Keynes

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Regime Change — Technology Style

I have mentioned many times here that one of the ways in which economics has ventured astray is in its selection of capital and labor as the core constituents of production.  These are, to me, political and not economic quantities.  They are, at best, an approximation of reality and the farther we venture from the origins of modern technologically driven economic development the less useful the approximation becomes.  This is because they draw a veil over the essence of what went on: the first great wave of industrialization — the first great technological regime to borrow a phrase from Nelson and Winter — was centered on the substitution of different sources of power to drive production.  It was the harnessing and application of new sources of energy that defined this first regime.  

For most of history the energy needed to do the work necessary for human subsistence came in an animate form.  Either human or animal muscle power provided the energy to convert the natural world into something useable by our ancestors in their quest for survival.  Through the course of millennia wind and water were also tamed to assist, but even so most work was done by muscle.  

It was natural, therefore, for the earliest economists to look on labor as a primary input to production.  Their error was that they did not think more deeply and look beyond the obvious.  Energy, not labor, was literally the motive force getting work done.  That humans provided much of that energy was a result of the ancestral technological regime about to be overthrown by the technological revolution wrought by the introduction of machinery and the more advanced sources of energy — steam being the iconic one — that swept to the fore in the late 1700s and early 1880s.  The industry revolution rode on a wave of new energy sources.  The attachment of machinery to those new sources allowed the entire framework of industrialization to blossom.  The factory, the re-arrangement of the workplace, and the new institutions needed to manage assembly and distribution on a large scale were all a consequence of the harnessing of energy to do work on a hitherto unimaginable scale.  Our modern world is a reflection of our success in developing and using new sources of energy to do work.

Economics was invented during the early years of this industrial flux in order to explain the consequences of what was going on.  It took onto itself the task of giving a formal explanation of the benefits of the application of energy to extract more work from what it took to be the fundamental inputs to production.  It was particularly interested in explaining that the movement of labor from older ways of production to newer ways of production was not a loss but a benefit.  To do that it developed an obsession with productivity and efficiency.  It is no coincidence that efficiency and maximization emerged as central objects of analysis for early economists.  Their scientific milieu was deeply infused with the contemporary work of physicists who were busily explaining those same concepts in the context of the modernization of physics.  Work, efficiency, and maximization were naturally attractive to economists as they tried to understand the emerging industrial economy.  The problem was, as I mentioned above, that they lost touch with energy as the prime input.  They focused instead on the political problem of the upheaval implied by the shifts in labor from the old ways to the new ways. 

This forgetting of the prime inputs bedeviled economics right through to its development of growth theory in the postwar years.  By sticking with the political or social constructs of capital and labor, neither of which are particularly precise, economics limited itself with the consequence that it had to accept a “plug” in its equations when explaining growth.  No combination or amount of either capital and labor could be devised to explain modern growth.  There was always a very large — absurdly large at times — residual that has become known as total factor productivity [TFP].  

I have always wondered why the emergence of TFP did not force economists to question the basic quantities they were dealing with.  Surely this should have been a moment to go back to the drawing board.  

Which brings us to the second great technological regime.  The regime change we are living through.

The first had been focused on energy.  The second has been focused on the other fundamental input into production: information.   

Having cracked the importance of motive power and its application to mechanization as a solution to the problem of increasing production from limited resources, in essence solving the infamous economic problem that has dogged humanity throughout history, we turned our attention to the less material input.  This was necessary because of the complexity introduced into the economy by successive waves of specialization, division of labor, and thus increased interdependency caused by industrial production on large scale.  Such complexity highlights knowledge, information, and organization as economically interesting entities.  Coordination of industrial processes became a problem of central focus in the practical world of production.  The softer technologies of management or information processing and their associated methods rose to the fore in the same way that the harder technologies of machinery and energy had risen in the first technological regime.  

This second technological regime — the one we have been living in for some time now— has become one in which the study of knowledge and information are vital to continued development.  TFP is, in large part, a reflection of this shift in emphasis.  Our emphasis is increasingly on technique and on various ways to combine sources and kinds of information to create and manage products.  Yes, we continue to automate work to extract ever greater productivity from the material world, but our more immediate emphasis is on extracting greater value from the information that we have in abundance around us.  

But we are still new to this problem and much of our theory is inherited from the first technology regime.  In particular our understanding of economics is still rooted in those ideas of efficiency and maximization which, themselves, were presented as solutions to scarcity.  Inducing greater production from scarce resources requires some notion of a closed system that can be “maximized”.  However distant this idea is from reality it has uses when resources are scarce.  So does the more modern notion of a firm which is a method of closure around a set of processes.  At its most basic scarcity itself provides a closure to the system being maximized.  That condition no longer exists in an information based economy.  Information is boundless and is not reduced through use.  Increasing not diminishing returns dominate.  Connectivity matters more than isolating processes for discrete management.  Networks are paramount.  The information content of our products is increasing as information technology makes complexity more tractable to exploitation.  Production has always been implicitly algorithmic.  Now it is explicitly so.  

In an odd way this reverses one of the core values of management.

In an industrial process where most value is created by emphasizing predictable, replicable, and scale, what I call primary knowledge [PK] dominates.  Indeed the entire purpose of a business firm is to turn discovery or innovation into predictable activity.  In my schema the knowledge needed to innovate, adapt, or discover is secondary [SK].  This schema differs from that based on Michael Polanyi’s description of tacit and explicit knowledge.  My focus is on the management process.  Secure and successful exploitation of discovery depends on being able to translate the SK based adaptations into PK based routines that can be replicated en masse.  Efficiency is based on the more effective application of PK.  In contemporary wording: PK is the code of production.  

The problem with PK, or any code, is that its utility depends on its context.  Just like any supremely efficient entity its efficiency is simply a reflection of the system within which it emerged or was created.  Change the context and the erstwhile efficiency may suddenly become a hindrance.  PK or any code can become obsolete quickly.  To use Schumpeter’s insight: creativity, by changing the context, destroys what was once an efficient solution to a problem.  Creative destruction eliminates successful adaptations.  It does not eliminate poor adaptations because they have been eliminated already by their successful competitors.  Creativity is a threat to the successful not to the failed.  Novelty turns success into failure inevitably.

Which, if we think about it for a while, produces a conundrum:  to be successful in a rapidly changing context we need to be less efficient.  We need redundancy.  We need to be adaptable.  So instead of building successful processes by translating discovery into manageable predictability [i.e. an SK to PK orientation]; we reverse things.  We need to abandon a search for efficiency, we need to accept generalization in order to search for novelty.  We must forgo the predictable and manage discovery based upon a framework that changes constantly [I.e a PK to SK orientation].  

Meanwhile if the foregoing holds any truth at all it is that we have conquered the economic problem.  We have overcome nature’s most immediate threats to our subsistence.  Industrialization was a success.  Now we must clean up its unintended consequences.  But the threat of famine no longer hangs over us all in the way it once did.  Our issues are now political: how do we manage the abundance so that we all share in it?

Which brings to mind Keynes’ somewhat pessimistic view of how we are likely to deal with abundance.  In his wonderful short essay “Economic Possibilities for our Grandchildren” which struck an optimistic tone with respect to our ability to overcome the economic problem, he cautioned us.  He told us that we already have a glimpse of how humanity might deal with abundance.  After all the wealthy live in such a world already.  They are, in his words, our advance guard in such a world of excess.  And they aren’t doing very well.  His words from 1930 …

“To judge from the behavior and the achievements of the wealthy classes today in any quarter of the world, the outlook is very depressing!  For these are, so to speak, our advance guard — those who are spying out the promised land for the rest of us and pitching their camp there.  For they have most of them failed disastrously, so it seems to me — those who have an independent income but no associations or duties or ties — to solve the problem, which has been set them.”

Our second technology regime, this Digital era, is where we solve this problem.  So far, judging by the continued excessive focus of digital technologies on yet more automation and thus production of more wealth for the wealthy, we are not doing very well.  Keynes was right in his judgement.

 

Addendum:

That we have solved the economic problem is reflected in the amount of human labor we allocate to the production of basic or subsistence material.  Industrialization or mechanization allowed the massive reduction of humanity involved in food production.  Then it allowed the equally massive reduction in the numbers of  people involved in the production of the more material aspects of modern life.  These shifts of labor first from agriculture to industry, and then from industry to “service” are a triumph of technology.  It is no wonder that we give science and technology a prime place in our current worldview.  Whether they stay there will depend on their usefulness in solving the post-scarcity issues that afflict us.  Perhaps it is an irony that we turn to technology to solve the environmental degradation that technology produced as we sought to break free from nature’s grip.  Nature surely has a way to remind us that we have always to take it into account!  After all the threat is not to nature, but to us.

Nor ought it surprise us that in a post-scarcity world social and political issues emerge as those that most in need of urgent attention.  We have enough.  Now we need to resolve who shares in that abundance.  What use is technology in resolving that problem?  Especially when, as in recent times, far from being a force for democratic unity, certain technologies seem all too easily to undermine the solidarity we need to live in a world of shared affluence.

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Complex Ideas

The economy as a sea of information, constantly churning, far from equilibrium, with computation its key activity.  It is complex.  It is inscrutable to any method that fails to accommodate its multitude of layers, interconnections, feedback loops, and constant dynamism.  Since reading Ilya Prigogine ages ago I have never understood how anyone could not view the economy through such a lens.  The interplay between creative forces needed to sustain life and the constant dissipation or disordering that inevitably follows upon such creativity is, to me, the central theme being played out in an economy.

Given this, attempts to contain analysis within a neat box simply defy reality.  The instances of an economy that are unstable and out of equilibrium far outnumber, enormously, those that are stable or in equilibrium.  Disorder is normal.  Order is rare.  Vanishingly so.  And, given the radical uncertainty that permeates the economy, we can only focus on the short term.

So, an economy can never be “efficient” because we have no way of knowing how to anchor the universal analysis of such efficiency.

Nor can it be “optimal” because we simply don’t have enough information to draw such a conclusion.  Or, rather, an economy may well be in an optimal position, but we could never know if it was.  It is incalculable. This is essentially Hayek’s argument against central planning re-focused on any argument that relies upon complete information.  We just cannot know.

Efficiency and optimality thus become arbitrary points fixed by choosing a slice of reality, attempting to control it, and ignoring all the rest. The much vaunted price system is such a slice.  No one knows whether it contains all relevant information.  No one.  Discussions of both efficiency and optimality lie outside the domain of pure economics once we realize the foolhardiness of any attempt to pin them down.  What is “optimal” is a political decision not an economic one because economics cannot discuss optimality without stepping outside reality.   Likewise efficiency is better discussed in the realm of some place like business where a small space can be carved out and controlled temporarily.  Even then any conclusion about efficiency is dependent entirely upon the space in question and is not scalable to the entire economy.

By the same token the entire heritage of general equilibrium within economics is invalid.  We know this not only because it fails to engage complexity, but also because of it internal admission: it can only appear to be valid by expunging the real world.  It then becomes an interesting intellectual exercise about something other than an economy.  It is a tour de force of art.  Wonderful to behold and of no significance to our understanding of economies.

I am not alone.

The list of famous economists who have broached the issue of complexity is long.  To quote Flavio Comim at length:

“Indeed, Alfred Marshall’s famous appeal for “economic biology” as the “Mecca of the economist”, Maynard Keynes’ emphasis on the instability of equilibrium positions and the role of expectations, Piero Sraffa’s and Nicholas Kaldor’s criticism of the partial equilibrium method due to the existence of increasing returns and non-linearities in economic processes, and Joan Robinson’s argument for the asymmetric consequences of time in economic theory are just a few examples of the importance of themes relating to complexity in the intellectual history of economics.”

He goes on to mention Schumpeter, Shackle, Hayek, and Goodwin also.

Just to pick out one short quote from Marshall:

“Nature’s action is complex: and nothing is gained in the long run by pretending that it is simple, and trying to describe it in a series of elementary propositions.”

Brian Arthur sees it this way:

“To state in another way, formally, we can say that the economy is an ongoing computation — a vast, distributed, massively parallel, stochastic one.  Viewed this way, the economy becomes a system that evolves procedurally in a series of events; it becomes algorithmic.”

Or, more provocatively, in the words of Cesar Hidalgo:

“Emphasizing the ability of products to augment human capacities can help us refine what we understand as the economy.  It helps us see the economy not as the careful management of resources, the wealth of a nation, or a network of financial transactions, but as a system that amplifies the practical uses of knowledge and knowhow through the physical embodiment of information and the context-specific properties that this information helps carry.  This is an interpretation of the economy as a knowledge and knowhow amplifier, or a knowledge and knowhow amplification engine: a complex sociotechnical system able to produce physical packages containing the information needed to augment the humans who participate in it.  Ultimately, the economy is the collective system by which humans make information grow.”

Knowledge amplification seems a very apt description of what an economy does.

It cannot be an accident that the modern rush to prosperity, what some call the “Great Enrichment”, coincides with an explosion of useful knowledge along with the cultural acceptance that deploying such knowledge is, indeed, useful.  It is neither capital nor labor that underlies the rush to prosperity, they are a power relation and are not economic quantities, but it is the application of an ever growing pool of useful knowledge to various sources of energy that produces wealth.

Pure economics, then, is a very narrow discipline.  It is the analysis of a system similar to Hidalgo’s that incorporates knowledge with energy in order to produce wealth.  It has a sort of Schumepterian narrative in that it needs to explain how growth occurs within such a system.  It is the story of how scarcity is overcome by applied knowledge.

Practical economics is much more broad and yet it is far less universal. It is no longer a discussion of the system.  It is a discussion of how various localized decisions have different outcomes.  Its focus is on problems of distribution, allocation, optimality and efficiency subject to the reality mentioned earlier.  It recognizes that those problems are riven through with arbitrary or ideological contingencies.  It takes into account human frailties and behaviors.  Its is intensely pragmatic and real-world.  It is far distant from Friedman’s “positive economics”. As such it is an adjunct to politics.

All this is my attempt to separate two entirely different discussions.  The first is about growth and the battle with scarcity.  The second is about the politics of how the fruits of the victory over scarcity are allocated.   They are two different conversations that need to co-habit rather than co-mingle.  By muddling the two conversations into one modern economics became a handmaiden to a particular political point of view.  It is fine to be an ideologically committed economist.  It is not fine to be obscure about that commitment.

It’s a question of ethics.

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Notes to Myself

First.

With respect to my summer reading.

I have always been fascinated by information. Its role in the economy; its nature; and its effect on our institutions. Equally I am usually horrified by the abuse information gets in economic theory. To me asymmetries of information are the reason economies exist. They are the cause of need, of exchange, and, at a more pragmatic level of profit. Thus creating, protecting, and maintain asymmetries of information are the lifeblood of business. Which makes most microeconomics a mockery of reality. Especially any micro that presumes information to be either freely or equably available.

You cannot understand an economy without first understanding information.

But not information in the sense of physics so much as information in the sense of biology. Evolution, the origins of life, the subsequent trajectory of everything since that origin are all the story of information traveling through time. We ourselves, and hence everything we have created including economies, are manifestations of that process.

In which regard I want to note the following quote:

“Genomes do not predict the future but recall the past: they reflect the exigencies of history” – Nick Lane, “What is Life?” p. 23

Of course my thoughts went here:

“Economies do not predict the future but recall the past: they reflect the exigencies of history”

How true. The information that is encoded in today’s economy contains the instructions for tomorrow’s. But the exact instantiation of that code is subject to the vagaries of the environment, of error, of emergent novelty, and of many other forces that make that instantiation unique.

In such a context the traditional subjects of economic theory, even the so-called forces of supply and demand, are secondary causes of what will appear as tomorrow’s economy. The primary cause is the interaction of the code and its environment as modified, but not superseded by, those secondary causes.

To understand the code and its travel through time is to understand an economy. Perhaps economics is only part of that overall understanding.

Second:

With respect to an upcoming speech. Two comments I have made – to friends – recently:

“The challenges of the future are how to make growth compatible with environmental safety, how to return to an equable (fair) society, how to reduce class privilege, how to balance social change with our historical legacy, and how to re-capture a sense of security.”

“Meanwhile, one point I want to make clear: I think economic security is essential if society is to navigate through social upheaval safely. Your example of the 1960’s is a good one. Economic security broke down in the 1970’s [mainly due to resource cost inflation, i.e. oil] and produced an extraordinarily conservative reaction manifested by Reagan and then Clinton both abandoning the platform of the New Deal. We are stuck in the economic mire as a result – a proper Keynesian reaction to 2008 would have moved us markedly forward from where we are now.

In other words the intellectual reaction to the 1970’s was an error now so well entrenched throughout our elite thought – and hence policy making – that we cannot break free and recapture security until the elite itself is overturned. And, with respect to your favorite social phenomenon, our cultural elite is also culpable: it is either cynically out to exploit society for personal enrichment, stuck re-cycling out of date leftist critiques, or deeply engrossed in important but yet marginal issues – issues that leave the majority out.

If, for instance, you want a colonial, holocaust, or slave-owning history to be truly written into a nation’s textbooks and its self-knowledge, then you cannot lambast today’s generation as if they caused the problem. They manifestly did not. They weren’t present. Blame, revenge, the call for reparations and so on merely create resentment amongst the very group you want to educate. They create a barrier not an entry way. Look at the deterioration of race relations in the US. It is appalling. Our textbooks refuse to include the real history. Our children grow up ignorant. The loss of economic opportunity aggravates base feelings. So the combination of ignorance and insecurity ends up making matters worse.

A healthy economy, one where opportunity is both real and abundant, where education is available and rewarded, where privilege is reduced to a minimum, where prosperity is fairly shared by all involved in creating it, and where the weak, young, sick, elderly and poor are not subjected to puritanical abuse and thus abandoned, supports a society capable of adapting to its history and of writing a better future.

The great social and economic thinkers of the past were reflecting on the passage of society from its agricultural base to a newer and what seemed disorienting industrial base. Those ideas need to be adapted or replaced as we move from an industrial base into what appears to be an experiential or service oriented base.

It is exciting to try to contribute to that process.”

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Partying Like It’s 1848

This is not a time to dwell on the inconsistencies and even contradictions of the recent uprising of populism in the western world. Treat it as a fact. It just is. For there can be no mistaking the trend: people, large numbers of people, in a large swathe of Europe and America really are unhappy with their lot in life. Really unhappy. Fully 52% of Republican supporters of Donald Trump tell pollsters that they are angry with the way the country is going. Not just unhappy or disappointed, but angry. Anger leads to really bad political decision making. It is not a constituent of reasoned argument. It leads too quickly to rash thought and even to hatred.

One theme that emerges from this populist moment is the identification of immigration as a source of concern. No, not just concern, but of deep unease. People in both the UK and the US can be heard demanding that they “get their country back”. Leaders in both nations have lamentably failed to identify the importance of immigration as a lightening rod for malaise. Nor have they reacted with anything sensible as policy.

Here in America the reason most often given for the failure to deal with immigration is the gridlock in Washington. It is impossible to begin a conversation about immigration policy because the pre-existing political positions are so well laid out and well established that any talk leads immediately to a conformation of gridlock. So stasis abounds and people get more and more impatient.

The same goes for economic policy. This is what interests me most of course. The failure of economics is breath-taking. The failure of politicians to implement anything resembling sound economic policy even more so. I think the two go hand in hand. After all we cannot blame politicians for bad policy of the economics profession itself is still utterly incapable of updating itself to take into account its terrible pre-crisis performance. Worse, the constant infighting and name calling within economics has produced the same gridlock we lament in Washington: nothing can change because people’s reputations are at stake.

Economics is well known for the hubris of its leading lights. They are not exactly shrinking violets. It takes a certain kind of arrogance to announce to the world that the profession has sufficient knowledge that the business cycle is defeated. It takes an even more peculiar sort of arrogance to say such a thing and then make no adjustment when the business cycle rages on after you have said it.

I have, rather naively as it turns out, always thought that academics were a group we could rely on to change their minds in the face of evidence. If there was one part of society we could turn to for fact-based discussion it was supposed to be academia. Apparently not. Facts be damned. The neo-religious zeal with which the Chicago School defends its evidently rotten ideas is wondrous to watch. And every time those folks mount such a defense they erode both their personal integrity and that of the profession as a whole. No wonder the fringes of economics teem with apostasy, the high churches are both wrong and too proud to yield.

I am tired of the argument. I have invested too much of my own time in trying to create a space for economics to engage in debate about its own failings. Perhaps I am being too hasty, but I do not detect enough effort to construct a better product. Yes there are all sorts of attempts being made, but the great redoubt remains unchanged. The textbooks remain full of error. The old ideas are simply being re-processed. And society is being short-changed.

Ultimately, I think, it will be the relevance of economics that is diminished.

Professional economics rose in status considerably post-war. It attained a status for professionalism and competence that in retrospect its core ideas were not capable of sustaining. Those ideas were industrial in origin. Its basic structures were derivatives of crises decades ago. Even its great score-keeping ability and its measurement of the center of its attention have become steadily less relevant to the world it seeks to interpret. GDP is a moribund concept and needs an overhaul, but a profession as divided as economics cannot undertake the task. It is too busy fighting the 1930’s wars over and over again.

Speaking of which:

One of the greatest disappointments of this populist moment is the absolutely awful response from the left in politics. I read time and time again that either Brexit or Trump signifies a “crisis in capitalism”. People on the left have been twittering on about a crisis in capitalism since Marx made it fashionable to do so. Leftists have become akin to those religious sects who repeatedly predict the apocalypse and who never change their minds  when their predictions repeatedly fail. Instead of re-inventing a left of center narrative – one with a certain amount of flexibility perhaps – they wander off and yammer on about technicalities, the treachery of less-than-pure colleagues, or the apparent grip on history that the right wingers must have. After all, uncle Karl was surely right.

Well maybe in 1848. Not now. The world has moved on.

And so it goes: both sides in economics, and even the Keynesian middle, seem stuck in a time warp. Yet the march of technology, the change in demographics, the rising interconnection of societies around the world, the change in the nature and methods of business, and the need to re-evisage the nature and impact of growth have all failed to cause a radical re-interpretation of the discipline’s core ideas. They are simply assumed to be timeless and to have undiminished application no matter what happens to the economy.

The last great book on economics was by Keynes. There have been critiques aplenty since, some powerful others not so much, but no one has taken the time to sit down and re-write the core from a deep understanding of the changed world. The flood of formalized work over the past few decades has simply papered over the ever decreasing tightness of the connection between the core ideas and the economy itself. The discipline has become more and more self-referential; its advances more and more arcanely technical rather than interpretative; and its center more and more hallowed rather than open to challenge.

In many ways the entire effort smacks of the 1848 spirit. It attacks with zealous accuracy problems that are, whilst never entirely gone, less and less those we face today. It fails to update its thinking at the same pace that the economy is changing. It lives in the tenured, protected, sedate world of an academia that itself is looking less and less a model for future education. It resists change with a prodigious willpower.

Will the future care?

I don’t know.

But I do know it isn’t 1848. And I do now that the people of the western world need help if they are to avoid this populist moment engulfing the great liberty and prosperity that economics was once proud to have contributed to.

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Beating Dead Horse?

I am not sure I understand the point of Alexander Kaufman’s column in the Huffington Post. In it he takes Paul Krugman to task for being repetitive and talking about just there things: austerity is bad, inflation fears are overblown, and Keynes was right.

Well now.

Whether or not we have disagreements with Krugman – and I know many of you do – those disagreements pale in comparison with those we all have with the arguments of the people Krugman is targeting in his columns. Yes Krugman can be annoying with his emphasis on his version of the Hicks version of Keynes. But if it serves to get a vital message across to a public largely unaware of the internecine struggles within economics, so what? I don’t care. Nor should you.

And if he sounds repetitive, then we should ponder the reason: far too policy makers are still stubbornly clinging to disproven theories. Yes, disproven. So are far too many academics.

Policy makers, I think, may be less culpable because they are trapped within the political whirl that constrains rapid movement. That is, by the way, as far as I would go. Professional ethics have to come into play sometime. In a profession unique for its disavowal for the adoption of any formal ethical standards – the market will sort out the unethical? – we have to rely on the personal standards of the people involved in policy making. We thus remove from the public’s arsenal one very important weapon in ensuring that the economics profession serves it well.

And we are left with a more public version of the academic bun fight that characterizes economics more generally.

Economics doesn’t exist in any coherent form. It is simply a long established and ongoing discussion about various ideas many of which have been kicking around for centuries. Indeed many of the profession’s core ideas were established long before our contemporary economy emerged, and sometimes they have to be bashed into shape to remain relevant.

Given the enormous egos involved it is thus hardly surprising that economists whose ideas have suffered defeat in the real world don’t abandon them, but simply crank up the volume and shout loudly about those ideas they don’t like.

Worse, since economics supports many and often diametrically opposed narratives, and since we appear to be stuck in a long war of deep ideological significance, it cannot shock anyone that the many sides of economics are played and replayed many times. These the repetition that Krugman is accused of.

I have often used World War I trench warfare metaphorically when talking about economics. The entire enterprise seems stuck in trenches lobbing diatribe back and forth determinedly with no side going much ground if any at all.

But perhaps a better version would be that economic ideas are part of the ammunition being flung across the field from trench to trench. Economics is just one aspect of the great ideological battle. And economists are driven, not by a sense of science, but by their own ideological perspectives.

Thus the quaint libertarian refrain: “markets good, governments bad”. Or the willingness of the Marxists to see the world in terms of a teleological historical narrative despite the modern emergence of democracy and the apparent error at the center of their vision.

Pragmatists will always be squeezed from either side by their more zealous peers. They don’t, after all, subscribe as deeply to the various utopias that so motivate the zealots, and they can be called craven for daring to change their minds periodically. I put Krugman in this more pragmatic category. He seems quite comfortable with slipping from idea to idea depending on the circumstances. That’s his strength. Quite a few people don’t like it because it smacks of a lack of ideal or principle. But flexibility is a principle. One that I quite like.

So when someone like Krugman gets stuck in a rut and appears to be repetitive in his commentary, I think it quite likely that it is because the context for his thinking remains similarly stuck.

And so it is.

Even after all these years since the great crisis, and even after the evident failure of so much policy, we are still mired in the same debate.

 

It is juvenile to think that we need to stop saying the same things just because the public might get tired of listening. What else are we supposed to do?

When we are stuck in the trenches we have to keep slogging away. Because to stop is be defeated. Yes I would prefer more movement and progress. But given the stubborn and committed nature of our opponents all we can do is match their stubbornness with ours.

And so it goes.

Austerity is still wrong. Inflation fears are still overblown. And Keynes is still right.

So why not keep repeating that?

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