Economic Heterodoxy

Christopher Hayes has an interesting article in The Nation about "heterodox" economists which has been causing a bit of a stir in the blogosphere. That is, those economists whose work and philosophy strays from the neoclassical textbook traditions. His thesis is that the heterodox are cast into the corner for philosophical reasons, such as their greater emphasis on market failures, irrational agents, and behavioral concerns.

Any article of this sort which comes from The Nation must be understood in that political context. The Nation has a vested interest in diluting the message of free-marketers, and so cherry-picking economists who stray from economic orthodoxy (whatever that is) is to be expected. Hayes maintains that these newer forms of economic study - such as behavioral economics - are resisted by the establishment. This may have been true several decades ago, but the profession seems pretty accepting of new perspectives now, provided that they are empirically-backed. Behavioral economists have won the Nobel Prize, after all, as have the developers of microcredit. The most well-known economists today are probably Levitt, Krugman, and Landsburg, none of whom are known for propagating laissez-faire policies.

But just because the economic profession is changing doesn't mean that it is changing to something that Hayes would approve of. The neoclassical models still hold up pretty well on the macro level, even if some revisions are being conducted on the micro level. So with regards to broad, sweeping, public policy proscriptions, there are very few serious economists - heterodox or orthodox - who would go very far down the same road as The Nation. This piece is probably best read as an attempt to marginalize and discredit the consensus of economists in order to further a political agenda.

Julian Sanchez has more thoughts. So does Tyler Cowen, who offers this nice line: "There's much talk in Hayes' article about discrimination against heterodox economists, but he gives surprisingly little attention to which of their valid propositions have been neglected. I'd like to see a simple list and start the debate there."