I agree with what Anne Mayhew and Kevin Quin wrote
about Warsh's book. Indeed the book is not logically tight, but my
point is not that Warsh has it confused, but that the
economists about whom he is writing had it confused.
Perhaps it has been empirically established that there are
constant returns to scale, but, if so, that is very significant with
respect to market structure, as another respondent has pointed
out.
There is, however, much in another realm towards which
Warsh's book points. It is a history of economic thought, and, for
all its illogic, it contains a very interesting story -- as Anne Mayhew
has pointed out. When it is put with Helpman's MYSTERY OF
ECONOMIC GROWTH, it is an indication of the impossibility of
pursuing theory apart from the history of theory. When it is put
with Lipsey's ECONOMIC TRANSFORMATIONS, it becomes
evident that economic history is closely tied to economic theory.
Because Lipsey and company are using theory to constrain
understanding of the past, and using the past to establish, if not
verify, theory.
Lipsey's account of 'All Purpose Inventions" entails
Romer's "endogenous growth model", about which Warsh has
written. (I hope I understand all of this correctly.)
I conclude that neither Economic History nor the History
or Economic Thought are about to pass away, though they may
not be closely tied to their institutionalization in academia.
But I have been too dogmatic in writing this, and I
wonder what you all think with respect to these matters. Further,
there is much more that could be said about "Romer and Warsh",
For example, I have read Kurtz's (I hope that is the name)
critique of Romer. It recently appeared on this server. Clearly the
limitations of particular theories are of some concern. Indeed the
limitations of all theories in Economics are of fundamental concern.
Which is not to say that because limited theories are of no use
whatsoever.
And again further, non-rivalrous goods, primarily information, and
technological advance, which are at the heart of Romer's theory
have yet to be considered.
Robin Neill
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