presentation by Peter Knight (American Literature – Manchester University) with a lot of interesting visuals on the place of the stock ticker in late nineteenth-century financial market culture.

After a short break, we listened to Roei Davidson (Communication department-Haifa University) who spoke about the role of the business press as an agent of economic culture. And, last but not least, we had the pleasure to attend to Tiago’s Mata very lively and thought-provoking presentation on the media history of the on-going financial crisis. I was then suppose to open a general discussion, but it was late and we were all tired so I call it a day and everybody packed and went home.

I will not comment on individual performances, although there was as usual great diversity in this regard, but rather try to summarize the different impressions I got from organizing and attending this workshop.

First, I was pleased by the general atmosphere that emanated from the workshop. In particular, the fact that non-economists did not feel the need to differenciate themselves rhetorically from the economists (or the reverse). I have seen too many economists’ conferences/workshops with one or a few other social scientists that displayed every signs of being very aware to be strangers in a strange land (or the reverse) to not appreciate that this was not the case here. Everybody simply presented his/her piece of research without any need to situate it into a specific disciplinary context. Hence the conversations were lively and tended to focus  on content rather than audience. I believe that the notion of culture had been crucial in this respect, because many social scientists can relate to economic culture or the culture of economists but feel estranged to economics per se.

This leads to my second point, which is the sentiment I have from this workshop, as well as from contacts I had prior to it with individuals that could not come,  is that history of economics as culture seems to be a worthwhile field of investigation for those historian of economics interested in interdisciplinary research – I am eager to know the feeling of readers of this blog on this issue.

My third point is a reflection on what I had in mind with the double title “History of economics as culture – Histoire des savoirs économiques”, for the English title is open to some interpretation and the French title meant something apparently quite different from the English – at least several participants questioned me on these issues. What I was interested in (and still is) was having a set of papers that cover two grounds:

1. To consider the possibility of a cultural history of economics, that is to study the interactions between the medium that conveys economic knowledge and its content, either intrinsic or perceived content.  To this category belongs I think Boulat, Davidson and Forget’s paper.

2.  To account for the interactions between economic knowledge in whatever form (text, media documents, objects) and specific cultures, be it professional, artistic or more general.  To this category belongs I believe Chancelier, Knight and Mata’s papers (though the latter can also claim to partly belongs to the former category). In this regard one of the things that I would have liked to be more prominent (only Knight’s paper deals somewhat with this aspect) was the representation of economic relationships and knowledge in the arts – literature and visuals arts being my most obvious candidates.

To conclude, I intend to repeat the experiment next year.

All the little men and women are appearing by courtesy of the Gerd Arntz web archives (http://www.gerdarntz.org/home)

I’ve never been especially supportive of the attempt to describe academic professions by means of the market metaphor, which seems to me too narrow a frame. However, a recent piece by Neal Young, John Ioannidis, and Omar Al-Ubaydli caught my attention. They argue that – just like the winning bidder at an auction – the editors of scientific journals may be over-betting.

The average bid in an auction is likely to get close to a reasonably ‘true’ value. However, accurately predicting the value of a good affords no reward, because it is not the average bidder who wins. ‘The Winner’s Curse’ is a catchphrase suggesting that the winning bid in an auction must come from the bidder who holds the highest expectations about the present value of a good of uncertain value – which is very likely to be too high.

In Young et al.’s paper such good of uncertain value is ’scientific information’. They suggest that the more trials and repetitions have been conducted for a scientific study, the more likely it is that the scientific community comes to an agreement about its ‘true’ value. As in the auctions, however, these are not the results that get published in top-tier journals. Instead, editors may be biased to grant preferential publications to “extreme, spectacular results”. Regrettably, these results turn out to be ‘false’ all too often. Young et al. report that, of the 49 most-cited papers on the effectiveness of medical interventions published in top journals in 1990–2004, 25% of the randomized trials and 83% of the non-randomized studies had already been contradicted by 2005.

Given the artificial scarcity of good publication outlets, and the large supply of scientific papers, the market for scientific information is bound to fail. Oligopolistic editors serve as middle-men between the producers (scholars) and the consumers (other scholars, funding bodies, society-at-large) and bear minimal costs for their failure to select valuable scientific information. The curse, in other words, befalls the consumer. Who is, let me add, either in a weak position to fight back (if she is not a scholar herself and so suffers from asymmetric information) or in a conflict of interest (if she is a scholar).

The authors conclude that “there is a moral imperative to reconsider how scientific data are judged and disseminated”. Since when do market failures entail moral indignation? Perhaps this owes to the fact that only Al-Ubaydli is an economist, while Young and Ioannidis Medical Doctors and that the article has appeared on a medical journal.

If you definitely want to prevent an undergrad from doing research in HET, you just have to show him Box 1 of Patinkin’s papers at the Duke Library. This is where are stored the raw materials Patinkin has collected to write his 1973 AER piece on Frank Knight’s “Wheel of Wealth”.  The archives show that Patinkin has looked at many books, textbooks and documents to find the origin of the diagram Knight used in the classroom and in his Economic Organization to represent the allocative functions of the price system in a capitalist economy.

The list of books Patinkin has scanned for this research is pretty impressive: it goes from Cantillon to Taussig and includes the works of Bastiat, Cannan, Marshall, Ely among many others. Most often, it ended up with a “no relevant diagram or text” scribbled under the reference. Then he went on with the books and textbooks that contain diagrams and pointed them out, noting the relevant pages and adding some stark comments: “some diagrams are pictures, not analytical diagrams” (on Fisher’s introductory text), “a lot of diagrams” (on Marshall’s Principles, which he didn’t bother to enumerate). He wrote to the University of Chicago’s archivist, obtained some copies of Knight’s unpublished manuscripts, wrote to Samuelson (the letter is mentioned in Knight’s article on “Frank Knight as Teacher”, which is also included in the same issue of the AER, but is not in the archives at Duke), wrote to McGraw-Hill, scanned the first eight editions of Economics, observed that Knight is not mentioned (except in the 2nd edition).

As you can expect, the result of all that is rather meager. The 1973 article does not locate the origin of Knight’s Wheel of Wealth, noting that it is possible that “it seems to have been original to him” (p. 1044). For the contemporary historian of economics – especially for the author of these lines -, it is also very frustrating. Like the 1973 piece, the archives show that Patinkin was fascinated (if not obsessed) by Knight’s diagrams but never unveil the reasons for this fascination.

Quite depressing, uh?

Well, yes …and no … because in fact, Patinkin’s unfruitful research produced two articles published in the AER (!) … and if we, the kids, could expect such a prestigious output every time we embark on a bibliographical research of that sort, I guess we would have already been considered for a tenure somewhere …

Yesterday was the Amsterdam-Cachan Fall Workshop, aka “research day,” in the history of economics. The venue was held in the seminar room of the Tinbergen Institute, neighbor to the Faculty of Economics of the University of Amsterdam. The room was nicely packed. Unbenounced to the participants there was a secret society infiltrating the event. Two of the presenters were members of this blog, and two more “kids” were in the audience. World domination is in our grasp.

Besides our two papers, there were presentations by David Gindis, University of Lyon 2, surveying a close and distant history of conceptualizations of the firm as a legal person/entity/fiction, and Chris Renwick, University of Leeds, giving the tortured history of sociology at the London School of Economics and its self design as social biology. Finally, Roger Backhouse gave a draft of his (and Philippe Fontaine’s) introduction to an edited volume on the history of Post-WWII social science. One should applaud this project for its originality and the wealth of the materials it was unearthed. (I learned, for instance, that psychology headed many of the interdisciplinary efforts of the social sciences!) Omissions are a disclaimer in such comprehensive histories, and Roger was rowing against a stream of criticism when the floor opened for questions.

I want to reject our academic navel gazing, and the belief that “the dynamics of academia is surely too complex to be captured in a book”, or an introduction to a book. It should be easier to write a history of post-WWII social sciences than a history of economics from Aristotle to the present. The project is feasible. The trouble is how to write it? How to structure your text to stack up the materials? One might structure the introductory survey in short segments. This is how the authors are drafting it, slicing sections suffixed “context” (too much “context” however endangers semantic spillage). The assumption is that academia despite its internal mutation and biodiversity was faced with the same environment. It is one way to strike sameness. But I would look for it at another level, thinking cohorts and generations. Imagine three generations, one coming of age in WWII, another in the Cold War, another in the 1960s, and follow that generation around. For each generation one could select a branch of social science (scientists) to describe. As one follows the travels of our Odysseus, one could remark on how other social sciences faired. The social science interactions would come out vividly from a microcosmic vantage point.

To conclude, I file my suggestion for the Cold War period, be the turtle…

Just bumped into the Duke University YouTube channel and high up on the Favorites list, guess who?