As I said in yesterday's post, I'm very impressed with Phillip Mirowski's book on the strange non-death of Neoliberalism-according to him it not only hasn't been killed but has nary a scratch. This certainly isn't the first time I've written about his book-and this one today likely won't be the last.
http://diaryofarepublicanhater.blogspot.com/2013/09/mirowski-on-emh-resistance-is-futile.html
Yesterday I looked a little at his criticism of most attempts to criticize the EMH. The trouble with these attempts, he argues, is that they all are trying to reform Neoclassical Econ from within. Yet how successful have previous critiques of EMH been? Well one way to answer this is to note that it's still alive and kicking. The reason is that critiques of EMH within NC aren't going to be wholly effective-it will never be too difficult for the EMH proponent to answer any such critique.
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It's the same trouble with critiques of DSGE. According to Mirowski critiques of DSGE is another major way that those who want to reform NC look. Yet the same problem is run into again. One problem he identifies is a real weakness in the history of economic ideas among most of the NC establishment. Indeed, Krugman freely admits to having no interest in it and Sumner as best as I can tell is at least as uninterested. One exception to this that I know of is David Glasner.
In any case, what a history of NC shows is that DSGE was basically an attempt at detente by establishment econ as there were so many bloody fights between Chicago. et. al and the Saltwater coasts. It was meant to have a little something for everyone. Enough real world aspects to please the New Keynesians but all the microfoundations anyone could want.
There lies the problem for Mirowski. This is what he says that Krugman lacks. Krugman would be happy for it to return to 1969; ie, a return to Old Keynesian-as it was practiced in the U.S., ie, the old Samuelson-Hicks IS-LM curve.
However, the problem-for Neoclassicals-was that IS-LM was 'ad hoc'-it lacked the requisite microfoundations to please NCers as required in the Lucas Critique.
This is why Mirowski argues that the only way to get rid of the 'zombi ideas' is to get rid of NC altogether. After all, didn't it all start with Samuelson himself and his 'Classical Synthesis'-really the Neoclassical Synthesis?
As long as we're in NC, macroeconomics will necessarily always be the handmaiden of microeconomics, unable to do anything without avoiding the veto power of Micro. So the real problem in that vein is NC microeconomics. Either Macro escapes the straitjacket or it won't be able to move forward on strong foundation of it's own.
http://diaryofarepublicanhater.blogspot.com/2013/09/mirowski-on-emh-resistance-is-futile.html
Yesterday I looked a little at his criticism of most attempts to criticize the EMH. The trouble with these attempts, he argues, is that they all are trying to reform Neoclassical Econ from within. Yet how successful have previous critiques of EMH been? Well one way to answer this is to note that it's still alive and kicking. The reason is that critiques of EMH within NC aren't going to be wholly effective-it will never be too difficult for the EMH proponent to answer any such critique.
.
It's the same trouble with critiques of DSGE. According to Mirowski critiques of DSGE is another major way that those who want to reform NC look. Yet the same problem is run into again. One problem he identifies is a real weakness in the history of economic ideas among most of the NC establishment. Indeed, Krugman freely admits to having no interest in it and Sumner as best as I can tell is at least as uninterested. One exception to this that I know of is David Glasner.
In any case, what a history of NC shows is that DSGE was basically an attempt at detente by establishment econ as there were so many bloody fights between Chicago. et. al and the Saltwater coasts. It was meant to have a little something for everyone. Enough real world aspects to please the New Keynesians but all the microfoundations anyone could want.
There lies the problem for Mirowski. This is what he says that Krugman lacks. Krugman would be happy for it to return to 1969; ie, a return to Old Keynesian-as it was practiced in the U.S., ie, the old Samuelson-Hicks IS-LM curve.
However, the problem-for Neoclassicals-was that IS-LM was 'ad hoc'-it lacked the requisite microfoundations to please NCers as required in the Lucas Critique.
This is why Mirowski argues that the only way to get rid of the 'zombi ideas' is to get rid of NC altogether. After all, didn't it all start with Samuelson himself and his 'Classical Synthesis'-really the Neoclassical Synthesis?
As long as we're in NC, macroeconomics will necessarily always be the handmaiden of microeconomics, unable to do anything without avoiding the veto power of Micro. So the real problem in that vein is NC microeconomics. Either Macro escapes the straitjacket or it won't be able to move forward on strong foundation of it's own.
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