Krugman comes down as a Kuhnian

Responding to Noah Smith, Krugman says the following about the long term effects of the “Macro Wars”.

 On the academic side: look, to a first approximation nobody ever admits being wrong about anything. But my sense is that a lot of younger economists are aware, even if they don’t dare say so, that freshwater macro has been a great embarrassment these past four years, and that liquidity-trap Keynesianism has done very well. This will affect future research; it will, over time, break the stranglehold of decadent Lucasian doctrine on the journals.

He doesn’t use the term, but I usually associate this with Kuhnianism, particularly in the way he describes dogmatism. Scientific progress has never been made changing the minds of adherents.The antagonists are far too dogmatic for that and attached to their theories. One theory only “wins” by convincing the audience, which is the next generation of scientists. That’s how we see knowledge progressing in the physical sciences – despite the naive Positivist sentiment that the scientific mind would be convinced solely by prediction and evidence. Ideally maybe [fn1], but never in practice.

And why on earth would we expect economists of all people to be less dogmatic? This is why I think Steven Grenville’s criteria for success in economic debate is a little flawed. If we insisted that an admission of wrongness was a criteria for success in every field of knowledge, then we’d struggle to find one. Certainly not in regard to plate tectonics or the big bang theory where the losers took their views to the grave. Most likely the same will occur between adherents of string theory and quantum loop gravity.

The only problem is that in macro, the view vindicated by evidence is not promoting a new paradigm, but an old one. Perhaps Kuhn should have also written The Structure of Economic Restorations.

 

[fn1]And by “maybe” I mean no, but that’s a debate for another time.

 

15 thoughts on “Krugman comes down as a Kuhnian

  1. I think Krugman is being naive. Macro orthodoxy is still being taught to the next generation and thus creating new believers, and on balance it is also spreading in a geographical sense. There are challenges to the orthodoxy but I am afraid the recession probably wasnt big enough to make a change this time round.

    You like that positivism post, dont you? :-)

  2. A similar thought in a different context here.

    economists have greatly exaggerated the benefits of incentives by themselves, without changes in people. Economic theory of socialism has put way too much weight on incentives, and way too little on human capital. Winners in the communist system turned out not to be so good in a market economy. Transition to markets is accomplished by new people, not by old people with better incentives. I realised this and wrote about it in the mid-1990s, but the lesson both in firms and in politics in profound: you cannot teach an old dog new tricks, even with incentives.

    On the criteria for good debate, you could conclude that Grenville is right – and that there’s very little good debate. That’s my conclusion.

    I’ve changed my mind on that over the years ;)

    But seriously, it really is worth saying that a high value in debate is the ability to be persuaded. It’a actually happened here on Troppo on a few occasions.

  3. I followed a link on Stephen Grenville’s blog post to John Taylor’s blog. He got together with a bunch of other people and what did they conclude?

    In sum there was considerable agreement that (1) policy uncertainty was a major problem in the slow recovery, (2) short run stimulus packages were not the answer going forward, and (3) policy reforms that would normally be considered helpful in the long run would actually be very helpful right now in the short run.

    That first conclusion is a giveaway I’m afraid. Fails the laugh test. And of course the emphasis on marginal tax rates and incentives to work. Every now and then a few million people decide to take a holiday. Oddly enough this contagion occurs country by country. Not so many taking holidays here.

  4. Nicholas – When a debate changes someone’s mind, or when someone is open to persuasion, it’s a wonderful thing. I have no desire to deny its virtue. But it’s a higher virtue, a bonus. But we can’t treat as the benchmark because we’d never get anywhere. It’d be like taking Bradman as a benchmark for batsmanship, or Keynes for quotability.

    Paul – Even if the next generation learns the same toolbox, the bigger issue is that they might actually be aware that it’s a toolbox, and not truth, and put some effort into making sure the way they use the tools reflects reality.

    Though I do wish we’d hurry up and get some better tools.

  5. richard, nick,

    we here agree with the problems with macro-orthodoxy but I am afraid that that critique is not really going to change anything. One needs a new story to replace the old one. There are plenty of new stories, many of them actually very old stories, but the many critiquers cannot agree on one and so the orthodoxy wins again.
    It is easy to see the flaws in accepted wisdom. It is a whole different kettle of fish to come up with a uniting alternative that appeals to the next generation. Indeed, not only is it true that old dogs who are on the inside dont learn new tricks, but old dogs on the outside refuse to unite on new tricks too because they are uncomfortable with the compromises they see in the alternative and do not want to expose themselves to the ridicule they will get for supporting something imperfect. That is the main reason that only the new generation really pushes new things: they dont have something to lose by doing so.

  6. Richard, Paul.

    As I understand it we’re discussing the normative standards of debate. And in this area the main thing is to argue bona fide, which is to say that you argue as if you might be wrong, or not to bother much with people who are unpersuadable.

    We are reason giving creatures, and the best way we have to get somewhere is to think things, give reasons for them and discuss. And some people do this better than others.

    But it’s also true that people don’t do this well. People don’t do lots of things that they should well. So what? It certainly means we sdn’t put much store in our words in making the world a better place, but it’s worth calling them on not being very good at something that they’re pretending to be good at.

    Paul, are you saying that if IS-LM is better than any major departure that’s come after it, that we can’t get back to IS-LM until someone comes up with something else, more modern. Kind of IS-LM with some platform shoes on to go with the other season’s fashion?

  7. @1 Paul.

    You say (quite correctly) that it is being taught to the next generation.

    They would do well to regurgitate what they are thus taught in assignments and exams. Such compliance is necessary to get the piece of paper.

    However, what they are being taught says nothing at all about whether they agree with the teaching, nor about what they themselves will teach in their turn.

  8. My reading of the macro wars is that it is neo-Keynesian ideas that have triumphed, rather than “Hicksian” Keynesian ideas. And of course neo-Keynesians are big users of DSGE.

    A good example is the (very persuasive to my mind) recent Summers/DeLong paper on when fiscal stimulus can reduce net government debt (Answer: only sometimes in a genuine liquidity trap, which is rare). Now that conclusion is indeed arrived at by a form of IS/LM with some added ad-hoc dynamics. But there is, in principle, no reason at all it could not be arrived at by some perturbation of a Woodford-type DSGE (probably with one of those neat monopsony search models of labour and product markets embedded in it to generate the wage and price stickiness). It is not that ISLM is truer for this question, just that it is more useful, because more direct. Remember RBC and DSGE are by no means synonyms, and the absurdities in the first shouldn’t discredit all of the second.

    Which is a plea for plurality in method – as they say, all models are false but some are useful. Teach students that, and teach them to recognise when to use which approach.

  9. Marks – To argue Paul’s case for a bit, it’s not as simple as the piece of paper. The issue isn’t the macro in undergraduate where jumping through the hoops is an option. That macro isn’t that bad. It’s the macro in post-graduate.

    The bad macro isn’t just bad, it’s a highly elaborate kind of bad, difficult to master. Macro grad students need spend >= 5 years (in the US) doing post grad, learning this stuff and writing tens of thousands of words based on a similar number of hours writing equations and computer code. Then competing for a job based on your papers based on that research. A rather larger effort then faking one’s way through one course for a semester.

    And once you’ve invested that time and energy and emotion, it becomes that much harder to declare that it was all a lie. Your job (not yet tenure) application was based on rubbish papers and a rubbish degree and you spent your best years doing rubbish. That’s the time for dogmatism.

  10. @10 Richard.

    Absolutely true for those who are true believers, and who put in the time – as you say. If Paul had limited his ‘being taught’ to those who are that dedicated, I should have no problem. However, do you not think that someone entering into such an enterprise might not already be convinced?

    I guess, I saw Paul’s referring to the amount being taught as not being necessarily related to the amount being learned or agreed with. Of course, in your scenario, people are more self-learning and researching rather than being taught.

    Sorry if I misunderstood.

  11. the view vindicated by evidence is not promoting a new paradigm, but an old one.

    yes well, the reason for that is, apart from within the economics profession, nobody actually believes that economics is a science.

    True story, I was asked in a general/introductory economics course exam, “is economics a science?” I have done more history and philosophy of science than most, and certainly more than the lecturer (though I don’t claim to be an expert). Unfortunately, when I argued that the answer was no, I got zero marks. How churlish, what a precious ego that fellow had.

  12. “when I argued that the answer was no, I got zero marks”

    Heh. Not allocating marks for the quality of argument (notwithstanding any “wrong” conclusion) proves you right. Perhaps it was his oblique way of acknowledging as much.

  13. Well he was Melbourne Uni (Melbourne Business School maybe). Can’t remember his name. Anglo bloke. Wasn’t Nilss Olekans, I did another general intro to Macro with him, he was alright.

    Also, this essay I had to write was pen and bloody paper for three hours. Well into the 21st century!

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