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Web Letter

This is an excellent description of the sociology of the economics profession. I can only add one point. The regnent neoclassical paradigm is not really a spruced-up version of the classical paradigm of Adam Smith, as the piece implies. In fact, Smith, Ricardo and company have a lot more in common with Marx in recognizing structural features of capitalism like class. Many of us in the heterodox community think of ourselves as "classical" in this sense. (I think the heterodox community is broadly a synthesis of classical, Keynesian, and Institutionalist economics, and Tom Palley is right: our work is at least as good as theirs on scientific grounds, if not better.)

Tom Michl

Delmar, NY

Jun 11 2007 - 10:34am

Web Letter

I took introductory undergrad microeconomics and macroeconomics courses in the '80s. This hardly qualifies me as any kind of expert, but the ideas seemed sensible, if oversimplified in the same way that my calculus homework was generally kind enough to disregard the effects of air resistance.

Over the years, however, I have come to regard the rational self-interested actor as the unicorn of economics. I don't believe I've ever met one. I'm certainly not one. Hard-headed businesses don't even qualify. And let's face it, if homo economicus actually existed, the impulse stand at the supermarket checkout wouldn't. Supply and demand curves might be observable in the wild, if people didn't always screw them up.

I don't think it even matters what the price tag is. Buying a new car or even a house is ultimately decided on a gut, here-we-go! level. Sure, you shop exhaustively and consider all the angles. Until you're exhausted with shopping, and then you basically pull the trigger on an emotional basis.

It's not just that information is asymmetrical. It's that information is never completely available, ever. And even if it were, our brains are only so big, and so we cram as much in as we can stand and then kinda wing it. After factoring in charm, coolness, fashion, of course.

I don't regard heterdox economics to be a revolution. I think of it as more an attempt to recognize that actual humans are involved in the supply-and-demand curves. More a blending of anthropology, sociology and economics. At some point, even economists had to notice that their graphs never looked like they thought they should.

Jason Spicer

Mercer Island, WA

Jun 5 2007 - 12:44am

Web Letter

The Nation publishes exactly such a critique of global warming. See Alex Cockburn's column in this same (June 11, 2007) issue.

Dennis Fischman

Somerville, MA

May 31 2007 - 2:11pm

Web Letter

It was an excellent article, and gave us some idea of what passes as economic thought in higher education. Many of these theories have been tried before and exist in the historical record. Economic History would, no doubt, provide some useful insights.

I would suggest reading Alexander Hamilton's "Report on Manufactures" made to Congress in 1791. It was America's blueprint for industrialization, which made us a world power and the arsenal of democracy through two world wars. Free trade had nothing to do with it. Protectionism allowed our infant industries to grow, and not be buried under the cheap goods of developed nations. Tariffs could bring some of those those industries back from China or create new ones. With those industries comes jobs.

Pervis James Casey

Riverside, CA

May 30 2007 - 5:17pm

Web Letter

As something of a dualist, I recognize there tend to be two sides to every coin, but that only one can be seen at a time. In mediating between the individual and the group it should be remembered that the absolute is the essence out of which we rise, not a model of perfection from which we fell. That said, I think there is a basic fact about the nature of money that economics hasn't taken into account.

Money is not a commodity. It is a public utility. As a medium of exchange and government obligation, it has far more in common with the public highway system than with private property. We like to think of our bank acounts as personal property, but they are not a safe deposit box. That money is only in our possession when we need it, much like the section of road we are driving on is only ours as we need it. Everyone decries government debt, but it is an essential part of the overall investment pool. The same with Social Security. Where would that money be invested otherwise? The stock markets, real estate etc. are flooded with liquidity already. If this surplus wealth wasn't being recycled through the public sector and back into the economy, it would be a much smaller economy.

If we understand money as a form of public utility, then wealth becomes as much a responsibility to the larger economy as it is a right to direct that economy. If money is simply one more commodity to be traded, then there is little obligation beyond the Darwinian imperative to maximize one's position. When we tie it to a particular commodity, whether how much gold is in the treasury, or how much is needed to run the oil markets, then we give those who control that commodity undue influence over the rest of the economy. Those with the gold, rule. Also given the power this gives oil interests, energy conservation is politically impossible.

John Merryman

Sparks, MD

May 29 2007 - 4:43pm

Web Letter

As a recent graduate with a BA in economics, I was lucky enough to be exposed to various schools of thought in both economic methodology and political economy. I, and I dare say the bulk of my graduating class made the transition from Keynesian, Neoclassical economic assumptions and conventional wisdom to a more "heterodox" understanding of both the science and art of economic analysis. Simply by being exposed to alternative analytical processes that just, well, made more sense, compelled us to question the rigid orthodoxy of Neo-classicism.

As one professor used to say, the heavily math intensive neo-classical methodology was a useful, albeit limited, tool to understand certain questions about normative economic law. However, the dynamics and processes comprising economic activity were taken for granted as "constants" in the equations--and the way both Price Theory (micro) and Neo-Keynesianism (macro) understood these phenomena as "given" was incomplete at best.

While I'm sympathetic to any critique of the Establishment, this article seems to implicitly endorse the heterodox economists on the basis of their questioning the validity of the free-market in guaranteeing social welfare. This is hardly fair. Friedman’s Chicago school is not strictly "free market"; though inspired by Classical Liberalism, his contributions didn't quite advise a shrinkage of government involvement in the economy rather than a shift to different, less stupid and harmful types of intervention.

Secondly, It should be patently clear that what's referred to as the "free market" by the author, mainstream economists and those who benefit from the present state of the economy, is not really a free market at all but rather a neocorporatism distinguished by more arbitrary laws, bureaucracies, agencies, regulations, taxes and subsidies than can fill a library. Such is the nature of a specia-interest democracy in which state economic intervention is viewed as legitimate.

I was surprised and disappointed that this article made no mention of the Austrian School of Economics, namely the body of ideas proffered by Ludwig Von Mises and F.A. Hayek among others, especially since this school heavily influenced the free-market insurrection in the 1980s and the rise of the Friedmanites. The Austrians were the original heterodox economists, defending freedom from the onslaught of the socialism and fascism of the twentieth century, which the establishment of that era posited to be wholly superior to individual, voluntary action. The Austrians are still around and gaining traction, though just as marginalized in today's era of Big Government as they ever were. They certainly belong among the objects of the article's examination.

The author sets up a false dichotomy between the establishment mafia of "free-marketers" and the repressed, rebellious heterodox economists who all seemingly think government should be more involved in regulating economic action. Pointing out the flaws and deficiencies of Establishment economic theory is one thing--it’s an illogical leap to suggest that the "natural" alternative is more, or different, State intervention.

Jordan Braunstein

Port Washington , NY

May 28 2007 - 3:19pm

Web Letter

An interesting article, but hardly persuasive: As scientists everywhere are wont to observe, the plural of anecdote is not data. Furthermore, I am old enough to remember when Keynesianism was the dominant orthodoxy and people like Friedman and Hayek were considered heterodox.

In any event, nothing in this article hasn't been said before about scientific progress in general. Indeed, the gravamen of the article appears to be a warmed-over version of Thomas Kuhn's argument in The Structure of Scientific Revolutions.

Finally, I wonder how The Nation would respond if someone had written an equivalent article about the "climate Mafia" and its so-called "consensus" regarding anthropogenic global warming?

David G.D. Hecht

Alexandria, VA

May 26 2007 - 11:38am