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

[Robert Scott Gassler <rsgassle@xxxxxxxxx>]

Here it is. Let's stay in touch.

Scott

At 14:44 24/05/02 -0700, you wrote:
>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
>> >> >
>> >
>> >
>
>

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