Tuesday, November 15, 2011


Elsewhere on the World Wide Web: Some UMass comrades have revived the internet tradition of the grudge blog with this interesting new blog, with the Stakhanovite goal of refuting (tho thankfully not fisking) every post Greg Mankiw makes. It's an ambitious goal, especially since the average wordcount ratio of an anti post to its underlying Mankiw post is running around 50:1. But they're managing so far. You should read it. And if anyone wants to take a swing at the pinata, I think they may still be looking for new contributors.

So why aren't I contributing? Mainly because time is scarce and I am very lazy, so blogging-wise I'm tapped out just keeping up a trickle of content here. But also, to be honest, because I have some qualms about the anti-ness of the left in economics generally. Anti-Mankiw is a great project, and I have nothing but admiration for the students who walked out of Mankiw's class. But there's a certain assumption here that we on the left have a well-developed alternative economics, which the Mankiws of the world are ignoring or suppressing. If only that were true.

Right now I'm teaching macro, and I’m presenting basically the same material as everyone else. ISLM, AS/AD, and their open economy equivalents. How come? Well, partly because I feel a certain professional duty. Students signed up for a course in intermediate macroeconomics, not in J.W. Mason Thought. (That will be next semester.) But mainly because it’s the path of least resistance. I don’t know any good textbook that presents the fundamentals of macroeconomics from a genuinely Keynesian or radical perspective. And working up a course by myself would be vastly more work, and I don't think I could do it justice. A downward sloping AD curve, let's say, is absurd. There's no real economy on earth in which the main effect of deflation is to stimulate demand via a real balance or "Keynes" effect. It pains me to even put it on the board. But what's the counterhegemonic model of inflation I should be teaching in its place?

It’s not just me. I know a number of people who are unapologetic Marxists in their own work, yet when they teach undergraduate macroeconomics, they use Blanchard or some similarly conventional text. It’s a structural problem. I don’t mean to defend Mankiw, but in some ways I think those of us on the left of the profession are more to blame for the state of undergraduate economics education. We spend too much time on critiques of the mainstream, and not nearly enough developing a systematic alternative. Some people criticize radical economists for just talking to each other, but personally I think we don’t talk to each other nearly enough.

The anti-Mankiw that's needed, it seems to me, isn't a critique, but an alternative; as long as we're arguing with him, he still gets to decide what we're talking about. That's one reason I prefer to spend my time debating people like Krugman, DeLong, John Quiggin, and Nick Rowe, who I respect and learn from even when I don't agree with them. (Another reason is that attention is a precious resource and I prefer giving the bit I get to allocate to people and ideas that deserve it.)

It’s true that the ideological policing in economics is very tight—but mainly at the top end, and even there mostly not at the level of undergraduate teaching. As far as I can tell, most places nobody cares what you do in the classroom; there’s already plenty of space for alternatives at schools that aren't Harvard. But people mostly aren’t using that space. In my experience, even when people want to bring a “radical” perspective to undergraduate econ, that means presenting the mainstream models and then dissecting  them, which preserves the mainstream view as the default or starting point, when it doesn't just leaves students confused. "Radical" economics almost never seems to mean simply teaching economics the way we radicals think it should be taught.

So yes, Occupy Mankiw, by all means. But maybe we should also think more about the classrooms we’re already occupying. Or as a graffito that should be familiar to the male fraction of anti-Mankiw says:

Start your own hit band or stop bitching

EDIT: If anyone reading this wants to suggest good models or resources for what an undergrad economics course ought to look like, I'd be thrilled to hear them.

FURTHER EDIT: Lots of suggestions. I need to walk back a little: There are more good alternatives to Mankiw  & co. than you'd guess reading this post. But the key point is still, we need to move past critique and develop our own positive views. As long we're responding to him, he's setting the terms of the conversation. Read about, say,  Paul Sweezy in the 1940s -- he was so admired not because he had such a cutting critique, but because he so clearly and confidently offered an alternative. (And because he was so charming and good-looking, but that sort of goes with it, I think.) We'll be getting somewhere when, instead of rushing to rebut everything Mankiw says, we can say, "Oh, is that guy still writing? Well, forget about him -- here's the good stuff."

So, the good stuff.

I should have mentioned two excellent macro texts that, while they are too advanced for the students I'm teaching now, really comprehensively describe the state of the art alternative approaches to macro: Michl and Foley's Growth and Distribution and Lance Taylor's Reconstructing Macroeconomics. If, like me, you;re more more interested in short-term dynamics than growth models, you might get a little more out of the Taylor book, but both are very good.

In comments, NKlein suggests Godley and Lavoie's Monetary Economics: An Integrated Approach, which I know other people recommend but I'm afraid I haven't read (tho it's on my Kindle), and mentions that Randy Wray and Bill Mitchell are working on a new textbook. I believe Wray currently teaches undergraduate macro at Kansas City using Keynes' General Theory as the primary textbook, which is not a terrible idea (tho it would probably depend on the students.)

A lot of people like Understanding Capitalism, by Sam Bowles, Richard Edwards and Frank Roosevelt. Sam's microeconomics textbook is also supposed to be good, if, god forbid, you have to teach that. (But the orthodox-heterodox divide doesn't really exist in micro, I don't think.)

Meanwhile, over on anti-Mankiw itself, Garth suggested -- more or less simultaneously with this post -- Steve Cohn's Reintroducing Macroeconomics, and linked to a long list of heterodox texts. I'm only familiar with a few of the books on the list, altho most of the ones I do know are grab-bags of critical essays, which is not quite what I'm looking for. But clearly there's a lot out there.


  1. Josh,

    You can explain to the students how a liquidity trap or interest-inelastic investment function leads to a vertical AD curve. And then explain that this was the basic point of the General Theory--what Krugman calls Depression Economics. And then explain that Keynesian unemployment has nothing to do with 'sticky wages'--which is the misconception currently being taught in graduate schools about Keynes (this all started with Patinkin and Modigliani in the 40s). I have them read Ch. 16(?), "Changes in money wages" to disabuse them of that fairy tale. You might even elaborate a bit and bring in Minsky, whose liquidity trap story is essentially a vertical IS curve due to a present value inversion. You know all this, I'm sure. What should we add? I think the idea of path dependence/hysteresis--there are multiple 'natural' rates or NAIRU's.

  2. @Josh,

    The shortcomings you pinpoint in left economics—all critique, no alternative—may not have a remedy. If after a couple of centuries of trying no one has come up with a coherent, textbook-ready body of left economic doctrine, maybe there is no such beast. The inability of left economists to agree on a consensus account of signal economic developments, even on this noble blog, indicates that none is on the horizon. (The communist economies had a settled doctrine, but it failed.)

    The left does have a cogent case against mainstream claim that a free-market economy is stable and fair without state intervention. But that argument doesn’t imply an alternative.

    It may be that mainstream economics is the only coherent, systematic formulation of economic behavior we can come up with, but that it is still inadequate for explaining or correcting crucial phenomena: collective action and coordination problems; mood swings between irrational exuberance and pessimism; persistent inequality and poverty. There are theories that do address those problems, like Keynesianism and behavioral economics, but they qualify and complicate mainstream economics rather than overthrowing it. They suggest state intervention to correct and regulate the free-market economy, rather than novel principles on which to refound the economy.

    And, probably of necessity, that state action will always be pragmatic rather than systematic—when necessary, lower or raise interest rates, print money, proffer stimulus with deficit financing and government works, raise reserve requirements, buttress confidence with insurance, care for the old and the hungry and the sick; if things really freeze up, simply order the economy into gear fighting fascism or building nuclear power plants. A left economic program has a toolbox of measures to try until problems are fixed, but only a haphazard, disputed and basically anecdotal theory of why or how or when they work.

    So criticism of the mainstream orthodoxy, along with a pointed analysis of how it serves the interests of the undeserving rich, may be the best you can hope for. The left may have to settle for advocating a regimen of pragmatic state control over the market economy rather than advancing a principled alternative economics to replace it.

    The more basic problem is that the left envisions an economy whose intrinsic workings produce justice, equality and human fulfillment. The right claims that a free-market economy does intrinsically produce those things. The left—quite correctly—denies that claim and wants a socialist economy that really will deliver them.

    But maybe that’s barking up the wrong tree. I think that justice, equality and fulfillment are not things that any economy, even a socialist one, can produce from its own internal logic. Only the state can produce them by intervening to regulate the economy and redistribute its fruits, acting on explicitly moralistic principles that are exogenous to any logic of efficient allocation.

    In other words, justice, equality and fulfillment are problems of politics and morality, not of economics.

  3. I hear Bill Mitchell and L. Randall Wray are working on a textbook. The University of Missouri-Kansas City supposedly has a pretty good heterodox economics program. I wonder how they do things over there.

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  5. Not sure if Wynne Godley and Marc Lavoie's "Monetary Economics: An Integrated Approach to Credit, Money, Income, Production and Wealth," is appropriate for an undergraduate econ course, but I've read parts of it and even though it's been a good seven years or so since I took undergraduate econ (using Samuelson's textbook), I found it to be quite comprehensible. Godley's approach of using national accounts data is quite different from most mainstream approaches and I think that may be a way forward for those looking to teach outside of the mainstream paradigm.

    If you're interested in that approach, Bill Mitchell has a section of his website called "Teaching Models," that i think is pretty similar to what Godley and Lavoie are doing:


  6. Hey Tom,

    Yes, I've done pretty much exactly that. Except I didn't ask them to read Keynes or Minsky. (Next time maybe.) ISLM is the one part of mainstream macro I have no problem with teaching -- it's far from complete, obviously, but it's a good starting point (even if the idea that central bank sets "the money supply" has to have so many caveats piled on it that it's almost invisible.) And yes, the standard AS curve is a useful way to talk about the conflict model of inflation, hysteresis, and the possibility of multiple "natural" rates of unemployment. It's the textbook AD curve that I think needs to be thrown out and replaced with something else. It's not just a rough first approximation, IMO, it's actively misleading & wrong. That and Solow growth models, which I''m not doing at all, but will presumably be unable to avoid forever.

    But yes, it is definitely possible to add a lot of interesting stuff around the textbook models. So maybe my complaint is exaggerated. Still, I'd like more of a clear consensus. Theory is a language, and languages only work if there's a community of people who speak them the same way. I'd like there to be a usable, let's say left-Keynesian or Post Keynesian language I could teach students in the confidence that if they want to continue with this stuff, they can find other people speaking the same language, and not just a bunch of idiosyncratic private dialects of the dominant language.

    Will B.,

    The last paragraph is in reply to you too. Maybe it's too much to ask, but I want a counterhegemony.

    Still to a large extent you're clearly right. Obviously there is no never going to be an equivalent to the closed axiomatic system at the core of mainstream economics, because real economies (or societies) can't be usefully described in those terms. There are *aspects* of economic behavior that can be usefully formalized, tho, as long as we keep in mind that are formalisms are going to apply over a certain range of contexts. And insofar as economics can be formalized, I think we left or heterodox economists could do much better at finding a common way of doing it. I'd rather see more energy going into that and less into attacking Mankiw, who isn't listening anyway.

    You are also right to warn against the temptation of imagining that there's a set of institutional mechanisms that permanently solve the political and economic problems with capitalism.

    justice, equality and fulfillment are problems of politics and morality, not of economics.

    Very true. But injustice, inequality, and the absence of fulfillment can be more directly linked to economic arrangements, I think. (Altho that's not really what I'm looking for here.)

  7. Hi NKlein,

    Randy Wray at UMKC teaches macro with The General Theory as his primary textbook. It's an appealing idea, but it's asking a lot from students. You'd have to be an exceptionally good teacher (as I've heard Wray is) or have students with a significant background in economics already to pull it off, I think. I'll be very interested to see their textbook. I have the Godley and Lavoie book on my Kindle (thank you, library.nu). I should look at it again. Thanks for the suggestion!

  8. @Josh

    But without a rival “closed axiomatic system” to oppose to mainstream economists’ closed axiomatic system, left economists don’t have a compelling intellectual basis to challenge mainstream economics root and branch, especially since the latter is successful in many contexts and really does still constitute the tacit starting point of left criticisms of it. That means left economists are pretty much relegated to being a dissident faction within the larger universe of mainstream economics.

    So you’re doomed to taking potshots at Mankiw. But is that really so unworthy a project? The left arsenal is still a formidable one. It can deploy the psychological realism of Keynesian and behavioral economics to oppose rational-actor dogmas. It can mount empirical demonstrations of the failure of mainstream orthodoxies in many contexts. It can show how politically organized elites bias the economy in favor of the rich. It can build a pragmatic case for vigorous state regulation and intervention in many aspects of the economy.

    Come to think of it, why can’t you collate all of that into a standard textbook that synthesizes it with mainstream economics? And why can’t that textbook make left economics the dominant faction of mainstream economics? I’m kind of surprised to hear that there isn’t already a textbook or three like that. I bet you could write one—do-it-yourself counterhegemony!

    But then, a textbook like that might suggest an agenda of social democratic reform instead of revolutionary upheaval, which may be too dull a prospect to interest radical economists…

  9. I like the Godley and Lavoie book but I don't think it's a substitute text, especially not for beginners, because you really need to be comfortable with at least the basics of macro - even the simplest model there has 12 equations and it assumes knowledge of the meanings and interrelationships between basic terms like 'income', 'flow', 'stock'. Stephen Kinsella has an honest account of teaching with this book as text here: http://www.economicsnetwork.ac.uk/showcase/kinsella_pbl

  10. FYI, here's Duncan Foley on teaching intro macro without AS-AD (and the syllabus) at INET, which has started hosting alternative syllabi (departing to varying degrees from the mainstream):

    "The syllabus deviates from the standard Introduction to Macroeconomics course primarily in framing the issues in terms of economic history and the history of economic thought, and emphasizing institutions complementary to theories. I personally find the widely-adopted “AD-AS” framework for teaching macroeconomics intellectually fallacious and ideologically loaded, so I try to stay away from it."


    And INET's 'Imagining a new intro economics':

  11. Mike, thanks. Both for the Foley and for the INET series, which is exactly the sort of thing one hoped they would do.