I recently was pointed toward an article in The American Prospect, “Why Economsts Cling to Discredited Ideas.” The article outlines what (it claims) are discredited ideas about markets, invisible hands, and such, to which (the article claims) economists (it claims) cling to. The article is interesting, making some fairly familiar claims (though more explicitly than most). There is,however, a lot of contention on Madrick’s part, and he doesn’t present much evidence for what he is claiming. He is talking about some very fuzzy things.
I would say that, as usual, things are a bit more complicated. First, the idea that free market/invisible hand ideas have “failed” i s a highly subjective notion…failed on what basis? Compared to what? (Planned economies?) The ideas certainly don’t apply to all the places the conservatives would like them to…but to call them a failure is kind of stupid. They’ve been right, they’ve succeeded, quite a bit. I’m not saying that the economics profession hasn’t taken the ideas too far in many places…but “failed” is a bit much.
More to the point, check out journal articles here
that provide a bit more scholarly approach to what economists think. The articles confirms my suspicions, based on the economists I know: we economists are by-and-large progressive.. Most economists recognize that market failure is pervasive. And these articles are a bit dated; I’d bet that more information about minimum wage, in light of the past 8 or 9 years, has made even more economists drop the notion that the minimum wage is bad. (Heck, up until 4 or 5 years ago, I wasn’t sure myself…but now more careful studies have been done, the data on inequality is overwhelming, and it’s clear that a higher minimum wage doesn’t lead to more unemployment in the vast majority of cases.)
I think Madrick comes closest to the mark when he talks about careerism, but even here, the analysis is superficial. There’s a theory of knowledge called actor-network theory that fits economics very well, I believe. Actor-network theory sez that the people who advance in a discipline, and what ideas they advance, is very much tied into who gets published, who knows who from cocktail parties or squash games, who gets tenure and who doesn’t; paradigms shift when the old editors die.
And there is just built-in inertia. For example, there is a particularly vicious cycle with undergraduate textbooks; several books become well established, lots of professors use them, and the publishers don’t want to change much within them because they don’t want to lose these professors…so the professors, who are loathe to depart from the textbooks, don’t ever teach anything different. Besides being lazy, the profs are loathe to depart from the textbooks because any student who doesn’t get “the standard material” will be at a huge disadvantage at the next higher level of classes. This happened at Oregon while I was there, and we had a passel of bitter students. Of course, I don’t have to worry about this at College of the Atlantic because I’m the entire department, teaching all levels; thus, my courses can and do go in directions that I think best explain economic phenomena.
Frankly, I don’t think it’s the economists’ fault…it’s the politicians. They’re the ones who cling to outdated ideas like the Washington Consensus. Within development economics, the Washington Consensus is quite dead…but it lives on in conservative think tanks and firebrand politicians. To see this in stark relief, look how few climate scientists *don’t* believe in human-caused climate change…yet most of the Republican party clings to the small, small bit of science that supports denial. When you look at climate change, you see just how desperately politicians will seize on ideas long after they’ve been demolished within academia.
I would point out that I’m a card carrying ecological economist, which makes me heterodox (but in case any of the wrong people are reading this, I would also point out that ecological economics doesn’t seek to replace neoclassical economics, but rather, to “include and transcend” it). But neoclassical econ has changed quite a bit in the last 30 years, and there are particular reasons for it not changing more. We shouldn’t let a couple of dinosaurs from Chicago, and the Republican Party, obscure that.