John Komlos takes down Alan Blinder's take down of Jeffrey Madrick's Seven Bad Ideas: How Mainstream Economists Have Damaged America and the World.
Again, it's mainstream economists ignorance and denial of the role of class and power, and the economic rent and rent seeking to which power leads, as well as the prevalence of fraud and outright cheating in the real world. Economists stuck in their formal models and introspective assumptions are oblivious to the obvious in the real world.
The Invisible Hand of Alan Blinder
John Komlos | Visiting Professor of Economics at Duke University and Professor of Economics (retired), University of Munich
4 comments:
This is a strange article seeing as Blinder agrees with Madrick that "the Invisible Hand is an approximation, usually not applicable in the real world without significant modification”.
Blinder, in a rejoinder article, followed up with the following:
"Madrick still insists that “economists rely on a fairly pure version of the invisible hand most of the time.” Not us mainstreamers. I’m a member of the tribe, I live among these people every day, and—trust me—we really don’t apply the “pure version” to the real world. For example, many of us see reasons for a minimum wage, mandatory Social Security, progressive taxation, carbon taxes, and a whole variety of financial regulations—to name just a few. On the other hand, we do normally view the invisible hand as the best “mechanism for delivering the right goods and services to the right people at the lowest possible costs” (my words, in the review).
Packer observes that the invisible hand does not guarantee low unemployment (true, that’s why we have monetary and fiscal policy) or that income is distributed equitably (true, that’s why we have progressive taxation and the welfare state). But every mainstream economics textbook makes both of these points."
I used Blinder's text in college and its full of statement to the effect that the completely free market doesn't work.
Note that the Canadian edition of Blinder and Baumol is co-authored by Marc Lavoie and Mario Seccareccia.
Should have added that I used the textbook's edition from the late 80s (which was then not co-authored by Lavoie and Seccareccia). The current version is Blinder-Baumol-Lavoie-Seccareccia.
Yes, that's the Canadian version. I got a copy a couple of years ago. It's still probably the best text until Mitchell & Wary is published.
I see that there are a few used copies available at Amazon US for a penny plus shipping here. Such a deal.
In Madrick and Komlos's defense, the economists being chiefly listened to at the policy level tend to be Friedmanites, not Keynesians. When Greg Mankiw is considered a "Keynesian," you know something is wrong. That's a very strong signal. Even "liberal" economists like Summers and Krugman are monetarists.
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