The Easy Way To Deal With Factionalism In Economics

Professor Simon Wren-Lewis recently wrote: "The dangers of pluralism in economics: the case of MMT." (I believe that he later wrote that "factionalism" would have been be a better chouice than "pluralism" in the title, and better reflects the tone of what he wrote.) There's a lot of stuff in his article, but the reality is that there is a simple solution to the problem he identifies: mainstream economists need to act like real academics, and respond to heterodox criticisms in the academic literature. If you live in an intellectual bubble -- like many mainstream economists (Wren-Lewis himself is presumably an exception) -- you cannot be shocked by the response you get when you leave that bubble.

The gist of the story is that he was disturbed by the reception of some comments he got on Twitter to his discussion of Modern Monetary Theory (MMT). As a Cambridge graduate, my tribal bias is to have low expectations for someone from Oxford, but this managed to underwhelm even me. What did you expect you would get on Twitter -- a reprise of the Cambridge Capital Debates? Twitter is useful for highlighting interesting articles, discussing points with people within your intellectual bubble, or posting memes. The format does not work for discussing fundamental theoretical questions. I see a lot of sniping at MMT by people who should know better, but at the end of the day, almost all of these comments can only be described as useless.

I worked in a real academic discipline. Believe it or not, real academics recognise the existence of all academic journals in their field. There were certainly cases where I deliberately ignored the existence of some of the literature. However, I would not have gone to Usenet to debate the point. If pressed, I would either explain that the papers in question just re-derived known results, or were outright incorrect. Essentially, everybody involved was going to be much happier with me ignoring the papers in question. (I did make points like this in either private communications, or during the review process. In one case, I had to reject a paper because it relied on a previously-published incorrect "theorem," and I disproved that "theorem." That was the academic equivalent of lobbing a live hand grenade into the journal editors' laps, and I left them to deal with it. The key was that this was done through normal academic channels.)

So long as mainstream academics want to pretend that the post-Keynesian literature does not exist, they should not be shocked to have it develop in an antagonistic direction. Even neophytes in economics can figure out that the mainstream lives in a bubble that brooks no external criticism. Conversely, post-Keynesians critique the mainstream, and so outsiders can see that they are playing the academic game the way it is supposed to be played. In Wren-Lewis' case, he does write about MMT on his blog, so one can argue he at least has one foot outside the mainstream bubble. Although that is nice to see, it still does not address the dysfunctional nature of mainstream academic writing.

Wren-Lewis argues that MMT concepts can be explained using mainstream terminology. Since I tend to use fairly standard terminology, I cannot disagree with that argument. However, I would phrase it differently. Mainstream discussion of fiscal policy is almost invariably clouded with theoretical junk ("fiscal sustainability", "budget constraints", "intergenerational transfer", "bond vigilantes") that it takes considerable effort to strip the junk out to get the correct description, which almost always ends up being the MMT description. The MMT jihad against various phrasings and framing terms reflects the need to think clearly about fiscal policy.

As an example, he once again brings up overlapping generations (OLG) models. These models are the key practical difference between MMT and mainstream economics. The reason for that is simple: from a MMT'ers perspective, OLG models are a joke, and only designed to give the desired political outcome. However, that is a debate that is not going to be resolved by posting memes on Twitter.

Modern Monetary Theory is evolving outside the journals that are locked down by the mainstream, and is focussed on real economic issues. Meanwhile, the mainstream is using dubious mathematics to painfully re-derive results that have been part of the post-Keynesian tradition for decades. You do not need a degree in the history of the philosophy of science to guess what the outcome is going to be. What we are seeing is the inevitable blowback of the attempt to stifle debate; since criticism cannot work through academic channels, it is instead funneled through non-academic ones.

(c) Brian Romanchuk 2018