Randy Wray — Breaking into the Mainstream: Can Heterodoxy Do It?

Here’s a short but thoughtful piece on heterodox economics by a researcher at the Federal Reserve Bank of Richmond.

Nice thoughts based on what happened a while back in the economics department at Notre Dame, when the heterodox element was all but eliminated.

Economics as it is practiced is not science. It is a cultural myth that justifies a particular way of life that can be broadly characterized as neoliberalism, that is, the view that the neoclassical economic paradigm is the natural basis for a society and it's institutions, underlies democracy, and is the basis for globalization. Heterodox economists that attack the paradigm from the periphery do not contest the foundations of the core, which is liberalism. Without critiquing liberalism there is no solid foundation to stand on.

For example, the same signs function as different symbols in different contexts embedded in different worldviews. When the same terms don't even mean the same thing intentionally how can there be a debate. From the logical point of view, debate requires criteria, and criteria are not independent of the system whose boundaries they delineate. 

Orthodox and heterodox economics are not so much different methods of approach in economics as they are different ways of interpreting the same data as different information. This is a clash of worldviews including different criteria expressed as norms and values. Each is a conceptual model of a way of life that forms the basis of cultural myth that gives rise to a narrative context in terms of which information get structured. From the logical, anthropological and sociological points of view, "reality" is a social construct. The question is not what constitutes reality but rather how different realities get constructed from the same given, and the difference these differences make.

The fundamental philosophical (foundational) questions since ancient times have been about living a good life in a good society. Until that critique is undertaken seriously by the participants, the debate will lack a solid foundation and any economics built on it will rest on sand. Therefore, even if heterodox economics does break into the mainstream, it will be unable to do much more than tinker at the edges of the fundamental issues unless it can change the universe of discourse. 

Orthodox economists exclude heterodox economists not because they think themselves "right" about the science and the others "wrong." Rather, they view heterodoxies as an existential threat to their worldview as the prevailing socio-economic, political and ethical cultural myth, which happens to favor certain interests over others and justifying this as the outcome of a self-organizing and self-regulating natural system. In this view, any thing less than operation at maximal efficiency resulting in meritocracy and just deserts is the result of artificial inefficiencies that need to be reduced and ideally eliminated. Therefore, any outcome that calls the paradigm into question is not considered an anomaly but rather is explained as the evidence of an inefficiency having been introduced that needs to be excised.

Orthodox economists tightly control the universe of discourse. That's dogma, the antithesis of science. What's needed is a thorough reformation of the discipline and a new universe of discourse that results in a cultural myth that is suitable for the times.

Economonitor — Great Leap Forward
Breaking into the Mainstream: Can Heterodoxy Do It?

L. Randall Wray | Professor of Economics, University of Missouri at Kansas City

See also John Kozy, What Evil Lurks in the Hearts of Men.

In fact, no culture was ever created to discover and disseminate truth. None exists for that purpose today. A culture exists to promote a group’s existence. Cultures are instruments of preservation. Cultures are defined by myths. Unless a culture’s myths are known, it’s nature cannot be understood. 

The myths, although obviously false, are often considered as historical truths, and a culture’s institutions are used to inculcate them. Once inculcated in the minds of people, the myths are almost impossible to expunge. Ears are deafened and eyes are blinded. The social critic is neither heard nor seen. The culture uses its ability to ignore the social critic as a defensive tactic. Ignorance defends the culture, and the culture’s educational institutions promote the ignorance. The institution cannot be divorced form its culture.…

Promoting Free Trade Is Like Pushing Heroin? God Damn the [UnRegulated] Pusher Class.

   (Commentary by Roger Erickson)



Yet another bad news story was recently published, this time about India, yet it included a now-familiar refrain.

"... every second child is malnourished."

Starving Children ... on "Children's Day" (uneducated too)

And India is seriously thinking of trying another war with Pakistan and/or China? No way.

That's like a half-dead man climbing into a boxing ring. No wonder a few Brits could defeat & colonize the whole country.

India can send a rocket to the moon, but can't even feed half it's people? Something is near fatally out of whack.

How did this happen?

WHY on earth is it STILL happening?

Then, reading on, a sickening phrase popped up, explaining all.

"Barriers protecting industry, manufacturing and agriculture were demolished." 

Uh, oh.

Maybe India doesn't keep up with known literature any more than our Middle Class  - or blindly treasonous economists - do. What good is ANY amount of data, accounting, or theory, if people have already endorsed a context other than the one that THEY inhabit? The entirety of orthodox economics is officially insane. It completely ignores the most simplest of questions.

How Rich [Classes] Got Rich And Why [Middle Classes] Stay Poor

The answer? The poor ones - countries or classes - misplace their faith in treasonous "leaders" and their economics pushers, who sell their fellow citizens to merchant colonists and/or merchant gangsters ... for pennies on the pound. (And then reward themselves with faux "Nobel" prizes for doing so.)

Erik Reinert is the only economist I've ever heard who seems to have a basic familiarity with truly complex systems, physiology or biology.

Of course every culture needs merchants, just like every body needs dozens of organs and hundreds of different cell types. Yet they must ALL be hemmed in, and aligned, by adequate checks & balances. Otherwise a given cell type becomes a cancer on the body. And an unregulated merchant class becomes a cancer on the very populace it purports to serve. Our Upper Looting Class is simply that, a constant cancer on society, in every country.

Free Trade? That's like me shutting down my kidneys, because a vendor offers to give me "free" dialysis ... (for awhile). Sure you get some free goods, briefly, but you are thereafter dependent, forever, and soon dead.

Promoting Free Trade Is Like Pushing Heroin? 

 
"Goddamn the [UnRegulated] FreeTrade-man"

Triumph of Neo-Capitalist Economics: Latvian Politicians Gain Freedom From Russia, Drive Talented Citizens Abroad as Price of Joining Euro, Then Invite Bribes From Russians To Return. Huh?

Commentary by Roger Erickson

Political rats swimming TOWARDS the buffet on a sinking ship? Whatever.

If YOU don't detect any sense in orthodox economics, don't feel bad. No logician does. It's all a convenient fraud. It's just that some frauds are more convenient than others. The following is how Latvian politicians try to compete with Goldman Sachs to get noticed in the competitive world of doing "God's Work."

Make sense of this chain of events, if you can.

Latvia finally gains freedom from the Soviet occupation.

Then, at the behest of orthodox "economists," Latvian politicians beg to be allowed to surrender their electorates new found sovereignty to the EU, and even to the EU's "monetary union" currency protocols. The agreed upon price of this political and banking surrender is aggressive austerity to gut the living standards of Latvians, and drive the bulk of their youth and talent to flee the country, for subsistence employment anywhere it can be found. Hey, it's the price a politicians got to arrange to have paid, by others, in order to secure his or her personal advancement, right?

With this quid pro quo complete, Latvian politicians then turned to "agile" methods for shoring up their own prospects. How? By recruiting and accepting legal "cash-for-Latvian (and hence EU) residency" bribes, (mostly?) from Russians barred from other paths for obtaining EU residency papers.

You couldn't make this up, this bitterly tragic mess - or accept it. Well, not unless you were steeped in the cynics of Latvian politics. Or used to taking bribes for screwing your country under the guise of economics declared "undeniably plausible" by certain, self serving (or breathtakingly clueless) economists. Or just a tragic fool, easily separated from the general welfare of your people.

Who says life is fair? If it is, Latvian politicians deserve to live in poverty, in the country they've sold. Getting promoted to cushy jobs in Brussels will be equivalent to a "get out of jail free" ticket, from the very jail they expropriated and sold to the highest bidders.

Heckuva job politiķi! Your actions are worth a četrkāršs sejas palmu!

The Latvian nation is half dead! Long live the kontrole Krāpšana!

Mark Buchanan — Is Economics a Science or a Religion?

Is economics a science or a religion? Its practitioners like to think of it as akin to the former. The blind faith with which many do so suggests it has become too much like the latter, with potentially dire consequences for the real people the discipline is intended to help.

The idea of economics as religion harks back to at least 2001, when economist Robert Nelson published a book on the subject. Nelson argued that the policy advice economists draw from their theories is never “value-neutral” but foists their values, dressed up to look like objective science, on the rest of us.

Take, for example, free trade. In judging its desirability, economists weigh projected costs and benefits, an approach that superficially seems objective. Yet economists decide what enters the analysis and what gets ignored. Such things as savings in wages or transport lend themselves easily to measurement in monetary terms, while others, such as the social disruption of a community, do not. The mathematical calculations give the analysis a scientific wrapping, even when the content is just an expression of values.

Similar biases influence policy considerations on everything from labor laws to climate change. As Nelson put it, “the priesthood of a modern secular religion of economic progress” has pushed a narrow vision of economic “efficiency,” wholly undeterred by a history of disastrous outcomes.

Bloomberg View
Is Economics a Science or a Religion?
Mark Buchanan

I would not call economics a religion, although there are certainly illuminating parallels that can be drawn. I would say instead that religions and other normative social phenomena are ideologies whose norms structure power relationships. 

To claim that an ideology whose framework is structured by norms with outcomes structured to benefit certain interests over others is positive science is beyond ridiculous unless it is a pure description of the structure, as it is sociology. However, conventional "orthodox" economics represents this not descriptively but normatively, although the noms are often hidden assumptions or disguised as descriptive, e.g., "law-like." 

This misrepresentation is due either to sheer ignorance or intended propaganda. This is obvious to most any social scientist or ethicist that is not captured by the illusion or compromised by interest.

For example, Nelson is not writing against economics as a religion of progress. He recognizes it and likes since he thinks it is doing a better job of bringing prosperity than the old-time religions, which kept humanity stuck.

I don't disagree with this overall. Science has been a good thing for humanity and it had to fight against normative ideology for liberation. That fight is still going on.

However, to pretend that scientists are value-free or that objectivity can be isolated from subjectivity is not only naive or disingenuous, it goes against knowledge gained from contemporary cognitive science.

Neoliberal economists, and that includes most conventional economists, need to acknowledge the normative side of the discipline instead of continuing to pretend that they are doing positive science.

But they will not, since neoliberalism is at least as strong an ideology as any religion of the past or present, and as such it is a locus of power that benefits vested interests, a structure from which conventional economists profit, especially the major voices in the field.

So the conclusion is not so much that they are the new high priest as that they are knowing propagandists for vested interests. Or they are being used and don't care to see it.

Simon Wren-Lewis ignores heterodox economics, again.

Who is doing the misinterpreting here. I submit that it is Professor Wren-Lewis who has missed the Godley Revolution, the Lerner Revolution, and the Minsky Revolution, as well as the bulk of Post Keynesianism, when he says,

If you bought the ‘responding to the last crisis’ narrative, you would expect to see some sea change, akin to Keynesian economics or the New Classical revolution. I suspect you would be disappointed. While I see plenty of financial frictions being added to DSGE models, I do not see any significant body of macroeconomists wanting to ply their trade in a radically different way. If this crisis is going to generate a new revolution in macroeconomics, where are the revolutionaries? However, if you read the history of macro thought the way I do, then macro crises are neither necessary nor sufficient for revolutions in macro thought. Perhaps there was only one real revolution, and we have been adjusting to the tensions that created ever since.

Of course, if he is thinking that all the above mentioned are part of the Keynesian revolution, no issue, but I don't think he is, especially when the above hold that the Keynesian-neoclassical synthesis is not Keynesian in any genuine sense, but rather a perversion of Keynes.

mainly macro
Misinterpreting the history of macroeconomic thought
Simon Wren-Lewis _ Professor of Economics, Oxford University

Most Exciting News All Year!!! :( [Not.]

UK Treasury Gets £35bn Windfall From QE

"The UK Treasury is to receive a £35bn boost as part of a deal with the Bank of England that will effectively reduce public debt. Chancellor George Osborne and Bank Governor Sir Mervyn King have agreed that the BoE will give the Treasury interest earned through its £375bn economy-boosting programme known as quantitative easing (QE)."

Wow! :) Where oh where did all that interest come from? Distracted from the group-foot we're really aiming at by default? :)

Maybe they won the Fiat Lottery? :)

Citizens, a YouTube "Fiat Humor Channel" would be useful. This sort of nonsense should all be archived for black-humor comedians. We couldn't possibly make it up fast enough. It's likely already past critical mass, and is breaching the Bozone Layer.

This would be equivalent to an Army digging up a new vein of medals, and feeling relieved that they now had enough to get by for another year of so. Only the priesthood of orthodox economists could be this dense, backed by unmotivated masses swallowing one too many faux credential.*

"Ex multis distractions, propriae destructiva, commodum personale." ?

ps: This just in. Breaking news!!! "The NFL has discovered a hidden cache of POINTS, lost for decades behind a scoreboard. The game can continue! Owners, Agents, Free agents & beer vendors all celebrating! Another crisis averted!"

Whoa. Just in time. All sports scoreboards everywhere were about to go blank! Maybe the NFL can extend "point-swaps" with some of the other leagues, who aren't so lucky? After all, we have to protect Free Trade Distractions above all else - or else Merchants everywhere would have to find stable homes.

Switching distractions adroitly, if we get past this NFL crisis, we can move on to the real Fiscal Cliff Notes hanging over the entire gaming world: "Where is Parker Bros. going to get all the Banker Money required for worldwide Monopoly(TM) games?" We obviously can't let them just print their own Monopoly money. That would be saddling future generations of Monopoly players with our game debts! The Idiot's Solution is clear as an empty belljar: we simply have to start living below our monopoly means. We have to practice Oust-erity; banishing adaptive logic by getting rid of anyone who dares suggest it.

ps: ps: As always, we're about to launch yet another version of the "Nation-State Darwin Awards Games," featuring de-selection of the least fit to generate group intelligence. In that sudden death elimination league, how many lost points for a W.C. Fieldsowngoal?

* [Aside: Some, otherwise intelligent people err in seeing the institution of credentialism as a statistical process, missing that a team's success rate may be only as strong as it's least reliable credential.  When it comes to an endless adaptive race, the next unreliable credential is always the one that makes an old institution obsolete.]

Philip Pilkington interviews Sheila Dow on economic methodology

Philip Pilkington interviews Sheila Dow. It goes right to the heart of the basic issues in terms of choice of methods and the assumptions this choice rests upon.

Five stars.

Naked Capitalism
On Economic Methodology: An Interview with Sheila Dow
Sheila Dow | Emeritus Professor of Economics at the University of Stirling, Scotland, and Convener of the Scottish Centre for Economic Methodology

However, I disagree with Blair's view about gates and fences.

The term ‘structured pluralism’ is intended to signal a difference from a pure form of pluralism; this pure form is the ‘anything goes’ position. At the level of methodological pluralism, structured pluralism means that we can roughly categorise a finite range of approaches (or schools of thought). These schools are communities, with shared understandings of the real world and of how best to build knowledge about it. As a socio-epistemic activity, therefore, economics has to be structured within groupings, and there is a logistical limit to how many schools can function effectively within the discipline. This limited range of schools helps us be methodological pluralists in the sense of allowing us to recognise and learn about other schools of thought than our own.

Once gates and fences are erected they confine thought and reduce options. They inevitably lead to established viewpoints. See Paul Feuerabend, Against Method and Michael Polyani's Personal Knowledge: Towards a Post-Critical Philosophy, for instance.

BTW, light posting this week due to PBS's broadcast of the Met's new production of Wagner's Ring Cycle at the time when I usually do my evening reading of the RSS feed. That gold ring of power that you know already know about through LOTR. It's a pervasive Western teaching story about the spiritual and moral trifecta of love, duty, and power.

Geoffrey M. Hodgson — Logic Freaks: Modern economics is sick

Economics has increasingly become an intellectual game played for its own sake and not for its practical consequences for understanding the economic world. Economists have converted the subject into a sort of social mathematics in which analytical rigour is everything and practical relevance is nothing.

Read it at Adbusters
Logic Freaks: Modern economics is sick
Geoffrey M. Hodgson | Editor-in-Chief of the Journal of Institutional Economics

(h/t Kevin Fathi via email)

Lars Syll — Oh dear, oh dear, Wren-Lewis gets it so wrong – again!

Axel Leijonhufvud the first “New Keynesian”? No way! This is so wrong, so wrong.

Read it at Lars P. Syll's Blog
Oh dear, oh dear, Wren-Lewis gets it so wrong – again!
Lars P. Syll | Professor, Malmo University

The Orthodox Economic "Mafia"

Randall Wray passes on this piece by Chris Hayes (of The Nation and MSNBC) on the challenge mounted by heterodox economists to the neoclassical consensus.

Read it at the Multiplier Effect
The Orthodox Economics "Mafia"
Michael Stephens

This is potentially a big deal. Chris Hayes is a major player at The Nation and an up-and-comer at MSNBC. He is going to be on the national stage for a long time, and he is on the way to getting it. The Nation has already run an article by Bill Mitchell.