Monday, April 6, 2015

Never Trust Any NYT Economist Who Isn't Already Dead

By Robert Wenzel

Never trust an economist under 60, especially when it comes to methodology, Paul Krugman seems to tell us in a recent blog post.

The sixty-two year old Krugman writes:
Younger macroeconomists — and by younger I mean in their 40s or even 50s — don’t know anything about the intellectual history of how the field got to where it is. Worse yet, if they’re trained in freshwater macro they have absorbed a fake history, in which the rise of their style was an inevitable consequence of superiority on all fronts, rather than a questionable methodological choice...
He has a point, up to where I stop the quote, but I doubt Krugman is very familiar with the extremely important early methodological debates in economics. He certainly espouses economic theory as though he is not aware of those debates and who won them,

Krugman for example ignores, or is unaware of, the groundwork in the methodology of economics laid down by Jean-Baptiste Say.

He also appears to ignore, or have no knowledge of, the great methodenstreit debate between the German Historical School of economics and the Austrian school, which was launched by the important work by Carl Menger, Investigations into the Method of the Social Sciences with Special Reference to Economics, which originally appeared in German as  Untersuchungen uber die Methode der Socialwissenschaften und der Politischen Oekonomie in 1883.

Prof Joseph Salerno writes:
Investigations precipitated a furor among German economists who heatedly responded with derisive attacks on Menger and the “Austrian School.” In fact, this latter term was originated and applied by the German Historicists in order to emphasize the isolation of Menger and his followers from the mainstream of German economics. Menger responded in 1884 with a scathing pamphlet, Irrthumer des Historismus in der deutschen Nationalokonomie (The Errors of Historicism in German Economics), and consequently the famous Methodenstreit, or methodological debate, between the Austrian school and the German Historical school began.

Greg Ransom comments:
To say Investigations into the Method of the Social Sciences with Special Reference to Economicst is a landmark in the philosophy and  “method” of social science doesn’t well capture the significance of the Menger’s text.  In it Menger lays out the essential blue print for “bottom up” spontaneous order or unintended consequences type explanations, he provides the foundations for the case against positivism and inductivism, he undermines the case for historicism — and sets the agenda for much of the history of the philosophy of economics and social science over the last 120 years setting the problem situation grappled with by — among others — the German Historicists, Hayek, Schumpeter, Mises, the Vienna Circle, Weber, the Verstehen philosophers, and various interminglings of these perspectives.
Indeed, Ludwig von Mises alone followed up with a number of writings on methodology, including Epistemological Problems of Economics and The Ultimate Foundation of Economic Science: An Essay on Method. Friedrich Hayek wrote The Counter-Revolution of Science; Studies on the Abuse of Reason.

It is sad that most young economists, especially those educated strictly in Keynesianism and econometrics, have no knowledge of the great debates that went on over methodology, But, if I may make an empirical observation, this applies to older living economists as well, Krugman being a prime example.

This is not to say that there are no living economists who understand the rich history of the methodological debate, Hans-Hermann Hoppe does, as demonstrated in his book, Economic Science and the Austrian Method. As do Salerno and Ransom. It's more that you won't find this type of understanding by mainstream economists who lurk at popular media outlets such as the New York Times.

The last decent economist to write for NYT was Henry Hazlitt (1894-1993). Don't trust any NYT writing on economics after him. They don't even get correct methodology, even if they are over 60.

Robert Wenzel is Editor & Publisher at and at Target Liberty. He is also author of The Fed Flunks: My Speech at the New York Federal Reserve Bank. Follow him on twitter:@wenzeleconomics

1 comment:

  1. Once you have read Rothbard's easy-to-read "The Essential Von Mises", you know instantaneously if someone else has any familiarity with the subject matter. We can safety assume that Krugman does not.