Fundamentalism, hiding as Dutch pluralist economics

Five years ago I discussed the “Dutch Taliban“. I can now include Dutch “pluralist economics” to this narrative.

There is this particular course “Economics from a pluralist perspective” in English though created by two Dutch professors Irene van Staveren (ISS) and Rob van Tulder (RSM) and a PhD student. I have no access to this course so I cannot check whether they refer to my analysis in DRGTPE and CSBH or not. I presume that I would have been informed if they had. The following is conditional on the probable assumption of neglect.

I will refer to some books that I haven’t read, and explain why I will not read them. One book by Van Staveren that I haven’t read deals with economists who aren’t read. I understand that she doesn’t include me as an economist who isn’t read.

I already wrote about “Economics as a zoo” in 2005, and pointed to the terms of orthodoxy and heterodoxy as inadequate. Much is plain old history of economic thought. Apparently the new term is “pluralism”. Also, I was one of the economists who warned before the 2007+ crisis, yet Dutch economists neglect my work and neglect my protest against censorship, and apparently I am in some other dimension than their “pluralism”.

I regard myself as a neoclassical economist, in the term as coined by Paul Samuelson. I am eclectic and open to ideas but for practical work there must be a model, using theory and tested by statistics. My work is not mainstream yet because my work has been hit by censorship. My work rejects neoliberal economics (Robert Lucas), but anyone can check that neoliberal economics is emperically untenable. Readers should not confuse neoclassical economics with neoliberal economics.

My impression is that “pluralist” economists might so much fear mainstream economics and also so much desire to be accepted, that they opt for versions of “pluralism” that are not really dangerous to mainstream economics. Which means that their “pluralism” is useless. But they can applaud each other greatly in their mutual admiration bubble.

Pluralist economics, before or after the crisis ?

The two professors cause the tantalising question whether pluralism starts before or after the 2007+ crisis.

The online course refers to Irene van Staveren’s matricola textbook Economics After the Crisis. An Introduction to Economics from a Pluralist and Global Perspective.  ($61.53) (Dutch: Managementboek).

The online course manual states clearly that this textbook is not necessary for the course itself. This is fine, since the book is rather expensive, and one would wish for open access books nowadays. (See here for a cheap solution for open access publishing.) They state that the book will be helpful if you want to read from paper. The professors apparently thus think that the economic crisis hasn’t been a natural experiment that explains which approach was empirically most relevant, but only provides a case for more pluralism, perhaps to allow for more natural experiments by economists who don’t know what to think because they have so many theories to choose from.

Pluralism as Orwellian newspeak

Dutch pluralist economics is Orwellian newspeak for anything fashionable, as long as it neglects the censorship of science since 1990 by the directorate of the Dutch Central Planning Bureau (CPB). Dutch pluralist economics has these fundamental tenets:

  • Economics is an empirical science, and the censorship at CPB doesn’t exist so it cannot be observed. Any fact on this can be neglected. (If I worked there and there aren’t CPB publications to my name, then this must have another explanation than censorship.)
  • Scientists will protest against censorship, and since scientists don’t protest then apparently there is no censorship. Hail to free society and the wisdom of Dutch government and Dutch economists. Except criticism for pluralism, of course.
  • Errors by the directorate of the CPB might be made, but not on censorship and dismissals with untruths. If the Dutch legal system allows such censorship and untruths because judges assume that the Dutch government wouldn’t do such things, then this only proves that there is no censorship.
  • The censorship has no consequences for policy making either, since something that doesn’t exist clearly can have no consequences.
  • It is only possible to know what the censorship is about once it has been lifted, but since it doesn’t exist it must be about nothing.
  • The economic crisis of 2007+ confirms my analysis of 1990, yet for Dutch economists there is the special task to completely neglect his work and his protest against censorship, since Thomas and his work do not exist, as proven in the above.
  • Well, Thomas might exist as a lunatic, see his protest against this censorship by the directorate of CPB. Completely irresponsible about such a respected institute (even though the directorate goofed on the crisis and its treatment and the policy of wage moderation).

What might seem tolerant or pluralist appears to be another form of fundamentalism. Professors Irene van Staveren (ISS) and Rob van Tulder (RSM) show engaging smiles that however hide mental niqabs or beards. (There is no need to overdo the metaphor with Photoshop.)

Van Staveren is anabaptist and her answer to neighbourly love is that she selects which neighbour to love. Van Tulder has a book for students about the essential skills for studying. Indeed, in our knowledge society, studying is actually a job too, and I am in favour of a student wage. Van Tulder’s book has the advice: “Dare to build upon research from others” – and apparently he has found other others than me who he really dares to build upon for his version of pluralism.

 

Smiles that hide fundamentalism. (Source: RSM and wikimedia)

Amartya Sen, voting theory and the Brexit referendum question

Irene van Staveren states that she derives much inspiration from the work of Amartya Sen. Sen however is a very mainstream economist and is seriously misguided on some key issues, so that one wonders what Van Staveren finds so inspiring. Sen is famous and fashionable, true, but fame and fashion are not scientific criteria.

  • One of my papers that got hit by the censorship deconstructs Kenneth Arrow’s impossibility theorem. (CPB internal memo 90-III-37, but better start now with my book Voting Theory for Democracy (VTFD).) Sen in his Collective Choice and Social Welfare gives a useful standard presentation of Arrow’s theorem. One can check that Sen doesn’t understand it. (Dutch readers can look here.) With Arrow, Sen actually helps to destroy democracy.
  • One can check that Sen’s own theorem on the supposed impossibility of a Paretian liberal is misguided as well, see VTFD.
  • Sen’s book Development as freedom is a collection of platitudes and open doors, comparable to “don’t give money but a fishing rod”.
  • Sen contributed to the Stiglitz-Sen-Fitoussi report, but this neglects the work by Tinbergen and Hueting on the economics of ecological survival (see my draft book).
  • Sen’s argument that democracies have less famines than non-democracies is questionable, see India itself. It is a better argument that the Trias Politica model of democracy fails, also in the case of hunger, whence each democracy requires an Economic Supreme Court.

While Sen has a training as an economist and mathematician, all this suggests that he is more inclided to abstract thought as a mathematician and less as an empiricist. It is not clear to me what Van Staveren’s background w.r.t. mathematics is.

It are such uncritical professors like Irene van Staveren who cause that Sen has gotten such authority in some circles. This is not without consequences. Sen’s misconception on voting theory shows also in his article with Eric Maskin in the NY Review of Books on electoral reform in the USA. The key advice that voting theorists can give to democracies is to switch to proportional representation (PR) in the House of Commons of parliament, and the selection of the executive power (ministers including PM) by such a PR House of Commons. Instead, Maskin and Sen stick to direct election of the US President, which however is subject to many voting paradoxes as has been illuminated by Arrow’s theorem. They adopt the best way to destroy democracy, namely by using methods that are unconvincing for the general population. There are various techniques of voting, but these better be used by parliament itself, once parliament has been chosen by PR. (Compare Holland with the UK.) Thus, Maskin and Sen, in their lack of understanding of voting theory, keep the US caught in suboptimality and cynicism. If there are no good alternatives, then Trump perhaps really was the democratically best choice. Similarly for the UK and India indeed. And Van Staveren cheers on, finding inspiration in Sen, and neglecting the censorship of science by the directorate of the CPB w.r.t. my work that contains the scientifically correct analysis.

Another example is Brexit. Undoubtedly many UK policy advisors have been trained either directly or via their teachers on Sen’s Collective Choice and Social Welfare as well. See my article in the RES Newsletter, April 2017, and reproduced on the LSE Brexit blog.

Environmental sustainability

A bit more can be said about sustainability, apart from Sen. Rob van Tulder has a major teaching engagement on management of sustainability in businesses. If prices aren’t right, then companies might make amends themselves. It seems that he neglects Tinbergen and Hueting’s on environmental sustainability. It would be much more effective to argue that environmental costs are included in the prices, since companies should not do what only the government can do properly.

“Professor van Tulder is co-founder of RSM’s Department of Business-Society Management, a world-leading department on the issues surrounding sustainability. The department offers a highly successful master’s specialising in sustainability.”

Also, Irene van Staveren and Jan Peil have edited this Handbook of Economics and Ethics. (2009), £168.30 in a period where open access already was a known concept.

  • Hans Opschoor there explains the topic of sustainability. I don’t have the text and would be interested to see what he states about Hueting’s work, since there are remarkable confusions about it. Opschoor coined the term “milieugebruiksruimte” (environmental carrying capacity) in 1989, but this is only an application of Hueting’s notion of environmental functions of 1974, after which Opschoor got citations that should have gone to Hueting. In this short text of 2016 Opschoor only refers to Hueting”s 1974 thesis but not to his later notion of environmentally sustainable national income (eSNI).
  • My own analysis on Arrow’s impossibility theorem might be included too, since Arrow claims moral desirability for the demolition of democracy, while I use deontic logic to show that this is unwarranted, see VTFD chapter 9.2 on page 239. (And perhaps read “Deontology” by Mark D. White.)  Yet, why would my analysis be included in this book behind a paywall, as VTFD is already online ? Hopefully some of the authors refer properly.
  • There is a chapter on Sen by Sabina Alkire, and hopefully she was aware of the above.
  • There is a chapter on poverty by Andy Sumner and on minimum wages by Ellen Mutari, and I can only hope that they have been aware of the following below.

Unemployment and poverty

In 1998 I gave Van Tulder a copy of this Dutch book on unemployment and poverty. He would read it and get back to me. This didn’t happen. Perhaps Van Tulder did not like the book ? We can only guess. This is a nice review in Dutch at DISK (lay people) and this is a misguided and misleading review by a Dutch economist, Joan Muysken, which case I already discussed on CofFEE or latte. If Van Tulder had misgivings in 1998 he could have discussed those with me. My impression is that Van Staveren can be annoyed towards Van Tulder that his silence on this may have caused her the lost years of 1998-2017 of looking for a good analysis, and the rest of the world the actual crisis of 2007+.

The book is a text for the general public, and fellow economists can find the same analysis in DRGTPE. However, journalists Hans Hulst and Auke Hulst report also on some events w.r.t. CPB which isn’t in DRGTPE.

Van Staveren’s co-editor Jan Peil, from above book on economics and ethics, also collaborated on a Dutch book on poverty and social exclusion. Translation: “Almost a million people in Holland have to deal with poverty.” This is a review at DISK in Dutch of 2007. DISK has been abolished now. Above book W&A had been reviewed also by DISK, but the review might no longer be at their site. My impression is that various channels of information have not been used.

Economists who (almost) aren’t read anymore

Van Staveren also wrote a book (EUR 22.50) for the general public, in Dutch, about economists “who (almost) aren’t read anymore”. (The brackets are logically strange.) There exists already a Dutch translation of Heilbroner’s masterpiece, but Van Staveren wants to link up to the 2007+ crisis.

The book’s cover has a problematic claim. Let me use Google Translate for the fun of it, and it actually does a remarkable good job. The first sentence is that neoclassical economics seemed to be the only relevant theory.

“After the Cold War, the only relevant theory seemed to understand the economy and influence the neoclassical. Economists who thought otherwise were dismissed as naive, or worse, as stupid. The financial crisis has painfully shown that this limited look is unjustified and can even cause a lot of damage. Irene van Staveren therefore advocates a pluralistic approach to the economy.” (Google Translate of: “Na de Koude Oorlog leek de enige relevante theorie om de economie te begrijpen en te beïnvloeden de neoklassieke. Economen die anders dachten, werden afgedaan als naïef, of nog erger, als dom. De financiële crisis heeft op pijnlijke wijze laten zien dat deze beperkte blik onterecht is en zelfs veel schade kan toebrengen. Irene van Staveren pleit daarom voor een pluralistische benadering van de economie”)

It is incorrect to say that other thoughts were generally dismissed. Perhaps there were instances, but not over the board. Good economists have kept an interest in the history of economic theory. But not everything can be used at the relevant job at hand. When there has been bad policy, a main factor has been the failure of the Trias Politica model of democracy, with too much room for politicians to manipulate information. See my advice for an Economic Supreme Court.

The unread ones are supposedly: Karl Marx, Hyman Minsky, Keynes, Frank Knight, Barbara Bergmann, Thorstein Veblen, Amartya Sen, Gunnar Myrdal, Adam Smith and Joan Robinson.

Why doesn’t Van Staveren mention my work as largely unread ? For an answer, she only allows the categories that I would be naive or stupid. This doesn’t strike me as logically and empirically sound. Her book must be the product of a severely deluded bubble.

I wonder whether I should show Van Tulder’s “Dare to build upon research from others” to give some indications about these authors. I can spend only a line on each, and this might strike the reader as dismissive and disrepectful, while the fellow economist might have worked hard most of his or her life to contribute to economic science. I wouldn’t want that my own work would be dismissed disrespectfully either. Yet, Van Staveren’s selection strikes me as rather curious:

  • Of these fellow economists, I had never heard of Barbara Bergmann before. Apparently she looked at gender in economics, and this hasn’t been my topic of interest. I suppose however that she is well read by economists who deem gender an important aspect. (E.g. on risk taking.)
  • Karl Marx is only interesting for history, in the same way as one would read Julius Caesar.
  • Perhaps Gunnar Myrdal isn’t much read nowadays, but that requires a longer explanation, including the lifting of the censorship at CPB.
  • Hyman Minsky of course is the celebrated case, but the description about his lack of influence is more complicated than mere dismissal. He really was a professor of economics, and I am not. I wonder whether there weren’t more standard neoclassical authors who said much of the same, so that Minsky’s main advantage is that he now is the best known “neglected” one. The main point is not neglect, but the failure of the Trias Politica model of democracy.
  • Keynes would not be read ? Well, one might say that many neoliberals didn’t read much of Keynes before 2007, but Ben Bernanke was chairman of the US Fed in 2006-2014, and we can be assured that Bernanke read Keynes, and that he responded admirably to the crisis, for otherwise the world had imploded. Let me also mention the biography by Skidelsky, that generated a renewed interest in Keynes, starting in 1983.
  • Frank Knight gave wrong definitions of uncertainty and risk, see DRGTPE. What was relevant however got reworked by Keynes. The 2007+ crisis caused a renewed interest in the Chicago Plan, indeed. See the comment on Minsky.
  • Thorstein Veblen wasn’t read ? I cannot believe this.
  • Amartya Sen has been amply read, see above discussion. Van Staveren wants to portray him as unread only to promote her bubble.
  • Adam Smith unread ? I cannot believe this. Contrary to Marx, he is still quite relevant, see Heilbroner.
  • Joan Robinson ? Apparently her contribution on “imperfect competition” has been included in neoclassical economics. In heterodoxy, her writings have some popularity, but it is not clear to me why she should be read more widely. Her work never seemed to matter for my own work and I haven’t really read her. Perhaps she is relevant for other fields of economics, but I would not know.

Above indication isn’t intended to mark these authors in a particular manner. The only intention is to argue that Van Staveren’s selection is rather curious. Most likely the title of her book is plain wrong. The present title might be much of a marketing ploy. A neutral title might have been: Views from the history of economics on the economic crisis.

It matters a great deal how the issue is presented (framed):

  • My analysis is that economics already contained ample information, so that the crisis has been caused by failure of the Trias Politica by abuse by policy makers. For example, policy makers could and can cherry pick an economist to defend a particular policy. My advice is an Economic Supreme Court, so that such cherry picking is no longer possible, for the ESC will weigh arguments on content.
  • Irene van Staveren puts the blame of the crisis on the economics profession itself, also at the academia, instead of the policy makers. She wants the whole of the economics profession to function as an Economic Supreme Court. This is a category mistake, since the academia do not have the task to support policy making but to generate new insights and criticism.

Misleading the public

In her bubble, Van Staveren neglects my work, doesn’t mind about the censorship, and misleads the public.

A lay person’s review shows that Van Staveren partly did a good job in reaching out to the public.

“A few jumping points from the book: Not only did many scientists see the 2007 financial crisis, the same people predict that the weather will go wrong. According to them, nothing has changed, such as the strict separation of savings banks and business banks and insurance. Taxpayers have to pay billions to save banks that were too big to fail, the banks are still too big to fail and still sell incomprehensible and uncontrollable products, so soon we have to dock again. If we all agree to vote On politicians who send themselves through the bank lobby because we just do not understand well, we have to pay for our intellectual laziness.” (Google translate from: “Een paar springende punten uit het boek: niet alleen zagen veel wetenschappers de financiële crisis van 2007 aankomen, dezelfde mensen voorspellen dat het weer mis zal gaan. Er is volgens hen niks wezenlijks veranderd, zoals het strikt scheiden van spaarbanken en zakenbanken en verzekeringen. Belastingbetalers hebben miljarden moeten betalen om banken die too big to fail waren te redden, de banken zijn nog steeds too big to fail en verkopen nog steeds onbegrijpelijke en oncontroleerbare producten, dus binnenkort moeten we weer dokken. Als we met z’n allen blijven stemmen op politici die zich door de bankenlobby laten sturen, omdat we het gewoon niet goed begrijpen, zullen we dus voor onze intellectuele luiheid moeten boeten.”)

However, this message could also have been given without this particular book.

This lay person shows a confusion between neoclassical economics and neoliberal economics. Perhaps Van Staveren has this too ? Also, this lay reviewer states to have gotten an interest in Amartya Sen because of Van Staveren’s praise. Ouch.

More points tomorrow

There are some more points, see the next blog entry.

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