April 2012

Relativist versus absolutist history of economics

I don’t seem to be able to fully grasp Mark Blaug’s distinction between a relativist and an absolutist approach to the history of economics – first introduced in Economic Theory in Retrospect (1962) – and that is a source of much frustration. At first sight, the distinction seems obvious enough. Relativist historians emphasize the social, political, personal etc context in which economic ideas were developed; absolutist historians view history as a sequence of Great Economists building on and/or refuting each other’s theories. Obviously, most histories of economics use a bit of both. Read more

Life Among the Econ: Talking history with Axel Leijonhufvud

Like many economists, I have enjoyed Axel Leijonhufvud’sLife among the Econ” and nodded appreciatively when he described the social classifications of the Econ as “Grads, Adults and Elders” and chuckled when the young grad tries to impress the elders of the ‘dept’ through adept ‘modl’ building; so when the man himself was holding a glass of champagne and chatting with me at the INET conference, I had to ask how he got that paper started. Read more

Feelings Offstage

INET Berlin 2012 - back home again. On stage, it’s been a huge amount of claims, assertions, and arguments about what went wrong, about what exactly happened, about why this time was different, about what will certainly happen, and about what remains deeply uncertain, about what “we” shall do about it, about what “we” could do better. And despite the many uses of “we” I felt little addressed, and will not remember much of it, I’m afraid.

Explaining 'New Economics' with Two Diagrams

I think I am on the track of what 'New Economics' is, and one could roughly sum up two days of presentations in two diagrams:

 vs.  Read more

How to spend the $75m Janeway and Soros just gave to INET!?!

Lunch was just interrupted Bill Janeway standing up to announce that this morning he decided to give $25m to INET and the board will fund-raise this up to $100m over ten years, but then George Soros added $50m in unconditional funding for INET... Not sure what more to say. Two days of talks about how Austerity doesn't work, and then this. INET staff, if you're reading, consider this the first grant application: The future of New Economic Thinking in Historical Perspective! Oh yeah, of course they finished by playing "the best things in life are free" and are now introducing Amartya Sen. Unreal.

@INET Berlin: Paradigm Regained

The title of the conference, "Paradigm Lost," is an obvious combination of two references. "Paradigm" refers to Thomas Kuhn's use of the term, as the dominant and imposing mode of thinking of a particular group of scientists. "Lost" refers to John Milton's Paradise Lost. Based on Kuhn, the title of the conference says: Too many anomalies have built up, and we're looking for the new paradigm that will replace the old. Fine, and very true. The reference to Milton is more complicated, however. Is the paradigm that we lost a paradisiacal world we (should) seek to regain? By relying on Milton, the title suggests a romantic longing for an innonence that we lost during adolescence and that we forever struggle to regain during the rest of our lives. Read more

Manufacturing jobs will disappear - no matter where you are

just as the agricultural share of employment has fallen from 40% in the 1920s to less than 2% of the workforce in Europe today, manufacturing's share of employment will fall to less than 5% of employment. That is not jyst for Europe, according to Adair Turner's excellent dinner speech, but that is across the world. He has pointed out that it is not an issue of international transfer of jobs (although it dominates headlines) but it is because of innovation which makes the productivity of (manufacturing) labour increasinglty higher. As that happens, less and less labour input will be needed to prodcue the tangile products we need - hey, even China's manufacturing workforce has been falling for a decade - and the logical conclusion of such a tendency is that we won't need as much labour. Read more

@INET Berlin: The Great Divide

Behind all the technical language and the common theme of bashing bankers, there remains the Great Divide between Germans and the rest. To Angel Gurria of the OECD, Michael Hudson of the University of Missouri and many others, the key lesson for the EU is that cutting the deficit too quickly does not work, that temporary QE is according to the book, and so on. To Germans such as Kai Konrad from the Max Planck Institute for Tax Law and Public Finance, the key lesson is that we thought all countries in Europe had responsible governments with well-functioning institutions, but then found out we don't. Economics versus politics if you like. Or technical finance versus trusting The Other. Can they be reconciled?

@INET Berlin: Doing the actual work

While yesterday presented a number of frontrunning scientists discussing current economics and state of the economy in general, academic terms, today starts with ECB executive board member Asmussen. Interstingly, the ECB is quite a bit more positive about the development of the crisis and about the measures taken by politicians. But maybe that's just politics. It also gets more technical. Key message: 1) LTRO bought time, it is not the solution, 2) Now politicians should adjust budgets to "sustainable paths" - but no timeline given. Who could disagree?
But then, briefly and only at the end, a plea for fiscal and political integration, addressed at Germany principally. Nice.

Kids Behind the Wall

On my way back home from the Brandenburger Tor, I recalled that I already have been there, it must have been in 1988. Like many other Western German school kids we visited Berlin for a week. We climbed up a little elevated visitors’ platform on the West front of the gate to peer over the wall and watch Eastern German soldiers walking up and down. No way to pass.

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