4. He claims that the 1950s were a special period of reconstruction, in the sense that the success of these years is not easily repeated.
Comment:
In my analysis, the conditions of economic success can be influenced, and similar results achieved again. The mood of optimism would follow the results, rather than conversily (though there is feedback too, of course).
5. Ormerod: “So what can be done ? One solution to the problem of high European unemployment, for example, is work-sharing.” (p207) To achieve this, he appeals to social values.
Comment:
But work sharing is not necessary (see my work in general), and less easy to achieve anyway.
6. Ormerod: “But perhaps the most important point of all, linked though it is to the underlying mathematics, must be stated in words, for it is a question of moral values. The concept, rampant in the free-market philosophy of the 1980s, that there is no such thing as society is one which, if it is allowed to persist, will prevent the creation of full employment regardless of the form which economic policy takes.” (p211)
Comment:
There is little use in discussing whether there is or is no “society”, since it would seem to be a matter of definition. If a government would choose not to solve unemployment, then this should be accepted in a democratic society. It is a different thing that we now can show a solution to inefficient unemployment, since that is a matter of logic and intellectual honesty.
H&M: “Crisis of vision”
Heilbroner & Milberg (1995) are very wordy and imprecise - and the many words are used for hyperbole instead of exactness. It is very easy to get irritated.
There are only a few points that I agree with, but even these points are formulated vaguely and annoyingly, and my comments are guarded. Also, to reduce the irritation, I only usefully comment mainly on chapters 1 and 7:
1. H&M: “(...) Keynesian theory can be judged a success (... when allowance is made for ...) bargaining power of labor.” (p57) and “Stagflation has come to an end with the political and economic events of recent years. The bargaining strength of labor in the advanced industrial countries has been threatened in part by the rise of international competition.” (p59)
Comment:
Advanced nations are ‘service countries’, and see Krugman on “international competition”. Bargaining power is a very important variable, but you go too fast on the impact of international competition on that. [125] Taxes are neglected. With unemployment and poverty so large, we are only at the low inflation asymptot of the Phillipscurve, and stagflation is not dead yet. Strangely, H&M’s book is motivated by social problems, but the problem is declared dead ! In other words, they don’t see that their problems are caused by stagflation.
2. “(...) the extraordinary combination of arrogance and innocence with which mainstream economics has approached the problems of a nation that has experienced twenty years of declining real wages, forty percent of whose children live in “absolute” poverty, and which has endured an unprecedented erosion of health, vacation, and pension benefits. (reference) The commitment to full employment legislated in 1946 has been “honored” in these socially destructive years not by vigorous employment-generating programs such as the reconstruction of its cities, but by redefining “full employment” as a higher level of unemployment.” (p6)
Comment:
Agreed on the concern, disagreed on the rest. Do not mix up politics with economics. See Krugman’s description of how policy fashions drifted from economics proper. Also, there were serious questions regarding the causes of unemployment, and these questions cannot be played down so so easily and derogatory.
3. “It is the legitimacy of the public sector within capitalism that lies at the core of the contemporary crisis of vision.” (p120)
Comment:
They are too vague on this, so they might as well be wrong. But agreed in principle, see my advice to adapt the Trias Politica.
In general, H&M don’t clearly distinguish between economists as scientists (who have all the time of the world to doubt) and economists as policy advisers (who also have to take into account that decisions have to be made here and now).
4. “(...) the mark of modern-day economics is its extraordinary indifference (to the connection between theory and reality /TC). At its peaks, the “high theorizing” of the present period attains a degree of unreality that can be matched only by medieval scholasticism.” (p3-4)
Comment:
Yeah, for “peaks”: that may be. It is good we have those peaks.
“Analysis has thus become the jewel in the crown of economics. To this we have no objection. The problem is that analysis has gradually become the crown itself (...)”
Comment:
Well, that is an overstatement. Is the suggestion that all economics now is a “peak” ? Besides, did you really look at the practical work at the relevant institutes ?
H&M miss the point that my analysis is fine work in the mathematical tradition, and that it is neglected by many (by him too). Rather than downgrading all math, they should highlight the work that matters, and state the reasons why it matters.