Re: [Pen-l] On the mediocrity of Heterodox Economics

[Jim Devine <jdevine03@xxxxxxxxx>]

Richard Portes writes:
> "Mediocrity is rationalised on the grounds that it is hard for the
> ‘heterodox’ to publish in top journals -- despite the examples of Joseph
> Stiglitz, Amartya Sen, Herbert Simon, Samuel Bowles, Herbert Gintis, and
> many others."

What is "mediocrity"? I'd guess that for Portes, it does not involve
fancy math; for others, it might involve making outrageous assumptions
(such as the _homo economicus_ assumption) despite the fact that it
violates experimental or other evidence. To my mind, most of what gets
published in economics is "mediocre" by my definition.

Mediocrity's definition (like that of almost (?) all  complex
concepts) depends on the context. For example, Milton Friedman's work
would never be considered to be "mediocre" by the Chicago school of
economics, even though his econometrics is often dreadful and his
theory clearly ideological. (One of my colleagues once worked with MF
and I always thought of as a Monetarist. Nowadays, his econometrics
(the true center of his loyalty) tells him the MF's stats were often
bad.)

It's true that there are some more sophisticated people within the
economics profession (e.g., Arrow or Sen). However, the ideological
nature of the profession is reflected in the fact that the vast
majority of its products is mediocre -- but still gets published. If
you agree with the majority of the profession's informal consensus,
then you don't have to be smart or sophisticated or as math-oriented
as Arrow or Sen. The bar is lower than for those who agree with the
consensus.

And the ideology gets reflected in that consensus (e.g., "free trade
is always good" or "something that does not have a price is
worthless") which in turn is reflected in the textbooks. The ideas of
Arrow or Sen do not.

Michael Perelman writes:
> Consider his list of Heterodox economists.  Herbert Simon?  There is some
> overlap there, but he ceased to do economics and moved on to other fields.
>  Joe Stiglitz did good stuff before he became active in public debates, but
> I think most economists would regard his more policy-oriented work as
> belonging in top journals.  Amartya Sen also does interesting work, but has
> he ever been associated with the left.

Since the usual definition of "heterodox" economics includes the
"Austrian" school, it's a mistake to equate heterodox with "the left."

What is the definition of "heterodox"? I think that we should reject
the currently prevalent grab-bag version of that concept, so that the
"Austrians" are booted. The concept of the "orthodox" should be
replaced with "textbook economics," a clearly empirical concept that
can be verified by reference to (say) the top ten best-selling
economics textbooks. Then, heterodox economics would be defined as
that kind of reasonable economics (fitting empirical evidence, etc.)
which does not appear in textbooks. It would not include astrological
economics and the like.

The ideas of the Austries appears in the textbooks, by the way, often
as a dynamic dimension of the essentially static neoclassical
orthodoxy (forming a shot-gun marriage) while many books see
"entrepreneurship" as a "factor of production" along with labor and
capital goods.[*]

If I remember correctly, at the ASSA convention, Terry McDonough
described the Austries as "pretenders to the neoclassical throne"
rather than being truly heterodox. Whether I got the quote right or
not, it's apt.  Was it "ruling paradigm in waiting," Terry?
-- 
Jim Devine / "Segui il tuo corso, e lascia dir le genti." (Go your own
way and let people talk.) -- Karl, paraphrasing Dante.

[*] I've never understood this: why isn't "entrepreneurship" simply a
form of labor? why is it presumed to be a good thing, in that the
introduction of crack cocaine into the market was done by an
entrepreneur?
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