I will start a new thread since it is not directly on Larry's question, but it is related. 

I do not believe that we should stop dividing up micro and macro, but I believe that they should be divided somewhat differently than they currently are in the standard courses. The reason is that they can, and should refer to different modes of analysis and cannot necessarily be integrated.  

I believe micro includes what we currently teach in micro and in graduate macro--which is equilibrium based micro analysis. Then there is what Samuelson described as non-equilibrium dynamic analysis, if I remember correctly--this included the multiplier-accelerator model and other dynamic models, which today would be described under the heading complex system analysis. 

The reason this cannot be micro based is that emergence of new properties is possible here, which could not have been deduced from any micro analysis, but which nonetheless has sufficient regularities to warrant study. 

After Keynes wrote the GT some economists, such as Goodwin and Strotz starting investigating along these lines but the math was too complicated for most in the field, which stuck with comparative static models with implied micro foundations. Ultimately, that led to the synthesis and the fading away of neoKeynesian economics.  

In terms of teaching, if in macro we teach the Keynesian type models as simple examples of the type of turbulence that can occur in non-linear dynamical systems, and give up the pretence of a well-specified equilibrium micro foundation, then we can continue to teach much of what we have in intro macro courses since they are in large part definitional and institutional.  Then in intermediate macro theory we can go into some non-linear models and introduce students to complex systems--possibly through agent based models and simulations.   In graduate macro theory, the students can really get into complex systems analysis and explore the interconnection between the two realms. 

 


David Colander
CAJ Distinguished Professor of Economics
Department of Economics
Middlebury College
Middlebury, Vermont, 05753
(802-443-5302)


-----Original Message-----
From: Societies for the History of Economics [mailto:[log in to unmask]] On Behalf Of mason gaffney
Sent: Saturday, July 17, 2010 9:33 PM
To: [log in to unmask]
Subject: Re: [SHOE] Question about micro vs macro classes

I fully agree with Arthur Edwards that we should stop dividing micro and
macro. What ties them together is capital theory; a macro glitch could be
summed up as a massive misallocation of capital and land.  If anyone cares,
please ask me to cite chapter and verse.

I am dubious of Edwards' implication (if that was his intention, which is
not crystal clear) that this is part of a dirigiste plot to aggrandize
government officials. That doesn't sound like something Galbraith would
condemn, anyway, but rather something that some teabagger would accuse him
of. I hope Edwards will clarify his point, and/or Galbraith's.

Anyway, I suggest a different origin for the divide.  Step One, leading
economists in the 1930's were embarrassed and discredited by their serious
failures to anticipate the crash, and to suggest remedies. Step Two, along
came Keynes, resurrecting the ancient public works solutions, and attracting
a huge following. The old timers were trained to preach free markets and
austerity for labor, and had tenure and seniority, so to compromise they let
young Turks teach fiscal policy, and old fossils teach free markets: macro
and micro, two half-separate disciplines. 

Micro could logically about this time have evolved into Industrial
Organization, a study of how markets were really operating. This would have
elevated Institutionalists to power, teaching Berle and Means, Commons,
Clarence Ayres, TNEC Reports, J.K. Galbraith himself, the need for
regulations and price controls ... not the kind of things that Regents et
al. like to foster. So Micro added Chamberlin and Robinson's Imperfect and
Monopolistic Competition to their "kit of tools", to trivialize all that
while appearing to be dealing with it - "death by abstraction and modeling",
one might say. Macro, meantime, also dismissed questions of I/O into a
little pen called "structural problems", treated with disdain. And I/O
itself became a separate discipline for those who didn't mind having their
careers stunted. Along came math modeling and econometrics to downgrade
studies of structural problems that might be hard to quantify, and to
exclude more laymen from understanding the mysteries inside the great
economic motor. 

Along the way there were of course many other changes - nothing is as simple
as that sketch above. One major change that I deplore was to remove
Distribution from curricula, and replace it with "Growth". "Distribution"
itself, the residual still taught, was 90% personal distribution, omitting
functional distribution that had been so central to classical economics.
Diminishing returns and production economics, which used to introduce
students to marginal analysis, have been replaced by "supply and demand" at
the beginning of every commercial text - factor proportions might as well be
constant, markets solve all problems.  And personal distribution is centered
mainly on "income", a catchword rarely defined carefully, but in practice
omitting much of property income and overstating wage and salary incomes. O
Tempora, O Mores - I'd better quit here! Except to shake up all this mess
and begin again, let's integrate micro and macro!

Mason Gaffney

-----Original Message-----
From: Societies for the History of Economics [mailto:[log in to unmask]] On
Behalf Of Arthur Edwards
Sent: Saturday, July 17, 2010 11:48 AM
To: [log in to unmask]
Subject: Re: [SHOE] Question about micro vs macro classes

Galbraith describes the micro / macro distinction as 'one of the  
intellectually suffocating errors of modern economics.'

"The point of the analogy between macro and micro economic aspects is  
that we can no longer continue with the dangerous notion that these  
represent two different realities. Galbraith, attributing this stark  
distinction to Keynes, describes it as 'one of the intellectually  
suffocating errors of modern economics.' (1987:295) One can concur  
with Galbraith's view, since, whatever its author's intentions, a main  
effect of a construct that divides the economy in two in this way is  
to give rise to the idea that whatever individuals do and think is not  
really important. Indeed, macroeconomics deliberately aggregates and  
simplifies this element, encouraging the belief that the big picture  
has to be left to governments and experts, and behind them the  
wondrous workings of the invisible hand. We should, rather, see the  
macro and micro as two ends of a spectrum. Far from referring to  
separate worlds, they are two ways of addressing the one reality. "
Galbraith, J.K. (1987) A History of Economics, London: Hamish Hamilton.

FROM: Money, Bookkeeping and the Inherent Ethics of Accounting. 11th  
World Congress of Social Economics. Albertville, France, June 2004.  
Christopher Houghton Budd

Arthur Edwards

On 16 Jul 2010, at 21:16, Lawrence Boland wrote:

> I am working on a book about model building and wanted to note when  
> separate micro and macro classes were first taught. I have asked  
> many senior economists starting with Ken Arrow and Dick Lipsey and  
> accept for Ken remembering that he taught one in 1949, not much else  
> has been uncovered.
>
> I looked at my undergraduate and graduate catalogs but these only  
> show recognition in the early 1960 (interestingly, not the earliest  
> ones but only in the year I graduated).
>
> The question now is when did separate and explicitly micro and macro  
> courses first appear in an economics curriculum (not counting  
> business cycles type course)? Obviously in the 1940s in North  
> America (but Dick thinks only in the 1950s in Great Britain) -- but  
> where and what year? Any ideas? Does anyone have a catalog or  
> calendar that lists separate courses in the 1940s?
>
> Regards,
>
> LB
>
>
> -- 
> Lawrence A. Boland, FRSC
> Department of Economics, Simon Fraser University
> Burnaby BC Canada V5A-1S6
> ph: 778-782-4487, web: http://www.sfu.ca/~boland