Having finished Thaler’s and Sunstein’s bestseller Nudge recently, I somehow ended up with the second edition of Debunking Economics by Steve Keen (2011). It is more or less an in insiders’ tip for its reckoning with economic theory, going through its flaws both at micro- and macroeconomic level. To be honest, I had not heard about Keen until recently. But then my Macroeconomics lecturer turned to a discourse of the Global Financial Crisis in 2008. Focusing on Fisher’s Debt Deflation Theory and Minsky’s Financial Instability Hypothesis, Steve Keen’s work came into play and I actually ended up catching up on that week’s lecture material with some of Steve Keen’s numerous Youtube videos.
Being quite impressed by Keen’s online lectures I decided to broaden my reading list with his post-Keynesian book Debunking Economics. First of all it is heavy (literally) with more than 450 pages of pure Economics. Second, this is clearly not an easy-going book. I admire his style of writing but it makes the book also less accessible. Being an Economics undergraduate I can, for example, mostly follow his argumentation in chapter 3 ‘The Calculus of Hedonism’ but I am certain it would be hard to sell to a ‘foreigner’ and I am sure I will be mentally challenged over the course of the book.
While still ploughing through the first part, the very opening of Keen’s fourth chapter “Size Does Matter” caught my interest. It refers to Leijonhufvud’s 1973 rather sarcastic paper Life Among The Econs. Keen refers to this paper because it touches upon Economists’ obsession for (strictly downward-sloping) demand and (strictly upward-sloping) supply analyses to find the one and only equilibrium in an economy or a market. However, the overarching idea of observing academic Economists through the lens of an anthropologist initially sounded absurd to me. But what followed hit the nail right on the head and so I decided to have a go at Leijonhufvud’s paper.
First of all, Leijonhufvud’s ‘Life Among The Econs’ (1973) is sarcastic through an through. There is the hypothetical Econ tribe which social structure has the two dimensions of caste and status. While caste is the basic division, status follows at the next level with a network of status relationships of every Econ. What is more, Econs call their castes ‘fields’. Several fields are mentioned by Leijonhufvud (1973). Besides the Micro and the Macro, there is also the Math-Econ and the Develops but there is no clearly set hierarchy despite the general observation that the Math-Econs are being the priests above all. The Econs work in distinct social units, i.e. the villages or ‘depts’, and almost all castes come together and interact in these depts. Thereby the status of the Econ derives from his ability to make ‘modls’ of his field while the trouble that they overall do not seem to have practical use is widely ignored. In particular, the most basic modl of both the Micro and the Macro are called the Totems of the two castes. While the Totem of the Micro is the S-D Model, the Macro’s Totem is the IS-LM Model. Leijonhufvud (1973) points out that both castes adore their Totems to such an extent that intermarriages seem impossible. At the same time they collectively are firm believers in their Totems while there is a decreasing amount of implementarists who question both castes’ modls. Overall, the future of the Econ is bleak to put it into Leijonhufvud’s words. The Econ tribe suffers from poverty, high population growth and there is no reason to hope that the disintegration of Econ culture is about to reverse. The political organisation of the Econ is weakening while rural-urban migration is increasing and Econ turnover from dept to dept is on the rise, even for the seniors among the Econs. What is more, Leijonhufvud (1973) predicts “alienation, disorientation, and a general loss of spiritual values” (p. 336) which could mark the end for the tribe in the future.
That is a really brief overview on Leijonhufvud’s paper but there is much more to it and I recommend anyone with a good taste of humour and sarcasm to have a go at it! It really made my day!
Keen, S. (2011). Debunking Economics: The Naked Emperor Dethroned? New York, NY: Zed Books.
Leijonhufvud, A. (1973). Life Among The Econ. Western Economic Journal, 11(3), 327-337. Retrieved from http://www.econ.ucla.edu/alleras/teaching/life_among_the_econs_leijonhufvud_1973.pdf