Wednesday, December 24, 2008

What Is Economics?

This may seem like an odd question to pose in this blog. Suffice it to say, it's a way to draw your attention to a couple of interesting articles.

Back when I first taught economics, one of my objectives was to familiarize my students with some of the major names from economics that had or could have an impact on their lives. Thus, they were introduced to Smith, Malthus, Ricardo, Marx, Marshall, Keynes, Friedman and others.

However, a key point I made was that the all the theories were attempts to explain behavior. And this was to either solve a problem or answer a pressing question. The major theoretical shifts seem to happen at times of great change or crisis. And that sets the stage for the two articles mentioned earlier.

The first article was in Sunday's edition of The Boston Globe. The author, Drake Bennett, speaks to the idea that most economists missed the current downturn, but all are now scrambling to explain it. Yes, there were a few who, at the time were seen as "doom-and-gloom", but are now reaping good fortune as a result of their pessimism. But the profession is still trying to sort out all the events that led to this point in time, both to explain it and to try to formulate a way out. For that reason, I suspect the next "great economist" is out there. It may be a seasoned academic with years of research and publishing under his or her belt, combined with an exemplary ability to speak simply. It may also be a young, freshly-minted PhD with a new sense of how all the myriad pieces fit together. Either way, times such as this seem to regularly produce sea-changes in economic understanding.

This brings us to the second article, from the January 2009 issue of Prospect magazine. Robert Skidelsky wrote an excellent biography of John Maynard Keynes a number of years ago. And I would be hard-pressed to identify anyone who understands Keynes better. There may be some who can quote The General Theory and other works chapter and verse. But Skidelsky speaks to the person as well as the economist that was Keynes.

In his piece for Prospect, Skidelsky is calling for a new Keynes. Some may read the piece and say it's a call for a new Keynesianism. They may be right. But as I read it, he is looking for the next great economist. The idea is that there needs to be major shift in theory - perhaps more closely aligned with what Keynes said - but certainly internalizing the recent wave of globalization and what it can do, as well as what it possibly can't. Skidelsky would have us remember Keynes was not just an economist but a moralist. His view of the world was one that didn't put a dollar sign (or more correctly, a pound sign) in front of everything.

I would add that Keynes was, perhaps in a better position to moralize than many, being financially comfortable and ensconced at one of the world's great universities. However, I mention that only because someone else will. It should not detract from the message.

The articles are both good and both thought-provoking. And perhaps there are thoughts you can provoke among your students in the next semester. I look forward to your thoughts. Happy holidays.

1 comment:

fresno dan said...

First, I read the blog, so I find it enjoyable and informative. And I think economists are by and large intelligent individuals.
But...As George Orwell would say, "There are some things only an intellectual can believe, for no common man could be so stupid."
In my neighborhood, townhouses were selling for over 300K...now, you would have to see these hovels to understand ... that those prices were ridiculous. And perhaps therein lies the problem.