Philip Pilkington — I’m Pointing at the Moon, You’re Looking at My Finger: Janet Yellen on Post-Keynesian Economics

Here’s an interesting fact that I’ll bet many of you didn’t know: the current head of the Federal Reserve, Janet Yellen, wrote a short paper in 1980 examining the theories of the Post-Keynesians. You can find it here.

The paper is very clear and logically articulated. But it also manifests quite a few sicknesses of the mind that, for example, the current pluralist movement among students will almost certainly encounter in the coming months and years. Yellen cannot really think outside the confines of what she understands to be economics. So, the analysis is mainly an exercise in trying to reduce Post-Keynesian theories to their neo-Keynesian counterparts. She is not so much trying to find insights in the literature as she is trying to prove similarities between some aspects of the literature and the more mainstream neo-Keynesian literature.

This is a rather typical tendency in mainstream economists that I have pointed to before. We might call it ‘identity thinking’. That is, trying to reduce heterogeneous insights about the real-world to something that one already knows. “But we already know that”; “But we can get the same result using our model by making this and this tweak”; these are the hallmarks of identity thinking. Identity thinking is an inherently conservative mode of thought that academics should be very, very guarded against adopting. It is a mode of thought that shuns new insights — typically repressing them by pretending that they are already known or taken into account. It is an a priorist, anti-empirical and ultimately anti-scientific mode of thinking.

Fixing the Economists
I’m Pointing at the Moon, You’re Looking at My Finger: Janet Yellen on Post-Keynesian Economics
Philip Pilkington

Interestingly, Phil has studied philosophy and one of the first things that one must do if one has competent teaching is extricate oneself from the tendency toward reading to evaluate before one read to understand. Everyone has a worldview that is based in part on interest, preferences, and values. It is very difficult to read a thinker and understand what that person is actually thinking in terms of his or her worldview if one is seeing it terms of one's own. This is especially difficult when dealing with historical and cultural contexts different from one's own, since without being very familiar with the context and the meaning of terms in that context, one will be reading and trying to understand in a different meaning set than the author's. Obviously, this results in more fog than clarity.

Most economists are not trained in this and many seem to be unaware of it. This is a reason that economic methodologists, economic historians, and economic anthropologists are better economists than most theoretical economists who have not studied beyond their specialization. Consequently, many of whom are ideologues and do not even realize it.

Faced with this sort of rhetoric heterodox economists should not engage. Rather they should point out clearly the absurdity of what is being done and question why it is being done.