Page 83 - Global Political Economy_Understanding The International Economic Order

CHA PTER T HREE
Johnson’s Council of Economic Advisors, proclaimed in his 1965
Godkin Lectures at Harvard University the arrival of “the age of
the economist.” 39 The theoretical triumph of Keynesian economics,
Heller toldhis audience, meant that economists now knew how to
“fine tune” the economy in order to avoid the twin perils of recession
andinflation; at long last, the destructive business cycle hadbeen
conquered. Moreover, he added, the American political elite had ac-
ceptedKeynesian macroeconomics. (Even President RichardNixon
agreeda few years later that “we are all Keynesians now!”). Heller
pointedout that, as a consequence, economists now sat at the right
hand of the President and advised the President on how to guide the
economy to ever-increasing prosperity. A few years later, Harry John-
son, an economist of a much more conservative inclination, pro-
claimedthat the ability of economists to quantify and predict consti-
tuted their claim to superiority over most intelligent individuals with
an interest in economic problems. 40
These statements by Heller andJohnson reflected economists’ con-
fidence in the efficacy of their methods and theories in the early dec-
ades after World War II. Unfortunately, economists frequently have
been overly confident in their methods; believing that if something
cannot be measured, quantified, or tested by the methods of econom-
ics, it either does not exist or at least is irrelevant, economists have
often excluded other analytic approaches. The economics profession
often ignores crucial aspects of social reality that cannot be modeled
or made consistent with neoclassical assumptions. Kenneth Arrow,
one of the truly great minds of modern economics, has suggested a
plausible explanation for this excessive self-confidence. Economists,
Arrow points out, see themselves as privilegedpurveyors of rational-
ity; certainly the intellectual confusion andimprecise thinking en-
countered in public debate on economic issues lends credence to such
a self-perception. Yet, as Arrow continues, “Unfortunately, there is a
close connection between rationality andintolerance: If you know a
thing a priori, the way you know a column of figures is right when it
is correctly calculated, there is no room for argument and anyone
who disagrees must be either stupid or dishonest.” 41

39
Walter W. Heller, New Dimensions of Political Economy (Cambridge: Harvard
University Press, 1966).
40
Harry G. Johnson, On Economics and Society (Chicago: University of Chicago
Press, 1975).
41
Kenneth Arrow, quotedin E. L. Jones, “Economics in the History Mirror,” Eco-
nomic Discussion Papers No. 6/88, School of Business, La Trobe University, Bundoora,
Victoria, Australia, 7–8.
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