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Wednesday, August 15, 2007

"Reintroducing Macroeconomics": A Review

As promised, here is my review of Steven Cohn's book: "Reintroducting Macroeconomics, A Critical Approach."

So that you my reader can understand any biases I may have, I offer up a brief background of my thinking as a student of Economics:

As an undergrad, the textbooks for my classes were largely Classical-Keynesian Synthesis in nature, while most of my professors had a very obvious laissez-faire, classical, bent to them. I remember noting to myself early on that there appeared to be a direct correlation to how much math was used in the class to how 'classical' the professor seemed. As it was my game theory professor was the most hardline: every sentence he spoke had the word "rational" in it - and whenever he said the word "irrational" his lips would curl and nostrils would tighten as if he were smelling a skunk.

Here is a quote from my professor, as best as I can recall, from the very first econ class I ever took:

"Economics is about how selfish individuals make decisions under conditions of scarcity. Selfishness is not a bad thing - being selfish makes everyone better off..."

Even in those days I can remember thinking that my professors all had severe bias issues and whenever 'gains from trade' or perfect markets etc. were discussed I remember spending hours and hours later at home trying to rationalize what I had learned with reality. By the time I graduated, I had chosen a personal middle-ground - not quite classical and not quite Keynesian (at the time, those were the only choices I thought I had). When debating with friends though I would always defend the classical position - because it was the one that I knew the best - it was the one I paid to learn - so I felt in defending it, I was defending my decision to learn Economics.

In grad school, most of my macro classes were from a New Classical bent, with real business cycles and dynamic theory based on intergenerational models of perfectly rational agents. Assumptions were just that - and were never discussed. My grad schooling taught me alot about econometrics, simulation economics, and in-depth classical thought, but it also only served to justify my growing opinion that Economics is a growing failure as an authentic science.

Over the last few years I have drifted more and more away from classical ideas taught me throughout my economics education. I still believe much can be learned from neoclassical economics, but ever since that first undergrad class, I've found true scientific rigor to be lacking. Economics classes always seemed like a secret society of conservatives - an indoctrination built on assumptions more than on inquiry and open debate. Certain other fields never seemed any better (the political science department was filled with die-hard liberals that never bothered to see the other side as well), but I had always hoped that Economics would grow to be more holist: to include thoughts of politics, psychology, sociology, etc. But it seems to have grown more and more sheltered since I started my schooling.

As my longing for more holist ideas have grown, so has my thirst to learn more of these ideas. As such, I've been paying closer attention to thoughts espoused by the post-autistics, the post-keynesians, and the behavioral economists.... I purchased Steven Cohn's book so that my students might not have to deal with the same internal struggle I dealt with regarding economic thought. With that, here is my short review:

As an introductory textbook (which is what it espouses to be - either as a supplement to a mainstream book, or as a book for independent study), it fails. First, the book spends too much time denigrating mainstream texts, and not enough time being mainstream's alternative. As such, the text mentions how market failures or group-think can prevent nice long-run market outcomes, or how AD-AS models are often inadequate, but it spends little time presenting a coherant and detailed counterargument. Instead it presents a hodgepodge of arguments from different divisions of heterodox economics: Marxism, feminism, post-keynesian, institutionalist.... Ordinarily that would be good (afterall the whole point of the book is to present economics more holistically), but the problem is, due to space constraints, it makes the book's arguments seem weak, the feeling of being 'all over the place, and more argumentative. Perhaps a more narrow focus on a handful of macrotopics would have been better....

Another dissapointing feature are the endnotes. Chapters end with pages and pages of endnotes(footnotes) - often time more interesting than the text itself. This again is an obvious example of how the author wrote too broadly and felt the need to condense his thought on many topics. I hate endnotes - especially when they belong in the body of the text.

The final reason this fails as a textbook is the lack of visual interest - there are only a couple graphs and they are poor quality. The book is written in book/novel format and would and should be an instant turnoff to most introductory undergrads.

Having said that, some more interested and thoughtful students will find this book insightful. It does a great job of singling out mainstream assumptions and showing how those assumptions can and often fail - and (as mentioned, too briefly) discusses the results of how the macroeconomy differs as those assumptions fail.

Also, the author picks up on what I feel is the major problem with mainstream texts - the tendency to "note but ignore" issues with their assumptions, and markets. In the end, the point of the book works, and that point is that mainstream economics fails to offer a truly holist attitude to economics, and it fails to have an open dialogue with its students, preferring to offer a skewed picture of the world for the sake of simplicity. I view this, however, as a hastily put-together, though useful, working document of heterodoxy. Hopefully one day a more appealing text will arrive on scene.

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