Only Mainstream Macroeconomists Exist For Krugman

Many have already written about Paul Krugman's article, "How Did Economists Get It So Wrong?" in the September 6 issue of the New York Times Magazine. Krugman himself followed up with blog comments. Brad DeLong has prepublication and postpublication comments, as well as comments on other commentators. I like Colin Danby's take, in comments, on the intolerance of the orthodoxy. Mark Thoma has a comment on Sean Carroll's take. Some commentators, such as Ramanan get it.

In Krugman's article, all macroeconomists are either freshwater or saltwater. Post Keynesian criticisms that apply to both types are not mentioned. Although I am not too familiar with mainstream macro, I can think of three:

• Both situate their models in logical, not historical time
• Both assume a representative agent
• Both assume a single good that functions as both a capital and a consumption good.

These limitations rule out a priori the possibility of some interesting dynamics and perhaps make it difficult to see why agents in the model would want to hold money or even trade with one another.

References

• Paul Davidson (1982-83) "Rational Expectations: A Fallacious Foundation for Studying Crucial Decision-Making Processes", Journal of Post Keynesian Economics, V. V, N. 2 (Winter): pp. 182-198
• Alan P. Kirman (1992) "Whom or What Does the Representative Individual Represent" Journal of Economic Perspectives, V. 6, N. 2 (Spring): pp. 117-136
• Graham White (2004) "Capital, Distribution and Macroeconomics: 'Core' Beliefs and Theoretical Foundations", Cambridge Journal of Economics, V. 28, N. 4: pp. 527-547