RE: interview with Paul Davidson in the EEJ

["Colander, David" <colander@xxxxxxxxxxxxxxxxxxxxx>]

In case any of you don't have access to the Eastern Economic Journal (If you
don't you should get it; or get your library to get it--it's one of the most
interesting journals around, and they don't overcharge for it, even to
libraries.) here is the interview that Ric mentioned. Those of you who are
nonspecialists in ecnomics should know that Paul is one of the very few top
economists who spends time discussing issues with nonspecialists. His role
on this list is emmense, and we all owe him an enormous debt of gratitude,
even when he is unreasonable, which he sometimes is.  (Paul, you knew I
couldn't leave it too positive.)




An Interview with Paul Davidson
Paul Davidson, Holly Chair of Excellence at the University of Tennessee, has
been a leader in heterodox economics for over 40 years. I first met Paul at
the initial Post Keynesian seminars at Rutgers and Columbia back in the
1970s. I have followed his work, with admiration, since that time. His
contributions to economics are multitudinous-almost 20 books and 100s of
articles. (A highly selected bibliography is presented at the end of this
interview.) His focus on true uncertainty (We live in a non-ergodic world.)
as being the appropriate framework for Keynes, and for all economic
thinking, has provided many of us with a sense that there was much more to
Keynes than could be found in the texts. His insistence that Keynes must be
seen as a Marshallian is now generally accepted, and his proposals for
international monetary reform are playing significant roles in current
policy debates.

 His knowledge of Keynes' work is legendary; in discussions he will often
cite chapter and page number where arguments are to be found. His work on
aggregate supply and demand, now mostly forgotten by the profession, is
still far closer to correct than that presented in the current texts.

But going through his writings alone is insufficient to convey a full sense
of his contribution to heterodox economics. Through discussion and
organizing activities he has encouraged an entire generation of young
economists to question the models they are being taught, and to approach
economics with a critical eye. He is a regular on the PK Net, and he spends
enormous amount of time patiently, and sometimes not so patiently,
explaining the logic of his position to newcomers.

His wife, Louise, has been a constant companion and co-organizer throughout
his career. In her role as managing editor, and in his role as editor, of
the Journal of Post Keynesian Economics, they have guided the Post-Keynesian
movement, and kept it in the public eye.

The interview was conducted with Paul and Louise at the University of
Tennessee in his office in 1997. I specifically asked that Louise be at the
interview, because of the central role she has played in guiding Paul, and
thereby in guiding the Post Keynesian movement.

Paul Davidson Interview
July 1997

Colander: Is there anything in your childhood that led you in your
rebellious ways?

Davidson: I had a fairly normal childhood. My parents were very strict
Democrats. My father didn't like union workers because unions created a lot
of problems for him as a small business entrepreneur in the construction
industry. My mother was a very strong supporter of unions. I thought I was
very apolitical, basically. But, raised in a basically Democratic household,
I suspect there was some influence on me.

Colander: How did you get into economics?

Davidson: My first contact was in college. My folks wanted me to be a
doctor--the profession for any young Jewish boy. I didn't want to be a
doctor, but I compromised and majored in biochemistry at Brooklyn College.
Then I went on to graduate school in biochemistry at the University of
Pennsylvania. However, as I approached my Ph.D. thesis in biochemistry I
decided I didn't like biochemistry. In the meantime I had met Louise, and
became more interested in her than in biochemistry. And she was still back
in New York City.
		So I quit biochemistry and went back to the city. And what
do you do in the city? You have to go to business. So I thought of taking
business and economics courses, as I'd never taken any such courses as an
undergraduate. Louise and I took a Principles of Economics course together.
I decided I'd get an MBA at the business school of City College, and, while
there, I took more economics courses and found out about econometrics. As a
biometrician I knew much more about the use (and abuse) of statistics than
most econometricians did in those days.
		I had enjoyed teaching while I was at the University of
Pennsylvania, so I thought, well, maybe I can be an academic teacher, not in
biochemistry, but in economics. So that's what first steered me toward
economics. But I don't think I really understood what an economist was.

Colander: Did you get your MBA?

Davidson: Eventually I did, but in the interim I spent two years as a
biochemist in the Army, but, luckily, part of the time I was stationed at
Camp Kilmer in New Jersey doing biochemical research. Being stationed at
Camp Kilmer, I could go to City College at night. So I continued to take
courses at City College at night for my MBA. By the time I got out of the
Army I only needed a few more courses, so I got a job in an actuarial
department at a life insurance company during the day and continued at night
and finished up my MBA.

Colander: Were you married then?

Davidson: Yes, Louise and I got married just before I went into the Army. So
we had been married about 2-1/2 years when I finished. She continued to work
and support me.

Colander? Where did you work?

Louise: I was working at Macy's, part time, because I was still finishing up
college.

Colander: So, then, you're coming out of the Army with the G.I. Bill.
Where'd you apply?

Davidson: I applied to M.I.T., Harvard, Brown, Berkeley, and Pennsylvania.
All of them offered me fellowships, but Penn offered me the most--$2500. I
considered Berkeley, but we decided to go where we got more money.

Colander: What would you have done if you  had  gone to Berkeley?

Davidson: Well, I would have been a good neo-classical Keynesian, I suspect.
Hopefully I would have seen the light. But I'm not sure about that.

Colander: So Penn was really important in structuring your life?

Davidson: What a question! The answer is, clearly, going to Penn and coming
under the influence of Sidney Weintraub at exactly the right time structured
the rest of my career. You see, Sidney was a microeconomist. He was the
first Jewish professor hired by the economics department and the second
hired by the Wharton School. The first one at the Wharton School was Simon
Kuznets. It was about 1950. His work in the 1940s was all micro. But
somewhere in the late 1930s and 1940s, he got bitten with  the Keynesian
macro bug. In about 1954 he went over to England for a year and he wrote a
book on income distribution. (He published some of it in the EJ and AER.) It
was his attempt to bring aggregate supply back into Keynesian economics.
When I was in my first year at Penn he was teaching from the manuscript
since the book hadn't been published yet. He was overwhelming and bubbling
with these ideas and I found him just mind-boggling.

Colander: Who else was at Penn?

Davidson:  Nobody really. All the professors at Penn at that time--the
older, full professors--were textbook writers who had been popular in the
1930s and during the War. Raymond Bye, for instance; he wrote a famous
textbook in the 1930s, and on into the 1940s, which was one of the ones that
Samuelson knocked off in his first edition. Bye was a "Socialist." He
believed in 100 percent money. He taught me macroeconomics. He hadn't the
slightest idea what an equation was. I remember once he wrote on the
blackboard "Y= C + I" and said, "Now, that's an equation." Then he said,
"Wait a minute--I'm not sure," so he erased it and started off on a
different topic. His macroeconomics was pretty bad.
		We did have a whole bunch of textbook writers, some of whom
had been called up before the McCarthy House Un-American Activities
Committee and I suspect were card-carrying Communists.
		I took Sidney for both microeconomic and Comparative Modern
Economic Thinking. In this latter course, Sidney presented Joan Robinson's
Accumulation of Capital chapter and verse along with Hicks's revision of
demand theory. Sidney was a Cambridgephile. He loved Cambridge. So anything
that Joan Robinson was writing was what his students had to read and know.
		The other thing that was, I think, great about my education
was the preliminary examination. When you first became a graduate student
they gave you a list of 100 great books in economics. There were 10 or 15
books in various subcategories such as income distribution, welfare
economics, price theory. You had to read half of the books in each
subcategory, list the books that you read, and give the list in to the
committee. It then examined you on those books. It was an oral examination.
They were allowed to ask you any question about any of these books, which
were roughly 50, that you had listed.

Colander: Do you remember any of the books you chose?

Davidson: One was The General Theory.

Colander: What did you do your thesis on?

Davidson: I had contemplated doing something on econometric studies. After I
met Sidney I lost interest in that. We discussed what I should do my thesis
on and I said I wanted to do a thesis on whether Social Security payments
would be sufficient to pay people when they retired. Sidney said that if I
wanted to finish my thesis before I went on Social Security, I should not
take that topic because it would take that long to do it. I couldn't think
of any other thesis to take, so I said, "Well, what would you suggest?" He
said, "Why don't you take the topic called 'Theory of Relative Shares'?" I
had no idea what the theory of relative shares was. So I said, "Fine. What
is it?" He said, "Good. You'll be able to handle it because you don't know
anything about it." So that's what I took--a history of economics
consideration of income distribution, which, of course, since Sidney had
just finished writing his book, was what he wanted me to do.

Colander: When you left Penn, what did you do?

Davidson: I went to teach at Rutgers.

Colander: What was your research program there?

Davidson: The first article I ever published was on Ricardian rent sharing;
it came right out of my thesis. The thesis was also published, as a book. So
the first one or two articles I published were on income distribution or
relative shares.

Colander: How was that approach to macro seen at that time?

Davidson: Sidney was the only economist who saw macro in this framework. His
macro book was called An Approach to the Theory of Income Distribution. It
was shocking, because nobody thought of income distribution as a macro
topic. Everybody knew it had some macro implications, but nobody saw
macroeconomics as directly determining the distribution of income
		Joan Robinson, Richard Kahn, and Nicky Kaldor in the late
1950s had picked up this argument about profit shares from Kalecki. Kalecki
had this profit shares as a function of investment shares, so the I-S
investment savings equality suddenly got translated into an income
distribution curve. So there was this overlap.
		Sidney's theory was not the same as Kalecki's theory. For
about two or three years Sidney was trying to meld these two. He
corresponded with Joan Robinson, about how these theories could be melded
together. I always knew, and still do, that they don't meld, except in some
superficial accounting way, and that Joan was absolutely wrong. She thought
that Kalecki had discovered The General Theory before Keynes--she was
absolutely wrong--that's a separate story. Sidney was much more ambivalent
about the Keynes versus Kalecki debate.
		After two years at Rutgers, my salary didn't improve
dramatically and we now had two children. Considering my G.I. Bill income,
when I took the job at Rutgers, my after-tax income actually went down by
about 20 percent. So in the first two years at Rutgers we were living below
what we did when I was a graduate student, and we now had a second child. So
things were getting pretty tight at home, and I was not getting very large
raises (e.g., $250 per year or $5 per week), so that's why I went and looked
for a job. I was offered this job at Continental Oil Company. Louise
actually applied for this job for me because I wasn't very interested. I
ended up getting this job, which was for $15,000 a year, compared to the
$6,700 a year I made at Rutgers.
		I worked for Continental for about 11-1/2 months, until
1961. High pay, good expense account, nice office, etc. But I didn't stay,
for two reasons. First, the culture shock of living in the segregated South
was very difficult. Second, I found out that I was losing my skills as an
economist. Our job wasn't economics; it was public relations. So the pay was
very nice, but professionally and culturally it was not. On the other hand,
it did allow me to do a lot of research, and I did publish one article, in
The Southern Economic Journal, on the effect of a general excise tax on
macroeconomics. That was published after I left, but it was written while I
was there at the oil company.
		I also did a lot of research for the oil company on what the
effect of Keynesian economics would be for our company, and for the industry
as a whole. So when I came out I could do an article for the American
Economic Review on problems of the domestic oil companies.
		I also did a third article on Keynes's income and Kahn's
employment multiplier in which I showed that the Keynesian income multiplier
and the credit multiplier could be handled by Sidney's average aggregate
demand curve. So after a year I went back to Penn. Penn hired me to teach
Industrial Organization, not macroeconomics, because I had an MBA  and I was
somebody who'd met a payroll and had worked for the oil company. So I
started out teaching, in the graduate program, Industrial Organization.

Colander: At Penn, did you collaborate a lot with Sidney?

Davidson: No. Interestingly enough, Sidney and I only worked on two articles
in our whole lives together, and both of them were done when I was at
Rutgers the second time. I was working independently of Sidney. I did most
of my work in macro.
		The next important article I did was on the finance motive.
Sidney had taught the finance motive in the course that I had taken with
him. He didn't know what in the world to do with it. It always intrigued me
that here was this fourth motive for holding money that no one seemed to
know what to do with. So that's why I started working on the topic. I worked
it out and Roy Harrod happened to be visiting Penn and I got to know him
fairly well. I sent the manuscript to AER and it got terrible reviews . (The
editor of the AER had switched to John Gurley.) So I showed it to Harrod. He
took one look at it and said, "This is exactly what Keynes must have meant."
He said he would get it published in the Oxford Economic Papers. So it was
published in the Oxford Economic Papers. It was that article that made me a
monetary macro economist. Up until then I had been just doing standard
macro.

Colander: When did you turn into a Post Keynesian?

Davidson: Well, that was the great question. That didn't come about until
the 1970s.

Colander: OK. Up through the 1960s you had been writing; you had a slightly
different view, which was competing with the other Keynes views, but was not
fundamentally different.

Davidson: That's right. The only difference about it, it had aggregate
supply in it. And Eugene Smolensky and I wrote this manuscript called
Aggregate Supply and Demand Analysis. It was dedicated, when it was a book,
"To Sidney Weintraub, of course." Our argument was that "aggregate supply"
had to play an equal role with "aggregate demand."
		I remember that when we submitted the manuscript to a number
of publishers, they all disliked the title. We sent it out, and everybody
said, "Change it to Macroeconomics " or something like that. We insisted on
the title, Aggregate Supply and Demand Analysis. When it didn't sell the
editor and the publisher said, "We told you so!"

Colander: Who were the other Keynesians in aggregate supply focus? How about
Lorie Tarshis?

Davidson: We didn't really think of Lorie as being part of the group but he
clearly did have an aggregate supply focus. But basically we were the only
ones. Kenneth Kurihara, who was at Rutgers at the time, edited a book in
1947. It was called Post  Keynesian Economics, which is the first time, as
far as I know, the term "Post Keynesian" comes up. It had nothing to do with
Sidney or anything like that.
		The interesting thing was to see an article, in that book,
by Paul Samuelson, if I remember correctly, in which he's surveying what
Keynesian economics meant since 1936. And he has a paragraph in which he
says Sidney Weintraub was working on Keynesian economics with aggregate
supply as a "lone wolf." And he gives Sidney this "lone wolf" connotation.
And I think that's right. There were no other people working on aggregate
supply. And Sidney tried to convince Roy Harrod.
		And then Sidney writes a book. Sidney started writing these
books with these tremendously long titles. In one he attempts to do the
Harrod model in terms of an aggregate supply/aggregate demand analysis. But
Harrod just wouldn't buy it. So in terms of aggregate supply Keynesianism
there were very few of us. And then Smolensky drops off and becomes a
poverty institute type. He goes to the University of Chicago, and that ends
his game [laughter]. So then there was only Sidney and me.

Colander: So you kept on working. You were doing other stuff, too.

Davidson: Well, the next major thing that I did involved growth models.
Harrod, and, of course, Sidney were both interested in growth models. In
1965 Tobin published an article called "Money and Economic Growth."  I
looked at it and I said, "This is a disaster." It was a neoclassical model
where you had a substitutability between the demand for money and the demand
for real capital. And I thought that was wrong basically. So I wrote an
article, which I sent to Econometrica, because that's where Tobin's article
was. It was on what's wrong with Tobin's article, what the demand for money
in a real Keynesian growth model really looks like. I had two prices: the
spot price on old capital and a forward price on new capital. When the spot
price rose above the forward price, demand for capital growth would rise. It
was a strictly Marshallian market period versus short-run price analysis.
		I sent it in to Econometrica and after sitting around for
six or more months it gets rejected. It gets rejected because one of the
referees says, "It's not rigorous enough. It sounds like it's a good idea,
but it's not rigorous enough." So I called up Sidney and I said, "What do
they want for rigor?" And Sidney said, "You don't have any equations in it."
I had diagrams, but no equations. So I sat down and I took every paragraph
where I had a diagram and wrote in an equation. In all, I added about 14
equations. I sent it in again. The exact same paper. I didn't change a word
except to explain what each symbol meant. And it was accepted. So that gives
us a sense of what they mean by "rigor." And I was pleased, because I
thought that  Tobin, a man whom I really admired, would respond, and that
response would lead the aggregate-supply Keynesians and the "real"
Keynesians to rejoin forces. I was shocked to find out that there was no
response. Absolutely nothing.
		I had submitted this in 1965. Econometrica didn't published
it until the end of 1967 or early 1968. So it had a long publication wait. I
assumed, at the time, they sent it to Tobin and Tobin saw it. Tobin comes
out in the middle of 1968 with his  "q" ratio relationship, which was very
similar to my spot vs. forward price analysis. The q-ratio is basically the
ratio of the spot price over the forward price of capital goods. I was very
annoyed. I don't know that Tobin saw any relationship between that analysis
and mine, but I can't believe that he didn't. I would have thought that the
Editor of Econometrica would have sent him a copy of my paper by late 1966
(when the paper was accepted for publication), and hence Tobin must have
been aware of my spot vs. forward price analysis before he published his
q-ratio analysis. Yet there was no indication--nor had there been any
indication till this day--that Tobin was aware of my spot vs. forward price
analysis in Econometrica. And the absence of any recognition by Tobin told
me that I had to sit down and write a book. I couldn't just write these
little nice journal article pieces. I had to put the whole thing together.
So I then decided to write Money and the Real World, which came out in 1972.

Colander: We are getting ahead of our story; you were at Rutgers when you
wrote Money and the Real World. How did you get from Penn to Rutgers?

Davidson: By 1966 I had been at Penn five years and I was still associate
professor, reasonably good salary but still associate professor, and other
people were getting promoted who had not published as much as I had
published. I went over and told the Chairman of the Economics Department
that I wanted to get promoted.  I felt I had enough publications in major
journals so that I should get promoted. And he said, well, I'd have to wait
until X, Y, and Z, who had more seniority, were promoted. Yes, they hadn't
published as much as I, but they were on the list and I'd have to wait 3 or
4 or 5 years before I could get promoted. At that point I started searching
for a new job. And Rutgers happened to come around.

		At the time Jan Kregel was a graduate student at Rutgers,
and he wanted to write on the  reswitching controversy. I told him the thing
was to go over to Cambridge, England, to do it, and I wrote to Joan Robinson
and she invited him over. He was technically doing his dissertation under me
but actually doing it under her. Jan  told her I was writing this new book,
and she wrote me back a letter inviting me to come over and let her look at
this thing I was writing. So in 1970 I took a year off from Rutgers and went
over to Cambridge, England.

Colander: When did the term "Post Keynesian" develop?

Davidson: Sidney in the early 1970s takes a leave from Penn and goes up to
the University of Waterloo and decides he wants to start a journal. He wants
me to come up, but Louise and I didn't want to go to Canada-it was too cold,
among other things. Sidney thought he had financing for the journal but
somehow it never got off the ground.

	He came back in 1975 or 1976, and at that time I'm chairman at
Rutgers, which means I had some secretarial resources. We agree to start a
journal. We made up a list of 75 names of people that we thought would be
supportive. We expected them to join the editorial board and also to send us
some seed money. We expected to get about 25 people. In fact, we got about
67 who agreed. Some of them wouldn't let us use their name but sent in
money.  A few of them didn't want either to give money or to have their name
used. One of the reasons why was we weren't sure of what the journal was
going to be named. There were a number of suggestions, and one of them was
"Post Keynesian." A few people objected from the American side because they
felt -- at this stage of the game I guess-- that the name "Post Keynesian"
was already being associated with Joan Robinson, although she called them
"neo-Keynesian." And so some of them would give their money but they didn't
want the name "Post Keynesian" because of the association with Joan.

	So one of the other things we thought of was, "Let's just call it
the Journal of  Keynesian Economics." But the problem with that was the
acronym: J-O-K-E. So that knocked out Keynesian Economics; Joan had already
used "neo-Keynesian;" so we took "Post Keynesian," although some people
objected. About the same time Paul Samuelson starts calling himself
"post-Keynesian," with a little "p" and a hyphen. So we made it with a
capital "P" and no hyphen.

Colander: Tell me about Rutgers. That was known as a Post Keynesian school
for a while, and then it wasn't any more.

Davidson: When I first came there the man who was the chairman was a man
named Max Gideonse. He was a very conservative Chicago type. The second
time, when I was recruited back to Rutgers, which was 1966, the chairman was
Monroe Berkowitz; he was a Columbia Ph.D., an Arthur Burns type. Most of the
other people there were either from Columbia or Harvard. So it didn't really
have very much of a Post Keynesian flavor. I guess I was hired because they
needed a normal Keynesian in those times, and because I was known to be a
nice personality--little did they know! And I had these two articles
published in the AER which made me somebody who had published in a
mainstream journal. At that time, already, I had two in the AER, one in the
Review of Economics and Statistics, and a couple of other major journals. So
when I came there it was still a very orthodox department

		Rutgers didn't become a center for Post Keynesian economics
until the mid-seventies when the provost decided he wanted to differentiate
Rutgers from other schools. There were six undergraduate colleges at
Rutgers, each with its own economics department. Each college reported to
the dean of each of these colleges, and the dean reported to the provost.
There was also an "area-wide chairman," so all the six undergraduate
chairmen also reported to this area-wide chairman of the discipline. The
area-wide chairman then also reported to the provost.

		When I was area-wide chairman, the provost came to me and
asked how to differentiate the Rutgers economics department. The Journal of
Higher Education had recently had an article on how the economics department
of the University of Massachusetts had become well-known because they had
hired all these radicals that Harvard had not hired. He asked, "Couldn't we
do something similar with this liberal deviant economics called Post
Keynesian?" We decided one of the six undergraduate departments would be the
base for all types of heterodox economics -- not only Post Keynesians but
Marxists, radicals, and institutionalists--as its focus, and the other five
departments would be much more orthodox. And since students were allowed to
register for courses in any of the colleges, any student who wanted to could
still get an orthodox education -- or exposure to heterodox ideas.

		And so Livingston College became the resident heterodox
college and Jan Kregel was the first Post Keynesian that I hired there. At
no time were there more than three or four Post Keynesian faculty members at
Rutgers in economics out of 81 faculty members as a total in the six
undergraduate colleges at Rutgers in New Brunswick.

Colander: Who were they?

Davidson: Jan Kregel, Al Eichner, and myself, Nina Shapiro might have been
considered Post Keynesian. She had come from the New School. And then there
was Michelle Naples, who had come from the University of Massachusetts;
Bruce Steinberg, who is now the chief economist at Merrill Lynch, had come
from Michigan; and one or two others who had come from some program with
exposure to heterodox notions. These few people --never representing more
than 6 per cent of the economics faculty--represented non-mainstream or
heterodox economics on the New Brunswick campus of Rutgers University. But
only three of us were clearly real Post Keynesians.

Colander: Let's go back to the starting of the Journal of Post Keynesian
Economics. Louise, you played a big role here, right?

Louise: Well, in the beginning, Al Eichner started holding these meetings at
Columbia (even though he was at SUNY-Purchase he had been to Columbia and
was able to use the facilities there). There must have been about four
meetings at different times where people came from as far as Washington,
Philadelphia and Wesleyan.

Colander: I attended a couple of those meetings.

Louise: Those meetings started systematic thinking about the Journal. Sidney
became very enthusiastic that this was the time to start the Journal. So
he's the one that pushed it.
		Then the question was: how to do it, and that's when we
asked people to contribute. The contribution was, I think, $50, although
some people paid a little more.

Davidson: Galbraith said he would match whatever we raised.

Louise: But then it turned out that Sidney knew a publisher, Mike Sharpe,
who said "Why don't you let us do it?".  It seemed just very easy to do it
with Mike Sharpe because he was going to take all the losses--and, of
course, most of the profits (if there were any)--and that's what we did.
Rutgers was not very generous. We had a computer out in the hall that other
people used, and they gave me a desk in one of the satellite offices.

Davidson: Louise was the office manager. It wasn't much of an office; it was
really a closet that had a window.

Louise: And I had to pay the postage out of the money that I had collected
from the contributions.

Davidson: After we had agreed that we were going to do this, we sent out a
little flyer to everybody that we knew was interested, and to people on a
mailing list that we got from Mike. We told the people they could be charter
subscribers. We got 400 people who sent in money.

Louise: We were trying to make it as inexpensive as possible because we
wanted people to have it. That was the whole point.

Davidson: This must have been 1977. We had a meeting in New York at the AEA
to celebrate the kickoff of the Journal, although it wasn't going to come
out until September 1978.

Colander: Did you get lots of submissions at the beginning?

Davidson: We had an acceptance ratio of anywhere between 15 and 30 percent.
We also commissioned articles. This was due to Galbraith. As I stated,
Galbraith helped finance us, but he did it on one condition. This condition
was a very interesting one. He said that his friend, Seymour Harris, had run
The Review of Economics and Statistics. And Seymour ran it on the basis that
the articles weren't published just because they came over the transom--in
other words, in the mail--but Harris continually organized symposiums where
he would have invited groups of people who would focus on a particular
question. So Galbraith extracted a promise from Sidney that we were going to
have these symposiums, and do this relatively often.

		And so one of the things has been that when submission flows
get slow, I have gone out of my way to induce a symposium, so that some
years we have many more symposiums than others.

Colander: How did you and Sidney split the work on the Journal?

Davidson: Initially, we just had both names listed and you could submit an
article to either editor. We quickly agreed that both of us were free to
make our own decision about acceptance, rejection, or revision. If we wanted
to, we could ask advice from each other, but we didn't have to. I would say
85 to 90 percent of the time we made independent decisions.

		Since all of the mechanics of getting the paper ready for
publication were done at Rutgers, we always got a look at Sidney's
manuscripts that he had accepted before he got a look at mine. And
occasionally I would read something that he had accepted and I would be
shocked that he had accepted it. Sometimes I would be even more shocked
because he would have edited it without the author's approval. He would just
send it in with the original typescript with his pen scrawlings and
cross-outs all over the place. I would tell him he ought to get the author
to at least approve of all these changes, but his response was always, "No,
don't worry about it; they'll be happy to get the publication." And nobody
ever complained to me. So I guess he was right.

Colander: Louise, how did you manage to deal with these two strong egos?

Louise: There was really no problem. They did have some serious arguments at
the very beginning.

Colander: What were the arguments about?

Louise: Before they decided to each accept or reject on their own, they
would argue about what papers to accept. Sidney would want to accept
something from somebody that he knew, and Paul  wouldn't think it met the
standard.

Davidson: We also had agreed not to accept a lot of papers and have a long
publication lag. So when we had a lot of acceptances, we would become much
more careful about accepting further papers in order to make sure that
anything we accepted would be published within 6 to 9 months of acceptance.

Colander: Let's switch tracks a bit. Louise, you were thinking of going on
to study economics. You could have gone on, but now you are running a
journal. Were you content with that?

Louise: Well, we came back from England in 1971 and I got very excited about
political science, because we'd spent a lot of time with Galbraith, and I
was very interested in the process. However, when we got back it was too
late for me to register; then our son got sick, and I wanted to be home, so
somehow I never got around to going back. So when the Journal came up in
1978, it seemed an interesting challenge; and I didn't have to work full
time on it. I think it worked out just fine. Paul and I get along well;  we
can tolerate each other seven days a week.

Davidson: Well, I have to amend that a little bit. When we first started,
Louise had the office next to mine for the journal. And when something would
go wrong, I would storm into her office and shout at her. And she would say,
"You wouldn't shout at me if I was a secretary. You're only shouting at me
because I'm your wife." And I would say, "I would shout at you if you were
the secretary!" And she would say, "Well, I never hear you shout at a
secretary." So the question was whether I was picking on her because
something would go wrong and I didn't like the way it was managed or was I
picking on her because she was my wife. I suspect I would have picked on her
regardless.

Colander: My suspicion is that had she been only a secretary, and not your
wife,  and you picked on her, she would have walked out.

Davidson: That's true.

Louise: He's never done that to anybody else. But that's O.K. After a while
I just ignored him.

Colander: Louise, you followed all this. What are your views on Post
Keynesian economics?

Louise: It's an interesting fight. I assume that if ever it became the
mainstream (which is very unlikely), the fight would be over and so would
the fun.

Colander: Was Sidney upset about never being accepted into the mainstream?

Louise: I think he liked the fight, too. You know, everybody wanted to get
up there and get the Nobel Prize, but it's not a very likely scenario.

		And you know, Paul is a person who doesn't like authority.
He didn't tell you about that, when he was a child. And we have a son who
also doesn't like authority. So I think it is fair to say that Paul is an
inherent dissident.

Davidson: I think there's no question that Sidney was much more conciliatory
to people like Solow, Samuelson, and Tobin than I am. I blame them for the
failure of Keynesian economics to establish itself in the profession. And I
think Sidney always made excuses for them.

		Here's a telling story: The Royal Economic Society met at
Cambridge University in the summer of 1983 to celebrate Keynes's 100th
birthday. They invited me to attend, but they didn't invite Sidney. That
really hurt. I don't know how it happened, but somehow Kaldor found out that
Sidney hadn't been invited. So Kaldor wrote to him and said, "Look. I will
give up my place on the program and you can present the paper on Keynes on
the program instead." I thought this was wonderfully gracious of Kaldor.
Sidney never accepted it, but that was because he was so sick;  he died in
January of that year, so it became moot whether he would have accepted it or
not.

		In June of that year we had the conference and there was a
specific session where Samuelson was chair. Axel Leijonhufvud and somebody
else gave papers. Solow was a discussant. Solow said something to the effect
that one of the problems with Keynesian economics was that it never dealt
with the problem of aggregate supply, and that reconstructed Keynesians
ought to deal more with supply problems. That really rubbed me the wrong
way. During the discussion I raised my hand and I said, "It is unfortunate
that Sidney Weintraub can't be here, because he's somewhere else at the
moment. But Sidney wrote this book about aggregate supply and aggregate
demand, which was reviewed in the American Economic Review by somebody from
M.I.T. who said that the problem with the book was that the whole thing was
implicit theorizing about the aggregate supply function. Had Keynesian
economics followed Sidney they would have had aggregate supply way back in
the 1950s and they would not have needed to wait until the 1980s. And it was
somebody at M.I.T. who had written  this attack on a Keynesian analysis that
included aggregate supply."

		Paul Samuelson immediately jumped up and said, "Don't blame
me! It's him," pointing to Solow. Bob Solow then got up and hedged, saying,
"Well, . . . this and that." But he really had to admit that this was what
axed down the aggregate supply approach to Keynesian economics. I don't
think Sidney would have jumped on Bob as I did.

Colander: Let's switch topics back to Rutgers and its connection to Post
Keynesian economics. The Journal progressed and did fairly well in the late
1970s and early 1980s. Rutgers expanded and grew in reputation for a while,
and then some problems arose. Can you talk about that?

Davidson: Well, we had all sorts of internal political problems. I had a
five-year appointment as chairman. At the end of five years there was a
fiscal problem and I had some fights with deans; I demanded more lines from
each of the deans because the economics department was heavily overloaded
with students. The student/faculty ratio was much higher than anywhere else
in the college. I got some of the deans to agree with me, but not others.
The provost supported me, but the deans, who made the allocations, refused
so I resigned. I immediately got a call from Ken Galbraith who said, "Never
resign. It lets the other bastards in." And he was right. So I was
responsible for letting the neoclassicals in, who immediately started to
attack the Post Keynesians. I attributed this vicious attack by the orthodox
members of the department to the fact that they didn't want Rutgers to be
known as this weird place with Post Keynesians, although there were only at
the time perhaps four or five people out of 81 faculty members who could be
identified as Post Keynesian or at least heterodox. They believed that it
was better to be a third rate imitation of MIT, then to obtain stature (they
believed notoriety) as a center for Post Keynesian analysis.

		I did a study and discovered that those five heterodox
members of the Rutgers faculty had published more in five years than all the
76 other economics department faculty members together. After I left as
chair an institutional witch hunt was instituted , a sort of McCarthy hunt,
by my successor in an attempt to weed out the Post Keynesians. Those
heterodox economists who didn't have tenure, didn't get tenure no matter
what their publications, no matter what their student evaluations.

Colander: What was the argument? That they hadn't published enough in the
"right" journals?

Davidson: One case was Nina Shapiro's. She had 8 or 10 publications when she
came up for associate professor. There was one young neoclassical professor
who had one 4-page note in The Review of Economic Studies. He got promoted;
she did not. So it was that kind of thing. He had published in the "right"
journal, Nina had not.

		The witch hunt also affected me. I had always taught one
half of the one-year introductory macroeconomics course in the graduate
program and some orthodox economist taught the other half in that one-year
course. When the new director of the graduate program came in, I was not
permitted to teach that course. The argument was that I would not teach them
orthodox economics, which was what the first year of the graduate program
was about; if students wanted to take Post Keynesian economics, they should
take it after the comprehensive examination, and I could teach it in their
second or third year. So it was a systematic attempt to dilute Post
Keynesian teaching from both the graduate and the undergraduate classes.

		I was assigned to teach large sections of either the
Principles of Economics or Money and Banking since they felt I could do no
damage teaching those things. And for about two years that's what I actually
did.

		Al Eichner was the focal point that finally caused all this
all erupt. As I said before, the provost and the Dean of Livingston College
wanted it to be known as a Post Keynesian center. At the time of the job
search for the position Eichner ultimately occupied, Jan Kregel was chairman
of Livingston College. (I happened to be on leave at the time so I wasn't
even involved in developing the criteria for that position.) Kregel and the
Dean got together and wrote a description for a full professor at Livingston
that almost said that the applicant had to be Post Keynesian in order to get
the job. They made the offer to Al Eichner. The other mainstream faculty
members became very incensed about this procedure. In order to get the
appointment through, everybody in the whole economics program had to vote.
Livingston had about 8 people, and they voted 8 to nothing for Eichner, but
of the 73 other people who had a vote, about 52 of them voted against.
Nevertheless, the Provost overrode the faculty and made the appointment of
Eichner. The Dean of Livingston College strongly supported Eichner's
appointment. I was not there so I did not recommend it or dis-recommend it.
I wasn't even asked.

Colander: Was the vote against Al solely because he was a Post Keynesian, or
based on Al's record? Al hadn't done a lot of writing.

Davidson: That's true. Al hadn't done a whole lot. He had written The
Megacorp. He had written an article with Kregel in The Journal of Economic
Literature. He also had a few other articles. He fit because the way the job
description was written it was of course for a Post Keynesian economist.

		The members of the faculty, for some reason or other, felt
that I had gone to the provost and lobbied, for Eichner. I didn't really
know Eichner that well. Jan knew him because they had written this article
together for The Journal of Economic Literature.  I knew him from the
meetings at Columbia. But I was really overwhelmed with his brand of Post
Keynesian economics, which was more Kaleckian, so I really wasn't overly
enthusiastic. On the other hand, I thought Eichner was reasonably good and
would have supported him. I hadn't even spoken to the provost about it
because I knew Jan Kregel was running the war. I fully suspected that
because the provost and I had agreed that Livingston should be this
heterodox college that the provost was going to approve Eichner. So I didn't
have to lobby.

		When Eichner came there was terrible animosity, and there
was verbal abuse of all sorts. It became very unpleasant just to be there.
When Kregel ended his term as chairman, a non-Post Keynesian, a typical
neoclassical economist, took over as chairman at Livingston College. Kregel
then went back and spent one term in Bologna, did one term in Italy, and
then came back to Rutgers. There was a new area-wide chairman, and one year
he assigned Jan Kregel to teach accounting. (Because the economics
department didn't have a separate business school, we had accounting
courses, finance courses, and marketing courses.) We had people who taught
these business-school-type courses, but instead of giving Kregel economics
courses to teach, the area-wide chairman insisted that Kregel be assigned to
teach accounting courses. And so when Kregel came back the second time, he
was assigned to teach two accounting courses. Of course he didn't have any
particular expertise in this area. So he objected, and the chairman said,
"Well, somebody's got to teach 'em, and that's you." Jan ended up resigning,
and that began the exodus.

		So the situation was that young Post Keynesians didn't have
a chance for tenure, and they had to leave. Established Post Keynesians,
like Kregel, found it so unpleasant that they left. The new powers in the
economic department assigned me what I call checkerboard teaching
assignments: Monday at nine, Friday at three. So instead of concentrating
courses so I could do research, I was teaching all over the book, eight
o'clock in the morning, five o'clock in the afternoon-- that kind of thing.
It was done just to make things unpleasant. So that gave me the idea to look
for another job as well.

		At the time I was the highest-paid economics professor at
Rutgers, and in order to offset my influence, a new professor line was
opened up, what they called a "World Class Scholar" position which permitted
above scale pay. The pay was in the mid-$70,000s, which was excellent at
that time. The new chair recruited a Solow-growth-model specialist, from
Brown. I talked to him and I said, "Look. I have to vote on you. What do you
think about the idea that you and I teach the basic graduate course
together, because currently I'm not allowed to teach the basic graduate
course?" And he said, "You're not allowed to teach it and I don't think you
ought to be allowed to teach it." I saw I was going to have a problem. I
went to the chairman and I said, "Look. "For 74 grand we can do better than
X." They, however, didn't want to give up on X. So there was a big fight as
to whether he fit the description of a "world class scholar" and was
therefore entitled to above scale pay. I lost.

		One other thing happened. Several years after I had resigned
from the area-wide chair, a young professor was accused of sexually
harassing his female graduate student teaching assistant. The teaching
assistant filed a complaint. The affirmative action officer of the
university and the young professor agreed that his "punishment" was that he
was not to teach any course that the teaching assistant was taking. That was
the only punishment.

		I didn't know about the harassment charge or the agreed
solution. I believe most economics department faculty members did not know
about it. But graduate student friends of the teaching assistant knew about
it and they were incensed by the University's solution to the sexual
harassment charge. And so the graduate students came to me and to Eichner
and told us that Professor Y had somehow sexually harassed this graduate
student and had threatened her with the loss of her job if she told what had
happened.  Al Eichner and I then went to the Administration and complained
that this was not sufficient punishment. That created additional animosity
within the department because it was looked upon as Post Keynesians picking
on a neoclassical economist and trying to get rid of him by using sexual
harassment as the excuse.  And I think even that some of my colleagues
thought that the graduate students who had complained were somehow in
cahoots with us in making up this story.

		In the end the Administration decided that everybody,
including the Post Keynesians, had to take sensitivity training. All the
faculty went to sensitivity training sessions and listen to all sorts of
stories about sexual harassment. The only one who goofed off and often did
not show up at these sessions was the professor who was accused of sexual
harassment.

		I wasn't seriously looking for another job, but it just so
happened that at that time, somebody from Tennessee, sent me a letter. They
had these special Positions of Chairs of Excellence. Tennessee made me what
I call a Godfather offer. It was such a great offer I couldn't refuse. And
since I wasn't so anxious to go, I could negotiate not only for high salary
but for lots of other things. When I left, only Al Eichner was the remaining
heterodox economist at Rutgers. I told Al that he ought to leave, but he
stayed on. After I left, or as I was leaving, many of the graduate students
came to me and said, "Can't you stay?" but after they'd seen what was
happening they were afraid they would have problems in their other courses.
So it was not only that the professors were being intimidated but that a
whole bunch of the graduate students, many who came to Rutgers because they
could get some exposure to heterodox ideas, were being intimidated as well.

Colander: What were your hopes for Tennessee?

Davidson: The people who recruited me were basically Clarence Ayres-type
institutionalists and had a very strong non-orthodox flavor. I had gotten a
macro Chair of Excellence. There was also a micro Chair of Excellence that
was open, and there was evidence that I could help recruit someone in the
micro position. So I saw this as a possible place to create a new center for
Post Keynesian economics.

		Two things happened. One was they had already made the offer
of the micro chair to Kerry Smith, who was a former student of mine at
Rutgers and had been at Vanderbilt, and he had turned them down. I thought I
could persuade Kerry to come. It turns out that Kerry was interested, but he
had just moved to North Carolina and didn't want to make another move so
quickly. So then they had to recruit somebody else. The second person they
offered the micro chair to used the offer as a bargaining chip to
substantially upgrade his position at his own University. He negotiated for
a whole year and finally won what he wanted from his own University and then
turned Tennessee down. At that point, the funding for this micro chair of
excellence had disappeared. In the interim, a lot of the
institutionalist-sympathetic economists were retiring or leaving.

Colander: But you guys were in control. Why didn't you replace yourselves?
It was an institutionalist haven?

Davidson: Well, that's a good question. Why didn't they replace themselves?
Part of the answer is that they thought they had to play honestly and give
the other side the right to express their own views. The result was we could
never get a close to unanimous vote to present to the Dean.

		 For example, there was a micro line at an associate
professor level. And I recommended somebody, I forget who it was, a very
good mathematical economist with a Post Keynesian orientation. The
neoclassical people had somebody else. The neoclassical people admitted that
the Post Keynesian, the guy that I brought in to give a seminar, was much
better than this neo-classical guy, who gave a terrible seminar. So even the
neoclassical people wouldn't vote for the neoclassical job candidate. But
they also wouldn't vote for the better Post Keynesian microtheorist.
Accordingly, no one was hired and the line was used to hire TAs.

		Then the University began to have financial problems as a
recession occurred and the State cut back funding (in nominal dollars) to
the University. Many of the lines of people just disappeared as the Dean
recaptured these lines in order to reduce the College's expenditures.  While
approximately 10 members retired or left since I have been at Tennessee, the
number of replacements were what? three? Three young people in 10 years, two
of them in 1996. So that explains why nobody got replaced. There was just
complete shrinkage.

Colander: Where does that leave Post Keynesianism in the 1990s?

Davidson: Well, not in Tennessee-that's for sure. Not at Rutgers-that's for
sure. There's a little bit at Denver; there is a possibility of something at
the New School; and one or two other places. But I don't see any
institutional base for Post Keynesianism. One of my fears is that Post
Keynesian economics will die out because there is no place for it in terms
of some institution where we can train graduate students. At Tennessee, for
instance, the first few years I was there, I had a number of graduate
students who did theses. My last one graduated a year and a half ago, and I
have one student now.

Colander: Have you placed your students?

Davidson: I've always been able to place everyone, so far.

Colander: Any regrets?

Davidson: Oh, lots of regrets.

Colander: Let's hear them. What would you have done differently?

Davidson: I would have taken Galbraith's advice and not resigned. That was
clearly a mistake, because I did have central administration support. That
was the biggest mistake that I made. I'm not sure about other regrets, but
that was clearly a mistake.

Colander: Would you say one lesson is that you've got to play the
institutional games in order to arrive at your goals?

Davidson: I've been friendly with people like Paul Samuelson, Bob Solow, Jim
Tobin, Franco Modigliani, Bob Clower--many of the big names in the economic
profession who are accepted by the mainstream as well as the heretics. From
time to time people have suggested to me that I did not use this old boy
network properly. If I had been a different kind of person, had a different
kind of personality, I might have been able to promote Post Keynesian
economics through these people, or use these people to promote it.

Colander: Let me rephrase my question. As opposed to seeking compromise and
integrating your view, you moved toward distinguishing your views. Any
regrets along those lines?

Davidson: I think that's the correct way of saying it. I was brash. I was
too willing to emphasize differences rather than similarities. No question
but that I might have caught more friends with sugar than I did with the
vinegar. So the question is: Would having emphasized similarities
compromised my own views too much? Back in 1970-71 I had this long debate
with Bob Clower along these lines. Both Bob and I agreed that mainstream
economics was wrong--that mainstream (Samuelson-Solow-Tobin) Keynesian
economics was wrong and often led to wrong policies. And from a policy
standpoint the question was how to you get the economy from point A where it
is now to point B. My argument was: Well, you show the economists who
influence policy makers why the theory they are using is wrong; you have to
show them what the right theory is and its policy implications  then  you
can get the decision makers to move towards  B. And Clower's answer was: No,
you will not convince them that the theory they have invested so much in is
wrong. What you do is you take their theory and you make a marginal
adjustment to their theory. You know where you want to be, so you know which
equation to change to get a result that will get them to move towards B. By
an ad hoc change to their equations, and phrasing the argument in their
terms, you make it so they won't object too much and you can get them to
move in that direction. The constrained demand analysis that Clower
developed in the 1960s was the example he used.

	 My answer was "No, that's not the way to do it." because ultimately
they'll make another mistake. If you just use their theory with just one
marginal change, they'll find another marginal change. That will throw them
off again. You have to wipe the slate clean and develop the "proper" theory.
That was Keynes's revolutionary message.

		Let me give you an example. I was walking to a classroom
with Nicky Kaldor in 1971, and Cambridge had just won the capital
controversies--reswitching debate with MIT Cambridge Mass. And Kaldor said
to me, "How long do you think it will be before people in the United States
stop teaching the marginal productivity theory?" And my response to him was,
"Nicky, not in your lifetime and not in my lifetime, because there are a
million other ways of justifying the marginal productivity theory as long as
the basic neoclassical theory remains as the microfoundations of
macroeconomic theory."

Colander: From Chris Bliss, I did not learn the Cambridge line. I heard they
were debating the wrong issue.

Davidson: Well, what did Cambridge win? Cambridge won the argument that if
you had a simple monotonically decreasing function, you couldn't create a
measure of capital.

Colander: No one ever debated that!

Davidson: That's right. All the neoclassical economists had to do was
introduce a more "well-behaved" production function that ruled out
reswitching by assumption and then they could resurrect marginal
productivity theory. And that's what I meant when I said to Nicky that he
was never going to win.

Colander: You're making it a strong statement-about winning or losing.
Debates are never won in terms of the set of debates; they're won in terms
of what people move to after they've argued and are totally exhausted and
fed up with the topic. At that point you see who is willing to move a little
bit this way or the other way. Even though you lose all the debates, you can
still win the war.

Davidson: Well, I don't know. Let me give you two examples. Let me take the
question of ergodicity. Sidney asked me in the early 1970s to look at
rational expectations and explain why it was wrong. I had other things I was
doing. For years I kept putting it off, and finally I decided I would take a
look at it. Since I had had biometrics training, I thought of writing down
the statistical theory behind it. I knew quickly enough when I started
looking at the statistical economic literature that there was nothing there
that could help me. Then I found two items. The first was a single sentence
reference in Malinvaud's first edition of Econometrics; but he dropped it in
the second edition. The other one was from Herman Wold, who had written a
book called Analysis of Economic Time Series. And that book gave me  the
clue as to what I had to investigate. And I knew quickly enough  to go to an
engineering and/or a biometrics library because I immediately suspected what
the problem was although I didn't know everything about it myself.

		Sure enough, in the engineering library of Princeton
University (I lived in Princeton, New Jersey at the time)I found the answer
in terms of the theory of ergodic processes.  I then  wrote this article
"Rational Expectations: A Fallacious Foundation for Studying Crucial
Decision-Making Processes" (published in 1982) where I related uncertainty
with a non-ergodic system. I sent the paper to John Hicks, who I had become
professionally friendly with since a meeting on the microfoundations of
macroeconomics in 1974. Since then Hicks and I had continual discussions
whenever I visited England, either in London, Oxford, or Porch House
(Hicks's home). Many of these discussions involved uncertainty and
economics. Hicks was really mixed up about Knight' s vision--the debate
about uncertainty was not new with Keynes. As I say, Knight had used the
term as an integral part of his theory of profits. The question was whether
you could use probabilities or what it meant not to have probabilities to
use to forecast the future.

	After I sent him my rational expectations paper, I got this lovely
letter (dated 12 February 1983) back from John Hicks saying, "I just have
been reading your RE [rational expectations] paper, ....I do like it very
much. I have never been through the RE literature; you know that I don't
have proper access to journals; but I had had just enough to be put off by
the smell of it.  You have now rationalized my suspicions, and have shown me
I missed a chance, of labeling my own point of view as non-ergodic. One
needs a name like that to ram a point home".

	Ever since 1982 I've been written about uncertainty and
nonergodicity -- even in The Journal of Economic Perspectives (1991). Smart
orthodox economists such as  Stock and Watson and others who are specialists
in rational expectations suddenly began pointing out that the system has to
be ergodic as well as stationary. And so, if I had somehow compromised and
said, "Well, Keynes's concept was like Knight's concept of complexity, and
so forth," we would still be confused about what do you mean by uncertainty.
There would not have been a nice precise specification of the problem in
terms of ergodic vs. nonergodic processes. It seems to me you can't
compromise when you come to something important. So that's one example.

Colander: I've followed the debate on the Post Keynesian network on
ergodicity. There seems to be some debate about its meaning.

Davidson: A lot of people don't understand it. I agree with you. But Solow
understands it. Solow, by the way, after reading an earlier Brookings (1974)
paper of mine on the energy crisis where I attacked mainstream analysis of
oil prices and the Hotelling theory, refused to be a discussant on that
paper because it was unfair to mainstream analysis. Solow was a discussant
of an early (1983) paper of mine on ergodicity and the failure of American
Keynesianism. Solow's discussion started with the statement that he wasn't
going to discuss this because it would require too much time to straighten
it out. He then went on to give his version of Keynesianism. At the cocktail
party later I asked him why he refused to discuss the ergodic axiom and its
role in mainstream economics. He didn't give a very coherent reply. But a
little over year later, in The American Economic Review, in May1985 issue he
wrote "Much of what we observe can not be treated as the realization of a
stationary stochastic process without straining credulity.... There is
enough for us to do without pretending to a degree of completeness and
precision which we cannot deliver... My impression is that the best and the
brightest in the profession proceed as if economics is the physics of
society".

		Now "stationary" is a necessary but not a sufficient
condition for ergodicity, while non stationarity is a sufficient condition
for nonergodicity. So here was Solow, one year later, arguing that
nonergodicity was an essential element in economic analysis--something that
he refused to discuss a year earlier. But one year later he pointed out that
the problem with orthodox economists was that they were assuming
stationarity.

Colander: I remember in Arjo's [Klamer 1983, p. 137] book Solow made the
comment that essentially he'd never really followed you and understood your
views. Could you have led him along to address your views?

Davidson: I did try to  lead him. He had started his discussion of my paper
with the following quip, which I think is a very clever quip-I got to use it
some time later myself. Solow said something about "the problem with
Davidson's paper is when I read it I felt like an American sailor who just
came out of a Turkish harem and when asked what he did in the harem, he
said, 'There were so many things to do, I didn't know what to do first, so I
just left.'" Solow said, "That was the trouble with Davidson's paper.  There
were so many things to clear up I didn't know what to do so I'm just going
to leave the paper."

		So at the cocktail party afterwards I went to him and I
said, "Look Bob, tell me what you think is wrong with the idea that economic
time series are non-ergodic. He said well, he thinks that's too strong a
statement. You don't really believe that behavior patterns do not carry over
time." Yet by 1985 Solow is chiding economists for assuming economic time
series are stationary!


Colander: What's the future of Post Keynesian economics?

Davidson: Well, it depends whether you ask me on Monday, Wednesday, and
Friday or Tuesday, Thursday and Saturday.

Colander: Today's Monday. Give me Mondays, Wednesdays, and . .

Davidson: My pessimistic assessment is that it has no future; that the
control of the economics profession has become so tight that, unless a
cataclysmic economic crisis occurs in the real world, nobody would turn to
an alternative. If there's a great depression, then clearly there's a
possibility of an alternative. But, as I see it, the profession has become
more and more controlled by a group, I hate to say. I don't think there's a
conspiracy-not because they conspired to control it but because they believe
they have vision and everybody else is, sort of, wrong. And I give as a good
example the last issue of the Royal Economic Society's newsletter. I don't
know if you saw it or not. New Editors have taken over the Economic Journal.
And they argued that the Economic Journal has not had the stature of the
American Economic Review and some of the other journals where the latter
feature more technical articles and ignore controversial ones. They suggest
that the lesser stature of the EJ is due to its publishing less technical
articles than the AER. What the new editors are going to do is to restrict
some issues of The Economic Journal each year for strictly technical
articles. In other issues they will still permit controversy. This says that
basically the same journal is going to have Series A and Series B issues,
where Series A is going to be solely technical articles-- and they hope that
these technical oriented issues will be more professionally praised. And if
they go that way, and I think they will, then that is the end of Post
Keynesianism. All heterodox sorts are always beating up on each other. Today
and back there in the 19th century as well, and they were never considered
more than a bunch of cranks, tinkering at the edges.

Colander: Well, that's your Monday view. What's your Wednesday view?

Davidson: My Wednesday view is there's still hope. Every once in a while
some person from the establishment sends a signal to me or something, which
indicates that they really do think there's something in Post Keynesian
economics and asks can we somehow amalgamate the two, integrate the two.
Hopefully there will over the years be some ultimate movement in that
direction. I don't think Post Keynsians will ever take over the economics
profession as the Neoclassicals have. But I hope there's some way where it
becomes an influence, turning the Neoclassical system into a much more
compatible Keynesian system.

Colander: Now what would that Neoclassical system be?

Davidson: Well, the argument which I've made is basically the question of
what is the axiomatic foundation of the logic. I should say, for example,
when I started this ergotic-nonergotic axiomatic distinction at Cambridge,
which interestingly enough has a long history even before I started it,
nobody in the establishment worried about this. Since I've raised that issue
I've noticed a lot more people have now raised that issue, and so, as
Keynes's General Theory, they will see the orthodox neoclassical system as a
special case of a more general theory. And the question is: which axioms are
applicable to the particular system that they're looking at at the moment.
Then Post Keynesianism has a niche.

Colander: Any different Friday view?

Davidson: No, on Friday I rest.

Colander: Any final words of wisdom for young researchers?

Davidson: Well, I would hope that they wouldn't follow the invisible hand,
completely at least, and that they would follow their intellectual minds,
basically, and that leads them into things that are not necessarily
orthodox. I would hope that's the way to go.
	I was lucky, my initial publications were really still pretty much
orthodox and I managed to make a number of AER's and EJ's and journals of
that sort, so that even though I'm Post Keynesian, I'm sort of
semi-establishment in some sense. People know about me. A young person
coming out's got a very difficult problem, it seems to me, and if they
follow the invisible hand they may be successful in the sense of income and
establishment, but not successful in terms of intellectual development.

Colander: Thank you very much.

REFERENCES

Klamer, A. Conversations with Economists. Totowa, NJ: Rowman & Allenheld,
1983.





> ----------
> From: 	Ric Holt
> Reply To: 	pkt@xxxxxxxxxxxxxxxx
> Sent: 	Monday, March 5, 2001 6:48 PM
> To: 	pkt@xxxxxxxxxxxxxxxx
> Cc: 	Ric Holt
> Subject: 	interview with Paul Davidson in the EEJ
>
> Pkters,
> I just want to mention that there is an interview with Paul Davidson by
> Dave Colander in the the most recent issue of the Eastern Economic
> Journal, Winter 2001 that people might enjoy reading.
> -Ric Holt
>