People and Place

James K. Galbraith cuts straight to the chase. “We need a replacement for neoclassical economics,” he declares in a speech to the Canadian Economics Association.

The speech celebrates the life and work of his father, the economist John K. Galbraith, and is posted as part of the TPM Cafe Book Club discussion of “Hip Heterodoxy,” which I wrote about last time.

“Critics of the neoclassical doctrines have penned, over more than a century, millions of words,” he says. “Our task now is to build the alternative. … My father’s work provides major markers of direction. Let me suggest a few key characteristics of what should follow. ”

Some pieces that caught my eye:

The micro/macro distinction … should be abolished. … We should [move] toward a unified economics of human behavior based on principles of organization and a recognition that macroeconomic forces shape personal and group response.

Empirical work should be privileged. Real science does not protect bad theory by concentrating on matters that cannot be observed. …

Our economics should teach the great thinkers, notably Smith, Marx, Keynes, Veblen and Schumpeter – and John Kenneth Galbraith. We need not reinvent the field; nor should we abandon it. Economics … is not mainly about scarcity … nor about choice. … Rather, economics is about value, distribution, growth, stabilization, evolution, and limits. The great ideas in these areas, and the history in which they were embedded, are fundamental. They should be taught, not as dogma but rather as a sequence of explorations.

Pop constructs derived from neoclassical abstractions–social capital and natural capital are current examples–are noteworthy as efforts to reconcile neoclassical ideas to real social problems. But to a degree these constructs also extend, rather than attempt to overcome, the logical defects of that system. … This is something to be wary of. …

Let’s not forget our political obligations. Our task is not only to understand economics and the world that economics attempts to describe. It is also to change it. And to do so in a spirit of abiding liberalism, generosity of spirit, openness and fair play, combined always with humor and a touch of detachment. Those are my father’s enduring traits and they should also be ours.

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