I’ve just started reading Steve Keen’s [amazon_link id=”1848139926″ target=”_blank” ]Debunking Economics: The Naked Emperor Dethroned[/amazon_link], and it looks a very enjoyable rant. I’m sure I’ll agree with quite a bit of it. But a page in, and two issues of terminology are very apparent.

One is that by ‘economics’ he means ‘macroeconomics’. Of course, he’s not alone in this – most people think macro is the entirety of economics – but then, he’s an economist and could be more precise. We microeconomists are as shocked as any normal person that, as it turns out, pre-crisis macro models didn’t have a financial sector. We’re certainly going to have to get out much more and explain to people what it is that we, as opposed to the macro guys, actually do.

The second is revealed by footnote 1, page xv, in which Prof Keen describes his realisation early in his education that economics has no clothes (to continue the metaphor in the title) when he appreciates that getting rid of unions to let the labour market work freely is a bad idea when there are monopolies on the other side of the market. The footnote refers to reader to the classic Lancaster and Lipsey theory of second best, a familiar result in – economics. While it’s true that the language of market forces in public policy for the past generation has meant that their insight about second best has not been implemented, it isn’t entirely correct to say either that ‘economics’ is therefore useless.

Perhaps we need different typefaces. There is economics, as it is actually practiced by economists, much of it micro not macro, empirically-based and increasingly eclectic in its methodology. Then there is

economics

the not entirely unreal but equally not much observed in the wild version that critics object to. If anybody wants to read more in this vein, my recent Tanner Lectures go into it, and here again is the link to the excellent Stumbling and Mumbling post on the same kind of issue, and a follow-up post.

[amazon_image id=”1848139926″ link=”true” target=”_blank” size=”medium” ]Debunking Economics – Revised and Expanded Edition: The Naked Emperor Dethroned?[/amazon_image]