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Claims I made to David Levy yesterday
The richness of early twentieth century economic thought remains to be fully appreciated by historians of ideas. Pigou, Wicksteed, Pareto and many others led a behavioral revolution. rooted in Smith and Jevons. Veblen's best work was splendid, but it was less of an outlier than is usually thought. Duesenberry and Scitovsky drew directly on these earlier traditions. "Freakonomics" was common, albeit with lower-tech statistics. The notion of economics as household behavior dates from Aristotle and was never lost. Marshall was in reality an institutionalist. Experimental economics comes from William James and Edward Chamberlain. The real question is how so much got lost in the 1940s and onwards. Contemporary economics is oddly conservative, moving back to the 1900-1930 period in its emphases.
Posted by Tyler Cowen on November 15, 2007 at 05:26 PM in Economics | Permalink
Comments
William James -- brother of Henry James the novelist, and also claimed by psychologists as a founder?
Could one of your points be that we've sliced and diced up social sciences so much that we've lost a vision of the whole?
Old joke: Career academics often learn more and more about increasingly narrow areas, so they end up having comprehensive theories about nothing.
(I'm in applied work, not a university, so I'm learning less and less about more and more, and will soon know nothing about everything.)
Posted by: ZBicyclist at Nov 15, 2007 5:51:05 PM
The same could be said for anthropology or architecture or much else involving human sciences and arts. Western Civilization peaked around 1913, and continued to thrive in parts of the West in the 1920s, but the Depression brought on the reign of the ideologues. Even Keynes, an eminently civilized man, got himself turned into an -ism.
Take a look at the buildings on your campus. The ones built before 1930 make you feel proud to be associated with your college. Then there aren't any new buildings for about 15-20 years. Then, from the 1950s onward, there is a generation or more of hideous buildings. Finally, late in the 20th Century, there start to be buildings again that are worthy to compare to the ones from before 1930. (If you are at MIT, though, then you start to get ludicrous buildings in the 21st Century like Frank Gerhy's 2004 Stata building, which is a good tribute to Roger Rabbit's Toon Town, but not a well-functioning college building)
Similarly, in anthropology, the anti-Darwinians started to drive out evolutionary-based thinking during the Depression, with little recovery until late in the 20th Century.
Posted by: Steve Sailer at Nov 15, 2007 6:26:06 PM
The decline starts in 1947 as Tyler well knows.
Posted by: Alex Tabarrok at Nov 15, 2007 11:32:06 PM
Math is the big mistake that economists made after WWII. Economics is a way of thinking, not a way of computing.
Posted by: Russell Nelson at Nov 16, 2007 3:09:21 AM
[The real question is how so much got lost in the 1940s and onwards]
and the real answer is in Phil Mirowski's two big books; it got tangled up in operations research via von Neumann and the RAND corporation.
Posted by: dsquared at Nov 16, 2007 4:55:47 AM
Math is the big mistake that economists made after WWII. Economics is a way of thinking, not a way of computing.
Yes, but math is not a mistake. Mathenomics is a mistake.
Paul Samuelson is the most overrated economist ever.
And Hurwicz (sp?), a recent Nobel winner, is also.
Posted by: Bill Stepp at Nov 16, 2007 6:49:50 AM
It is just plain silly to bitch and whine about Samuelson. PAS is the
great pragmatist in American economics. McCloskey is barking up the wrong
tree in singling out PAS as the Great Satan.
Posted by: Anon at Nov 16, 2007 8:05:11 AM
1st: It's Edward Chamberlin, not Edwin Chamberlain.
2nd: For folks interested in marketing strategy and pricing, the big decline started when the cloneoclassicals (think pure commodities, perfect markets) shoved the diff-neoclassicals (think differentiated products and quasi-monopolistic markets with commodity centers) off the stage.
But Schumpeter, Chamberlin, and (in marketing) Alderson are making their way back.
The competition that produces big advances in progress is the stuff that makes a product that was perfectly fine yesterday less that worthless today. The stunted, amputated micro PAS came up with in order to develop a workable GEM has no place for that kind of dynamic.
Markets are too complicated to be solved. But their core algorithms can be identified and they can be simulated.
Posted by: Dick Harmer at Nov 16, 2007 8:40:22 AM
Thanks for the correction...
Posted by: Tyler Cowen at Nov 16, 2007 9:36:29 AM
Hey -- I thought it's been downhill since the Greeks?
Seriously, I agree that mathematical economics led us to take our eyes off the ball -- first, by departing from the diversity of reality ("how do I get all this into one equation"), and second, by mistaking a mathematical proof with a useful predictor of behavior (either micro OR macro). We do best in the philosophers (not physics) of human interactions (markets, family, etc...)
Posted by: David Zetland at Nov 16, 2007 11:00:11 AM
Theblen is cooky. His Leisure Class work weakens capitalism and the independent spirit by overemphasizing the importance of inherited wealth. He seems to have no recognition of entrepreneurs or social mobility. His work is cheap sociology. He has little evidence for his basic claim that nearly all wealth is rooted in people who basically bonked others on the head and otherwise stole/cheated their way to riches and then passed it down through the generations. He is pathetically nostalgic for the small time craftsman of old. What is there in Veblen of value? He is a rambling amatuer sociologist with little to add to economics. His work can be an excuse for the "Man is keeping me down" kind of thinking that keeps people from really trying to improve themselves. Bad economics, bad influence, noth worth reading.
Posted by: VeblenSplendid? at Nov 16, 2007 11:49:57 AM
Veblensplendid? writes: "What is there in Veblen of value? He is a rambling amatuer sociologist with little to add to economics."
Well, you are entitled to your opinion, but you might want to consider this:
"We were surprised to discover, upon rereading Thorstein Veblen's influential Theory of the Leisure Class (1934), that he anticipated many of our results, although he did not make systematic analysis. Veblen argues that social interactions are extremely important in modern economics; he particularly emphasizes behavior that conveys signals about one's wealth, that is, "conspicuous consumption", to use his famous phrase."
That's from Becker and Murphy (2000), Social Economics.
Posted by: Johan Almenberg at Nov 16, 2007 3:59:53 PM
Sorry for the off topic query, but this is the closest thing I could find for my question.
I am currently involved with another blog, EvC Forum, where someone claims that the subject of economics has no empirical support and therefore "adds nothing to human knowledge." I would like to whack him for that statement.
As a community college librarian, I have only taken macroeconomics and engineering economics, so am unfamiliar with any books or articles that would provide such evidence of empirical support (I did look but my expertise is not in this area).
Please help me in my quest to show this person wrong by either pointing me to the appropriate person, forum, resources, books, or articles
Posted by: Anglagard at Nov 18, 2007 6:37:17 PM
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