> Have you seen George Akerlof's AEA presidential address? In a somewhat
> crude, rudimentary way, it seems he's trying to introduce this way of
> thinking, though it's not a wholesale abandonment of methodological
> individualism. Tell me if I'm wrong, but it strikes me as a nod in the
> direction you suggest. Here's the abstract:
>
>
> http://www.aeaweb.org/annual_mtg_papers/2007/0106_1640_0101.pdf
Hey, thanks for that, very interesting. Definitely it's an advance (or retreat) from the new classical stuff, going back to the old Keynesian basis of 'stylised facts' rather than a priori microfoundations. And a bunch of sociologists quoted too! It's still focused more on norms of individual (including firms) behvaiour, which are treated as exogenous, and seems less able to cope with the evolution of the system as a whole, which is essential to understanding financial crisis.
It is also a case of the reinvention of the wheel... post-Keynesians have been doing this kind of economics for sixty years. I also think that in practice applied economists in policy and the banks have always been thinking like this; they tend to work from rough-and-ready regularities rather than the new classical axioms. I think well before the crisis mainstream academic macro was moving back to where it left off in the early 1970s before it went batshit crazy. See N. Gregory Mankiw, for instance, chair of Bush's Council of Economic advisors and author of a standard undergrad textbook, who calls himself a New Keynesian and often ever-so-politely says the monetarists and the new classicals are crazy. The crisis has further elevated the saltwaters over the freshwaters (Paul Krugman's terms based on the location of the American universities).
Philip Arestis at Cambridge has written some insightful stuff about what he calls the 'New Macroeconomic Consensus' of the 2000s, including an edited book from 2007. He points out some stuff orthodoxy has absorbed that the post-Keynesians have been working with for years, like an endogenous money supply.
So there are signs that neoclassical Economics is shifting back towards realism. But some post-Keynesians and marxists have been doing it all along and better. When I was talking about an alternative to methodological individualism, I was thinking of what Lance Taylor (at the New School) calls 'structuralism', in his 2004 textbook "Reconstructing Macroeconomics" (which Eubulides put me on to a while back):
"In the North Atlantic literature, structuralism's intellectual foundations lie within a complex described by labels such as (original, neo-, post-)-(Keynesian, Kaleckian, Ricardian, Marxian) which nonmainstream economists have adopted; numerous variants exist in developing countries as well. The fundamental assumption of all these schools is that an economy's institutions and distributional relationships across its productive sectors and social groups play essential roles in determining its macro behaviour." [p. 1]
Cheers, Mike scandalum.wordpress.com