The economic crisis has a new trope. Zombies. An Australian economist, professor, blogger has published a book titled Zombie Economics: How Dead Ideas Still Walk Among Us. And Paul Krugman wrote a recent op-ed “When Zombies Win.” (it is not the first time he played with the term.) The message that Quiggin and Krugman express is that some ideas rise from oblivion, and just won’t go away, won’t die, i.e. zombies.

I believe I know a thing or two about zombies. I watched, at a very impressionable age, The Night of the Living Dead, credited to have originated the concept (zombies are the most modern of monsters), although I always preferred the zombie comedy not being a horror buff: Army of Darkness, Zombieland and that classic Shaun of the Dead. I am now adept of zombie videogames playing often with my main bro Left 4 Dead 2, and looking forward to play in Call of Duty: Black Ops where I will choose between JF Kennedy, Nixon, McNamara or Castro and fight for survival against zombies in an underground complex (really! no kidding!).

These are my extensive zombie credentials, and with those I feel confident to say a thing or two about the semiotics of zombiehood.

Survival. The first and last element of all zombie tales is survival. Financial crisis is dire but it seems hardly the matter for life and death struggle, chainsaw in hand. In this the analogy presses urgency, but not action. Survival in a zombie world is to escape, keeping out of sight, lay low, and wait for someone with big guns to come clean the place. This is not Krugman’s approach who wants us to go out there and fix the economy…

Sadism. In most of its comedic and particularly in its videogame versions, the real pleasure of zombiedom is sadism, and indulgence in its exploration. Zombies look like people but their status as infected or cursed allows you to dispense of them with extreme prejudice. The human body is dehumanized, and somehow it’s ok. Here is what worries me most about the zombie analogy and the crisis, that it invites some level of dehumanization of those that are your opponents, these zombies ideas are also zombie people, and it is ok to terminate them with righteous violence. I don’t predict physical extermination, but a unhesitating deletion of the other from public discourse is not implausible.

Closure. Along with sadism, the underlying theme of a zombie story is that of a loved one (or a peer) that cannot rest, cannot go in peace, and that is incensed by a hunger for your flesh. Tough call. Zombie narratives are about letting go, about forgetting. How do you kill a zombie? You destroy his brain, his memory, his mind, his idea. This is a hot subject in science studies right now: the construction of ignorance, of forgetting. Take the work of Naomi Oreskes on climate change and her Merchants of Doubt: like the tobacco companies many decades ago trying to deny the links between smoking and cancer, the climate change deniers are today attempting to turn back the clock on knowledge. Krugman and Quiggin might be claiming that pseudo-science is holding us back from knowledge, but as an historian I worry about their appeal for forgetting and closure. As an historian I sympathize with the zombies. Sure if they bite you you will get very ill, but i plan to keep my distance.

(this post is all the more appropriate since AMC is doing a marathon of the first season of its Walking Dead)

Delusions of grandeur: meeting at Duke to discuss the Krugman critique

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!

The use of HET in the crisis debates

A Duke maling-list message just made me aware of this article from the University of Chicago magazine, “Chicago Schooled: the visible hand of the recession has revitalized critics of the the Chicago School of Economics.” It offers an interesting and quieter counterpart to the Krugman debate which is turning into a settling of old scores, but the bottom issue is the same. How much is the Chicago genealogy, from Murphy and Cochrane back to Heckman, Pelzman Fama, Becker, Stigler, and, of course, Friedman (how comes? ) among many others, and its market enthusiasm responsible for the present crisis.

Even more interesting is the use made by the author of recent works by historians of economics, mentioning Ross Emmett and Phil Mirowski.

Here’s the extract:

“The 2008 market collapse shocked the global economy like nothing since the Great Depression. Given the breadth of the failures involved, casting blame at a single school of thought may seem overly simplistic. But the Chicago School’s ardent championing of market forces, says Ross Emmett, a Michigan State University economist who studies the Chicago School and heads an oral history of it, makes it “a convenient locus” for anger.

Chicago’s market focus developed as the original Frank Knight/Jacob Viner Chicago School—also anti-Keynesian but skeptical of markets’ efficiency and mathematical models—waned along with World War II. The government’s influence on the University’s scientific-research funding disturbed then-president Robert Maynard Hutchins, according to Philip Mirowski, professor of economics and the history and philosophy of science at Notre Dame, and coeditor of the new book The Road from Mont Pelerin. (The Mont Pelerin Society was a Friedrich Hayek–led debating organization dedicated to advancing free-market ideals, including markets’ ability to efficiently show information.)

In 1946 Chicago already had a neoclassical presence: the Cowles Commission for Research in Economics, funded by Alfred E. Cowles III, scion of one of the Chicago Tribune’s owners. Cowles’s postwar staff at Chicago included nine future Nobel laureates, among them Kenneth Arrow and Tjalling Koopmans, who won Nobels in economics before Friedman. Cowles promoted an economics more scientific than the theoretical type that dominated the field at the time. But he was left-leaning. Hutchins wanted specifically anti-statist thinkers, Mirowski says, enlisting help from the now-defunct libertarian William Volker Fund to hire, among others, Aaron Director at the Law School, Friedman (Director’s brother-in-law) in economics, and Hayek at the Committee on Social Thought (the economics department nixed Hayek). Cowles would decamp to Yale in 1955. »

As an aside, there is increasing references (on the blogosphere) to the paper by Robert Gordon on the development of macroeconomics since the 70s in the light of the current crisis which was presented at the 1st ISHET. It is viewed as a more balanced criticism of the current state of macro research than Krugman’s.

Is the next step the recognition of HET as useful knowledge for economists in a time of crisis?

You Can’t Always Get What You Want.

tomtomorrowI 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.

The lenses of the past

Observing Sputnik through telescopes at the astronomic post of the Novosibersk Institute of Geodasy, Aerial Photography and Cartography.
Observing Sputnik through telescopes at the astronomic post of the Novosibersk Institute of Geodasy, Aerial Photography and Cartography.

During my forced quarantine, I have read this blog with a rough and absent-minded eye. Upon return, loose fragments and sensations of what has been going on here are surfacing: the financial crisis and how to make its history, political discourses, brains, expertise, trust, Joe and Barack, TV, teaching, researching and publishing, asset prices, and the debate over the amount of posts dealing with 2008 in a blog devoted to the history of economic thought. Could this characteristic reflect a concern with recognition, intellectual and institutional? Our eagerness to have the new approaches we are striving to develop assessed by historians’ standards, and the necessity to meet economists’ standards in front of colleagues, students, and reviewers? Our willingness to prove that studying the past doesn’t make us has-beens, how our knowledge is relevant for today (despite repeated acknowledgment that ‘it doesn’t/ shouldn’t matter’)?

Or maybe it is only the reflection of my own confusion that I see in these posts. For, each time I wander around the New York Times website or some economists’ blogs and columns, I see double.

I see that Chris Romer has been appointed chair of the CEA and L.H. Summers director of the National Economic Council. The web is crowded with their curiculums, their past successes and failures as academics and advisors, with statements of how persuasive, influential and “intellectually intimidating” they are. I read titles about “Obama seeking credibility with economic appointments,” about “the Econ ‘dream team.’” And I cannot help tying this to the series on Collins and Evans’s Sociology of Expertise and Experience I read on the etherwave blog, and wondering what this news says on how scientific expertise and credibility are built, on how specific the relationships of economists to the political power is. I can’t help but notice how Romer’s work on the Great Depression is used to guarantee her expertise, and speculate on the similarities and differences with Friedman’s case.

I see that Krugman got the Nobel prize, I read the reactions by academics or journalists, the speculations that the Nobel Prize has been awarded for Krugman’s ideological opposition to Bush, that this choice was driven by the crisis context, and I find attempts, by Ed Gleaser for instance, to separate the scientist from the public intellectual :

“In his public role, Paul Krugman is often a polarizing figure, loved by millions but also intensely disliked by his political opponents. I still chuckle over an old New Yorker cartoon with one plutocrat saying to another that he gets some satisfaction from the fact that his vote will cancel out the vote of Paul Krugman. Within the less divided world of the academy, Mr. Krugman’s economic research has generated plenty of light, but far less heat. His papers are universally acknowledged to be immense contributions that helped to create two distinct fields. His Nobel Prize is extremely well deserved and not unexpected.”

Having just defended a dissertation on the links between economists’ private values and their research, I cannot help reflecting on such a sharp distinction between the economist qua scientist and the economist qua public intellectual. Does Krugman live two lives? Does he have two brains? Does his use of his scientific expertise in his columns make his opinion more scientific? Does requiring that laymen be able to separate the scientist from the columnist make sense?

I also wonder whether my historian’s reading of these events is different from that of a sociologist, whose field of inquiry includes the present, or whether studying the present de facto implies that I use sociological rather than historical methods, concepts, etc. I wonder if looking at the present through the lenses of the past (or at least the framework I built to study the forties and fifties) is relevant at all.

Five years ago, the concerns we express on this blog would have resulted in a HES session on the ‘future’ of HET. But we’re now standing right in this muddy ‘future.’ Should we organize a session on the history of current economics?