Mainstream economics, and good economics

The Huffington Post has a solid article about the Federal Reserve has, accidentally or otherwise, has narrowed the range of acceptable discourse in mainstream economics through its widespread consulting relationships:

The Fed keeps many of the influential editors of prominent academic journals on its payroll. It is common for a journal editor to review submissions dealing with Fed policy while also taking the bank’s money. A HuffPost review of seven top journals found that 84 of the 190 editorial board members were affiliated with the Federal Reserve in one way or another.

“Try to publish an article critical of the Fed with an editor who works for the Fed,” says Galbraith. And the journals, in turn, determine which economists get tenure and what ideas are considered respectable.

And the Boston Globe has an even better article about Hyman Minsky, a previously obscure macroeconomist who has been getting a lot more attention of late because his writing seems to have presciently described our current million-car pileup:

Modern finance, he argued, was far from the stabilizing force that mainstream economics portrayed: rather, it was a system that created the illusion of stability while simultaneously creating the conditions for an inevitable and dramatic collapse.

In other words, the one person who foresaw the crisis also believed that our whole financial system contains the seeds of its own destruction. “Instability,” he wrote, “is an inherent and inescapable flaw of capitalism.”

It’s stuff like Hyman that’s why I read economics, and why I think it would be dangerous for people on the left to disregard the entire field. Just because economics is most easily associated with Alan Greenspan and the Chicago School doesn’t mean that you can’t find people doing great work out of the mainstream. There’s mainstream economics, and then there’s good economics. I mean, I’m a big fan of movies but that doesn’t mean I’m going to tell you to see Transformers 2.

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