History of Economics Playground

Paul Krugman’s New York Times article, How did economists get it so wrong? (September 6, 2009) was no doubt designed in part as a grenade to be lobbed at economics departments: to arouse anxiety and initiate discussion.  In that aim, if no other, it succeeded.  Last Friday, the grenade went off at Duke University, as the Center for the History of Political Economy hosted a department wide seminar to discuss the article.  The gathering was marked by a general sense of unease and unhappiness: some were annoyed by Krugman’s hypocrisy and tone and some were annoyed with the economics profession.  But many, as it turns out, still think that the greatest days of neoclassical economics are ahead of us and were very annoyed with Krugman for suggesting otherwise.

A macroeconomist, an economic historian and a historian of economics introduced the seminar.  The macroeconomist, clearly angered, promised not to speak for long, save to tell those assembled that the article demonstrated ignorance and vitriol: most of Krugman’s accusations were not true: macroeconomists were always trying to incorporate money and the financial sector into theory.  And as for Krugman’s argument that economists think that the more mathematically beautiful the model the better, nothing, we were told, could be further from the truth.  Testing theory against reality is all that matters to this macroeconomist.

The economic historian was less personally offended.  Krugman had raised some fair questions.  After all economists had not been sufficiently vocal in alerting the world to the unsustainable nature of the past few years and perhaps the emphasis on modeling had produced a certain selective blindness.  Finally, the financial sector had clearly not played the role in economists’ models that it should have done.  Still, the question remained: what is the ‘real’ problem here for economists?  Is this about the reputation of economists, a little bit of hurt pride; or is the economics profession actually part of the problem?  After all, the question was posed, how much influence does university economics really have on policy anyway?

Well, of course, I don’t know the answer to this question.  But judging from some of the comments from the room, it seems that most economists have a pretty high regard of their profession.  Not least of all Krugman himself for, as the panel member representing the history of economics pointed out, Krugman’s tone did not lack in arrogance.  For a start Krugman had placed himself above the profession even though he himself is as much implicated in his complaints as anyone else.  Moreover, were economists really to blame for the financial crisis: wasn’t the real problem with failed regulation, rather than economic theory?

Now it’s a funny thing.  Neoclassical economists working within the mainstream, either general equilibrium-ites or Chicagoans wouldn’t, I suspect, profess much love for Krugman, but they certainly do share his opinion when it comes to the importance of economics.  Thus we were told: if only the incentive structures for risk managers had been right, then these managers would have flagged up the risks to their bosses that were, apparently, all too evident in the value-at-risk models.  So the problem, it turns out, wasn’t the models (based as they were on only a few years data), but that economist hadn’t ALSO designed the internal management incentive structures.  But if you remain unconvinced by this then there was even more hubris to come.  It’s only a matter of time, we were told by another attendee, before the neo-classical approach can truly meet its destiny and provide a unified theory of everything (in the economy, just in case you wondered).  House values, financial sector leverage and option pricing, just three problems that will in time be solved.

So there you have it.  Perhaps those who thought that economists (including Krugman) were overstating their role in causing the crisis were right after all.  But, never fear, in the future ‘the general neo-classical theory’ of economics would be there to guarantee that things could never get of control again.  Well, that’s a relief.  Alternatively of course, some might suggest that the real battle in the room was between relative delusions of grandeur: the delusions of those who think that economists had caused this crisis and those who think that economists will in the future ensure we have no more.

To be fair, there were some dissenting voices in the room.  One contributor argued passionately that economics had reached such a level of arrogance that almost no economists were now taught basic skills, like how to read a balance sheet, a skill that would apparently have alerted many to the impending problems at the banks.  Another contributor suggested that economics could never be equipped to be able to definitively say when an asset was overvalued.  Modern economics after all is based on the idea that value is a function of the buyer’s personal assessment of value and utility.  How could economics ever say for sure that someone was overestimating what something was worth to them?  Were not questions about inflated asset prices moral and social questions beyond the realm of economics?

Still one suspects these comments fell on deaf ears.  As another contributor pointed out, the incentive structures in the profession were all wrong.  Such was the structure of modern universities that graduate students were so invested in current ways of thinking that they were always going to be unlikely revolutionaries in the discipline.  Economists misunderstanding incentive structures, institutions do play a role after all?? Never! I refuse to believe it!

In the last few, summer, months I have been an unreliable blogger. It is going to get worse. One good reason is that I have set up a new blog that requires my attention.

For 7 weeks in September and October, I teach a class titled generically “History and Methodology of Economics”, which I have ambitiously re-named as “the politics of economics.” The course reviews literature on the place and role of economists in contemporary society from an historical standpoint. Because one of my goals for the class is to develop appreciation for the multiple interpretations of which economics is subjected to, and to the multiple uses given to economic ideas in public life, I asked them to participate in a course-blog. This will be 10% of their final grade. Their task is capture commentary on economics or uses of economics in unexpected places, notably in mass culture.

From my brief, hands in the air, survey, nearly none of the students had experience with the blogging form. So they are learning not only about the practice of observing economics in its historical drift, but also about expressing themselves in a blogging setting. I leave you here an invitation to visit, to comment and to encourage on “Observing Economics“.

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…

Mister President,

If you may permit me, and with gratitude for the kind reception you once devoted to me, to have the attention of your just glory to remark that your star of justice, your joyful star, is in risk of being tainted by the most obscuring and indelible of threats.

Professor George Akerlof, Nobel Laureate of 2001, spoke in these terms to Bloomberg Radio on the 1st of April.

I feel that the most important animal spirit about the job market is what is creating the number of jobs we have. And for that, I think confidence is one. I think that stories about the economy is another. And the general feeling by the public, that the possibility that people may sell snake oil… And there is a long chapter about that.

Only today I heard Professor and Judge(!) Richard Posner speaking to Bloomberg Radio:

Animal Spirits is a John Maynard Keynes expression, and he said – and I think very insightfully – that because businessmen operate in a very uncertain framework, you known, uncertain environment… If you build a plant and its not gonna yield revenues for several years, you are really taking a shot in the dark. Because in a few years your markets may change, competitors may eat you alive, and so on. So you need some feeling of confidence, spirit, daring. And in a depression the economic environment becomes so uncertain, that people begin to freeze. So you see a lot of hoarding…

(Posner also adds that Frank Knight was an influence on Keynes. Sure, and the Easter Bunny was roommate to Santa Claus. No?)

Here is what John Maynard Keynes actually wrote:

Even apart from the instability due to speculation, there is the instability due to the characteristic of human nature that a large proportion of our positive activities depend on spontaneous optimism rather than mathematical expectations, whether moral or hedonistic or economic. Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as the result of animal spirits – a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities.

It is, I hope apparent, that Keynes idea of an urgency to action, the animal leap away from reason and best judgment, has nothing to do with either “confidence” or the drive of the “entrepreneur.” It is not the memory of man Keynes that I wish to preserve from blemish. It is mine and the public’s right to sanity in preserving the meaning and sense of words, their power to guide our thoughts. In Akerlof or Posner there is just nothing animal about them spirits.

I have but one passion: to enlighten those who have been kept in the dark, in the name of humanity which has suffered so much and is entitled to happiness. My inflamed protest is simply the cry of my soul. Let them dare, then, to bring me before a court of law and let the proceedings take place in broad daylight! I am waiting.

With my deepest respect, Sir.

One of those people that have initials for their first name, CP Snow is famous and infamous for a lecture given 50 years ago at Cambridge University. In “Two cultures and the Scientific Revolution”, Snow indicted the humanities for halting the progress of society. The literary inclined Universities were unwelcoming to the knowledge and methods of technologists and natural scientists. (A likely third culture might be social scientists, whether angels or devils, I don’t know if Snow specified.) In the New York Times book review section Peter Dizikes, a science writer, thought again about the Snow essay and tried to get something fresh and contemporary out of it. And it seems quite a struggle to make that text speak again. The world seems less binary without the Cold War. Dizikes concludes hurriedly:

the aspect of “The Two Cultures” that speaks most directly to us today. Your answer — and many different ones are possible — probably determines how widely and deeply you think we need to spread scientific knowledge. Do we need to produce more scientists and engineers to fight climate change? How should they be deployed? Do we need broader public understanding of the issue to support governmental action? Or do we need something else?

The equivalent of the “two cultures” is a bureaucratic decision about what kinds of big science to fund? I guess that means the humanities lost, but then again it was never their war…

In Obama’s speech yesterday he mentions the “day of reckoning.” He says it only once in the sentence: “Well that day of reckoning has arrived, and the time to take charge of our future is here.” after mentioning “we have lived through an era where too often, short-term gains were prized over long-term prosperity; … Regulations were gutted for the sake of a quick profit at the expense of a healthy market. People bought homes they knew they couldn’t afford from banks and lenders who pushed those bad loans anyway. And all the while, critical debates and difficult decisions were put off for some other time on some other day.”

The idea, which William Kristol finds “little ominous coming from a candidate of hope and change” is remarkably effective in capturing media attention, and maybe the public’s imagination. All news media used the sentence to summarize the speech – check google news search.

The question for me is why does it seize the imagination? In my mind it calls up an image, Bosch’s horrid paintings of confused nakedness and deformity. But what do western media see when it is conjured? Surely the staging of a trial, also the dividing of the world between saints and sinners? The news articles don’t help, some show a thoughtful Obama, others a solemn Obama, yet others show him playful. Maybe it calls no image, but primes you to a sense of justice, righteousness and comfort in the knowledge that someone above the fray will separate the angels from the sinners, and make the world intelligible again.

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.

I don’t know how rarely it is that a Nobel Prize winner has a piece published in a magazine that is devoted to pop culture in the larger sense of the term – I guess Playboy may have published that kind of stuff, too, and I also understand that Krugman has already published a few anti-Bush articles in RS before he received the Nobel-Prize -, but here it is in the last issue of Rolling Stone: Paul Krugman’s advice to the new President.

I will not comment the article to a large extent and want to leave it for your consideration. However, I have just two or three remarks. It is quite striking that Krugman cites a lot of politicians but not one economist (not even Keynes) to strengthen his argument. He doesn’t even cites his sources when he provides figures (though he refers to the Center on Budget and Policy Priorities at the beginning of his article). It strikes me, but doesn’t hurt me, either … after all, Krugman is known as a sharp columnist by a large audience and a columnist is not supposed to cite any technical material or refer to the state of the art in the discipline he writes about. That is fine, except that Krugman is not presented by RS as the New York Times columnist but as the “Nobel-Prize-winning economist” who “examines the profound challenges facing [the] new president” (my emphasis). Should his new Prize give him a different kind of authority and then responsibility as an economic writer? I was having a look at a small paperback volume called Economics From The Heart: A Samuelson Sampler and it shows that Samuelson’s columns in Newsweek were far less polemical and often referred to some economists (his colleague Robert Solow, but also his former  teacher at Harvard Alvin Hansen, as well as the alternative Newsweek columnist, Milton Friedman). Whereas Samuelson’s columns aimed at showing the powers of economics as a prescriptive science, Krugman harshly criticizes Bush’s economics (and even goes further at the end of his article) and, like many other polemicists, invokes the Great Depression as the example everybody must look at to solve the current crisis (two pictures that are not reproduced in the electronic version of RS emphasize this parallel).

A few weeks ago, I saw Joe Scarborough, the host of MSNBC Morning Joe, calling Krugman a “very hateful guy” who is “weighed down by his Nobel Prize”. It seems that Krugman’s turning into a political pundit doesn’t please much his new colleagues.

PS: I think I should say something about the comic strip above. It is called “This Modern World” and is drawn by Tom Tomorrow, the pen name of editorial cartoonist Dan Perkins. This cartoon is regularly published in The Independant Weekly, a liberal tabloid distributed throughout the Durham-Raleigh area. This is not the first time I see Krugman being mentioned in it.

On the 15th of December of 1969 “an anarchist and railway employee named Pino Pinelli dies by falling from the window of the office of Police Superintendent Luigi Calabresi, on the fifth floor of the Milan police headquarters, where he had been detained for three days.” The story is vividly dramatized in Dario Fo, The Accidental Death of an Anarchist (part 1, part 2).

Carlo Ginzburg is one of the great masters of history writing. In 1991, the medievalist scholar of witchcraft trials wrote a book about a ongoing court case – The Judge and the Historian. His friend Adriano Sofri, a former leader of the autonomist group Lotta Continua, was on trial as mastermind of the murder in May 1972 of Superintendent Luigi Calabresi. Ginzburg’s book is a lesson on the use of evidence. Reading the transcripts of the trial, and the record of testimonies, Ginzburg reveals contradictions, the interpretative shortcuts of the judge, the lapses of the carabinieri that express their interference, and finally how evidence was weighted and distorted to justify a heavy sentence. One would think that the historian should reconstruct events, urgently tying actions to individual motives. Ginzburg calls it a “judicial model” and rejects it. Unlike the judge, the historian aims at a larger interpretative frame, studying the courtroom drama as “historical experimentation” where evidence, the document, is being actively produced by the interactions of officials, lawyers, witnesses.

The historian shows the judge gets it wrong. The accused were falsely condemned in a new witch hunt. Reading the book more than fifteen years after its publication, I can’t shake a feeling of powerlessness at the indignation of the intellectual. Sofri and his comrades languish in jail, the former is gravely ill. Ginzburg in all his brilliance cannot save the world.

Day three is also the last day. The temperature dropped outside, hail fell yesterday, but since it’s still above zero, the ice melted overnight and under the warm shoes of the morning travelers. The conference mood has also turned south, tamer, more sleepy, less angry.

The paper that caught my attention today was Joel Anderson’s discussion on the political theory of Sunstein and Thaler’s Nudge Parternalism. The hook was to think of policy implications as architecture. Sinapses snapped and to my mind came the image of the Panopticon and M. Foucault’s argument on how human sciences of the 19th century were projects of disciplinary intervention. Anderson does not offer a model building of the Sunstein and Thaler’s paternalism, instead he turns scaffolding (of the individual!? brain architecture?), and plumbing (of collective action?!), further and further away from Foucault’s exemplar.

The Foucault story is so good because it illustrates this surprising outcome that social science’s interventions into the human, the individual, the soul, the brain, are/can be physical interventions. The Bentham’s designed the corridors of prisons. Sunstein and Thaler will talk about the contents of supermarket aisles and shelves. It is the mind-body distinction and the social-physical paradox suddenly subverted.

In his last book, Save The World On Your Own Time, Stanley Fish makes a compelling plea for a value-free academic world which would be only oriented toward true academic goals, the pursuit of knowledge and its transmission to the students. This is a very provocative statement, isn’t it ? Well, though I can already hear the howls of indignation coming, I will argue that, in a perfect world, this thoughtful and persuasive essay should not be provocative at all. But let me just detail the book’s content.

Fish’s main argument in this book is that how laudable are the ideals of a tolerant and peaceful society, which would foster democracy and struggle against gender discrimination and economic oppression (among others), this should not be the true purpose of an institution of higher learning to promote them. When professors offer themselves as moralists or political activists, they do not only waste their time; they also abdicate their true role: that of advancing knowledge among the students population by means of carefully chosen teaching materials and pedagogical virtue (indeed, one of the only “virtues” that has its place in a university). Though the book itself contains seven chapters (plus an introduction), it is mainly articulated around three ideas.

• do your job

• don’t try to do someone else’s job

• don’t let anyone else do your job

According to Fish, the only job which is relevant here is “a) introduce students to bodies of knowledge and traditions of inquiry they didn’t know much about before, and b) equip those same students with the analytical skills that will enable them to move confidently within those traditions and to engage in independent research should they choose to do so” (p. 18). That does not mean that political and current questions cannot be brought into the classroom, but in order to be relevant, those questions have to be “academicized”. “To academicize an issue is to detach it from those contexts where it poses a choice of what to do or how to live … and insert it into an academic context where it invites a certain kind of interrogation” (p. 170). Instead of asking ourselves if Barack Obama is right or wrong, we can analyze (grammatically, rhetorically …) his discourse and ask whether he is compelling or not, without offering a judgement on the political ideas that are at stake. Doing the latter, argues Fish, would transform the classroom into the kind of sterile TV show students can quietly watch at home, and would provide no advancement of knowledge. Then, Fish tackles the two main criticisms which could be made about his statement: the idea that everything is political and that you cannot totally separate your analysis from your opinion on the question. About the first criticism, Fish argues that it is crucial to make a distinction between the academy politics and the partisan politics. Whereas the latter is about social goals and international relations, the former is about the good interpretation of a poem, or the relevant choice of a textbook. Those can involve some harsh debates, even harsher that debates over death penalty or abortion, Fish argues, and they are the only debates which should be allowed in the classroom. And about the second criticism, Fish argues that separating analysis from judgment is what we do all the time if we want to behave in society. If I go to my best friend’s son’s Bar Mitzvah, I am not going to address the audience with a discourse on the evils of Israel’s policy in the Middle-East, even if I’m a zealous defender of the Palestinian cause (shall I precise here that the example is mine, not Fish’s !).

Stanley Fish, Photo by Barney Cokeliss

But what about free speech and democracy, which (almost) everybody regards as utterly important values, shouldn’t they be fostered in the classroom? Fish’s answer in the second part of his argument – don’t try to do someone else’s job - is unequivocal. It’s a no. Democracy and free speech are only political values, and not academic ones. Democracy, for example, is the idea that everybody’s voice weighs the same in our society, but it’s not true in a university. Teachers teach, students learn and administrators manage. That students take the same part as administrators in the numerous administrative tasks involved in the functioning of a university might not be a very good idea. As for freedom of speech, Fish argues that it is very different from academic freedom. The idea that any opinion must be valued is indeed totally opposite to the goals of the academy. Actually, only true and endured opinions, ones that can be demonstrated or rationally discussed, have their place in the university. That a professor, as a citizen, must be protected by the First Amendment is incontestable, but within the university this right is limited by the ability of this professor to do his job. Thus, academic freedom is only the freedom of pursuing the research of truth and the advancement of knowledge, not the freedom of offering any political view to the classroom without analytical insight. Fish provides many interesting examples of how a university should (or should not) react to the political events of the day, especially when they involve students or faculty members, including a very fine understanding of the issues at stake during Mahmoud Ahmadinejad’s speech at Columbia.

This brings us to the third part of Fish’s argument. If professors do not do their job or try to do someone’s else job, they will end up being despised by people outside of the academy, who will pretend they can do the job as well. Businessmen, opinion leaders, politicians and lobbyists argue that the faculty offers a biased leftist point of view and that ideological and political balance should be introduced in the university, by being open to a different set of ideas. They denounce gender and race studies and plead for creationism. The irony of some arguments does not escape Fish’s mind. Coming mostly from the right wing, those activists often use a very vulgar conception of post-modernism, a movement they abhor and long tried to fight,  to enforce their conservative political views. According to them, post-modernism is teaching that no theory can be held to be true, so that every opinion should be valued on an equal footing. But Fish argues that this is a very bad understanding of what post-modernism is. “Postmodernism is a general and abstract description of the way knowledge is established and challenged. It tells us that any establishing or challenging of knowledge is a historical rather than a transcendent event” (p. 134). But historical contingency has nothing to do with scientific relativism, because “[y]ou can be persuaded by postmodern arguments on the very general level of their usual assertion … and you can still hold firmly to judgments of truth, accuracy, correctness, and error as they are made in the precincts of some particular realm of inquiry” (ibid.). Holding against those who argue that post-modernism is the denial of scientific knowledge, Fish claims that, on the contrary, this conception of knowledge shares the same properties than the values which should be at the core of the academy: it serves no political or ideological views and it is totally useless to society in general.

This brings Fish to the last point of his reflection. Because the true purpose of liberal education is merely to give students a hint of the advancement of knowledge in any given discipline, it has almost no cash value for the society as a whole. It does not make better men and women, just men and women with better analytical skills. It does not contribute much to the national product; sometimes it does not even help people find a job. The question is: how can you raise funding with such a discourse? The answer provided by Fish is deceptively simple: you can’t. But if you pretend that higher education can have any practical interest for the rest of the world, you end up managing your university like a business and consequently undermine the true beauty of academic activity: its fundamental uselessness.

Fish’s book is not flawless. Some of his examples are a bit far-fetched (when he tries to “academicize” the question of whether George W. Bush has been the worst president of the United States ever). Elsewhere, there are some contradictions. For example, he could have eschewed writing he voted for Gore in 2000 and for Kerry in 2004 to counterbalance arguments that some may find too conservative. At the end of the book, his defense of the academy makes him write that most faculties are ideologically unbiased, which is a bit contradictory with some examples he introduced before.

But overall, I think that Save The World On Your Own Time makes a fascinating read. This is particularly timely regarding the current status of our discipline. Historians of economics often offer themselves as moralists and political activists, denouncing the evils of free markets, of mathematical reasoning and general equilibrium model-building or pretending that the world would be in a better shape if economics had stopped its development after a) Aristotle, b) Adam Smith, c) John Stuart Mill or d) Friedrich Hayek (you can choose your favorite one). They desperately try to prevent their students from investigating the topics they find “morally hazardous” – meaning: opposite to their own conception of moral -, reducing fascinating scientific debates to mere ideological wars. This temptation is obvious in conferences, on the HES list (now SHOE) and even sometimes on this blog (particularly in the comments section). But if historians of economics do not do their job – which consists in writing the history of economics – and try to do someone’s else job, who’s going to do theirs?

Stanley Fish (2008), Save The World On Your Own Time, New York: Oxford University Press, 189 pages, incl. index and  a selected bibliography.

Not from economics, but worth telling:

In the late 1970s and early 1980s B.F. Skinner was not yet very old. Born in 1904 the famous behaviorist was still busy working and teaching at Harvard Univeristy. But he must have felt old. His sternly defended and once highly influential behaviorism had gradually been discarded for a psychology that, horros of horrors, tried to open up the mind’s black box. In addition, a mathematical approach to psychology that dwarfed all behaviorism’s strict and formal claims to scientificity had strongly gained in prominence. But Skinner could not let go and sent letter after letter to his colleague Duncan Luce, by this time an equally famous cognitive and mathematical psychologist. Skinner tried to persuade Luce of the merits of behaviorism and the demerits of modelling the mind’s interior. Luce thanked him for sharing his ideas with him. Skinner sent Luce his latest book, and asked whether they could meet some time next week to discuss cognitive psychology. Pick a day and time of your convenience. One week later Luce responded politely that no unfortunately he was too busy. Lunch then? Skinner tried. But again Luce declined. A few more difficult back-and-forth polite invitations followed over the course of a few years.

Based on Luce -Skinner correspondance in archives of Harvard University

As Obama becomes the new President of the USA, I happen to wonder what has happened to the political orientation of our profession.

George Stigler (1959: 524) argued that economists are conservatives “in the sense of being hostile to an increasing number of innovations in economic policy.” But the pie-chart below suggests that we no longer are so hostile. The question is then: why?

Leaving aside the quite likely possibility that the survey (by econ4obama.blogspot.com) was biased, if economists have embraced ‘change we need,’ does it mean that (i) we do need the change,  (ii) economists have realized that we do need it, (iii) economists are so honest that they admit we need it, (iv) economists agree with the majority of the American laypersons?

Let’s play along and imagine that the answers to the four quesitons were yes-yes-yes-yes. Which ‘yes’ would be the most surprising?

Leonard Silk in 1972 wrote a book titled Nixonomics. It collected, extended, and rearranged previous text from the Saturday Review and from the New York Times, where Silk was editorial page writer and columnist. The book chronicled how the economic policies of Nixon, initially monetarist and pro market, turned in August 1971 towards control and Keynesianism. Nixonomics was not a consistent doctrine. Nixon’s policies were the thing of “politics,” pragmatic responses to the electoral challenges faced by the White House.

“Nixonomics” was not Silk’s term. William Safire, guru of political-speak and also New York Times connected, has claimed the first use of the term to a 1969 memo. Safire observes that Fordnomics did not catch on, neither did Carternomics, but Reaganomics was a success. Even embraced by Reagan.

Economics, or economic policy, was thus abbreviated to the suffix -nomics. Reaganomics is the “economics of Reagan.” The string is “nomos,” or “law”, suggesting the literal reading of the “law of Reagan.” For Silk and other economic journalists, it is by professional hazard that they consider economic ideology as framer of government action. Yet it is a statement on our culture that we now label the economics of the President as “his law”. My observation may be meaningless since cognitively few among us will note the semantic twists. Even so, it testifies to economics’s public prominence that it creates new nouns with each electoral cycle.

P.S. For the above video and many more see  “The Living Room Candidate” curating political advertisements (1952 onwards) from the Museum of Moving Image.

So said an unidentified economist to Business Week in 1960. So said Milton Friedman in 1965 when J. M. Keynes made it to the cover of Time. And Richard Nixon in 1971, when he shocked the nation and the economy with a “New Economic Policy.”

In 1968, the squatters of the Quartier Latin called out “We are all German Jews” in solidarity with Daniel Cohn-Bendit who had been denied re-entry into France. Forty years later, we are all Joe the Plumber.

The form “we are all” repeats. From the economists it sounds like a declaration of identity armistice erasing difference. From the politicos it sounds a battle cry, since “we are all” assumes the exclusion in 1968 of the French establishment and in 2008 of the Democratic Party.

Economists play identity wars, but they prefer to do it privately, with reference to water salinity – freshwater vs saltwater. To assume a Keynesian identity in public has stood for compromise or pragmatism. To assume a Keynesian identity does not beg emotion. It is oddly grey and safe.