>I took intermediate macro
>from William Nordhaus in 1972. He had us play with an economic model
>he'd built (without, of course, disclosing the assumptions, which
>were no doubt vulgar Keynesian). I ran his economy according to good
>Friedmanite principles, balancing the budget and throttling back on
>M1, and I ended up with a 20% unemployment rate. Not good for my
>grade.
My rambling notes mention your mentor, too, Doug. Tell me if I make sense, eh? And definitely tell me if I don't: _________________________
... an economic theory of politics lay immanent in the 'new' economics, but it was a theory within which a political theory of the economic was quite unthinkable. The new promised transnational harmony of the new world order had been driven by the needs of commerce, and, to the extent it was to come about, would be at the expense of the political. The public had, in effect, been trumped by the private. As Self notes (1993: 203):
[T]he market system must be seen not simply or primarily as a spontaneous system of voluntary exchanges governed by objective economic laws, but as itself a political system.
The pristine isolation of 'the economic' from the muddy waters of 'the social' constitutes, as Friedman noted, good for model-building. But it has also been singularly good at projecting its econometric assumptions into the political culture in general, and the academy in particular, in the form of commonsensical premises. As Friedman and von Hayek reclaimed for their diagnoses and prescriptions a salience they had not enjoyed in forty years, so did authors like Nordhaus (eg. 1973 and 1975) and Arrow publish a plethora of texts on the application of public choice theory. This theory shared with the Mont Pelerin economists the behavioural postulate of homo economicus: the rational, competitive, autonomous maximiser of private utility, and it shared with the Trilateral Commission the conviction that the state should not carry too heavily the 'load' of democracy (see the Trilateral commission Report A Crisis of Democracy, by Crozier, Huntington and Watanuki 1975). As the authors were neoclassical economists, and the founding premise was that of neoclassical economics, the methodology of public choice theory was itself that of neoclassical economics. This is significant because the raison d'etre of public choice theory was to explain non-market decision-making, to apply economics to political science (Mueller 1989: 1). On this view, the institutions of democracy in general and policy-making in particular, are reduced to fora in which politicians, bureaucrats and lobbyists behave exactly as would the rational egoist of the marketplace. Unsurprisingly, it was within the USA, a polity given its mythology by the writings of Thomas Jefferson ('no friend to big government'), and in the painful process of making sense of the Watergate scandal, that public choice theory first came to dominate political science journals.