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Connecting approaches in heterodox economics


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Connecting Approaches in Heterodox Economics session at 12th International Conference

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Connecting approaches in heterodox economics

  1. 1. Connecting approaches in heterodox economics Marc Lavoie
  2. 2. Session abstract • The session will honor the work of Fred Lee by discussing the development of heterodox economics and the prospects for connecting various heterodox approaches. The participants will discuss their own experiences in connecting heterodox traditions as well as the contributions of Fred Lee. (2) The discussion will include defining heterodox economics and how do we identify a heterodox economist. In addition we will discuss (3) pluralism and sectarianism within heterodox economics and to what extent connecting approaches is possible and useful. The session will specifically address (4) the case of Post Keynesian economics and (1) the contributions of Fred Lee to Post Keynesian theory and to the development of heterodox economics. The discussion will be both forward-looking and historical. Click View then Header and Footer to change this footer
  3. 3. Fred Lee and I • I may have first met Fred Lee at the Great Malvern conference, back in 1992 or 1993, when he was asked to comment on my book Foundations of Post-Keynesian Economic Analysis, which for some obscure reason, he did not seem to like that much. • Despite this, my first reaction was that Fred was an extraordinarly funny and interesting character, telling fascinating stories and anecdotes about economics. • My knowledge of pricing theory, as described in my 1992 and 2014 books, owes a lot to his writings. • I am proud to have edited a symposium with him, on the defense and the future of heterodox and post-Keynesian economics, for ROPE, and a 2013 book on the same topic. Our collaboration went very smoothly. Click View then Header and Footer to change this footer
  4. 4. Fred Lee and the broad-tent approach • Fred Lee has been an unrelenting advocate of the broad-tent approach, and he has himself given quite a lot of his time to organizations devoted to this broad-tent approach (ICARE, AHE, the Heterodox newsletter). • Ironically, our only academic disagreement, as far as I know, was on the subject of whether markup pricing was acceptable or not in heterodox macro models. • While Lee (1985, p. 206) had claimed that 'mark up, full cost, and target rate of return pricing are different forms of the same general pricing procedures’, Lee (ROPE 1994) latter argued that pricing models relying on the work of Andrews and of other Institutionalists involve ‘the rejection of much of what passes as post-Keynesian pricing theory’. • By contrast, I argued (ROPE 1996) that there was a lot of overlap between Andrews and modern-day Kaleckians, thus making a broad-tent argument! Click View then Header and Footer to change this footer
  5. 5. Heterodox economics • 1990-1992 • Non-orthodox economics • Unorthodox economics • Post-classical economics • 1995 • Heterodox economics (in a French journal) • 2004 • Heterodox economics (in articles and Introduction book) Click View then Header and Footer to change this footer
  6. 6. Dissenters in economics Lee’s heretics (believers) Heterodoxy Orthodoxy Dissenters Mainstream Lee’s blasphemers (non-believers)
  7. 7. Defining heterodox economics and identifying heterodox economists Paradigm Presupposition Heterodox schools Orthodox schools Epistemology/Ontology Realism Instrumentalism Method Holism, organicism Individualism, atomicism Rationality Reasonable rationality Hyper rationality Optimizing agent Economic core Production, growth, income effects Exchange, scarcity, substitution effect Political core Regulated, tamed, markets Unfettered market optimism Ideology; Mathematical formalism; Open systems; Equilibrium ???
  8. 8. Strands of post-Keynesianism Hamouda and Harcourt (1988) Arestis and Sawyer (1993) Arestis (1996) Lavoie (2011a, Click View then Header and Footer to change this footer 2014) American PK Marshallians Marshallians Fundamentalists Kaleckians Kaleckians Robinsonians Kaleckians Sraffians Sraffians (Sraffians) Sraffians Institutionalists Institutionalists Institutionalists Kaldorians
  9. 9. Pluralism vs sectarianism or broad-tent vs narrow-tent approach • If one favours the pluralist PK approach or the broad-tent approach, then the expression ‘Post Keynesian’ (without the hyphen) must be forsaken, since this expression, as redefined by Paul Davidson (2003-4 and 2005), has a very narrow meaning. • (Davidson, 2003-4, p. 263) says that “Fundamental Keynesianism – what I would call Post Keynesianism – is based on throwing over the same classical axioms that Keynes discarded in the general theory” • At best, it only corresponds to strand 1 of post-Keynesian economics as determined by Hamouda and Harcourt, the Marshallian route, also called American Post Keynesianism. • At worse, Post Keynesianism, so defined, besides excluding Sraffians and Kaleckians, also excludes Eichner, Lee, Minsky, Kregel…. Click View then Header and Footer to change this footer
  10. 10. The dangers of sectarianism • I have underlined the dangers of sectarianism in a 2005/2006 paper ‘Do Heterodox theories have anything in common?’. • Tymoigne and Lee (2003-4, p. 285) have also argued that ‘broad heterodox community-building prevented Post Keynesians from retreating into a self-contained group’. • There are now fears among some PK economists that advocates of the Modern Money Theory may be driven by a narrow-tent approach. • Scholars must be generous and confident enough to accept criticisms without considering that the critic is an enemy. • As Pasinetti (2007) recalls, despite having differences about some details, one must never overlook all the beliefs and essential elements that the various PK strands have in common. Click View then Header and Footer to change this footer