Mainstream v mainline economics

Like many of you I look forward to the conversation over on The Coordination Problem - formerly The Austrian Economists.

Recently a blog post took me to a summary of the work of Peter Boettke and I found two of his shorter papers to be clear and thoughtful, as well as relevant to our conversation.

The first - Liberty v Power in Economic Policy in the 20th and 21st Century (scroll down the link to item 7 to download the paper) touches on the question of our dual responsibility as educators and as economists.

Boeetke makes a distinction between mainline economics and mainstream economics. The latter comprise the fundamentals of economics analysis set forth by Smith, Hume and Say and elaborated by Menger, Mises and Hayek.

Boettke reviews the evolution of the Smithian natural liberty - peace, easy taxes, and Hume's property, contract and consent. This evolution forms the foundation of the economic way of thinking and, Boettke anticipates the second paper in suggesting a timelessness to mainline economics.

Mainstream economics is the model de juer - adherents to the popular, consensus view of economics is characterizes as:

" . . . sources unenlightened by the economic way of thinking, but not always as some of the more vociferous criticisms and calls for government solutions come from the likes of Joseph Stigliz, Jeffrey Sachs and Paul Krugman"

I'll leave to you his rebuttals to the first two, but his reaction to the 2008 nobel winner is worth repeating:


Krugman as decided that since he is so very smart, it is perfectly reasonable to use the op-ed page of the New York Times to discredit himself and his profession by becoming a political hack, instead of practicing the sober analysis of the dismal science.

The meat of this first paper argues that the 20th and 21st century can be viewed as three historical movements which he labels The End of Laissez Faire (1900-1930), The End of Socialism (1980-1995) and the Rise of Leviathan (emerged since 9/11/2001). Your time will be richly rewarded from a read of this paper.

The second paper is The Ordinary Economics of an Extraordinary Crisis.

While this paper would most profitably be read by those who view the economic/financial crisis of 2008/9 as a market failure (clearly this is a failure of both government and understanding) there is a great deal here for reflection for those who are looking for constructive avenues with which to engage statists.

Boeetke makes the following point before beginning his analysis:

While there may be macroeconomic problems, there are only microeconomic solutions. We do not need more of the same old bad economic ideas that have persisted for much of the last century. What we need, instead, is a return to ordinary economics.

The rest of the paper uses the recent crisis to illustrate this point.