Extraordinarily absurd things called ‘Keynesian’

8 Jan, 2015 at 20:25 | Posted in Economics | 2 Comments

phil mirowskiToday, it seems, just about anyone can get away with calling themselves a Keynesian, and they do, no matter what salmagundi of doctrinal positions they may hold dear, without fear of ridicule or reproach. Consequently, some of the most extraordinarily absurd things are now being attributed to Keynes and called “Keynesian theories”. For instance, J. Bradford DeLong, a popular blogger and faculty member at Berkeley, has in a (2009) paper divided up the history of macroeconomics into what he identifies as a “Peel–Keynes–Friedman axis” and a “Marx–Hoover–Hayek” axis: clearly he has learned a trick or two from the neoliberals, who sow mass confusion by mixing together oil and water in their salad dressing versions of history. The self-appointed “New Keynesians” of the 1990s (including Gregory Mankiw, David Romer and Michael Woodford) took the name of Keynes in vain by unashamedly asserting a proposition that Keynes himself had repeatedly and expressly rejected, namely that market-clearing models cannot explain short-run economic fluctuations, and so proceeded to advocate models with “sticky” wages and prices (Mankiw, 2006). George Akerlof and Robert Shiller (2009) have taken three sentences from the General Theory out of context and spun it into some banal misrepresentation concerning what Keynes actually wrote about the notion of “animal spirits,” not to mention his actual conception of macroeconomics. And we observe contemporary journalists going gaga over Keynes, with almost no underlying substantive justification from the track record of the economics profession …

It is undeniably a Sisyphusian task to lean against this blustering tide of misrepresentation in the current Humpty Dumpty climate, with its gales of misinformation and gusts whipping about the turncoats, where economists harbor such easy contempt for history that words can be purported to mean anything that is convenient or politic for the selfish purposes of the writer.

Philip Mirowski

Phil has always been one of my favourite critics of neoclassical economics. I first met him twenty years ago, when he was invited to give a speech on themes from his book More Heat than Light at my economics department in Lund, Sweden. All the neoclassical professors were there. Their theories were totally mangled and no one — absolutely no one — had anything to say even remotely reminiscent of a defense. Being at a nonplus, one of them, in total desperation, finally asked “But what shall we do then?”

Yes indeed, what shall they do? Moments like that you never forget. It has stayed with me for all these years. The emperor turned out to be naked. Thanks Phil!

2 Comments

  1. Salmagundi: a new word for me. Just when I feel i’m beginning to find form in the scattered natterings of neoclassicals, i’m reminded that no such coherence exists. I sometimes wonder what the point is in dealing with the various misrepresentations of Keynes when we know what economics is really for. Oh, that I could move on from the German Ideology.

  2. Groundhog Day (economics)
    Comment on ‘Extraordinarily absurd things called ‘Keynesian’’
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    Lars Syll writes: “All the neoclassical professors were there. Their theories were totally mangled and no one — absolutely no one — had anything to say even remotely reminiscent of a defense.”

    A field day for Heterodoxy. One of many.

    In 1898 the great heterodox economist Thorstein Veblen asked: “Why is Economics Not an Evolutionary Science?” What he pointed out was that the equilibrium models of his neoclassical fellow economists were mistaken, useless, and misleading.

    He famously ridiculed homo oeconomicus: “The hedonistic conception of man is that of a lightning calculator of pleasures and pains who oscillates like a homogeneous globule of desire of happiness under the impulse of stimuli that shift him about the area, but leave him intact.”

    Well said. Yes, Orthodoxy is a failure. Yes, the emperor has no clothes. Yes, the textbooks are wrong. Yes, equilibrium is a nonentity and rational expectations are a green cheese assumption. Yes, the economy is non-ergodic. Yes, Keynes has been distorted beyond recognition. Yes, economics is the finest salmagundi of all times.

    We know all this. It does not help. More than 100 years after Veblen homo economicus is still with us. How to get out of the time loop?

    “… if we wish to place economic science upon a solid basis, we must make it completely independent of psychological assumptions and philosophical hypotheses.” (Slutzky, quoted in Mirowski, 1995, p. 362)

    Time for Heterodoxy to switch from deconstruction to construction (2015).
    .
    Egmont Kakarot-Handtke
    .

    References
    Kakarot-Handtke, E. (2015). Essentials of Constructive Heterodoxy: The Market.
    SSRN Working Paper Series, 2547098: 1–10. URL http://papers.ssrn.com/sol3/
    papers.cfm?abstract_id=2547098.
    Mirowski, P. (1995). More Heat than Light. Cambridge: Cambridge University
    Press.


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