Larry White takes on Paul Krugman the economic historian
on his blog:

http://divisionoflabour.com/archives/003500.php

>>What kind of historian of economic thought is Paul Krugman?

While other economists remember the late Milton Friedman fondly, as vividly
seen in the documentary The Power of Choice that ran on PBS on Monday night,
Paul Krugman isn't playing along. Krugman has published an essay entitled
"Who Was Milton Friedman?" in The New York Review of Books that doesn't just
reiterate Krugman's disagreements with Friedman's views, but actually
questions Friedman's intellectual honesty as a contributor to the public
policy debate.

Arnold Kling and Russell Roberts have already shown that in this essay
Krugman is not a reliable economic historian.

Krugman's essay is also an unreliable guide to the history of economic
doctrines. (I'm teaching undergrad history of economic thought for the first
time this semester, so I'm presently sensitive to these issues.) Consider
just the first two paragraphs.

Krugman:

    Until John Maynard Keynes published The General Theory of Employment,
Interest, and Money in 1936, economics--at least in the English-speaking
world--was completely dominated by free-market orthodoxy. Heresies would
occasionally pop up, but they were always suppressed. Classical economics,
wrote Keynes in 1936, "conquered England as completely as the Holy
Inquisition conquered Spain." And classical economics said that the answer
to almost all problems was to let the forces of supply and demand do their
job.

Fact:

    A close survey of the professional journals from 1912 to 1923 reveals
that American economists were virtually unanimous in their support of
minimum wage legislation for women and children. Interestingly, the few
academic economists who consistently rejected the minimum wage were
British. During these years, the only example of a prominent American
economist rejecting minimum wage legislation was J. Laurence Laughlin of the
University of Chicago

Robert E. Prasch, "Retrospectives: American Economists in the Progressive
Era on the Minimum Wage," Journal of Economic Perspectives Spring 1999, p.
222. JSTOR link here.

Fact: The founders of the AEA explicitly rejected laissez-faire. In the late
19th century, an emerging group of liberal Protestants probably provided more sustained public exposure for argument against laissez-faire than any other group in society.

    The most influential lay leader of what came to be called the "Social
Gospel" movement within Protestantism was the economist Richard T. Ely.
Richard Ely is perhaps best-known to economists today as the prime mover
behind the founding of the American Economic Association in 1885.

Bradley W. Bateman and Ethan B. Kapstein, "Retrospectives: Between God and
the Market: The Religious Roots of the American Economic Association,"
Journal of Economic Perspectives Autumn 1999, p. 250. JSTOR here.

Krugman:

    But classical economics offered neither explanations nor solutions for
the Great Depression. By the middle of the 1930s, the challenges to
orthodoxy could no longer be contained.

Since Krugman does not distinguish classical from neoclassical economics,
but seems to follow Keynes' labeling of all non-Keynesians as "classical",
we can assume this statement was meant to apply to all non-heterodox
economists.

Fact: Friedrich Hayek and Lionel Robbins offered an explanation for the
Great Depression. Dennis Robertson offered another explanation. Likewise
Ralph Hawtrey, likewise Arthur Pigou. These explanations -- and the
corresponding policy recommendations -- are no doubt not to Krugman's liking,
but that's different from his suggestion that until Keynes published The
General Theory the leading economists had nothing to offer.

Posted by Lawrence H. White at 11:11 AM in Economics <<


Greg Ransom