Thursday, April 22, 2010

anti-mankiw at its finest

Here are two articles discussing movements to displace Social Analysis 10 at Harvard, popularly called "Ec 10", with an alternative curriculum said to encourage critical thinking and attention to the social implications of economic analysis. The first is from the Harvard Crimson and details the committee rejection of the alternative curriculum (April 10, 2003). The second is from the Harvard Disguide, 2006-2007, which is a manifesto of sorts against Ec 10. These are effectively Anti-Mankiw in their view of the mainstream. Calling out the consensus in economic thought as conservative and divorced from the real world, on-campus proponents of the alternative, headed by Steve Marglin (tenured in 1968, before many of the controversies around the Harvard Economics Department began in the early 1970s), wished to replace the syllabus with one that includes alternative frameworks social thought (some of which is actually considered mainstream in other social sciences) which talk about the economy, but which see it as an embedded part of society -- not some abstract world governed by mathematical laws. They are to be commended for their efforts, and the efforts deserved to be recalled at this point, especially as the textbook queue gears up for the fall.

What surprises me most about this movement is its emphasis on the critical analysis that is apparently absent from Ec 10 as it is currently taught. I mean, isn't that what college is supposed to be about? But in Mankiw's book and presumably his classes, all social phenomena is framed in terms of market efficiency, and there is no room for a bird's eye-view critique. Mankiw is certainly "balanced" to an extent, but underlying all of his "back and forth" on the political right and left is an implicitly positive view of the market. What I have a problem with is not the "positive view of the market"part -- it's the implicit part that irritates me, to no end.

Allow me to explain.

One of Mankiw's favorite books (aside from his own textbooks!) is Arthur Okun's Equality and Efficiency: The Big Tradeoff (1975). The book amazes me, not the least for the fact that conservatives love to point to the fact that Okun is a social democrat. So, it provides a nice medium where conservatives and liberals can debate the relative balance over efficiency and equality, where the "right policy" is probably something in the middle. Great!

How and why is Okun so effective, so popular, so widely regarded even today? (Indeed, among the top-selling books on economics.) Well, one way of answering this question is to note that the book frames everything in terms of tradeoffs. This is a key idea in mainstream economics. Economists love tradeoffs. See a previous post where I note the prevalence, in mainstream economic thought, of cost-benefit analysis and how a critique of that view may arise. According to Okun, any gains in equality must lead to lower efficiency because of, among other things, the existence of "leaky buckets" -- government bureaucracy which is nonproductive labor, just filling forms, etc. -- think of the DMV.

However, it's not hard to see that this view of a tradeoff is not the whole story -- just ask any citizen of a Western European welfare state about the "efficiency losses" of universal healthcare. They will probably look at you as if you are crazy (here's a hint: YOU ARE!!!). A critical analysis of Okun may question why the choice between equality and efficiency is seen as a tradeoff, and where equality and efficiency may actually complement each other. See them as complements, and the entire analytical framework of Okun, Mankiw, and others, breaks down.

Indeed, this idea of complementarity of institutions underlies much of the alternative thinking in economics and other social sciences. But it's hard to see when everything is framed in terms of the market, and then debates are framed concerning the relative gains of equality and efficiency as tradeoffs. As soon as we get rid of it as an abstract concept, that is, once we critically analyze the economic system, things become much more clear about the subjectivity of the relationships -- and this subjectivity often arises due to where you stand in the economy.

By the way, if you're interested in more of the history connected to the points made in the first paragraph, over the history of the Harvard Econ Department, you will definitely hear more about them in the coming weeks. They are integral to establishing a motivation behind Anti-Mankiw.


  1. And of course, don't forget the grand daddy of them all in terms of relations between tradeoffs,especially in terms of efficiency and equality, our dear and beloved Walrasian General Equilibirum for those that study more "advanced" things, but get their initiation with the particular views of their appropriation of A. Smith. Don't you just love them!

    In terms of Harvard and Econ so many stories, hahaha! Good luck with that!

  2. Just as a quick follow-up to your point on efficiency and equity, as demonstrated in the example of universal healthcare: here is a famous quote by David Cameron, the Tory leader (not a crazy radical):
    "Tony Blair once told us that his priority could
    be summed up in three words: education, education, education. I can do mine in three letters: NHS".

    I am just wondering to what extent the type of economic analysis that you identify with Mankiw is a performative project - and has to be dealt with as such. It seems to me that their project is very little about describing what "exists out there" - by posing efficiency and equity as universally irreconcilable, it obscures or discredits social arrangements that would attempt to achieve one through the other (even if they happen in the UK). Most people remember that economics students tend to behave in the most self-interested manners among other participants in experimental settings. Similarly, by preaching that efficiency and equity are fundamentally antithetical, and by prioritizing the former over the latter, Mankiw et al secure their own position in the social division of labor and that of their employers, whether at Harvard or in Washington.
    In the end, maybe "instrument of bourgeois ideology" was not an inaccurate characterization.

  3. Hmmm... That's interesting about EC-10. Where did you first hear about this? Do you have other blog posts I can take a look at?

    Justin Davis
    MK Partners
    Workplace Efficiency Experts

  4. jdavis,

    you read my mind -- I've been looking for a Mankiw post that points to these events but have come up empty-handed.

    any other bloggers know of a good source for more background on this?

  5. "just ask any citizen of a Western European welfare state about the "efficiency losses" of universal healthcare"
    Better yet - ask any citizen of former USSR (that is anyone who was grown up enough at that time to remember) about time spent waiting in line, paperwork, buying presents for doctors, difference between "institutional" clinics and those for mere mortals. There was enough tradeoffs and so far no western country can't beat USSR at being commie. Though they are trying hard.

  6. Daniel,

    I concur with these points regarding misleading 'trade-offs'. It is very neat and clean to say that everything is a trade off - particularly with respect to efficiency, since the misguided way in which mainstream economics functions necessitates the negative (or at least non-existent)relationship between efficiency and equity. Specifically, if it is economics' goal to increase efficiency, then equity must be harmed significantly at worst or unimportant at best. But this follows only because of the way mainstream economists define 'efficiency'. That is, as a market-determined monetary static point where no one can be made better off without making someone else (theoretically at least) worse off.

    The first problem with this is its static nature. Who's to say what is efficient today won't be tomorrow, and vice-versa? The second is that the definition implies precise monetary measurement. But really, how do we measure what makes society better or worse off absent some form of value judgement. The third is that efficiency is assumed to be best determined by the market (assumed due to the definition of efficiency). What about Enron - how's that efficiency working on for your? The fourth, and potentially most critical assumption/problem (in economics, it is often the assumptions that ARE the problem)is the lack of recognizing that equity could be efficiency improving (even by the econ definition) in the future.

    Economists are therefore put in an awkward place where, because of the way in which their (our) own science has been taught and learned over the decades, we are forced to answer such important moral and subjective questions using only a black-and-white quantitative toolbox. And, not only do we re-teach this hogwash, but we expand on it with even more elaborate models with even more elaborate assumptions (so-called dynamic 'efficiency' models for example).