by Paul Krugman has often been criticized by people like yours truly for getting things pretty wrong on the economics of John Maynard Keynes. When Krugman has responded to the critique, by himself rather gratuitously portrayed as about “What Keynes Really Meant,” the overall conclusion is — “Krugman Doesn’t Care.” Responding to an earlier post of mine questioning his IS-LM-Keynesianism, Krugman write: Surely we don’t want to do economics via textual analysis of the masters. The questions one should ask about any economic approach are whether it helps us understand what’s going on and whether it provides useful guidance for decisions. So I don’t care whether Hicksian IS-LM is Keynesian in the sense that Keynes himself would have approved of it, and neither should you. The
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Paul Krugman has often been criticized by people like yours truly for getting things pretty wrong on the economics of John Maynard Keynes.
When Krugman has responded to the critique, by himself rather gratuitously portrayed as about “What Keynes Really Meant,” the overall conclusion is — “Krugman Doesn’t Care.”
Responding to an earlier post of mine questioning his IS-LM-Keynesianism, Krugman write:
Surely we don’t want to do economics via textual analysis of the masters. The questions one should ask about any economic approach are whether it helps us understand what’s going on and whether it provides useful guidance for decisions.
So I don’t care whether Hicksian IS-LM is Keynesian in the sense that Keynes himself would have approved of it, and neither should you.
The reason for this rather debonair attitude seems to be that history of economic thought may be OK, but what really counts is if reading Keynes gives birth to new and interesting insights and ideas.
No serious economist would question that explaining and understanding “what’s going on” in our economies is the most important task economists can set themselves — but it is not the only task. And to compare one’s favourite economic gadget model to what madmen from Chicago have conjured up, well, that’s like playing tennis with the nets down, and we have to have higher aspirations as scientists.
There is also a somewhat disturbing and unbecoming coquetry in his attitude towards great forerunners. It smacks not so little of hubris to simply say “if where you take the idea is very different from what the great man said somewhere else in his book, so what?” Physicists arguing like that when discussing Newton, Einstein, Bohr or Feynman would not be taken seriously.
The absolute all-time low in Krugman’s response is this remarkable passage:
Has declaring uncertainty to be unquantifiable, and mathematical modelling in any form foolish, been productive? Remember, that’s what the Austrians say too.
I won’t comment on the shameful guilt-by-association part of the quote, but re uncertainty it’s absolutely gobsmacking how Krugman manages to mix up the ontological question — is the economy permeated by calculable risk or by genuine and often incalculable uncertainty — with the epistemological question — how do we manage to analyze and model such an economy. Here Krugman seems to say — much in the spirit of Robert Lucas — that if reality is uncertain and non-ergodic, well then let’s just pretend it’s ergodic and susceptible to standard probabilistic analysis so that we can go on with our mathematical modelling! In other areas of science that would rightfully be considered fraud, but in modern mainstream economics, it’s obviously thought of as an unproblematic and justified procedure.
Being able to model a ‘gadget world’ — a world that somehow could be considered real or similar to the real world — is not the same as investigating the real world. Even though all theories in a strict sense are false, they cannot be unrealistic or false in any way. The falsehood or unrealisticness has to be qualified.
Where does all this leave us? Well, I for one, is not the least impressed by Krugman’s gadget interpretation of economics. And if labels are as uninteresting as he says — well, then I suggest Krugman and other ‘New Keynesians’ stop calling themselves Keynesians at all. I’m pretty sure Keynes would have appreciated not having his theories and thoughts being referred to by people having preciously little to do with those theories and thoughts.