Floris Heukelom's blog

Inclusive wealth and the history of GDP

The International Human Dimensions Programme on Global Environmental Change (IHDP) recently published the Inclusive Wealth Report 2012, in which the authors propose a measure of wealth based on the stock of capital present in a country, as opposed to the flow measure of GDP. It is an important step towards a more explicit recognition of the sustainability of the economy’s use of resources, and is so obviously analogous to the standard assets-based way of accounting and estimating wealth in the corporate sector that one wonders why on earth it took so long to appear on the scene. Read more

Between science and history

Last Friday, philosophers from the University of Leiden hosted the symposium ‘Between Science and History,’ in an attempt to figure out what the differences are between practicing scientists’ use of history and historians use of history. The organizers had conjured up the nice experiment of letting a scientist and a historian in one session give a talk on a famous historical figure – Einstein, Darwin, Christiaan Huygens. (Plus there were a few idiosyncratic talks, interesting in other respects, but let me leave those out here.) Read more

Let me tell you everything

Our usual problem in history (of economics) is a lack of information. Archival sources, if available at all, always present gaps of correspondence between people you just know should be there, and never contain that vital review report, or the minutes of that one crucial meeting. Moreover, if the people you write about are alive and willing to talk, it turns out they’re only human: they’ve forgotten the vast majority of their past, mix up events and people, mistake a recollection they once read for their own memory, or even willfully rewrite history. All too bad, although it gives us the possibility, perhaps even obligation, to speculate, interpret, and fill in. And then of course spend hours and hours discussing with one another whether we have done so correctly. Read more

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

@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

@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.

@INET Berlin: Decisions

A suprisingly large number of talks refer to the issue of human decision making. This afternoon Gigerenzer set out his story about the mind working on the basis of heuristics, right now Damasio talks about emotions as an effective decison making tool that has developed over evolutionary time. But the topic recurs in many of the other presentations as well. Gigerenzer has always been very clear with whom he disagrees (Kahneman and Tversky, and neoclassical economics principally) and so has Damasio (neoclassical economics, people who accept Descartes' mind-body distinction, people who appreciate Spinoza's understanding of human decision making). But what do they think of each others' work?.. Work to do next week...

Economics as a doctrinal discipline

In science, empirical disciplines such as physics, chemistry, history, and parts of sociology and political science, reason from facts. By contrast, doctrinal disciplines such as law, philosophy, and parts of sociology and political science reason from doctrines, or dogma’s. While doctrines must of course have a grounding in the empirical world, this relation is much harder to grasp. Moreover, to understand the doctrine and its derivation it is as much necessary to appreciate the context in which it was formulated, to understand the person first formulating it, and to assess the development of amendments subsequently made over time. Read more

What’s in a name