MACRO next paradigm, hetero + pluralist

Ökonomische Denkströmungen  –  Paradigmatic Drivers                @ Macronom / Plurale Ökonomik

hetero, post keynesian

theguardian 3-2023 ‘Our staff members are social activists’: the university with a critical approach to economics
Economist and best-selling author Ha-Joon Chang says that students at Soas University of London are encouraged to look at the failures of capitalism

Introduction to critical political economy in a multi-paradigmatic setting – By Johannes Jäger
Book – Principles and Pluralist Approaches in Teaching Economics

The Becker model of discrimination is anachronistic and should no longer be taught
John Komlos   6/2020  What decolonising economics means for someone who read economics in India   by Tirthankar Roy

“The mismatch between the real world and the toolbox of economics has long troubled those who taught the subject in the developing world. I studied economics in a small university in India in the 1970s. The economics I studied had a split down the middle: “theory” was taught with American textbooks and “Indian economics” taught mainly with Indian government reports. There was not even a pretence of fitting theory with practice.  Anyone could see that this was a sham. Theory did not ask the questions that those in charge of the economy thought needed answering.

Thinking people tried to reform this absurd system of education. One such set of reformers established the Centre for Development Studies (CDS) in Kerala, where I did my doctorate. CDS designed pre-PhD economics coursework which exposed the students to many types of theory in tiny modules. The message was, since there is no one right economics, you should know different economics, orthodox and heterodox; but only in small doses, for at the end of the journey, there is no reassurance that the right tool to solve a practical problem can be found in this clutter. Why invest time then?

Where did that leave research? Since the toolbox is a jumble, research cannot be an application of tools learned at school. Research is explaining an observation. Economic theory may have the tool to explain the observation; or it may not. The research programme, therefore, must be fieldwork-based, and the choice of tools interdisciplinary. CDS did not call this message “decolonisation.” But seeing how America-dependent our economics was, the experiment could be called that.

With hindsight, I believe CDS failed on teaching. Theory is a language. One needs to know it well to be able to use it at all. Knowing anything well does not happen in bite-size pieces. Besides, varieties within economics are not just different types, but products of internal criticism. A knowledge of heterodoxy does not develop without a solid base in orthodoxy. In teaching theory, any attempt to experiment is potentially a waste of time.

With hindsight, I believe CDS succeeded on research. Answering real-world economic questions is not application of the tools one has learned in school. Research and practice start from a study of people, not a study of calculus.

To be bound by a language of discourse is slavery for the scholar and the practical economist. The current worldwide movement to reform economics shows the truth of that statement.

Note: This blogpost is a version of a talk Tirthankar Roy was invited to deliver at Decolonising and Diversifying Economics and Economic History, an event held at the LSE on 20 February 2020 organised by the LSE Eden CentreLSE Atlantic Fellows for Social and Economic Equity and Decolonising LSE Collective    20/3/20121    Efforts to modernise economics teaching are gathering steam – The hope is that it will help diversify the profession    –      Economists are keen fans of dynamism, but there are too few signs of it in economics teaching. A survey of American lecturers last year found that their methods, which rely on lectures and assigned textbook reading, had barely changed in 25 years. Textbooks themselves can lag behind the practice of economics. A study by Jane Ihrig of the Federal Reserve Board and Scott Wolla of the Federal Reserve Bank of St Louis found that at least three of six leading texts published since the start of 2020 misrepresented monetary policy. They say the Fed sets short-term interest rates by buying and selling securities. But since 2008 the central bank has changed the rate it pays on banks’ reserves instead. Students say that inequality is the most pressing economic problem of the day, according to a paper by Samuel Bowles of the Santa Fe Institute and Wendy Carlin of University College, London. But in many textbooks, they argue, the topic is merely appended to the core curriculum. 

gaiageld/macro   2017   33-theses-for-an-economic-reformation  –  33thesesPDF , articles, comments

gaiageld/macro   2016  The Reformation in Economics : A Deconstruction and Reconstruction of Economic Theory  by Philip Pilkington  –  REVIEW ESSAY by Marc Morgan    The plurality of thought that existed in economics from roughly the turn of the twentieth century to the 1960s was impressive and rather beautiful to behold. Reading books from that era not only gives the reader a vision of what economics had been and what it could potentially be again but also opens doors to so many novel ways of thinking about things.

Narrative fixation in economics

This is a great book. Against the background of the dogmatism of much of modern economics, Edward Fullbrook has produced an innovative and wide-ranging argument for narrative pluralism. The timely book is beautifully written, accessible to all, provocative, extraordinarily insightful, and extremely compelling.        Tony Lawson, Cambridge University, UK

This fascinating and profound work should be read by all economists, and by anyone who is taken in by mainstream economics’ false claims of scientific objectivity. Fullbrook’s erudite, systematic and thoughtful investigation into the philosophical and conceptual bases of the “singular narrative” exposes the limitations of neoclassical economics and its degenerate practice, and provides a powerful critique of different models of economic rationality.     Jayati Ghosh, Jawaharlal Nehru University, India

Plurale Ökonomik  –  pluralism in economics  –  Samuel Decker etal_

„Plurale Ökonomik für alle!“

The complex economic problems of the 21st century require a pluralist, real-world oriented and innovative discipline of economics that is capable of addressing and teaching these issues to students. This volume is a state-of-the-art compilation of
diverse, innovative and international perspectives on the rationales for and pathways towards pluralist economics teaching. It fosters constructive controversy aiming to incite authors and commentators to engage in fruitful debates.

This volume addresses a number of key questions: Why is it important for a social science to engage in pluralistic teaching? What issues does pluralist teaching face in different national contexts? Which traditions and practices in economic teaching make pluralist teaching difficult? What makes economics as a canonical textbook science particular and how could the rigid textbook system be innovated in a meaningful way? What can we learn from school education and other social science disciplines?

Through examining these issues the editors have created a pluralist but cohesive book on teaching economics in the contemporary classroom drawing from ideas and examples from around the world. Advancing Pluralism in Teaching Economics offers a valuable insight into the methodology and application of pluralist economics teaching. It will be a great resource for those teaching economics at various levels, as well as researchers.          read or download PDF here

Int. J. Pluralism and Economics Education    2017  Why economics needs its own reformation: 95 theses  by Jack Reardon  


Introducing a New Economics: Pluralist, Sustainable and Progressive: Pluralist, Sustainable and Progressive
by Jack Reardon, Maria Alejandra Caporale Madi, Molly Cato     Jim Stanford 

Economics is too important to be left to the economists.

Jim Stanford’s Economics for Everyone has quickly become a standard reference for economics literacy and popular education.  Now published in 6 languages, the book is used in higher education, trade unions, and community education initiatives around the world.  This new second edition has been completely revised and updated, with new statistics, cartoons, and anecdotes.  The book also includes several all-new chapters – on inequality, on racism and discrimination, and on the lasting consequences of the 2008-09 global financial crisis.

William Lazonick  :  “… when most economists think of investments in the economy, they think of finance and what they call “capital flows” in the market. Through financial markets, money is supposed to flow to where it is needed. But that’s not the way things actually work! … ”  2019  After Over Three Decades, Rebel Economist Breaks Through to Washington. Here’s How He Did It.    by Lynn Parramore   2017  COREA new paradigm for the introductory course in economics   Samuel Bowles, Wendy Carlin 

Our intro courses fail to reflect the dramatic advances in economics – concerning information problems and strategic interactions, for example – since Samuelson’s paradigm-setting 1948 textbook. Missing, too, is any sustained engagement with new problems we now confront and on which economics has important insights for public policy – climate change, innovation, instability and growing inequality amongst them. …

The contributions of Keynes, Hayek, and Nash – aggregate demand, the central economic role of limited information, and strategic interactions modelled by game theory – were extended by many others and have become foundations of economic thinking. Before the end of the 20th century, all three innovations had become standard postgraduate economic instruction, as a quick glance at the tables of contents of leading texts (Mas-Colell et al. 1995, Romer 1996) would show.

What economists know, and what students get : Things are radically different at the undergraduate level. The Samuelsonian paradigm is basically Marshall plus Keynes, and this remains the basic content of the dominant textbooks today. Asymmetric and local information, and strategic social interactions modelled by game theory are mentioned, if at all, at the end of the introductory course, or as special topics,. (Von Neumann had commented – surely ungenerously – about Samuelson that “…even in 30 years he won’t absorb game theory”.)

Understandably, students think information problems and strategic interaction are simply refinements of the standard model, rather than challenges to two of its foundations – price-taking as the benchmark for competitive behaviour, and complete contracts (and hence market clearing in competitive equilibrium) made possible by complete information. CORE’s introductory text, The Economy, attempts to do for information economics and strategic social interaction what Samuelson did for aggregate demand. …”  RETHINKING ECONOMICS    The pandemic tests a new policymaking benchmark that includes civil society and  social norms    by Samuel Bowles and Wendy Carlin        read here   or   download PDF

Economics students cited inequality, climate change, and unemployment as top issues of concern between 2016 and 2020.

CORE textbook here

Macroeconomics Redefined  2015  by Philip GeorgeMacroeconomics Redefined by [Philip George]


This book resolves the central issues that have vexed and divided economists over the past eighty or so years. It explains

1. That the Keynesian way of viewing the economy through the lens of aggregate demand and the monetarist way of viewing the economy through the lens of money amount to the same thing.
2. Why recoveries from recessions that follow massive asset market crashes are necessarily long-drawn affairs.
3. Why holding the interest rate very low for an extended period has very little effect on the recovery.
4. Why fiscal spending has very little effect on the recovery.
5. Why productivity growth has been so low after the recession.
6. That the Keynesian multiplier during a recession is negative.
7. Why the Japanese recession is fundamentally different from the US Great Recession.

The book lays out a way of accurately measuring money supply. It disproves the money multiplier theory and explains how money is endogenously created. It shows that changes in the velocity of money have nothing to do with the speed at which money moves from economic entity to economic entity and are entirely the result of movements of dollars between demand deposits and other kinds of deposit.    Finally it shows what central banks really need to do to prevent recessions.

philosophy, sociology + history of economics How Should Econ 101 Be Taught?   By Donald J. Boudreaux

Harvard Economics wunderkind Raj Chetty … wants there to be more analysis of data and less attention to economic theory. As described by Dylan Matthews writing for Vox, “If Chetty is an advocate for anything, it’s for the notion that economics is an empirical discipline, a science just as much as, say, medicine is.”   Chetty  … clearly believes that this (mainstream) theory is overrated, overemphasized, and overused relative to analyses of empirical data. To help remedy this perceived problem, Chetty developed and teaches a new undergraduate course at Harvard: “Economics 1152: Using Big Data to Solve Economic and Social Problems.”  …  Heady stuff for undergraduates! Yet it’s very bad stuff both for economic education and public policy. The notion that data can be sensibly analyzed independently of theory is naïve, as is the related notion that students can learn an adequate amount of sound theory through the analysis of data.   27/01/2021  How Economics Lost Itself in Data –  Today’s researchers have tossed out price theory and don’t realize they’ve been politically compromised.  Alexander William Salter

William Allen, a professor emeritus of economics at the University of California, Los Angeles died Jan. 15 at 96. Few noted it, but Allen’s death was momentous. It represented a generational shift in the economics profession, one that bodes ill for economists and the public. Allen truly believed in economics—something that is hard to say about most economists these days.

Allen was among the last of a generation of economists who were masters of their craft. He wrote, along with his friend and colleague Armen Alchian, an excellent economics textbook that conveys the power and potential of the economic way of thinking: Despite the complexities of markets, economists can get at the heart of how they work by focusing on prices. This insight is so important, it gives economists’ core tool kit a name: price theory. Nobody can be an economist who is unfamiliar with or uncomfortable using this tool kit.

Yet by this standard, there are not many economists left. Professional economists are abandoning price theory in droves. The new status quo has upended the field. Economics is increasingly less scientific and more susceptible to political influence.

The absence of price theory in today’s economic research would have befuddled the great economists of the past. Contrary to the field’s naysayers, the golden age of 20th-century price theory was never about “neoliberalism” or “market fundamentalism.” Instead, it applied to markets a simple yet brilliant framework that revealed the hidden ways market prices—exchange ratios between goods—facilitated an extraordinary amount of economic coordination. It also showed why many (but not all) restrictions on price adjustments, such as rent controls, resulted in costly and unproductive secondary effects. This was all a part of a broad explanatory project. While individual economists had their policy preferences, the economic way of thinking was above politics.

For years, economics has been getting less theoretical and more empirical. Economists are spending less time building and thinking through simple models, and more time collecting and analyzing data. The “identification revolution” in economics raised the payoff, in the form of elite publications, to finding good data from quasiexperimental settings and conducting advanced statistical analyses. Better empirical work should certainly be applauded. But it came at a cost: an entire cohort of economists with serious theoretical blind spots. pdf   2018?  The Binding Force of Economics   Colin Harris  Andrew Myers  Christienne Briol  Sam Carlen
Abstract : A discipline is bound by some combination of a shared subject matter, shared theory, and shared techniques. Yet modern economics is seemingly without limitation to its domain. As a discipline without a shared subject matter, what is the binding force of economics today? We use a topic modeling approach to analyze the prevalence of different approaches to inquiry within economics. We find that economics has become increasingly defined by its common empirical techniques rather than its common theory. We question whether this trajectory is stable as the main binding force of economics as a discipline.

 The Philosophy of EconomicsDaniel M. Hausman   editor of:   The Philosophy of Economics GM PDF    

article : Does Macroeconomics Need Microfoundations?  2007  Kevin Douglas Hoover  –  The representative-agent in macroeconomics analyzes the gas as if there is one big molecule subject to the law that governs real molecules.   Are only acceptable macroeconomic models those with adequate microfoundations?

Does Macroeconomics Need Microfoundations?

In this chapter, Kevin Douglas Hoover begins by recalling that the idea of microfoundations does not originate from the new classical macroeconomics, but the domination of this school of thought from the early 1970s to the crisis of 2008 has cemented it in the mind of virtually all economists.   The profession has sworn allegiance to the ideal of microfoundations. Are they right to do so?

A Brief History
An early definition of macroeconomics is based on an analogy between the management of the household and the management of the state. Thus, the earliest empirical economics is macroeconomics. The transition to individualism has not been achieved until the marginalist revolution in the middle of the nineteen century with the works of Augustin Cournot and Léon Walras. It is worthwhile to recall that Smith, Ricardo, and other classical economists were mainly concerned by market phenomena and, thus, the individual was not at the center of their analysis.

Marshall discussed the role of the particular firm and the particular worker or consumer, but it was, as for its English and Scottish forefathers, to illuminate markets. The aim was to illustrate how the market functions in reality. Even proto-macroeconomics of earlier time has not completely vanished, economics appears to be mainly microeconomics by the 1930s.

The term macroeconomics has been used for the first time in 1931 by Ragnar Frisch. But, it was John Maynard Keynes that clarified the distinction between macroeconomics and microeconomics in the General Theory (1936). As Marshall, Keynes looks at the individual decision problem to illuminate market mechanisms. Although, he stresses the heterogeneity of individual responses as a central feature of aggregate behavior, he never explores the relationship between the individual and the aggregate in a really systematic way.

Microeconomics was so dominant in this epoch in economic thinking that microeconomic critiques of the General Theory have been published by Jacob Viner and Wassily Leontieff in 1936. After World War II, the main research program in macroeconomics was to give a “micro-economic flesh” to the Hicks’s aggregate general equilibrium, IS-LM model seen, at that time, as the formalization of the Keynes’s General Theory.

In the mid-1970s, Robert Emerson Lucas and Leonard Rapping began to model unemployment as an optimization problem. I was the first step that announced the domination of the representative agent model in new classical macroeconomics.

Reductionism and Supervenience
After this brief history of microfoundations, we come to the central question of this blog: What are the intellectual roots of this urge to ground macroeconomics into the individual?   …  

The success of microfoundations is not based on methodological individualism, but on ontological individualism. Methodological individualism consists in a strategy of basing all empirical explanations on the behavior of all individuals. Obviously, this strategy faces the Cournot problem. Ontological individualism is the conviction that the only real entities in the economy are individuals. The ontological individualist is reluctant to say that GDP or the general price level are real because they think that saying this implies that these entities are independent of the micro level. These entities are obviously not independent of the micro level. Of course, the first claim (the GDP or the price level are real) does not imply that the second claim (the GDP or the price level are independent of individuals).

The relationship between microeconomics and macroeconomics could be one of supervenience. Any identical reconfiguration of the agents and their situation results in the same configuration of the macroeconomic entities, but the mapping is not one-to-one. Furthermore, the supervenience of macroeconomics on microeconomics is not just a weak form of reductionism. This is because of intentionality at the microeconomic level. When I try to make plans about my future expenses, I use simple macroeconomic models (indeed crude time series models) because individuals, just like economists face the Cournot problem. But this means that I cannot completely reduce macroeconomics to microeconomics. Microeconomics of the real world necessarily uses macroeconomic models and concepts as input. The macroeconomic supervenes on the microeconomy but is not reducible to it. In the example of gas, the gas molecule does not rely on properties of the macro level to exist and to have its own properties.

The macroeconomy supervenes on the microeconomy but is not reducible to it.

The physicist who had successfully reduced the ideal gas law to the kinetic theory of gases does not then abandon the language of pressure, temperature, and volume when working with gases or try to use momentum, mass, and velocity as the principal phenomenological categories for discussing the macroscopic behavior of gases. In economics, the same techniques, the same mathematics, the same language is used for the macro level and for the micro level. This is puzzling. 

The question is : do representative-agent models provide a useful idealization? The question depends on its empirical successes (cf. the failure to predict the crisis of 2008). The advocate of the representative-agent model has no right to attack other macroeconomists for failing to provide microfoundations, for he fails to provide genuine microfoundations himself.

For Marshall, the representative firm was a typified firm at a point of its life cycle at which the extreme behaviors associated with very small and very young firms, on the one hand, or very large and very old, on the other hand could be set aside. In the terms of the physicist’s ideal gas example, Marshall wanted to describe the usual behavior of a molecule of gas under certain ideal conditions. The use of the representative-agent in macroeconomics is quite different. It attempts to describe how the gas behaves (its pressure and volume), not by considering seriously how the molecules behave in aggregate, but by analyzing the gas as if there is one big molecule subject to the law that governs real molecules.

The representative-agent in macroeconomics analyzes the gas as if there is one big molecule subject to the law that governs real molecules.

What happens to the microeconomy matters to the macroeconomy but macroeconomics has its own descriptive categories and may have its own mode of analysis. It shall remain necessary to the serious economist to switch back and forth between microeconomics and a relatively autonomous macroeconomics depending upon the problem at hand. “

Nota bene: This note is accessible on the ERMEES  website in French.  2018  Paradigm Shifts in Economic Theory and Policy    By Michael Jacobs, Laurie Laybourn-Langton

This paper seeks to understand the processes of paradigm shifts in economic ideas and policy. We begin with an explanation of the concept of a “politico-economic paradigm”, with reference to the theory and history of the two paradigm shifts occurring in the 20th century. We then examine how the second of these, the shift to “neoliberalism”, occurred. The final section assesses the degree to which economic and political conditions since the financial crisis offer an opportunity for a new paradigm shift away from neoliberalism.                                          This article is part of A New Economic Paradigm     What can Economists Learn from Deleuze?   Abderrazak Belabes

Listening, seeing and reading Gilles Deleuze has had an influence on my thinking more than most of the economic writings I have consulted over the past quarter of a century. This discovery and furtherance of knowledge enriched my reflection and also allowed me to go beyond the general philosopher, as a philosopher opening the way to new horizons. It makes the researcher aware that the most important thing is not the philosopher man but the man philosopher, i.e. the one who writes something that touches a human being at his deepest level and concerns him in his life every day. New generations of economists should meditate on this by going beyond the chapel quarrels coming from the Schumpeterian dichotomy ‘science versus ideology’. To quote one of Deleuze’s main ideas, no thinking against anything has been important over a long period; what counts are thoughts for something new that affect people’s lives, and which are produced with rigor. This opens the way to a thought for life and not against life, which is in line with the progress of research in methodology, where it is a question of giving more importance to social ontology as a level of analysis and not focusing solely on epistemology in the narrowest sense.

Deleuze among the Economists:  A Short Commentary  on  Abderrazak Belabes’ ‘What can Economists Learn from Deleuze?’    by  Geoffrey Pfeifer

CasP   Blair Fix      New ideas in economics and the social sciences