Monday, October 13, 2008

On Krugman's "New" Theories

From four commenters at Peter Boettke's post on the Nobel Prize Award to Paul Krugman.

Pierre Desrochers writes:

If it's any consolation, I can imagine that a number of economic geographers are feeling the same way this morning, but not for the same reasons (most of them agree with his politics). Funny how most economist like Tyler are "most fond of Krugman's pieces on economic geography, in particular on cities and the economic rationales for clustering" when in fact Krugman added very little to a body of knowledge that is more than a century old. But it was new to most economists...
Roger Koppl writes:

In 1989 Kindleberger objected to the idea that "new" trade theory and "new" international economics were, in fact, new. "As I told Krugman at Helsinki, I find it a bizarre notion that increasing returns in international trade are new." He goes on to cite parts of his 1953 textbook "based on the 1929 article of John Williams reprinted in the AEA 'Readings in the Theory of International Trade.'" (From his chapter in Colander and Coat's "Spread of Economic Ideas," Cambridge U. Press, 1993.)

In 1999 Rosser makes a similar, but more severe, argument in a JEBO book review (31(3) pp. 450-454) regarding location theory. Rosser cites quite a few specific sources he thinks Krugman should have cited, sources that give, apparently, fully articulated mathematical models up the the level of technical sophistication Krugman reached. Rosser concludes, "If he is indeed the emperor of the new economic geography, then he is an emperor who has no clothes."

I don't know how far to push this line of reasoning, but it does look as though Krugman's contributions were less original than many have claimed.
Neel writes:

I agree with Roger and Pierre's remarks above. Another nice paper that challenges the originality of so-called 'new trade theories' is Andrea Maneschi's "What's 'new' in the new trade theory?".

Among the sources Krugman should have cited is Bertil Ohlin's "Interregional and International Trade", but he confessed in a paper ("Was it All in Ohlin?") delivered at a conference celebrating the centennial of Ohlin that he had never read Ohlin, the reason being that "modern economists, trained to think in terms of crisp formal models, typically have little patience with the sprawling verbal expositions of a more leisurely epoch" ! Interestingly, he had given the Ohlin Lectures a few years back (lectures which appear in his collection of essays "Development, Geography and Economic Theory"). Krugman's other essay "How to Be A Crazy Economist" is also interesting on this issue.
Mario Rizzo writes:

If a group of "mainstream" economists would draft a letter of protest based on the academic merits I'd happily sign it. But protests by conservative and libertarian economists will look bad -- mean-spirited, politically motivated. Furthermore, this is really a distraction from more fundamental matters like the beginning of a decades-long attack on free markets generated by the financial crisis and the lack of good responses by most, though not all, free-market economists (so far).

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