Real World Economics: A Post-autistic Economics Reader (Anthem Studies in Development and Globalization) [ペーパーバック]

This book is must reading for anyone who wants to break out of the mathematical dream world of most contemporary economics. Unbeknownst to most economists and their followers in Washington, there has been an intellectual revolt brewing for several years. The pieces in this book cover a wide range of subjects, from philosophical questions to practical policy, and are written to be accessible to the educated non-economist. Because they run the gamut from left to right to center, no reader will agree with them all, but they eloquently demonstrate the breadth and intellectual sophistication of the post-autistic movement.

Some may complain that this single book doesn't overthrow the entire discipline of economics and erect a complete alternative theory. But that kind of work will take decades, and one has to begin somewhere.

No education in economics is complete without this book.

This collection of writings of the post-autistic critics of neoclassical economics has 59 chapters and six appendices, all in just under 500 pages. The contributions are thus short opinion pieces rather than detailed critiques of economic theory or the graduate economics curriculum. I confess that while I am an often harsh critic of neoclassical theory, I do not find much of value in these pages. My comments are directed at members of this movement and the authors in this book, whom I urge to do a more forward-looking and analytically serious job. The single best paper in the book is by Jamie Galbraith, who urges us to stop the interminable belly-aching and get on with the task of developing an alternative to neoclassical economics, giving several insightful suggestions as to how this should be accomplished.

Neoclassical economics is a microeconomic theory not concerned with standard macroeconomic problems, such as the business cycle, monetary and fiscal policy. Many of the critiques in this book deal with macroeconomic models that bear little relationship to neoclassical theory, and I will not deal with them. Moreover, the suggestions for alternatives to neoclassical economics are mostly thinkers operating in the macroeconomic tradition. Reading Keynes and/or the post-Keynesians rather than Mas-Collel et al. simply doesn't make sense, since these authors were concerned with the single issue of under-employement equilibrium and macroeconomic stabilization theory. Reading Marx rather than game theory is also misdirected advice, since Marx deals with the division of wealth between capital and labor, an issue that is peripheral to neoclassical theory. Similarly, Veblen is great for conspicuous consumption, but there are plenty of neoclassical model that capture his insights and much more.

I find it curious that young economists would suggest that old-fashioned macroeconomic theories should replace modern neoclassical theories, given that we live in an age where macroeconomic policy is a purely technocratic enterprise, and all the really burning social issues have to do with such microeconomic issues as corruption, incentive compatibility, overcoming anti-competitive bureaucracies and entitlements in the economy, skills and qualifications, gender inequality, and the role of altruism and other-regarding preferences in explaining economic behavior. The idea of our poring over the texts of Marx, Keynes, and Veblen to answer contemporary economic problems is ludicrous indeed.

Another persistent theme in these pages is that the core micro courses in graduate schools should use less math, since all the high-tech math of microeconomic theory is worthless. Why is it worthless? Because, say the post-autistics, the super high-tech economics journals produce a lot of fancy models with no real-world relevance. The fact is that most economists are not economic theorists, and could not understand an Econometrica article if they wanted to (which they do not). However, the level of mathematics used in the everyday life is orders of magnitude higher than that of other behavioral disciplines, and one cannot write a cogent analysis of an economic issue without being able to write and analyze simple mathematical models. Economists learn how to do this in the first three years of graduate school, where almost all course are applied micro of one kind or another. This is as it should be. I think the American Economic Review and the Journal of Economic Perspective are examples of journals that thrive on high-level microeconomic model building and testing of a sort that every economists should be capable of generating and understanding. If there is some systematic alternative to microeconomic theory, I would love to see it, but I doubt that it would be less math-intensive that the standard fare of the AER.

I am frankly saddened by the vapidity of the post-autistic economics movement. Who cares how hard the courses are? So what if you have to work a little? Why do you have to read Keynes in class. Are you incapable of reading him at home?

What is the goal of this movement? It seems that the answer is: it has no goal. It is just a bunch of people fussing because the courses are too hard, and hoping for an alternative that would make the life of the economist more like that of the armchair philsopher, or the social critic who wants to get paid well for issuing arcane philosophical critiques of capitalism from the halls of academe, offering nothing in its place.

Serious critics back up their criticism with an attempt to develop serious alternatives. Moreover, it is not just the post-autistic community that is disenchanted with received wisdom in microeconomics. The smartest young economics in each of the past four or five generations have revolutionized economic theory by developing alternative that have been incorporated in the contemporary economist's toolbox. It is the kiss of death to listen to the nay-sayers, prominent in this book, who claim that all the Nobel prize winners in economics are worthless, that all new theory is just old wine in new bottles, and that the current body of economic theory is completely without merit. It is also the kiss of death to listen to some critique who claims we should immerse ourselves in the writings of dead old f-rts for inspiration.

The editor of this book of collected essays claims that Post Autistic economics is well on its way to challenging the neoclassical mainstream that currently dominates the economics profession.This mainstream is based on the Bayesian Subjective expected utility theory that argues that all probabilities are additive and linear.Unfortunately,the post Autistic movement is no match for neoclassical economics.The first problem is that post autistic economics appears to be just another name for the Post Keynesian school that rejected Keynes's General Theory analysis contained in chapters 20 and 21 of the General Theory,as well as rejecting Keynes's interval estimate approach to probability and his c coefficient approach to decision making in chapters 6,15,17,20,22, and 26 of the A Treatise on Probability (1921).The Post Keynesian claim is that the only chapter in the GT that contains Keynes's analysis of effective demand is chapter 3 and that this chapter is an intellectual mess. The Post Autistic movement is actually built on a foundation that is an amalgam of the faulty analyses of Joan Robinson,Richard Kahn, Dennis Robertson,Sydney Weintraub, Paul Davidson,G Harcourt,D Vickers, and G L S Shackle.This school falsely claims that Keynes never provided any clear and convincing model or analysis in the GT. Contrary to the Post Keynesians,it's all there in chapters 20 and 21 of the GT.However,these chapters are not read by Post Keynesians or members of the post autistic movement due to the extreme mathematical illiteracy,innumeracy,and ineptness and confusion of Post Keynesian (post Autistic)economists.Keynes handed off the football to the Joan Robinson,Austin Robinson,Richard Kahn,and Nicholas Kaldor with a first down at the one yard line of the neoclassical school.THe result was fumble after fumble after fumble .Now the situation is reversed.The neoclassicals have a first down at the post Keynesians (post autistic) one yard line.It will only be a short time before the Post Keynesians disintegrate.This is why they plan to continue their losing battle under the name post autistic economics.

Keynes gave his nominal followers the following huge advantage on pp.304-306 of the GT in 1936-He generalized the neoclassical equation of exchange to include decision making under uncertainty and ignorance as well as risk.The neoclassical results only hold if Keynes's weight of the evidence index,w,defined on the unit interval [0,1],equals 1.The elasticities e and ed subscript on pp.305-306 equal 1 if w=1 .This means that there is no uncertainty and/or ignorance.There is only risk.Velocity will now be a constant,strictly proportional to gnp,stable ,or predictable because there will only be a transactions demand for money.Liquidity preference will equal 0 and there will be no asset demand for money so that M2 will equal 0 in the M=M1+M2 equation discussed on pp.208-209 of Section 4 of chapter 15 ,which is the necessary required prerequisite to understanding chapter 21.Then M= M1.Only voluntary unemployment will result.On the other hand ,if w < 1, then e <1,and ed subscript < 1.Decision making under uncertainty and ignorance,especially impacting the extremely important long lived durable capital investment sector of the economy ,will result in a situation where labor,as a whole, will be unable to cut its money wage.Involuntary unemployment results as liquidity preference increases so that M2>0.This basic analysis is nowhere to be found in this book or in any of the other writings of any of the other essay writers in this book.Keynes provided a general theory of decision making in the GT.It is an application of his c coefficient model which he presented on p.315 of the TP and analyzed carefully in footnote 2 of p.315.c=p2w/(1+q)(1+w).Define A as an outcome.The goal is to maximize cA.It has been proven by Brady that a modified c coefficient model, where w=1 ,would still result in involuntary unempoyment since neoclassical theory is based upon BOTH linearity and additivity.One then obtains c=p/(1+q).Additivity is satisfied but not linearity.Neoclassical theory is based on the assumption that all probability preferences are linear and additive.Keynes proved that the general case is that probabilities are non linear and non additive.Keynes's analysis takes place in chapters 15,17,20, 22, 26,and 29 of the TP.Unfortunately,Shackle and Davidson completely rejected this due to their own very poor scholarship and mathematical training.They have passed down their errors for a new generation of Post Keynesians to absorb .

I can't recommend this book to anyone.Students will come away completely bewildered ,baffled,confused,and dazed.