Should we read dead economists?
Alex Tabarrok recently discussed an article that criticizes philosophers for dwelling on the past:
Hanno Sauer on why philosophers spend far too much time reading and writing about dead philosophers:
Ironically, this post appeared directly after a Tyler Cowen post suggesting that the Quantity Theory of Money is still important. Almost all of the best work on the QTM is written by dead economists.
I am not well informed on philosophy, but one of the biggest problems in economics PhD programs is that the teaching focuses heavily on recent work, and too little attention is paid to macroeconomists that did their work 100 years ago. Students work with a limited set of models, which often reflect a single approach to macroeconomics. Thus in recent decades, the rental cost of money approach (focused on interest rates) has pushed aside the price of money approach and the quantity of money approach. Yes, these two alternative approaches have problems, but so does the interest rate approach. More importantly, they also contain insights that help us to better understand the world, insights that might be missed by those that solely focus on interest rate-oriented models.
In my view, a grad program in macro should spend 1/3 of the time teaching the history of economic thought, 1/3 of the time teaching macroeconomic history (i.e. the historical data), and 1/3 of the time teaching modern models of macro. Perhaps if they had done so in recent decades, then economists would have understood much earlier that a tight money policy by the Fed was driving the US economy into recession in late 2008.
I have a book coming out this year (tentatively entitled Alternative Approaches to Monetary Economics), which attempts to address this issue. In my view, it is not possible to truly understand a field like macro unless you see it from multiple perspectives. Unfortunately, the wisdom of macroeconomists like Irving Fisher, Ralph Hawtrey and George Warren has been largely forgotten. Even Milton’s Friedman‘s ideas are fading into the past.
Here’s Irving Fisher and his son: