Economics

Do Economists Lean Left? Yes, and They Always Have.

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George Mason's Peter Boettke has a fascinating post up at Coordination Problem. He explains that it's long been a truism that the academic study of economics "has long been a bastion of free market fundamentalism."

That's a bunch of baloney, says Boettke:

Even in the heyday of Samuelson and the neoclassical synthesis—which combined neoclassical market failure theory micro with Keynesian macroeconomic theory, the heterodox critics found a way to claim that the economics profession was dominated by free market fundamentalism.  One of the most interesting social theorist of the second half of the 20th century, Albert Hirschman talked about the incredible influence as market fundamentalist that Mises, Hayek and Friedman had over our intellectual culture—while he was secure with his royal academic position at the Institute for Advanced Study.  I personally do not stress the martyrdom narrative for Mises and Hayek, but the reality is that their positions were relatively speaking far from the academic royalty status that their critics enjoyed.  They persisted (and James Buchanan should be included here as well) against all odds.

Boettke isn't interested in claiming "martyr status" for Mises, Hayek, or Buchanan, all of whom had relatively shaky academic appointments despite their supposedly overwhelming hegemony among academic economists.

Rather he's pointing out that 

it is surely an act of utter intellectual delusion to insist that the economic profession at large is free market fundamentalist.

John Cassidy might say that; Phil Mirowski might claim it, but the facts are so contrary that it has to be presented as an unbelievable conspiracy otherwise it couldn't be sustained.  From Samuelson to Stiglitz; from Keynes to Krugman, the bottom line is that the royalty of the profession of economists has "leaned left".  Of course, not as "left" as their colleagues in the humanities and other social sciences.

Boettke than turns to a recent article at Bloomberg View by Noah Smith that contends contemporary economics "superstars" are (finally!) turning left. This, deadpans Boettke, has been true for 100 years.

More important, though, is that such a conclusion simply ignores a vast body of work:

Smith is unaware that in each manifestation of the so-called arguments for market failure, there have been sustained arguments from more market oriented thinkers to counter them conceptually, empirically, and comparative institutionally. Smith skips completely the work of Nobel econonmists such as Buchanan, Coase, North, V. Smith, and E. Ostrom.  He also skips Nobel worthy thinkers such as Alchian, Demsetz, Kirzner, Tullock, etc.  The modern models and the use of "big data" have simply put new trappings on conceptual arguments about agent rationality, market structure, asymmetric information, inefficiency, instability, and inequality.  Go back and read Keynes's "The End of Laissez Faire" carefully, you will see a good number of these same arguments surfacing—and not merely in hidden form, but very explicitly so.

Why such blindness? Boettke posits

The mainstream folks consider their work non-ideological and merely technical because they all share the same tacit presuppositions of political economy.  It would be healthy if they looked through a different window, and spent some time reading those Nobel economists I mentioned above, or the Nobel worthy economists I mentioned as well.

Read the whole thing.

This sort of genealogical and generational blindness has an analogue in literary and cultural studies dating back at least to Lionel Trilling in his The Liberal Imagination. I'd love to engage conservative intellectuals, said Trilling, if only there were any. A couple of decades and change later, his Columbia confrere Richard Hofstadter pulled the same trick in his book on anti-intellectualism in America. In the cases of Trilling and Hofstadter, I attribute the lapse to bad faith. They knew better (Hofstadter even grinds out pages in the foreword of his book explaining why William F. Buckley and other figures at National Review don't count as intellectuals).

In the case of Noah Smith, an assistant professor of finance at SUNY-Stony Brook, I attribute it more to the way business and economics programs teach their objects of study. Based on the admittedly limited sample of folks I've met, people who study economics broadly defined are rarely interested in the history of their discipline; nor are they forced to engage it via coursework. Rather, they tend to think mostly about contemporary thinkers and assume that past figures are neither relevant nor worthy of study. Which ironically is to be trapped in what Keynes himself warned about: "Even the most practical man of affairs is usually in the thrall of the ideas of some long-dead economist." Too bad that most of them never really whose grip has them by the intellectual short hairs.

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  1. Too bad that most of them never really whose grip has them by the intellectual short hairs.

    Is there a word missing here?

    1. Coprophile? I think it’s Coprophile

  2. ” Which ironically is to be trapped in what Keynes himself warned about: “Even the most practical man of affairs is usually in the thrall of the ideas of some long-dead economist.””

    Which is itself ironic since Keynes knew very little about economic history or ideas. Like Seay’s Law for example.

  3. Two thoughts:

    1) For many liberal academics there is also the need to create themselves as potential martyrs to the uneducated “great unwashed.” It is really amusing and/or annoying listen to tenured liberals bemoan how hard their lives if they happen to live in a “red” state.

    2) Fuck Richard Hofstadter.

    1. Hofstadter has some interesting ideas, but also some massive blind spots.

      I love that in “The Paranoid Style in American Politics” he correctly identifies people’s tendency to see politics not as a forum to negotiate between competing interests but as a cosmic struggle between fundamental principles of good and evil, and to see all who disagree with them as being united in vast, shadowy conspiracy.

      He then takes great pains to argue that only members of the Evil Conservative Conspiracy actually think this way, which is why they are evil and must be stopped.

  4. Speaking of George Mason, do yourself a favor and wander over to cafehayek.com. Don Boudreaux has some great libertarian/economic posts and discussions there.

    1. I try to read his posts every day. He’s really good at breaking down arguments and responding to progressive economic theories in an incredibly civil manner.

      He’s been spending most of his time recently on the new minimum wage laws and his arguments against them are excellent.

      1. My favorite thing about Boudreaux is the way he balances mannered civility with scarcely concealed disdain for utopians. His responses to the stereotypical characters who believe that advocating minimum wage laws marks them as morally superior are especially good.

        1. Even Paul Krugman is ambivalent toward minimum wages. That should be a pretty big sign that the theory fucked up.

          1. Krugman the economist is against them. Krugman the polemicist is for them.

  5. You don’t gain the ear of the king by preaching a hands-off approach.

    1. FoE: The Machiavelli of our times. Who will play him in the HBO series?

      1. Nicole?

        1. That’s the worst idea ever. Which is fitting.

      2. Who will play him in the HBO series?

        Peter Drinklage?

        1. I do like the open hand slap. And the whores.

      3. These are terrible suggestions. I was thinking Danny Pudi.

          1. (slow clap)

            Well done, sir. Worthy of Machiavelli. If he was on a comedy show.

      4. Richard Simmons?

        1. Interesting. But young Richard, not old.

      5. Idris Elba

        1. [grumble] fucking 4 episodes of Luther is NOT a “season!” [grumble]

          Sorry, its British, so “season”!

            1. Series…

              [RAGEFACE]!

        2. OT: I’ve been watching Luther and just got finished with the series where a guy is randomly rampaging through London killing people with a hammer and a knife. He kills some people a gas station at the beginning of an episode and later walks into a 7/11 or something and just starts taking things off the shelves.

          The first thought that came into my mind was that this idiot could be stopped if the clerks had a shotgun behind the counter. This clown wouldn’t be nearly as terrifying if people had the ability to defend themselves without the help of the coppers.

      6. I’ve alway pictured him as Steve Buscemi.
        https://www.youtube.com/watch?v=iMS4rqqiN20

        1. Any of you dipshits who have HBO need to watch the final season of Boardwalk Empire if for no other reason than the kid from Sleepy Hollow playing a young Buscemi perfectly.

          1. Quite an amazing job. Though the season as a whole was very disappointing. But I guess that’s what happens when you get canceled.

            1. Yeah they jumped ahead and tried to squeeze a couple year’s worth into what? Eight episodes, I think.

              Also, I’d like to cancel you.

            2. Marc Pickering did all the acting with his teeth. They had me convinced it was a young Steve Buschemi hologram.

          2. That guy was uncanny. The fake teeth helped, but he got a lot of Buscemi’s mannerisms down perfectly. The young Gillian was also pretty great.

            The season was shoddy, though. Why jump so far forward that we get no more Arnold Rothstein? C’mon!

            1. I was long expecting a depiction of Arnold Rothstein’s eventual murder.

      7. Fist is Oriental right? Rumor has it anyway.

        So…take your pick.

        https://www.youtube.com/watch?v=IrRqV_q3h3M

        Asian Machiavelli.

        1. Like looking in a youtube mirror.

  6. I’m currently reading The Dao of Capital by Mark Spitznagel and he does a really good job of reviewing the history of the Austrian school and the lineage of economic theory.

    It amazes me what these economists were able to figure out in the 18th and 19th centuries that we’re only just now being able to understand more deeply. Meanwhile, the modern thought process is all about the immediate gratification, treating symptoms instead of the source of the disease, and passing the buck to the next generation.

    1. http://www.wsj.com/articles/th…..1420212315

      It is depressing but unsurprising how the 1920-21 economic downturn, which was more severe than the 1929 one but thanks to the government letting it run its course lasted a bit over a year rather than an entire decade has gone down the memory hole.

      1. The greatest lie ever told is that Hoover sat by and did nothing like a laissez-faire fat cat while the country suffered. He was FDR-lite and probably would have gone whole hog if he had FDR’s aggression and charisma.

        1. It might not be the greatest, but it is up there.

        2. How about: WWII brought an end to the Great Depression?

  7. This sort of genealogical and generational blindness has an analogue in literary and cultural studies dating back at least to Lionel Trilling in his The Liberal Imagination. I’d love to engage conservative intellectuals, said Trilling, if only there were any.

    Oh please, Mr. Literary Critic posing with a cigarette delicately balanced between his fingers, please let me join the inner sanctum of intellectuals!

    1. “Those who deal with the sciences studying nature have to rely on the intellectual for philosophical guidance and information: for moral values, for social theories, for political premises, for psychological tenets and, above all, for the principles of epistemology, that crucial branch of philosophy which studies man’s means of knowledge and makes all other sciences possible. The intellectual is the eyes, ears and voice of a free society: it is his job to observe the events of the world, to evaluate their meaning and to inform the men in all the other fields.”

      “For the New Intellectual,”

      1. and, above all, for the principles of epistemology

        There is some truth to that. Of course leftist economists spend their entire careers denying the information problem. If only they would bother to do some honest thinking about epistemology.

        1. Here’s the thing about epistemology – intellectuals(academics) don’t understand it because they’ve never had to apply it – it’s an academic but not a pragmatic education.

          That’s why the works of Daniel Kahnemann and Nassim Taleb(and a few others) were so ground breaking, and why those works haven’t been embraced on a popular level.

          Also, whoever is quoted above draws a line between sciences studying nature and other sciences. Social science are being increasingly justified by data. That line is being blurred.

          This is a big item in Austrian economics – that economics is not a hard science. A pillar of the science method is that results are repeatable. In economics, you can never repeat the same “experiement” twice – no two people are the same, no two depressions are the same, etc.

          1. That is all true JEP.

          2. The Austrian issue is that it isn’t remotely related to “economics” as it has been practiced from the beginning of the 20th century forward, which most of us rightly see as a corrupted positivist discipline that offers plenty of advanced models with no useful predictive value due to their huge error terms. The real price of that isn’t the nonsense it leads to, but the kind of macho intellectual authority these latter-day prophets have politically.

            The only reason I can see that Austrians don’t abandon the word economics altogether is that calling themselves praxeologists would further marginalize them from intellectual life and hurt the initiative the have traditional a priori economics taken seriously in the next generation of classical liberals.

          3. I do like the narrative that Boettke has been using: there is mainline economics and mainstream economics.

            Amartya Sen argues that modern economics has existed in the corner solution of economics as engineering as opposed to economics as philosophy. At the time he wrote that book, Sen was agitating for a movement away from economics as engineering and toward economics as philosophy.

            I agree with Sen. I have made the distinction in my writings between the “mainline of economic teachings” that can be traced back to David Hume and Adam Smith and runs forward to F. A. Hayek, James Buchanan, etc., and “mainstream economics” which is more or less a sociological concept related to what is currently scientifically fashionable among elite academic economists. It is contributing to the “mainline” of economic thought that is more important in the long run, whereas fashion is fleeting. A phrase I often invoke in conversation with my PhD students is “shelf-life”, which simply means how long will that idea stay in the heads of economists. I first heard this distinction between “mainline” and “mainstream” from Kenneth Boulding, and I got my attitude about “shelf-life” from James Buchanan.

            1. and “mainstream economics” which is more or less a sociological concept related to what is currently scientifically fashionable among elite academic economists

              See for example the entire career of Cass Sunstein.

          4. Intellectuals today are mostly antifoundationalist in epistemology, which often seems to me like one massive cop out.

            And I might correct you third paragraph by saying that social sciences can and should be data-driven, but few social scientists these days seem to accept that. That’s why economists are increasingly taking over other social sciences because they’re the only ones willing to do quantitative data analysis, or willing to come to ‘unprogressive’ conclusions if they are the most plausible.

      2. If only she had been admitted into the ranks of the real intellectuals, Rand might have made something of herself.

  8. There are two reasons for this. First, it is an economist’s personal interests to lean left and lean towards government solutions. Someone who advocates for the free market is necessarily advocating for the government and by extension economists to have less influence and power. Who has more power and influence, some honest free market economist nugging it out at George Mason or some leftist crap weasel like Jonathan Gruber?

    Second, leftists, being totalitarian take over any institution or profession they enter in large numbers to the exclusion of all other ideologies. So not only do economists have an incentive to become leftist, once they do, they by virtue of being so drive everyone who is not leftist out of the profession.

    1. We are the leftoids. We will assimilate your profession and turn it towards the service of a propaganda organ for statism and collectivism. You will be adapted to serve as a strawman to make our bullshit theories look credible. Resistance is racist.

    2. There does seem to be a terrible amount of group-think amoung leftists on just about every topic.

      I think this is because leftism values “social solidarity” very highly. They are only in favor of dissent when they are the ones dissenting. But in reality, what they really want is for everyone to agree with them, join them, and help them build the glorious socialist future.
      Once they feel that they are on top, they start considering dissenters as wreckers who are trying to destroy their glorious project. People who need to be suppressed and cast out so that society can unify around their obviously true values.
      It frustrates them to no end that people won’t “get with the program” and join them even when they think they have “won”.

      1. Also the “good leftists” will suppress their own doubts about the program and go along for the sake of the group. Because that is what it means to share and work together – not dissenting, not rocking the boat, and helping to keep everyone working in unison towards the same goal.

        1. Also the “good leftists” will suppress their own doubts about the program and go along for the sake of the group

          Deindividuation, as it is called.

          1. Right, leftists dont value individualism in the first place. Their goal state is deindividuation. It’s only natural that’s going to lead to group-think.

      2. Time and time again Hazel politically neutral organizations, once they reach a critical mass of leftist members become explicitly leftist.

        A good example of this is the nation’s big charitable foundations. Things like the MacArthur Foundation, the Ford Foundation and such were set up to be a political organizations doing civic work. And they were for a while. But now they are run by leftists, to the exclusion of all others and have been completely co-opted into tools for furthering leftist politics.

  9. There are two things going on here.

    One is that to people who are really on the left (as in Marxist capitalism-hating, far left), economics, even the Keynesian kind, really is awash in “free market fundamentalism”. That is because these people deny basic economic ideas like supply and demand and the fact that human beings respond to incentives.

    They are kind of like the creationists who consider the ENTIRE field of biology to be capture by evil Darwinists and they nefarious creationism. That is how the far left regards basic economic theory. It’s ALL part of “free market fundamentalism”. Right down to Adam Smith (except for the labor theory of value part). The only way to have a non-right-wing economics would be if the entire profession decided that Marx was completely right.

    The second thing that is going on is that in practice economists (specificaly macroeconomists) often act as court astrologers. It’s their job to try to predict the future of this mysterious complex system we call the economy, and tell presidents and congressmen what policies they should enact, and the CBO what sort of projections they should make. They are almost always wrong, but their advice gives politicians useful propaganda to show the public they are doing something.

    1. er, nefarious evolutionism.

    2. Your first point is a very good one. It mystifies people on the Right that anyone could consider a Keynsian a “free market fundamentalist”. Yet, as you point out, to those on the left, that is exactly what they are. And indeed, that belief is shared by even the most liberal Keynsians. I guarantee you that someone like Robert Reich or Paul Krugman wakes up every day and considers themselves believers in the free market and representative of the reasonable middle.

      1. I guarantee you that someone like Robert Reich or Paul Krugman wakes up every day and considers themselves believers in the free market and representative of the reasonable middle.

        I bet they do. And before those two became nothing but political hacks, they may well have been. Krugman didn’t win the Nobel for sucking Obama’s (or other politician’s) dick.

      2. They do. I think even Tony says he is for the market. The state just needs to make sure it corrects this huge list of market failures, and then the market can go on working for everybody’s benefit.

    3. I was going to make the first point as well. Krugman, for example, supports free trade (not the best example link, but CTRL-F “free trader”) and opposes rent control. To many left-wing non-economists, that does indeed make him a right-wing extremist.

    4. That is how the far left regards basic economic theory.

      And, in practice, not even the far left and not even the theory. Saying we can’t afford the war on drugs/terrorism isn’t an seen inherently leftist position. Saying we can’t afford Obamacare/public pensions is an intrinsically “conservative-economist” position.

    5. It’s interesting to notice that leftist ‘students’ of economics prefer protesting economic discussions to joining them and attempting to rebut their opponents arguments. Greg Mankiw had a recent blog article on a recent protest of this sort.

      As I understand, it the school of ‘post-Keynesian” economics (which includes Thomas Piketty) is largely a neo-Marxist school seeking to displace ‘traditional’ pro-capitalist economic thought.

      Reminds me of feminist ‘scientists’ seeking to displace ‘traditional’ patriarchal science by arguing that gravity is sexist and the square root of -1 is penis.

  10. On the bright side, with Noah’s cheer that economics is turning left, maybe they can start finally start acknowledging that economics isn’t really a science.

    1. Economics is a science in the same vein as philosophy. And positivism has hurt its standing for the same reason that philosophers who offer existential arguments on the basis of reams of graphs and metrics would harm the pursuit of philosophy. Neither field lends itself to physics envy and reductionism very well.

      1. I actually disagree, sort of. Regarding economic theory, you’re right, they attempt to rigorously model the economy mathematically are quite futile and often silly.

        However, rather than going the way of philosophy and burying themselves in bullshit (ahem, Martha Nussbaum, this means you) they should try to be more empirical, at least in microeconomic research.

  11. “Too bad that most of them never really whose grip has them by the intellectual short hairs.”

    Never really what?

  12. Asking why there aren’t more right-leaning (or libertarian) academics is almost like asking why there aren’t more protestants in the Catholic Church. One of the central purposes of most prestigious universities is to convert students to leftist politics. It takes precedence even over training for careers, hence why science and engineering students are required to take leftist indoctrination (humanities and social science) classes, but humanities majors are rarely required to take math or science classes.

  13. “n the case of Noah Smith, an assistant professor of finance at SUNY-Stony Brook, I attribute it more to the way business and economics programs teach their objects of study.”

    You give Noah entirely too much credit.

  14. I read an article the other day about European economists worried about “alarmingly low” levels of inflation.

    SAY WHAT?! What kind of idiot thinks that rapidly increasing prices is a *good* thing?

    The cost of labor sits at the bottom of an economy. The next step up is the cost of energy, because of the labor involved in the cost of energy.

    Those two factors drive the cost of *everything else*. Raise the cost of labor and the cost of energy goes up, which ripples through the cost of everything else that takes energy to produce – even when not directly involved in the process. Factories needed heated or cooled so that energy cost must go into the end cost of the product.

    There’s usually some ‘market elasticity’ that delays the impact of altering one part of an economic system on the rest of it, but there will *always* eventually be an effect.

    1. If the price of a finished product or raw material *drops* despite an increase in labor and/or energy cost, one must look for what has offset it. Did the company reduce its number of employees? Did the company adopt a much more efficient method of production? Have competitors started producing the same raw material or a product that does the same function? Or was it simply because the material or product was something new with a high price for early adopters or it has taken a while to increase production, resulting in a lower cost per unit that’s being passed on to the customer?

      If there is no such mitigating reason for a price drop despite an increase in production cost caused by a labor/energy price increase, then it has to be that the company is just cutting their profit margin.

      One of the few products that has seen a long term price decline is electronics, despite huge labor cost increases since the dawn of the electronics age. What has created that decline is massive automation. Robots only need “paid” (purchased) once. The early market was miniscule – for computers once thought to be in the low hundreds worldwide. The electronics market should be the textbook for economy of scale.

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