Having re-read Heller's article of 1975 (AER 65(1): 1-26), I noticed a strong similarity between the present reflections after the Lehman crash and the long repeated debate during the decade from 1965 to 1975. The latter ended with no serious accepted lessons and this fact may be one of the causes which lead economics to the path that Paul Krugman judged "most work in macroeconomics in the past 30 years has been useless at best and harmful at worst.”(Cited in Economist June 11th 2009. The original statement was expressed a bit differently. See the video, LSE, 2009, around the 14th minute). It may be a good time to re-consider what was wrong and right with economics of that time and what kind of lessons we can draw from the discussion. Without this kind of deep reflections on economics, we risk repeating another 30 years which is useless at best and harmful at worst. What is your opinion on the present state of economics?
Heller cited names such as J. K. Galbraith, W. Leontief, F. Hahn, G. D. N. Worswick, E.H. Phelps Brown, J. H. Blackman, S. Maizel, B. Bergman, G. Myrdal, R. Heilbroner, and P. Sweezy among those who publicly deplored the "dismal state of our science".
On the other side, he cited names such as Harry Johnson, Donald MacDougal, Charles Schiltze, Fobert Solow, and James Tobin who stand as defenders of (neoclassical) economics.
Heller cited names such as J. K. Galbraith, W. Leontief, F. Hahn, G. D. N. Worswick, E.H. Phelps Brown, J. H. Blackman, S. Maizel, B. Bergman, G. Myrdal, R. Heilbroner, and P. Sweezy among those who publicly deplored the "dismal state of our science".
On the other side, he cited names such as Harry Johnson, Donald MacDougal, Charles Schiltze, Fobert Solow, and James Tobin who stand as defenders of (neoclassical) economics.
Heller cited names such as J. K. Galbraith, W. Leontief, F. Hahn, G. D. N. Worswick, E.H. Phelps Brown, J. H. Blackman, S. Maizel, B. Bergman, G. Myrdal, R. Heilbroner, and P. Sweezy among those who publicly deplored the "dismal state of our science".
On the other side, he cited names such as Harry Johnson, Donald MacDougal, Charles Schiltze, Fobert Solow, and James Tobin who stand as defenders of (neoclassical) economics.
Heller cited names such as J. K. Galbraith, W. Leontief, F. Hahn, G. D. N. Worswick, E.H. Phelps Brown, J. H. Blackman, S. Maizel, B. Bergman, G. Myrdal, R. Heilbroner, and P. Sweezy among those who publicly deplored the "dismal state of our science".
On the other side, he cited names such as Harry Johnson, Donald MacDougal, Charles Schiltze, Robert Solow, and James Tobin who stand as defenders of (neoclassical) economics.
Dear Yoshinori!
The present state of economics can be seen by the reactions on your philosophical question: there is zero interest of "economists" in basic questions of economy and society. There is no more Max Weber or Kenneth Galbraith around. Being an economist means: not sharing the risks of the entrepreneurs and the participants and victims of the daily economic cheat but being part of an "academic" leisure-class.
I speak for economists in Germany and Switzerland. In France and Austria it's a bit different. They conduct own research beyond the mainstream.
In the U.S. there are some genius guys like Stiglitz and Krugman. And of course you, Yashinori, still remember Ricardo, Schumpeter, Hayek, Mises and other original thinkers.
But in general being an "economist" means: "I want to earn money and to gain respect without any risk of being rejected by the mainstream." So the economist is like the banker.
Both believe in sharing a secret knowledge on "how it really works" and want a compensation for their alleged wisdom.
But there is nothing. The tresor is empty. The markets don't follow any rule.
Example: since 2008 all "economists" reclaim that the interest rates will increase due to the lack of capital since the financial crisis. The opposite happened and nobody knew why.
That's the reality of stupid mainstream thinking being called "economics".
Yashinori, you're not part of it. You are still rooted in the integration of economic thinking with philosophy, religion and social sciences.
Keep on to reclaiming economics to being a social and of course political science!
It is sad that there are only two persons, Dill and I, who are interested in this kind of questions. Since I posted this question, four months have passed.
I have found an interesting record of an event. On March 14–15, 2015, The New York Review of Books Foundation, Fritt Ord, and the Dan David Prize held a conference, “What’s Wrong with the Economy—and with Economics?” at Scandinavia House in New York.
The title and the problem setting is quite similar to my own. I didn't know this event when I posted my question.
Those who are interested can see and listen to the event:
http://www.nybooks.com/blogs/gallery/2015/mar/29/whats-wrong-with-the-economy/
Dear Yoshinori!
Yesterday I had a meeting in the Economic Department of the World Trade Organization (WTO) in Geneva.
I tried to explain the department that the transaction costs in trade depend on the bridging social capital, especially trust and the willingness to finance public goods.
He said, that in his respect that wouldn't be of interest for his boss and that I may present this idea end of 2016 on their public forum - on my own costs.
That's the reality of economics.
On December 7th I'm invited to speak at a meeting of behavioral Economists in Zurich. I still think on what to tell in the 10 minutes I have.
Dear Alexander,
Ten minutes are really very short. Even the speech in Davos Forum gives a speaker 15 minutes.
I am invited to speak in a Hausdorff Summer School next May. The organizer gave me 50 minutes but to tell a result in economics to a purely mathematical audience in 50 minutes is also very tight.
The point you made (the transaction costs in trade depend on the bridging social capital) is very important and provides us that there are a part of contributions that cannot be distributed among individuals (including the company).
Having been pointed to this thread by Yoshinori Shiozawa, and not being an expert on the current state of economics, I find what Alexander Dill has to say very interesting. Within the (very definite) limits of my own knowledge, I would have to agree with Alexander's long comment in all respects, except for ranking Paul Krugman as a genius. In response to another question posed on ResearchGate by Yoshinori Shiozawa, where he asked why so many economists have become acolytes of Friedmanism, I replied, as did some others, that the profession has been co-opted by corporate and political interests. Career building for young economists consists in feeding the masters what they want to hear - that's what is considered "mainstream" economics. Alexander here makes the same point, although in slightly different terms. I am encouraged by his (no doubt informed) suggestion that things may be a bit better in France and Austria than in some other places. That said, it turned out that I was not really responding to the question that Yoshinori Shiozawa had in mind. His question was more from a scientific point of view about why so many economists seem to have fallen for a flawed methodology, one that belongs to predictionism and instrumentalism, that he credits Friedman - rightly I think - with having promoted in economics. The fact that so many economists have fallen for this is why, as Alexander says, "There is no more Max Weber or Kenneth Galbraith around." He correctly, in my view, remarks that "there is zero interest of 'economists' in basic questions of economy and society." Economics used to be called "political economy" in English. All of the great economists were interested in basic questions of society and polity and didn't imagine that you could talk about an economy, or economic practices, except within the context of society, with its various (and changing) practices and institutions. What Sensei Yoshinori Shiozawa has in mind by the "theory" to which he feels economists need to pay attention, probably has to do with exactly that. On the other thread, I did name a few serious, "old fashioned" economists who have come within the ambit of my limited experience. Such are few and far between, and there is little interest in the "mainstream" in their work: "theory" is, from the point of view of the bought-and-paid-for, subversive and dangerous. Many thanks to both of you gentlemen.
Thank you for coming to this question page. I feel we can make a fascinating discussion here.
It is true that my "theory" is vague and ambiguous. We must discuss what a theory is and why it is important.
I haven't contributed anything to this thread for a long time - I have simply been overwhelmed by other matters - but I see that there hasn't been much recent action by others, either. I have had various relevant thoughts that I hope that I'll have time to contribute before to long. But I just ran across the following, which offers at least a partial answer to the question: http://www.counterpunch.org/2016/03/23/junk-economics-and-the-parasites-of-global-finance/print/ So I thought that I would send it along.
Dear Yoshinori Shiozawa and Colleagues, Here's something that perhaps throws some light on the discussion: https://www.youtube.com/watch?v=szIGZVrSAyc Best wishes, Mikael
PS - I entered the same comment on the thread concerning the influence of Milton Friedman.
Here is some relevant input:
https://www.youtube.com/watch?v=szIGZVrSAyc
https://www.youtube.com/watch?v=ZM0_7PVuVVg
Cheers,
Mikael
Dear Mikael,
thank you for reviving my question thread. I have no time for the moment. I will be back.
Yoshinori.
Dear Yoshinori, I have never forgotten your thread, or rather, two of your threads. I have not lost interest and have felt guilty at having dropped out of the discussion. But - like you at this moment - I have had less than no time to add anything thoughtful to the discussion. Let us hope that I can do better in the next months. All the best, Mikael
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