The “Raffishness” of Mainstream Macroeconomics: a Post Keynesian Critique

Abstract

In the 1997 AEA meetings a session was organized on the topic, “Is There a Core of Practical Macroeconomics That We Should All Believe?” The five panelists (O. Blanchard, A. Blinder, M. Eichenbaum, R. Solow, and J. Taylor) each answered with a resounding “YES.” Each panelist summarized his vision of the “core” and a significant consensus was exhibited.

Its not so much what folks don’t know. as what they know, that ain’t so.

Will Rogers

These days macroeconomics has become more popular than it used to be. I can remember when manyeconomists liked to say: “I just don’t understand macroeconomics.” There was a definite implication that something must be wrong with macroeconomics, not with the observer. Of course macroeconomics cannot be “exact.” It has to work by rough analogy and empirical compromise. Maybe a certain raffishness is inevitable. Most economists work on micro-economic problems with increasing use of new microeconomic data. But now it is widely understood thatmacroeconomics is at the heart of economics; it will not do to be snooty about it. This centrality will continue, for the best possible reason: the need to understand current events, especially unfavorable ones, and to formulate policies—even benign neglect is a policy—to deal with them.

Robert Solow, 2000: 151

Nothing is quite as difficult as not deceiving oneself.

Ludwig Wittgenstein