They Don't Make Them Like They Used To! Why even the best post-war analytical economist ended up a tragic figure

Previously I have written about the Econobubble (the handmaiden of the “real” Bubble) and the toxic theories of economists who were very recently rewarded with the Nobel Memorial Prize in Economics.  Following those tirades, a number of colleagues (and students) put it to me that economics is not what it used to be.  That once upon a time, they suggest, economists were giants whose intellect informed the public and who would have reined in the current crop of mindless hacks whose inane creed took over the great Economics Departments sometime in the 1970s. In this article (just published in Monthly Review’ MRZine) I beg to differ: The sad truth is that the malaise that is  today’s vulgar economics was founded on the analysis of some of the brightest and best minds. Click here for the article which uses the great Paul Samuelson as a case in point.

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  • In a Mad magazine spoof (Issue #158, April 1973 available at entitled “Rewriting Your Way to a PH.D.”, Tom Koch “describes” how an impressionable second-grader visiting his grandfather’s pig farm in Kansas was (well!) impressed and frightened by the pigs staring at him with their little eyes. A “how I spent my summer vacation” report was resubmitted at every stage of the educational process ending up with a doctoral dissertation in Abnormal Zoology entitled “A qualitative analysis of swine vision as it pertains to human behavioral response in Osbore County, Kansas”. I submit that mainstram economics had followed the same path.

    From Bastiat’s Economic Harmonies the tune is the same: “market knows best”. Then there are the “variations on a rococo theme” trying to prove with increasing mathematical sophistication and subtlety the same thing. Every generation of mainstream economists provide their proofs of the same theorem, which is in fact their axiom. To do so they make all the necessary assumptions, and as the subject is reluctant to submit, it is eventually manhandled into submission and relegated to mathematical Cloudcuckooland.
    Only those who wish to be converted do so. It is the belief in free market ideology plus a narcissistic pleasure of understanding the mathematical arcana that can make someone to be willing to translate GE theories to humanspeak and convince hard-as-nails politicians. In a sense, politicians, having the upper hand choose the theories they like, as Dick Cheney chose the Laffer curve.
    The question is still why non-embedded economists do it to themselves. The sadness of it all is that politicians have learnt since the last depression how to make academic economists say what they want them to say. PA Samuelson, a true Cold Warrior thoroughly obliged.

    Best wishes for the ominous 2011