1. Menno 20-Jun-07 at 10:08 am

    Hi Deirdre, Arjo and Steve. First of all, I want to say that the book’s conversational style is a big improvement to the mathematical axiom-proof style so common in other textbooks. It really brings to the fore the fact that economics is (should be?) an empirical science. My compliments! However, I am slightly disappointed that the book’s content seems to be very similar to that of other textbooks. I fear that, by adopting the neoclassical framework to the extent you do, you implicitly create a neoclassical perspective in the mind of students from which they will automatically judge the real world. Realizing the fruitful discussion between economists you aim for, requires a basic knowledge of different perspectives – which you cannot get from this book. For example, the metaphor of the perfect market suggests a value judgment about what markets should be like. (Something which has caused misguided government intervention in e.g. the energy industry.) Whereas from the perspective of subject areas like information economics, transaction cost economics and evolutionary economics the ‘perfect’ market is not only unattainable but in many cases undesirable. I would love to hear your thoughts on this. Thanks!

  2. Deirdre McCloskey 21-Jun-07 at 9:46 am

    Dear Menno,
    Yes, I know the problems. I’d respond to the first one you raise that we do not intend our book to be soooo radical, soooo far from a comfortable (if mistaken) Samuelsonianism, that most of our colleagues won’t even open it. You see the tactic? You and we agree on overall strategy—change economics into a human science. But we’ve adopted a cautious tactic in aid of the strategy—which tactic by the way fits with the attitude all three of have that as mistaken as our colleagues are (on statistical significance, for example; or existence theorems), we respect and love them, and want to respect and love them in the conversation!

    The point about “perfection” is one I’ve been making all my scholarly life. For example in my PhD dissertation I calculated how close to “perfect” the market was in British iron and steel, 1870-1913.

    The way I put the issue is a Chicago-School way: we can’t decide HOW “perfect” a market is on a blackboard, or by consulting what we feel are “realistic” assumptions. Left or right, we need to decide each time QUANTITATIVELY.

    So for example the bizarre misunderstanding of the “Coase Theorem” on the political right wing is that it “proves” that liability ends where it optimally should. No it doesn’t, and Ronald Coase never said it did. George Stigler imposed the crazy interpretation of what Ronald was saying.

    Ronald says: each time, you need to decide how large the transaction costs are, and whether in the case at hand they are large enough to change the outcome, and how much. Sometimes they are, sometimes they aren’t. Depends. On the facts. It’s a SCIENTIFIC, not a philosophical or political-preference, question.

    I say again: both left and right grossly misunderstand this simple little point of method. There is no perfection in the created world (I could go into the Christian theology on the point!). But such a truth does NOT mean anything empirical: supply and demand could be “close enough” for this or that purpose; or they could be “too far away from working.” Depends. It’s an empirical, factual, scientific question every time.

    My heroes among Marxist economists of an earlier generation, Paul Sweezy and Paul Baran, understood this completely. They measured how close to monopoly capitalism the American economy was. (They got it wrong, but their wrongness was the sort a serious empirical scientist might fall into, not a priori.) So did my heroes among the Chicao School economists of an earlier generation understand the point, and measure, Milton Friedman and Ronald Coase. So did my heroes among Harvard Keynesians of an earlier generation, Bob Solow and John Meyer. Measure, measure, measure. Absolutes on the blackboard just don’t cut it. They are guides, often questionable, to the empirical questions one might ask. But they do not themselves provide the factual answers. Blackboards don’t. Empirical magnitudes do.

    Regards,

    Deirdre

  3. Steve Ziliak 21-Jun-07 at 10:03 am

    Hi Menno,

    Thanks for yours.

    You raise a point that we’ve wrestled with throughout the writing of the book. We agree with you. It’s a serious question. “HOW MUCH of the standard material shall we include?” Our answer finally is: most if not all of it.

    To this you’ve replied, “I fear that, by adopting the neoclassical framework to the extent you do, you implicitly create a neoclassical perspective in the mind of students from which they will automatically judge the real world.” But here we disagree. First, we don’t believe that students of The Economic Conversation will “automatically” judge anything. “Automatic” is a property ascribed by Walrasians to market clearing behavior but our book leans hard against automatic answers from page one. The dialogues and alternative perspectives ensure it. True, students too often want “the right answer,” whether or not such a desire is coherent with the subject matter or course goals. (In the 17th century Galileo himself wrote a letter from Padua to his patron, complaining that his physics students wanted the easy way out.) But to the extent they do, they and their professors will want “easy” and “automatic” rather less after using our book.

    Obviously only a part of the book is uploaded. But you may be pleased to know that in for example the chapter on “The Political Economy of Nature” we criticize the traditional “circular flow” from a Herman Daly-type ecological economics perspective.
    Rodney and other students have a field day with that one.
    Over and over again we challenge the fiction of “perfect” markets. Our chapters on labor are written particularly for readers like you.

    Regards,

    Steve

  4. Menno 05-Jul-07 at 11:04 am

    Hi again,

    Thanks for your answers. I suppose you are right: everyone studying economics should know the standard material, as it reflects the state of the field. And therefore most of it should be included in any introductory textbook.

    Regarding ‘automatic judgment’, let me clarify myself. If I may use a far-fetched example: there is a difference between teaching Newton’s laws of motion along with its criticisms and teaching relativity theory. In the former case, it will be difficult (but, of course, not impossible) for a student to tackle a physics problem without using a Newtonian perspective. Even if he does know the limitations of the method. That’s why I hope you will manage to “cram in” as many alternative theories as you can without turning the book into a mess. A difficult but not impossible job! Kind regards, Menno.

  5. Normen Benjamin 04-Oct-07 at 10:53 am

    Some aspects I regard valuable to the understanding of economics as a discipline:

    1. Solutions for problems found thanks to specific economic research.

    2. (This seems important to me.) Where does the economist fit in world building. It is a fact, not of world order and scenarios that mainstream economics and its application by the armies of economists have had a tremendous influence on the stability of financial markets and overall capability to at all model economic behaviour. it is the common Heisenberg issue. Due to the economic field the institution of economic thinking has been introduced into social environments and ultimately leads to the state in which thoughts contradictory to common economic principles are to be seen as absurd and socially unacceptable.
    This is important to understand how at all hierarchies in markets and flow-architectures can come into existence and lead to the accumulation of power in the overall system, which leads to asymmetric and non-free markets – which, as the development can be understood as not to be suppressed – leads to the question of developing control regimes such as ethics and democratic principles into the financial power architecture.

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