Wednesday, August 5, 2015

In Defense of Robert Solow’s “Sarcasm”

Paul Krugman writes, “Paul Romer continues his discussion of the wrong turn of freshwater economics, responding in part to my own entry, and makes a surprising suggestion — that Lucas and his followers were driven into their adversarial style by Robert Solow’s sarcasm.”

No examples of Solow’s sarcasm are given by Krugman or Romer, but perhaps the following qualifies in their view:

“Suppose someone sits down where you are sitting right now and announces to me that he is Napoleon Bonaparte. The last thing I want to do with him is to get involved in a technical discussion of cavalry tactics at the battle of Austerlitz. If I do that, I’m getting tacitly drawn into the game that he is Napoleon. Now, Bob Lucas and Tom Sargent like nothing better than to get drawn into technical discussions, because then you have tacitly gone along with their fundamental assumptions; your attention is attracted away from the basic weakness of the whole story. Since I find that fundamental framework ludicrous, I respond by treating it as ludicrous – that is, by laughing at it – so as not to fall into the trap of taking it seriously and passing on to matters of technique.”

This isn’t sarcasm.  It’s a refusal to enter into a discussion with economists who refuse to discuss their own fundamental assumptions, viz. the “classical postulates” of rational choice and market clearing.  The analogy that comes to my mind are the libertarian arguments of Robert Nozick.  If you’re drawn into a debate over whether certain policies violate someone’s property rights, you’re apt to forget that it’s Nozick’s conception of property rights, itself, which is in need of justification.

Solow isn’t the only first-class economist who has found New Classical economics not worth delving into.  Although Lucas looks to the Arrow-Debreu model and its date- and state-dependent commodities as pillars supporting his own modeling, Arrow, himself, has rejected the notion that the macroeconomy is always in equilibrium and has mocked New Classical explanations of the Great Depression.  And Frank Hahn, who wrote an important book with Arrow, regarded modern general equilibrium theory, not as a framework for modeling the macroeconomy, but as a “list” of the far-fetched conditions required to rule out “Keynesian problems.”

I find New Classical Economics very clever and kind of interesting, but the scientism and “methodological arrogance” exhibited by some of its proponents is repellent to me.

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