Monday, December 12, 2011

rodrik on occupy ec 10

Responding to the issues surrounding the Ec 10 walkout, highly acclaimed development economist Dani Rodrik weighs in on the particular question of the ideological content of mainstream economics here.

We at Anti-Mankiw are glad to see the debate moving past the difficult-to-support claim that mainstream economics is not political, or that Mankiw's ideology is "not at all obvious". As we tried to emphasize in a previous article, a key sign of an ideological approach, especially in economics, is when space is not opened up to a critical analysis of the economy.

We are hoping that Mankiw can begin to address the most important question behind the walkout, namely, why any group of students would choose to walk out on a course that has (in theory) so much potential for enriching discourse on the economy. Thankfully, Rodrik suggests to us an entrypoint. His premise is the vast set of  policy proposals often invoked in economic theory. As he states succinctly here:

Indeed, though you may be excused for skepticism if you have not immersed yourself in years of advanced study in economics, coursework in a typical economics doctoral program produces a bewildering variety of policy prescriptions depending on the specific context. Some of the frameworks economists use to analyze the world favor free markets, while others don’t. In fact, much economic research is devoted to understanding how government intervention can improve economic performance. And non-economic motives and socially cooperative behavior are increasingly part of what economists study.

It is not clear to us how Mankiw's particular assumption set -- i.e., his 10 principles -- makes him immune to Rodrik's point. Aren't they just another assumption set, chosen by a professor with certain political aims? The weakness in Mankiw's approach is in the level of critical analysis that takes place in discussing economics. And why should introductory students at Harvard be spared of learning about the tools necessary for critique? Rodrik continues:
Now let the reporter go undercover as a student in the professor’s advanced graduate seminar on international trade theory. Let him pose the same question: Is free trade good? I doubt that the answer will come as quickly and be as succinct this time around. In fact, the professor is likely to be stymied by the question. “What do you mean by ‘good?’” he will ask. “And good for whom?” 
In other words, economic policy proposals are much more nuanced than Mankiw seems to present. (A similar argument could easily be made for recent economics work on minimum wages.) And if we were to add such nuance, this does not necessarily make things to difficult to grasp. At UMass, we ask these kinds of questions to our undergraduates: we ask them how different efficiency criteria might change ones policy proposal, and we question the foundations of a hedonistic approach to economic theory. While such discussions admittedly require sources outside of the standard textbook, there is no need to go "too far" for a solid discussion of these issues. They are definitely in the reach of first year students.

We'll let Rodrik have the last word here:
Applied appropriately and with a healthy dose of common sense, economics would have prepared us for the financial crisis and pointed us in the right direction to fix what caused it. But the economics we need is of the “seminar room” variety, not the “rule-of-thumb” kind. It is an economics that recognizes its limitations and knows that the right message depends on the context.
That's right. Contrary to what Mankiw might say, there is much that students can learn about the financial crisis which would come from a different approach to introductory economics. Let's not speak so condescendingly of them!


  1. 'Applied appropriately and with a healthy dose of common sense, economics would have prepared us for the financial crisis and pointed us in the right direction to fix what caused it.'

    Really? Economic models are incapable of modelling the crisis as anything other than an exogenous shock.

    1. "Economic models are incapable of modelling the crisis as anything other than an exogenous shock."

      Minsky had a model which works just fine. (Not that Mankiw would talk about that, obviously.)

  2. I think there are parts to Rodrik's post that are a bit too kind to economics. But with regards to the quote above, if by 'economics' he means a more inclusive economics that incorporated the ideas of thinkers like Hyman Minsky who for decades tried to convince the mainstream about our fragile financial economy, then I think his statement is roughly accurate. But if he means today's state of mainstream economics, then I have to agree with you Unlearningecon.

  3. "A key sign to an ideological approach" You know better Dan, its all ideology...

  4. I agree with Unlearningecon's point. I think if we pressed Rodrik to take a position on Minsky he might want to see some kind of formal model or he would be less inclined to include him in a model of established, "real" economists.

    One of Rodrik's older books is titled "One Economics, Many Recipes"... and I'm not sure that you really get to the right recipe if you have to include mainstream economics, in some form or another, in it...