These are my thoughts on the Boston meeting.
I
The ASSA annual meetings reinforce in me the view of economics, both
its theoretical and empirical sides, as an evolving organism. I can't
view the works of particular individuals or even conflicting schools
of thought as self-sufficient, finished renditions, but only as
tentative strands, ant-like contributions to a much broader, complex,
evolving whole in an also complex, contradictory relation to a
shifting social and economic life. And since the context of all this
is a *capitalist* society -- the most developed (in its antagonistic
sense) ever -- it doesn't surprise me a bit that the evolution of this
organism is *mostly* (but not entirely) dictated by the evolving needs
of this contradictory social formation at all its various levels of
agency.
IMO, the object of a renewed, necessary radical critique of modern
bourgeois economics cannot be a particularly obnoxious speck of grass
carried over by one or three ugly ants here and there, but the life of
the entire ant colony! We should not *assume* that modern economics
is sheer ideological noise. If at all, we should *conclude* it --
that is, after we do the homework. That is what Marx did with the
economics of his time: classical political economy.
Marx conjectured that the degree of scientific content in economic
thought in a bourgeois society depended largely on the state of the
class struggle and of social conflicts in general, the extent and
intensity of social conflicts in each particular historical epoch. He
seemed to have believed that bourgeois economic thought was in a more
or less linear decline since the European 1840s and that his
devastating critique would be the coup d'grace. But things didn't
happen that way. Still, he was up to something: in times when the
ruling class feels less exposed, there tends to be critical material
even in the most conventional product of bourgeois thinking.
If socialism can only be envisioned as an, at times gradual and at
times in-leaps-and-bounds, transformation starting very irregularly
from the insides of a capitalist society as we change our minds,
behavior, and political and economic institutions, armed with whatever
resource history has made available to us, then -- similarly -- the
evolution of a new collective worldview consistent with overthrowing
capitalism and building socialism won't result, by and large, from
merely ignoring or pre-rationally decreeing the irrelevance of
bourgeois thought, but by radically transforming it, by engaging it,
by critiquing it -- in the sense of, both, appropriating its rational
aspects and exposing the ideological coverup.
II
Michael Perelman wrote:
> I was struck by the difference between the young and old economists.
> The young ones seem very conservative, while a fair portion of the 50+
> economists still remain rather liberal and have a wider view of the
> world.
I also perceive this generational swing. The generation that peaked
in the 1980s and 1990s definitely seems to be dominated by pro-status
quo creatures. But in the younger generations, things may be more
mixed. Can we anticipate the direction of future shifts? For the
most part, again, the concerns of empirical economics and applications
in policy making will depend on an also shifting real world. But
there's also a sense in which concrete economic applications depend,
with a lag, on the developments in high economic theory.
I went to several discussion panels on fairly abstract theoretical
topics such as dynamic contracts, information, asset pricing,
optimality, and dynamic game theory. In the latter, there was a panel
on Saturday called "rationality and knowledge" chaired by a young
woman, Andrea Wilson (Chicago), that I enjoyed greatly. Two of the
presenters, Bill Sandholm (Wisconsin) and Muhamet Yildiz (MIT) tackled
solution concepts in game theory from two very different angles and
their theorems where devastating. The discussants, Larry Samuelson
(Wisconsin) and David S. Ahn (Berkeley) were brilliant.
In my mind, they're up to a game-theory analog of the
Debreu-Mantel-Sonnenschein theorem in general equilibrium. Judging by
the irreverent jokes they were cracking at traditional theory, I have
a hard time thinking of these kids as conservative. Clearly, they are
extremely skeptical of standard economics. But their doubts do not
result from a pre-rational fear of mathematical abstraction. In fact,
it is their broad and sophisticated understanding of the mathematical
underpinnings of economic theory that validate their doubts. I
wouldn't be surprised if, a few years down the road, discussions like
these end up reshaping our approaches to empirical work, applications,
and policymaking.
One other thing. The neo-utilitarian resurgence, in the guise of
behavioral economics, may have been cooking for a good while (Simon,
Tversky, and Daniel Kahneman began their work decades ago), but it's
until very recently that young economists from standard programs have
been exposed to their results. My impression is that George Akerlof,
as last year's president of the AEA, has been very active in giving
more prominence to history, behavioral economics, etc., a bit pulling
the stick away from standard mathematical economics. Of course,
Akerlof's actions would be unthinkable if there weren't a widespread
unease among economists about the practical results standard
economists are showing.
The presidential address was given by Daniel McFadden (Berkeley) on
what amounts to a behavioral critique of traditional consumer theory
using as illustrative case the Medicare reform mess (IMO, McFadden's
practical conclusions were underwhelming, rather shy). And the
Richard T. Ely's lecture was delivered by Claudia Goldin from Harvard
on a historical, feminist topic ("The Quiet Revolution That
Transformed Women's Work, Education, and Family"). It was mostly
historically descriptive, but in spite of her fleeting recognition of
Becker's pioneering work in household economics (I was sitting one row
ahead of Becker and Barro), Goldin's work can hardly be deemed
conservative. It's in the nature of the law of unintended
consequences that the ideas of politically conservative economists
like Becker backfire in these spectacular ways. It is known that
Akerlof, personally, has actively supported critical theoretical work
on the economics of racial discrimination (far apart from, say,
Becker's approach).
On Sunday morning, I attended a panel on female labor supply -- mostly
in the U.S. labor market. I was impressed by the feminist economists
at the Federal Reserve and by Casey Mulligan (Chicago) and Yona
Rubinstein's (Tel Aviv) model of household specialization. I know, it
sounds Beckerian, but the consequences of those models are not
necessarily an apology of women's oppression.
In general, a humbler attitude appears to be gaining ground among
economic theorists -- and even empirical and policy application
workers, if Daron Acemoglou's summary discussion in the "Policy and
Political Economy of Growth" panel is in any way representative. This
shift in attitude has been long in the making. It may have started
with Stiglitz and Akerlof poking of the informational holes in general
equilibrium (I'm not saying Stiglitz is humble in his personal
temperament). But, again, this is not the old, frustrated skepticism
against the direct application of abstract theories. It is a new kind
of skepticism, based on analytical and computational powers that allow
people to appreciate more humbly the inherent complexity of social
life. So this doesn't mean that general equilibrium, game theory, and
mathematical economics have been made altogether irrelevant and that
critical advances can result from ignoring them. The new "paradigm"
must contain, albeit transformed, the older ones as special cases.
The worn analogy of the relation of classical mechanics to general
relativity is more appropriate.
III
Next year in Chicago, PEN-L members should act in concert, sharing
here with the rest of the list the panels they plan attend -- perhaps
with an eye towards covering more ground collectively. And then
reporting back to the list on their experience in each panel. Like it
always happens to me, I had a very hard time deciding where to go. It
would've been simpler knowing that a group of us were going to brief
one another.
Julio