My idiosyncratic take on the intellectual history of macroeconomics. I’ve gotten a couple emails from academic economists praising it. But intellectual history is much under-valued in the economics profession, and this long essay/short book deserves a much bigger audience than it’s had. To me, it seems like a jolly good read.
This is very good reading as comes off as “Macro is dead, long live Macro”. Also from a historical standpoint we can point to failures of leaders during the post-ww2 period but we should note it was low on violence, lots people escaped poverty, and people are living longer. (And does the modern China or Inida economy thrive today without seeing the examples and markets of the US and Japan during the post ww2 years?) In terms of alternative history, we should not have some sort of Andy Griffin Syndrome of past societies. Often look at conservative lament the loss of 19th century Europe and not deal with the fact the ideals of 19th century Europe ended fighting WW1.
1) One aspect that makes macro so hard is the economic system interacts so much with the political system. How much of the Post WW2 boom years simply an over-reaction to the fears of WW1 leading to both the worst labor riots ever in 1919 – 1921 and the Great Depression? (On top of that fears of the Soviet Union) So we had a boom with active Fed with its models because it was a productive system that was up-ended by the Oil Shocks of the 1970s and Japanese manufacturing.
2) Or the second period of 1983 – 2007 in which there was a lot moderation of prices but debts (US consumer and Japan corporate) went through the roof leading to a severe 2 booms and bust cycles in Stock Markets and housing while the fears of the Soviet Empire collapsed. (Europe sort followed with individual nations busting at different periods?
3) And now the US, Europe and Japan have settled on a weird slow growth, stagnant population and high government.
You discuss Galbraith’s “The New Industrial State” and then use Bill Gate’s founding of Microsoft to rebut the lack of entrepreneurial activity. I think a better example (or additional example) if you were ever to update this piece would be to add in a mention of Wal-Mart, as they were founded in 62 and incorporated in 69, just two years after NIS came out, showing that the world was changing as he was writing those words and that he just couldn’t see it.
A jolly good read indeed. I especially appreciated how you dealt with your changing views of various Fischer Black assertions. Black’s work generally does appear consistent with disaggregation and as noted his recognition of the temporal factor in change would appear consistent with the fundamentals of the specialization and trade approach.
I read this several years ago and thought it the best essay that I have read. It substantially influenced my thinking and made me less inclined to accept that consensus of the experts represents proven truth (along with other events such as the Iraq war and the replication crisis).
Wow. Really good. Loved the hunter/gatherer thought experiment near the end. It actually make me think of Gregory Clark’s “Why Isn’t the Whole World Developed?”
Any plans to bring it up to date? Looks like it was finished five years ago now.