[PEN-L:30052] Re: Post-Autism in the Micro

[Eugene Coyle <eugenecoyle@xxxxxxx>]

I have been reading the exchange.  I was most impressed by the essay that triggered the
debate.

The Deirdre McCloskey piece in the current issue seems to me to be defensive and missing
the point.  I think I could pass the test he poses at the end -- I did have the Stigler
book as my undergraduate text, and loved it at the time.  I don't think it has much, if
anything, to do with economics.  Why doesn't McCloskey mention Theoretical Welfare
Economics by J. de V. Graaff, which, as sophisticated as any she does mention concludes
that the "Just Price" -- to stay in the 1300s that McCloskey cites as an example -- is
more useful to us that marginal cost.

    The current Galbraith piece is appealing, but professors need a more concrete road
map at this point --  his level of abstraction sets the stage, but what to actually do?

    No, there is NOTHING worth keeping in Microeconomics.  But having studied it, from
Stigler to de V. Graaff and on to Marris, etc., I admit that it is hard to get over.  I
think I'm there, but it is like quitting cigarettes -- still nudging.  (I never smoked.
I should have said quitting drinking.  Not that I've quit.)

Gene Coyle

Ben Day wrote:

> Anyone else following the post-autism "debate" over the role of
> microeconomics and game theory in economics curricula? What do folks think
> of this? The latest Post-Autistic Review has short pieces by McCloskey and
> Galbraith - Solow and and Blanchard had taken shots at the Post-Autistic
> petition a ways back in Le Monde.
>
> -----Ben
>
> http://www.btinternet.com/~pae_news/review/issue15.htm
> --------------------------------------------------------------------------------------
>
> Yes, There is Something Worth Keeping in Microeconomics
> Deirdre McCloskey   (University of Illinois at Chicago / Erasmus University
> Rotterdam)
>
> Bernard Guerrien is severe on Messrs. [and no Mesdames, I note] Varian,
> Schotter, Kreps,
> Mas-Collel, Whinston, and Green, and I think he's quite right to be
> so.  The usual idea of
> "microeconomics" is, as Guerrien avers, formalism useful only for the
> generation of articles in
> the American Economic Review and worse.  It's scandalous that game theory
> and GE and
> overlapping generations and other mere existence theorems are taught as
> "tools."  As we say
> in American English (with thanks to Yiddish): tools, schmools. No physicist
> would consider
> such stuff scientific.  She would want tools that can measure.
>
> The problem comes partly from a terminological confusion.  "Theorist" has
> come to mean in
> economics "guys trained in Mathematics-Department math."  (I note again
> that this Hilbert/Bourbaki
> style has nothing, nada, rien to do with the sort of math that physicists
> and engineers actually
> use to investigate the world; go have a look at The Physical Review and
> you'll see what I mean.)
> Since the "theorists" so defined can't do anything else (like give a
> substantive course in
> economic history or in urban economics), they get assigned to first-year
> graduate courses.
> It's their comparative advantage, considering that the department has made
> the mistake of
> hiring them in the first place.
>
> The result has been a catastrophe for economic education.  Most economists
> arrive on the
> job without knowing how to think like economists.  In fact they've been
> specifically and
> elaborately trained by the "theorists" not to think like economists, but to
> think like Hilbert/Bourbaki
> mathematicians, though of course to a childishly simple standard.  (By the
> way, a distinguished
> committee of the American Economic Association was some years ago on the
> edge of doing
> something about the catastrophe; Bob Lucas vetoed the proposal, since he
> wants economics
> to carry on being unscientific.)
>
> So I agree.  I highly recommend a pamphlet just published at the University
> of Chicago Press,
> The Secret Sins of Economics, which shows how thoroughly I agree.
>
> My disagreement with Guerrien is merely this: if microeconomics were
> properly taught it would
> be obvious that it does indeed have numerous scientific uses.  Not the
> Whinston and Green stuff,
> on the whole.  Most of that is useless, unless you think "use" means not
> "good for grasping the
> world in a quantitative way" (called "science") but "good for generating
> publishable articles."
>
> Yet there is tons of really useful stuff in, say, (the lamentable George)
> Stigler, The Theory
> of Price, or in Steve Landsburg's or David [sic] Friedman's similar books;
> or (if I may) in a
> wonderful but neglected book published last in 1985, The Applied Theory of
> Price.  (It's
> available free in its entirety, diagrams and all, on the web site
> www.uic.edu/~deirdre2; David
> Friedman's is available free on his web site, too.)  If graduate courses
> taught "micro theory"
> in this sense-namely, ideas about how to show this or that effect in an
> economy,
> quantitatively-economists would be good scientists instead of bad
> philosophers.  Some of
> the economists, admittedly, survive the first-year courses and go on to
> actually think
> about economic ideas and to measure their oomph in the world.  But so do
> some children
> survive households with beatings and sexual abuse.
>
> It just won't do, therefore, to say as Guerrien does that price theory (as
> we Chicago types
> prefer to call it) "obviously contradicts almost everything that we observe
> around us."  Huh?
> When OPEC (viz., Saudi Arabia) cut the supply of oil in 1973, didn't the
> relative price of oil
> rise, just as a simple supply-and-demand model would suggest?  And when the
> population
> of Europe fell by a third in 1348-50 didn't the ratio of wages to rents
> double, just as a simple
> production-function-and-marginal-productivity model would suggest?  The
> point is that both
> of these can be made as quantitatively serious as you want.  They are real
> scientific ideas.
> If you want to see hundreds upon hundreds of such examples, see The Applied
> Theory of
> Price---or, indeed, the serious scientific work of any serious economic
> scientist, someone
> actually trying to measure the oomph of an effect: Robert Fogel, say, or
> Moses Abramowitz,
> or Simon Kuznets (their teacher).
>
> Let me put down the following challenge to the people who think they hate,
> just hate,
> neoclassical price theory.  Go work through a serious book about it-not the
> "theoretical"
> micro that Guerrien and I both think is silly---and do the applied
> problems.  If you can't get
> inside the hundreds of empirical exercises in, say, my book, or in the
> applications of price
> theory as they occur (obscured by nonsensical existence theorems) in the
> neoclassical
> literature then you don't really know what the tradition of
> Marshall-Wicksell-Friedman-Coase-
> Alchian is about, and you are not qualified to sneer at it, right?  Doesn't
> that sound fair?
> I think so, and I would apply it to my own understanding of Marxian or
> institutional economics.
> ________________________
> Deirdre McCloskey's books include  The Rhetoric of Economics (Rhetoric of
> the Human Sciences), The Vices of Economists : The Virtues of the
> Bourgeoisie, and Knowledge and Persuasion in Economics.