Progress in Thought

There is a common tactic, especially on the economics blogosphere, to call out economists for holding different, oftentimes seemingly contradictory, positions over time. I’m sure that often this might be justified, but the longer the period between writings the less it is, I think.

Paul Krugman is a perfect example. A lot of people prefer Krugman’s earlier work to that of the past decade and a half, mostly because Krugman adopted a Keynesian twist by developing a modern liquidity trap. His most well-known “turning point” paper is “It’s Baaack: Japan’s Slump and the Return of the Liquidity Trap,” co-authored with Kathryn Dominguez and Kenneth Rogoff. In this paper, he expresses some reservations on the  impact of fiscal policy, advocating instead an unconventional monetary policy. In the past four years, Krugman has taken a much more favorable position in regards to fiscal policy (although, even in the 2009 edition of Depression Economics, he emphasizes the role of monetary policy and doesn’t discuss fiscal policy as much).

Rather than a contradiction, this change represents a transition in thought. In fact, it’s the transition that Krugman, it seems, talks about the most — he admits to holding what he perceives to be erroneous ideas. He’s probably less explicit about his influences, but it’s clear that much of the change is caused by the literature he reads. This includes economists like Richard Koo (and the balance sheet recession) and Minsky.

While he died decades before the advent of the world wide web, Keynes is also a victim to intertemporal comparisons. Even Hayek admonished Keynes for changing his mind frequently. There is controversy on just how much Keynes progressed, but the common story is that he at least began to slip away from the Marshallian positions he held at the beginning of his career. This includes a greater embrace of expectations and uncertainty, and an emphasis on real world disequilibria (I think, though, post Keynesians sometimes exaggerate Keynes’ disequilibrium economics). Yet, some like to point out inconsistencies between separate works and use this as a case against the author.

This is the wrong approach, for two reasons,

  1. Ideas should be judged on their own. That a new idea is seemingly opposed to an older one, even if both were at some point held by the same author, is not a case against either belief on its own — they have to be reviewed on their merits;
  2. We can justifiable believe that a change in thought is occurring in the wrong direction, but we should still praise these kinds of processes. Change is good, because it means that the person is still further developing theory. If there is a culture for attacking inconsistencies between works that can be positioned within a timeline of intellectual progress, the science is much worse off. How can we blame people for being unjustifiably stubborn if we make open and honest change too expensive?

Obviously, there are boundaries. If an author were to publish an article today saying x, and tomorrow another one saying y, where x and y can’t both be true (x ⊕ y?), then there is justification for calling out the inconsistency. But, as the length of time increases, this justification becomes more and more suspect.

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