A very good point from Dan Drezner

Quiggin thinks he’s only writing about the failure of free-market ideas, but he’s actually describing the intellectual life cycle of most ideas in political economy. All intellectual movements start with trenchant ways of understanding the world. As these ideas gain currency, they are used to explain more and more disparate phenomena, until the explanation starts to lose its predictive power. As time passes, the original ideas become obscured by ideology, caricature and ad hoc efforts to explain away emerging anomalies. Finally, enough contradictions build up to crash the paradigm, although current adherents often continue to advance the ideas in zombielike form. Quiggin demonstrates with great clarity how this happened to the Chicago school of economics. How he can think it won’t happen with whatever neo-Keynesian model emerges is truly puzzling.

Whether this applies to the Quiggin book is beside my point (I read an earlier draft of the manuscript but not the final).  It is in any case a valuable observation and John Quiggin discusses it here.  Drezner's full review, which covers a number of books, is here.

Comments

Or as Buffett says, there are the innovators, then the imitators, and finally the idiots. But the idiots aren't the innovators' fault. And I think GDP is a flawed number that people assume the last highest reading is the right one to be re-established. But that activity level was when the idiots were at their most furious.

I had an anecdote that made me think of a question. So, I'm having some work done. There is the contractor and he's got his workers. His main worker gets re-hired where he got laid off from. The other worker was a friend of the main worker and contractor doesn't like him. So, he loses his workers and the project comes to a slowly grinding halt as contractor has to do the work himself. So, I got to thinking about whether a lot of projects can suddenly become unprofitable if you lose key workers. Could businesses become unprofitable even if they lay off the zero marginal product workers? Sounds impossible mathematically, but as E. Bar pointed out there isn't really such a thing as a marginal worker.

The problem is that every intellectual movements aren'r born equal : for free markets ideas, anyone can become a follower : for taking other as idiots with free-trust creation with money, only a very few elected can play the game.

Therefore, failure of the neo-keynesian model will come quite faster than the failure of free market based models : especially since ruins is a free market.

Lol

Failure of free-market ideas indeed! Keynesians like Quiggin pray at Lord Keynes Temple everyday hoping, praying that their 'stimulus' programs work, and free market ideas are discredited.

Another side to this is that a model that explains the world very well when it is new and relatively unknonwn may work out quite differently when it becomes widespread, so that a large fraction of decisionmakers use some version of that model.

What problems are there with the Chicago school? What phenomenon did it fail to predict?

The term "good and just society" is a non sequitur.

All of this is just a subtle excuse for supporting a theory you know to wrong.

If you know the theory is wrong, then disbelieve it. That is all.

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