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Unlearning Economics: The Keen/Krugman Debate: A Summary
Paul Krugman and Steve Keen have been debating endogenous versus exogenous money - as well as some other issues - for the past few days. The debate appears to have drawn to close, so here I offer a summary for those who can't see the wood for the trees.


Looking over the debate, I'd score it to Keen - you might expect that, but I genuinely went through periods where I thought he might be wrong. Sadly, Krugman quite clearly moved the goalposts a couple of times, and Rowe didn't make it exactly clear where he stands, even after I asked him. Neither of them engaged properly with Keen's or anyone else's arguments.

I can't help but feel that the orthodox economists were deliberately obfuscating the debate - making it unclear exactly what they advocate, but simultaneously clinging to a core theory and asserting that its critics are attacking a straw man, ignorant of what is `added' at a higher level. I'm forced to wonder if their theories are simply immune to falsification.

The situation has been compared somewhere (which I can't retrieve) to the Cambridge Capital Controversy.

There are three stories about the euro crisis: the Republican story, the German story, and the truth. -- Paul Krugman
by Migeru (migeru at eurotrib dot com) on Tue Apr 3rd, 2012 at 08:57:24 AM EST
Good discussion with Keen and Rowe in this comment thread.

I am not surprised Krugman quit the debate, though it is a pity as they were just getting somewhere. Now, I agree with Keen on the substance, but using Ptolemaic Economics in a description of your debate opponents position is very likely to lead to anger. And anger leads to misunderstandings.

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by A swedish kind of death on Tue Apr 3rd, 2012 at 04:14:47 PM EST
[ Parent ]
I expect Galileo and Copernicus had the same problem.

But that's heretics for you.

I'm disappointed - but not surprised - by Krugman's rather juvenile responses.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue Apr 3rd, 2012 at 04:21:39 PM EST
[ Parent ]
The more apt the comparison the more likely it is to annoy. Metatone put up a link in the Monday OT to a long response by David Graeber in Crooked Timber to the comments on his book , Debt, The First 5,000 Years which had appeared in a 'web seminar'. Part of his response seems relevant to the Krugman-Keen rhetorical debacle, (a debacle on Krugman's part, at least):


The contribution of Henry Farrell, Associate Professor of Political Science and International Affairs at George Washington University, to this symposium, entitled "The World Economy is Not A Tribute System," is a perfect case in point.

Farrell's work is a classic example of de-legitimization, by which I mean, it is not written in an attempt to engage an author in a serious debate about issues, but rather, to try to make a case why that author's arguments are undeserving of debate and do not have to be assessed or considered at all. Rather than refute him point by point, which would presumably bore most readers to tears, perhaps it would be more interesting to explore how such a strategy works.

The links between military systems and money creation is of course a major theme of the book; it is only to be expected that I should pursue the matter to the current day. What seems to provoke Farrell is not this, or any outlandish claims I make--because I don't actually claim that the "world economy" is a tribute system, or make any particularly outlandish claims--but more, I suspect, the fact I use provocative language in doing so: words like "empire" and "terror." Mainstream discussions of such issues are riddled with euphemisms and taboo; it's considered acceptable, for instance, to speak of the US as maintaining an "empire" if one approves of such arrangements (if one is say a Bush aide, or Niall Ferguson), but not if one is critical of them; similarly, while those who attack the US or US military can be described as terrorists, the US, with all its bombs and drones and missiles, can never be described as inspiring "terror" in anyone. So not only do I draw connections between military power and what economists like to call "seigniorage" (the power to decide what money is), I had the temerity to say that the US is an imperial power and that US military power does scare a lot of people, and this is one (just one) reason some accede to US-sponsored monetary policies that are not to their economic advantage.

How does a strategy of de-legitimization proceed? Basically, the pattern seems to be this:

  1. start not by addressing the author's argument, but by challenging their authority to make one.

  2. Proceed to either

a. associating him with some other individual or group deemed similarly outside the bounds of respectable expression, and/or
b. ignoring the intellectual tradition he is drawing on entirely, so as to suggest he is an isolated lunatic.

3. Finally, now that the reader has been prepared to expect the worst, present a wildly inaccurate version of the author's argument, twisting it into something no reasonable person could possibly believe, and dismiss it as such.

This seems exactly what happened here, even if through sloth and arrogance. If Krugman emerges diminished from this it is his own doing. He wouldn't even do Keen the courtesy of trying to understand what he was saying.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Apr 3rd, 2012 at 07:39:09 PM EST
[ Parent ]
a lt goes over my head, but i get the impression krugman cannot refute his colleagues' arguments and is backing off, after making his (aloof) position clear.

whether it's because he sincerely believes they're 'not even wrong' and therefore impossible to debate, or because he would rather bow out without really sharing in the discussion to further intellectual curiosity, thereby sparing his theories any further public dissection, or at least retiring them intact before any more nobel pedestal crumbling takes place with his willing participation.

these guys are pushing him out of his comfort zone, he's in reputation damage limitation mode.

it's a pity, if he would publicly convert it would add enormous heft, but would the grey lady look favourably upon such doings? is pride the issue?

the pack is shifting dynamics, krugman has had a mega-visible podium for a while, and while he has been right about many things, he has been asleep at the wheel for the biggest events, and others have better theories now. from his high pulpit he possibly could have averted some of the crisis, or warned more about it, but that ship has sailed.

by walling off from the youngbloods, (who have paid their dues by now) he risks repeating the error and doubling the damage as the economy hits the next iceberg on his watch as pundit in chief. his position looks more and more vulnerable as events proceed, and outlier commentators decried as doomers or hysterics (by the ever so reasonable centre) are gradually perceived by a growing public to have correctly predicted the problems, and the compounding attendant risks, (which are the problem!).

come on paul, let go of the alpha stuff, the situation calls for pooling great minds right now, you're needed on the bridge, less neutered 'neutrality', more fullthroated conscience of a liberal with a media megaphone to match... you got the super hero costume, no phone booth nearby now everyone's gone mobile?

that's the trouble with centrism, the best ideas always emerge at the edges, like permaculture... the very fame you earned by thinking outside the box forms another box around you...

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Tue Apr 3rd, 2012 at 08:36:15 PM EST
[ Parent ]
As one commenter on PK's blog suggested, I can think of a seven letter Yiddish word beginning with 's' and ending with 'k' that describes what PK has been being in this whole one sided 'debate'.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Apr 3rd, 2012 at 11:32:45 PM EST
[ Parent ]
Speaking of the Old Grey Lady, wiki notes:
The New York Times was acquired by Adolph Ochs, publisher of the Chattanooga Times, in 1896.

I have only recently become aware that J.P. Morgan arranged the financing that enabled Ochs to make the purchase. Morgan was reported to once have asked how many newspapers one would have to control to have control over US public opinion. That number turned out to be something north of 80, if they were the right 80, IIRCC.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Apr 3rd, 2012 at 11:43:29 PM EST
[ Parent ]


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