Re: Re: Re: RE: Lies, damned lies, and economics

[Eugene Coyle <eugenecoyle@xxxxxxx>]

Robert,
    Thanks for being so gracious in your reply to my not so gracious post.

And, yes, do send me your article -- off list probably is better -- by reducing
the volume for others.  The framework for keeping track of assumptions sounds
useful.

    There was a good 10 page summary of the Cambridge controversy -- in mimeo, on
legal size paper.  I have a copy in a box somewhere but don't know where.  As I
recall it was anonymous.  But for a printed version you might look for something
Harcourt wrote at the time -- late '60s, early '70s.

Gene Coyle



Robert Scott Gassler wrote:

> At 16:44 23/05/02 -0700, Eugene Coyle wrote:
> >Robert, I haven't read your article but will make an effort to find it.
>
> A better article might be the one I did for the Pennsylvania Economic
> Association, which I can send you via attachment:
>
> "Political and Social Economics: A Framework and Some Examples,"
> Proceedings of the Pennsylvania Economic Association 2001 Conference,
> Lycoming College, Williamsport, Pennsylvania, May 31-June 1, 2001.
>
> >
> >    I disagree with the direction you are taking.  Have you ever been at a
> >conference with a panel up front, putting out a line? They might have a
> bit of
> >disagreement but essentially they agree.  Someone from the floor takes the
> >microphone and asks a hard question, thinking that it will totally devestate
> >the agreed upon line.  One of the panelists reponds, at length, ducks the
> >quesiton but goes on to affirm the original position.  Another panelist
> >supports the first.  The person from the audience has lost the mike and some
> >other question gets asked.
>
> I know what you mean.
> >
> >    Why let neo-classical micro be the agreed on story?
> >By the way, I think micro is a story, not a paradigm.  A story has to be
> >replaced by a story.  Let's tell our own story.
> >
> I've been looking for an alternative story and have not found one. Though I
> can tell a story about the labor theory of value and another one about how
> Lenin was right about imperialism, I do not know enough about Marxism to be
> a Marxist. Insitutionalism does not seem to have a story that I can tell
> easily.
>
> >    Neo-classical micro has been shown over and over and over and over to be
> >logically flawed.  Keynes wrote in the early twenties
> >
> >"The beauty and the simplicity of such a theory [neo-classical micro] are so
> >great that it is easy to forget that it follows not from the actual facts,
> but
> >from an incomplete hypothesis introduced for the sake of simplicity.  Apart
> >from other objections to be mentioned later, the conclusion that individuals
> >acting independently for their own advantage will produce the greatest
> >aggregate of wealth, depends on a variety of unreal assumptions to the effect
> >that the processes of production and consumption are in no way organic, that
> >there exists a sufficient foreknowledge of conditions and requirements, and
> >that there are adequate opportunities of obtaining this foreknowledge.  For
> >economists generally reserve for a later stage of their arguments the
> >complications which arise -- (1) when the efficient units of production are
> >large relatively to the units of consumption, (2) when overhead costs or
> joint
> >costs are present, (3) when internal economies tend to the aggregation of
> >production, (4) when the time required for adjustments is long, (5) when
> >ignorance prevails over knowledge, and (6) when monopolies and combinations
> >interfere with equality in bargaining -- they reserve, that is to say, for a
> >later stage their analysis of the actual facts.  Moreover, many of those who
> >recognise that the simplified hypothesis does not accurately correspond to
> >fact conclude nevertheless that it does represent what is 'natural' and
> >therefore ideal.  They regard the simplified hypothesis as health, and the
> >further complications as disease."  (The End of Laissez-faire)
> >
> My article enumerates these and other assumptions and puts them in a simple
> framework to keep track of them.
>
> >    A good book that took your approach, THEORETICAL WELFARE ECONOMICS by de
> >V. Graaff sets out the assumptions necessary.  A book of the assumptions.  He
> >writes "It may also help the reader to appreciate why I shall suggest that
> the
> >only price a public enterprise can be advised to set is what the medieval
> >scholastics would have called the pretium  justum."  (Cambridge U. Press,
> >1963.)  He also wrote, on the same page, 142, "The measure of acceptance the
> >marginal cost pricing principle has won among professional economists
> would be
> >astonishing were not its pedigree so long and respectable."
> >
> I have it beside me. It looks similar to Debreu's Theory of Value,
> Koopman's Three Essays on the State of Economic Science, and Arrow and
> Hahn's General Competitive Analysis. Makes the assumptions, relaxes a few
> of the easy ones, stresses the math. I don't do that.
>
> >    Another way in which neo-classical micro was demolished was in the famous
> >Cambridge Controversy, where Cambridge, Mass was totally routed -- and
> >Samuelson admitted defeat.
> >
> I think it's cool. Do you know of a 10p summary I could assign in class?
>
> >    I think teaching neo-classical micro and then critiqueing it is like
> >setting up a panel controlling the microphone and then asking unanswered
> >questions from the floor.
> >
> Agreed. That's why I stopped reading critiques of neoclassical 25 years
> ago. Besides, they usually don't say anything that the neoclassical
> economists themselves don't say better. The neoclassicals (at least outside
> Chicago) know the limits of their theories; they just use them anyway.
>
> >In the April HARPER'S magazine, Wendell Berry  wrote:
> >
> >"This idea of a global "free market" economy, despite its obvious moral flaws
> >and its dangerous practical weaknesses, is now the ruling orthodoxy of the
> >age. Its propaganda is subscribed to and distributed by most political
> >leaders, editorial writers, and other "opinion makers."
> >
> >    The "propaganda" Berry refers to is created by economists -- and repeated
> >and repeated and repeated in economics classrooms.  We can't critique it
> >around the edges.  We have to ignore it and tell a new story.
> >
> In my development class, I present it and then spend most of my time on the
> book of readings by Jameson and Wilber, with articles on dependency and
> oppression.
>
> >We don't have to get so fancy as developing a new paradigm.  Tell the story
> >you believe in, don't tell the story you don't believe in.
> >
> Agreed, though sometimes I start with neoclassical concepts. They are
> occasionally good for a start; you just have to make sure you go somewhere.
>
> >Gene Coyle
> >
> >Robert Scott Gassler wrote:
> >
> >> Sorry; I originally sent this on the wrong thread.
> >>
> >> Okay. I have an article which outlines my approach to teaching in all my
> >> courses (though I am sorry to say it is mostly micro):
> >>
> >> Robert Scott Gassler, "The Theory of Political and Social Economics: Beyond
> >> the Neoclassical Perspective," Journal of Interdisciplinary Economics, Vol.
> >> 9, No.2, 1998, pp.93-124.
> >>
> >> The trick is to make a list of the assumptions of what I call the
> >> "neoclassical default model" (perfect competition) and then treat them as
> >> jumping-off places by relaxing the assumptions. By the time you are done,
> >> you have systematically analysed a problem and destroyed students' interest
> >> in the default model.
> >>
> >> I think this will do a reasonably good job until we agree on a better
> >> paradigm.
> >>
> >> Robert Scott Gassler
> >> Vesalius College
> >> Vrije Universiteit Brussel
> >>
> >> At 22:00 22/05/02 -0700, you wrote:
> >> >I appreciate the reports that we get from people with expertise outside of
> >> >the US.  I wish that some of you lurkers would step in.
> >> >--
> >> >Michael Perelman
> >> >Economics Department
> >> >California State University
> >> >Chico, CA 95929
> >> >
> >> >Tel. 530-898-5321
> >> >E-Mail michael@xxxxxxxxxxxxxxxxx
> >> >
> >
> >