In his article "Who Are These Economists, Anyway?," James K. Galbraith sets out to list the economists he believes were sufficiently clairvoyant to foretell the financial crisis. Galbraith argues that they are not found where expected, in other words at the heart of economics, but instead are located in the margins, or even altogether outside of academic economics.
As he tells his reader up front, Galbraith’s list of economists is not exhaustive, and it clearly based in part on his own knowledge and his sense of the field. He jumbles together names like Dean Baker, Hyman Minsky, Wynne Godley and Gary Dimsky, figures of different intellectual origins but who, according to Galbraith, were all able to foresee the financial crisis (or in the case of Minsky, who died in 1996, to have provided theoretical tools for analyzing the mechanisms of financial instability). These authors also share the fact that they are not from the profession’s center, from what has been called « the mainstream », or, more awkwardly, « neoclassical theory ». The basic framework of Galbraith’s argument is that this reveals—or makes even more obvious—the fact that economics has been headed down the wrong path for years. He maintains that, as a consequence, it is important for the field to take advantage of the financial crisis to reorient itself, even if it means making a definitive break with conventional science. As Galbraith concludes, « It is therefore pointless to continue with conversations centered on conventional economics. The urgent need is instead to expand the academic space and public visibility of ongoing work that is of actual value when faced with the many deep problems of economic life in our time. […] The point is not to argue endlessly with Tweedledum and Tweedledee. The point is to move past them toward the garden that must be out there, that in fact is out there, somewhere ».
Galbraith’s position is interesting, and at least it is constructive because he is attempting to ground himself in (while also showcasing) analyses that, although on the periphery of economics, are trying to offer alternatives to the dominant approach. As I will note later in my response, numerous economists have expressed dissatisfaction with the current state of the discipline, particularly with the field of macroeconomics. The best known—but by no means the only—of these critics is Paul Krugman (2009), a point on which I concur with Galbraith. Nevertheless, my point of view differs from his in that, while we agree that the science of economics is in need of change, we locate the seeds of this much-needed reorientation differently, and I maintain that internal evolution at the discipline’s heart is more likely than a « scientific revolution » energized by the its margins. . . .
Read the rest here: http://www.laviedesidees.fr/Towards-a-Paradigm-Shift-in.html.
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