Monday, November 03, 2008

Galbraith on Mainstream Economics

I was struck yesterday by an excerpt from an interview with economist James Galbraith:

But there are at least 15,000 professional economists in this country, and you’re saying only two or three of them foresaw the mortgage crisis?

Ten or 12 would be closer than two or three.

What does that say about the field of economics, which claims to be a science?

It’s an enormous blot on the reputation of the profession. There are thousands of economists. Most of them teach. And most of them teach a theoretical framework that has been shown to be fundamentally useless.

Like his late father, Galbraith the younger is highly critical of mainstream economics. This is noteworthy in part because Galbraith is listed as an Obama economic adviser.

One of the more telling things to look out for in the coming weeks (assuming the seemingly inevitable Obama victory) will be which economists get which jobs in the new adminstration. Will the important positions be filled with people like Austan Goolsbee and Jason Furman, who are essentially mainstream economists with slightly left of center political views, or with heterodox economists like Galbraith who are deeply skeptical of the economics found in most textbooks? If the administration is filled with prominent members of both groups, the internal battles over the heart and soul of the new adminstration's economic policy should prove fascinating to watch.