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I tried the textbook, and then I tried the Foundations of Economic Analysis and I also went bleurrgh! and decided to go back and read the classics...

By the way, this thread is making me want to reread The General Theory. Are there other later books you would recommend apart from that, for macroeconomics?

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes

by Carrie (migeru at eurotrib dot com) on Mon Jun 2nd, 2008 at 01:32:57 PM EST
[ Parent ]
No excellent answer pops into my head, which means I have to look into it more deeply.

A good counterpoint to some of the blind spots of even General Theory macro is Jane Jacobs Cities and the Wealth of Nations.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Mon Jun 2nd, 2008 at 10:28:25 PM EST
[ Parent ]
Maybe there isn't a later book and Keynes is like Galileo waiting for his Newton...

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Carrie (migeru at eurotrib dot com) on Tue Jun 3rd, 2008 at 05:34:30 AM EST
[ Parent ]
There are heaps of later books ... but its been a while since I read them, and I'll have to refresh my memory to sort out which ones are useful in their own right, and which ones are useful in parts, as long as you understand that part of the argument is nonsense.

And then there is the assumed audience ... some assume that the reader is already well versed in a post-General Theory approach, like Post Keynesian Economics.

JK Galbraith is always good ... so many of his books are useful for one or another question that its hard to narrow him down. For a later Post Keynesian economist of substantial influence, Paul Davidson's Economics for a Civilized Society gives a fairly readable introduction to his approach ...

... its also useful for punching through a lot of the Economist/FT type framing which sometimes show their "broad mindedness" by taking into account critiques from "house dissident" schools like New Keynesian economics ... Paul Davidson is a bit of a one-trick pony on intrinsic uncertainty, but its a critical point that traditional marginalist economics is incapable of addressing effectively.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Tue Jun 3rd, 2008 at 10:08:08 AM EST
[ Parent ]
So, what about Veblen, Galbraith, Davidson and Jacobs? That should be good for at least a semester...

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Carrie (migeru at eurotrib dot com) on Tue Jun 3rd, 2008 at 10:33:09 AM EST
[ Parent ]
That's a good mix.

For Veblen, Theory of Business Enterprise, although Veblen is always to be read a chapter at a time, make notes of what you think he was saying, and then reread the chapter, to find the points where he was in fact saying something else. He's the opposite of an "accessible" writer.

For Galbraith, A Short History of Financial Euphoria would seem to be especially relevant. And of course, Paul Krugman considers The New Industrial State to "not be real economic theory", which is a strong recommendation in its own right.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Tue Jun 3rd, 2008 at 01:08:16 PM EST
[ Parent ]
Well, I read Galbraith's The Great Crash 1929 earlier this year, so maybe The New Industrial State would have lesser overlap than A Short History of Financial Euphoria.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Carrie (migeru at eurotrib dot com) on Tue Jun 3rd, 2008 at 02:55:08 PM EST
[ Parent ]
The New Industrial State is a tremendous complement to the General Theory, because the General Theory is about those aspects of a monetary production economy for which you can draw a general theory ... rather than, as some people misread it, a "theory about everything in general".

The New Industrial State is a "special theory", about the post WWII corporate-dominated monetary economy of the United States. And being a special theory, it can go further into its particular topic area than a general theory can.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Tue Jun 3rd, 2008 at 03:01:09 PM EST
[ Parent ]
Thanks, I hadn't heard of Jane Jacobs.

Her books are not stocked by online booksellers in the UK, but they sell for a couple of quid second-hand on Amazon.co.uk...

The Guardian: Obituary: Jane Jacobs (April 28 2006)

Influential fantasies about the perfect urban settlement had aggregated in the US over the previous 75 years into the dominant planning concept that she mocked as the "Radiant Garden City Beautiful", RGCB. "Cataclysmic money" was spent razing extant if tatty inner city zones, with their diverse uses, their self-generated social and economic energy vibrating on crowded sidewalks. They were to be replaced with RGCB public projects, segregated by income (therefore by colour: Jacobs was a fierce civil rights activist), with dwelling towers soaring above ornamental planting; by isolated civic and cultural precincts; by shopping malls dominated by retail cartels; by car parks linked by expressways. Together, these would aggregate into the city as a work of art, the vision of heroic egotists in generational revolt against the 19th century.

Everything would be provided: Jacobs thought everything "was the worst thing we can provide" and cited a preacher's prophecy that there would be gnashing of teeth in hell. A child asked: "What if you don't have teeth?" "Teeth will be provided." "That's it," Jacobs said, "the spirit of the designed city: Teeth Will Be Provided for You."

...

Jacobs met her arch-enemy, New York City master-planner and builder Robert Moses, who overrode residents to obliterate entire districts for automobile access to Manhattan. She recalled him, in a fury at her attempt to thwart his grand designs, yelling, "There is nobody against this - NOBODY, NOBODY, NOBODY, but a bunch of ... a bunch of MOTHERS!" and stomping out. She protested against his expressway ambitions through the 1960s, and was arrested on charges of riot and criminal mischief. The Janeites won that battle, too; Roger Starr, NYC housing administrator, acknowledged that despite Jacobs's homespun manner, "What a dear, sweet character she isn't."



When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Carrie (migeru at eurotrib dot com) on Tue Jun 3rd, 2008 at 05:50:25 AM EST
[ Parent ]

No excellent answer pops into my head, which means I have to look into it more deeply.

One might think that 70+ years after the emergence of a General Theory apparently adequate to the task of explaining a complex economy, and which, by extension, should serve as the foundation of computer based models of the economy, that the failure of the field of economics to provide such an updated theory says something fundamental about the nature of the discipline and the great majority of its practitioners---and that what it says is not flattering.

Three questions present themselves:

1.) Were an updated General Theory capable of making verifiable predictions about the international economy developed and written so that it stands alone, without requiring prior understanding of Keynes's General Theory, generally be used as a text for macroeconomics in undergraduate and graduate courses?   (i.e., would it be commercially viable?)

2.) Could such an updated General Theory be used, (or have such updated theories been used), to generate computer based economic models with significantly more predictive and explanatory power?

3.) If, as seems likely, both 1. & 2. could be done, what does the fact that they have not been done show?

Historian Christopher Hill, in describing the reluctance of the Puritans to execute Charles I, proposed that there had been a "mind stop" in place that made a necessary step unthinkable.  Is that what is happening here?  Would production of such a theory and creation of such a model make the author such a pariah that no one is willing to do it?

Just asking? :-)

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

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Jun 4th, 2008 at 09:49:52 PM EST
[ Parent ]
1.) Were an updated General Theory capable of making verifiable predictions about the international economy developed and written so that it stands alone, without requiring prior understanding of Keynes's General Theory, generally be used as a text for macroeconomics in undergraduate and graduate courses?   (i.e., would it be commercially viable?)
What you're looking for is a Feynman Lectures on Economics, so to speak, which as you know would have a cult following and hence be commercially viable but would be very unlikely to be used in any courses, graduate or undergraduate.
2.) Could such an updated General Theory be used, (or have such updated theories been used), to generate computer based economic models with significantly more predictive and explanatory power?
I suspect such (explanatory, I don't know about predictive) models could already exist, based mostly on Leontieff's Input/Output analysis. Also things like the model developed by the Club of Rome for the Limits to Growth.
3.) If, as seems likely, both 1. & 2. could be done, what does the fact that they have not been done show?
Are they really likely and to what extent? Bruce says downthread
the General Theory is about those aspects of a monetary production economy for which you can draw a general theory ... rather than, as some people misread it, a "theory about everything in general".
Also, Economics is more like evolutionary biology and ecology and an evolutionary discipline cannot be predictive except in the short term. In this case, the rate of economic innovation is much faster than the rate of speciation which makes "the short term" really short.

When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John M. Keynes
by Carrie (migeru at eurotrib dot com) on Thu Jun 5th, 2008 at 02:30:32 AM EST
[ Parent ]

Also, Economics is more like evolutionary biology and ecology and an evolutionary discipline cannot be predictive except in the short term. In this case, the rate of economic innovation is much faster than the rate of speciation which makes "the short term" really short.

I agree that explanatory is much more likely than predictive.  Predictions in emergent systems are always precarious.  With so many of those able to deal with these questions "in it for the money," for themselves and/or their backers or employers, it would seem that there are massive perverse incentives to keep the discipline as arcane as possible.  These folks would not welcome clarity any more than casinos would welcome a ban on scantily clad women plying gamblers with liquor.  The last thing they want is a level playing field.  The capital markets, especially of the USA and Great Britain, have become the by-product of the activities of casinos we call stock, bond and futures exchanges.  The question is how to build support for a restructuring of this socially destructive system.  

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

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Jun 5th, 2008 at 01:09:46 PM EST
[ Parent ]

I suspect such (explanatory, I don't know about predictive) models could already exist, based mostly on Leontieff's Input/Output analysis. Also things like the model developed by the Club of Rome for the Limits to Growth.

I would think such formulations would be most likely to be embedded in the source code of economic models, proprietary and inaccessible to all but those who maintain the model.

What I was getting at was the question of whether there might be some competitive advantage to a better theory that might facilitate adoption of said theory.  If so, this might be a disruptive technology that could be exploited towards beneficial ends.  More likely is that it would immediately be employed to build more profitable casinos.

The current Neo-Classical Economic Mythology seems to be the bastard offspring of Loki and Fortuna.

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

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Thu Jun 5th, 2008 at 01:28:17 PM EST
[ Parent ]

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