New Economic Thinking Conference to Shatter Illusion of Control


Joseph Stiglitz and Steve Clemons.JPG
(Steve Clemons and Joseph Stiglitz sitting in the private apartments of John Maynard Keynes, Kings College, Cambridge University; April 2010; photo credit: Leif Pagrotsky)
Nobel Laureate Joseph Stiglitz and I attended last year one of those conferences that decades from now historical societies will note with a marker on the wall.
The meeting, organized by the Institute for New Economic Thinking, in the hallways and chambers once the domain of John Maynard Keynes at Kings College, Cambridge was the brainchild of Institute Director Rob Johnson as well as financier and philosophical provocateur George Soros — who introduced his thinking on ‘reflexivity’ into the arena of debate and turf-wrestling among the world’s best economic minds.
Michael Hirsh, then writing for Newsweek best captured the revolutionary feel of last year’s conference — and now a second convening of the world’s leading economic thinkers are assembling in Bretton Woods, NH — where in 1944 Keynes and other global economic and political leaders from 45 nations met to establish the International Monetary Fund.
As INET Executive Director Rob Johnson, “last year’s conference punctured the mystique of market stability (not to mention real events). This year, the conference will shatter the illusion of control.”
Most of the sessions of this conference — sponsored by the Carnegie Corporation, the Sloan Foundation, and Stiftung Mercator — will be available on video right after their sessions — and the twenty or so academic papers for the meeting will be posted on line.
I’ll be covering the entire meeting. Among those who will be speaking and participating here are Kenneth Rogoff, Joseph Stiglitz, Lawrence Summers (uh-huh), Adair Turner, Gillian Tett, Rob Johnson, George Soros, Yves Smith, Paul Volcker, Chystia Freeland, George Akerlof, Gordon Brown (yep, that one).
Rob Johnson, responding in a conversation on Lou Dobbs Tonight to various concerns about what a room full of great economists might be up to, even invited Lou Dobbs up. No word yet on whether he will appear.
— Steve Clemons


18 comments on “New Economic Thinking Conference to Shatter Illusion of Control

  1. erichwwk says:

    Thanks for this post. Look fwd to digesting it, Am at a Counter COIN conf, where people of color and women are over represented. Can’t help noticing NOT ONE person of color, and few women speaking at Bretton Woods. For whom do they speak?


  2. questions says:

    Probably not new, certainly economic, and certainly thinking:
    ” We approached the problem … looking for what might bring long


  3. rc says:

    “Illusion of control” — more likely the illusion of accountability.
    These DC agents (and their masters) are concerned about a ‘flaw’ in the system — that somehow the accountability ‘buck’ will stop with them instead of the greenback buck.
    The sign on the oval office desk today reads: “The $$$Buck Stops Here!”
    If it is too big to fail — then its too big!
    If its too complex to control — then its too complex!
    Those with odious wealth and buckets of money for politicians are either not paying their workers enough, or not contributing to the responsible social good, or environmental sustainability — or all three.
    The criminal classes are in ‘control’ and the sooner this is realized by the general public the sooner restorative actions can be taken to return control to the people, for the people, by the people.


  4. JohnH says:

    It makes you wonder which “illusion of control” they’ll discuss:
    1- that the government has some measure of control over major economic players, like Wall Street, Big Oil, Big Pharma, and Big “Defense.” Or whether the government has surrendered its authority to these TOO BIG TO FAIL OR GOVERN entities.
    2- Anybody has the capacity to stimulate the economy
    or 3- Anybody can do anything about the rigged casino inaptly called the markets.
    I don’t see how you can talk about the illusion of control without identifying the factors underlying the loss of control–too much economic power in the hands of too few. But I doubt that these guys will touch that subject with a 10 foot pole. After all, some things are simply “too important” to be discussed openly in a “democracy.”


  5. questions says:

    The Brad DeLong Challenge!
    “For my sins, I wound up on the Institute for New Economic Thinking’s panel on economics education…
    I found myself with no strong conclusions, for I found myself gnawing the same four questions over and over again. They are:
    What is wrong with the undergraduate curriculum and how could we fix it?
    What is the graduate program supposed to train people to do?
    Why do so many of our professors know so little of what we collectively know?
    Why doesn’t more of the undergraduate program stick or stick more?
    “They ramify: we appear to have produced a professoriate–trained in graduate school–that appears remarkably ill-equipped to survive in the wild, and remarkably ignorant of the utilitarian and emergent foundations of the discipline.”
    So here’s my two cents worth (chutzpah-laden as I never bothered with Ec 10, or Ec 11 or Econ 101….)
    Once you admit a utilitarian foundation for your discipline, you’ve lost the left. It’s pretty simple.
    The left does not want trade offs in a basic basket of goods and services, it wants the normative claim to be rights-based instead. The liberal left is Rawlsian, and therefore Kantian, and therefore attuned to Rawls’s smashing of the rationality of both utilitarianism and libertarianism in the name of the Categorical Imperative and basic respect for all rational creatures insofar as they are rational — not insofar as they are rich.
    The leftier left dislikes Rawls’s acceptance of markets at all, the salary differentials, and Rawls’s basic middling America is good view of the world.
    The leftmost of the left dislikes more. And maybe even likes Marx, whom DeLong seems to dislike. Ain’t gonna get no Marxists at Berkeley with DeLong’s blog as enticement!
    So a left thinking student takes Ec 10 or 11 or Econ 101 and discovers that there are scads of graphs that show trade offs, utilitarian trade offs, between a couple or more variables. The left thinking student either drops the course or doesn’t take Ec 12 or Econ 102.
    Plenty of left thinking students don’t even get this far as they never bothered with a firm foundation in calc and stats and the rest of the courses Mankiw lists as necessary for econ majors (MV calc, lin al, analysis…..)
    So where do the left thinking students go? To places that welcome normative thinking, that don’t demand as much quant work, that deal in ideas or human services.
    That’s the undergrad story.
    The grad student story will likely deal with the kinds of winnowing that happen when you’re applying to grad school, looking for someone to write a diss with, looking for an interesting set of problems to work on, looking for a place to teach or an administration to join, looking for friendship and love. That’s what grad school does.
    So do left thinking people find any of this at major universities, along with a decent funding package? Are there left thinking advisers, or just a bunch of utilitarians happy to trade off baskets of necessities?
    Utilitarianism is the real problem with economics. As soon as Bill Gates’s intensity for another dollar counts as much as my intensity for a crown on a molar or a gallon of gas or jug of milk for my calcium-deficient children, well…. What is a left thinker going to do? Go into economics? Or study sociology/political science/nutrition/law/medicine or something in the humanities in order to add beauty to a plug ugly world of utilitarians?
    Well, what would you do?
    If you want to fix the undergrad curriculum, develop ideas-only courses — econ for poets! Physics and astronomy and music and all sorts of other fields have developed “My field for poets” classes.
    Soften and slow the math so that you get some algebra-challenged students sucked in. Then drop a little calc on them in baby spoonfuls.
    There is much that is fascinating in econ, much that is justice-related. Pull that out and bring it to the fore. It’s not tedious. It’s actually quite beautiful. Normative thinking is beautiful.
    And for grad school, good luck reforming the profession. People have stakes in their careers. Get one of the billionaires floating around to do simultaneous Fresh and Salt water endowments of people who are capable of wondering what the point of capital accumulation is, who should own capital, what are the limits of markets, what does one do in the face of market failure, what does behavioral economics offer us, how does (non-math) game theory fit in?
    Endowed chairs are probably the only way to get a field to accept some other kind of thinking. The career path wards off all other revolutions.
    And by the way, I would guess that the whole Cold War anti-communism thing is still being felt in grad schools. We will never be done with the bashing of the left.


  6. DakotabornKansan says:

    Greenspan, Rubin, Summers and The Invisible Hand of the Free Market
    Recommend watching the PBS Frontline show


  7. John Waring says:

    Please invite Alan Greenspan, who could stand to be roused from his dogmatic slumber. Since the tulip mania in 17th century Holland, financial markets have seldom, if ever, been self correcting. Crash and burn seems to be their end state.
    Dan, you would like to see a little everyday empiricism. I would like to see the economics profession adopt a little historical empiricism as well.


  8. Joshm says:

    This is AMAZING. Saw a note on Bloomberg news this
    morning that Mr. Soros pulled this together in order
    to create a whole new international financial order.
    The Institute for New Economic Thinking totally blew
    me away last year with the quality of its program
    and speakers (Watched a ton of the speakers — it’s
    up there as the economist’s equivalent of the TED
    conference, I think), and I’m very excited to see
    what comes out of this latest conference.
    Looking forward to your updates, Steve!


  9. rc says:

    Nothing to apologize for?
    “PJ Crowley, the former US state department spokesperson, about his inflammatory remarks that led to his forced resignation last month….”
    He speaks straight on Bradley Manning but gets tied up on Yemen, Bahrain and Libya foreign policy.
    Gaddaffi ‘turns his guns on his own people’ but Bahrain uses Saudi Arabian guns on their Shia majority. Hmmm, …?


  10. DakotabornKansan says:

    Yesterday, Amy Goodman and Juan Gonzales at DemocracyNow interviewed Joseph Stiglitz:


  11. questions says:

    This is new, economic, thinking:
    Rational inattention theory. My first encounter. Really interesting. Broadly applicable. Apparently there’s math behind it. Meh. I think just at the social level, taking behavioral econ insights and applying them socially can be fairly fruitful.
    If we’re limited in what information we can absorb, which of course is clearly true, then what kinds of short cuts do we take, what kinds of structures do we keep with us. What is the social analogue to the money illusion or to future discount or to hatred of loss as compared love of equal gain?
    My offhand guess, and today’s rant… is that much of this shortcutting and irrationalism ends up playing out through racial dynamics.
    Look at Mr. Macaca’s most recent racial revelation — he asked TWICE now some tall Black guy, “Hey, what position did you play” — the automatic assumption of a racially-loaded category…..
    Think about the voting patterns in Wisconsin — all fairly thoroughly racialized.
    The birther nonsense is racialized.
    The undoing of gov’t service programs has a strong racial link to it.
    The whole feeling of the heavy weight of the obese and all-consuming lazy American –there is a racial element here as well.
    The loss we contemplate from taxation is always going to feel more painful than any gain we get from services. The Repubs have this feeling down to a science. We take for granted transfer payments coming in, we take for granted the basically smooth functioning of the gov’t. But fuck all, you take my damned hard-earned money and I’ll hate you for life. And of course, we know who the biggest takers are because we’re too limited in our ability to absorb new information.
    So what does Fox Noise really do? They saturate the information intake valve in the psyches of large numbers of white flighters. These people are so saturated with information, so overly “informed” that they can no longer absorb information from their own senses.
    Rendered senseless, pretty literally actually, they fail to see or hear the basic humanity of others. They fail to see the possibility that the loss of some money might lead to a future gain of some health, some security, some happiness, some protection of their children, some education of the vast array of fellow citizens such that they’ll be able to find doctors and chefs, police and telcom services as needed.
    We focus narrowly on our own loss, on absolute status, on the lazy other, and we do not function well as a group.
    All of this might be fine were there not policy entrepreneurs/instigators ready to capitalize on the very human situation we find ourselves in.
    But, people make money, careers, gain status and power, probably have really great sex, too, because they fuck with the tender psyches of the white flighters, the loss-averse and gain-ignorant among us.
    The intensity of the news cycle, the implicit and often explicit racism, the sheer stupidity of the Ryanization of America, the [Wonkette] of libertarianism — all of this would seem to fit under the lovely new rubric of rational inattention theory.
    I have a new toy!
    Wisconsin. Ugh. The tale behind the numbers is unbelievably bizarre. Repub operative/elections official already in legal trouble in the past for bizarre electoral shit grabs the hard drive from her county or city (Waukesha) and shoves it into her own private computer in her own private office….. Against the rules, and all.
    Were the numbers already reported and the AP fucked up?? Was there fraud, simple stupidity, a desire to hold back, in anal retentive fashion, some amount of data? Who knows.
    The result will be the same. More energy on the right needing to be countered by more recall signatures on the left. The gov will feel a thrill down his leg, Prosser will continue to think the women he works with are bitches, and he will likely hate his fellow citizens all the more. And he’ll have another decade on the Court.
    In a climate like this, with this level of 50/50 partisan intensity, who could govern?
    Monkey Cage has a seemingly misdirected piece up criticizing Obama’s leadership style while failing to note the climate in which Obama has to govern.
    If he’s too strongly on any side, he makes it pretty much impossible for anything to happen at all. And with the economy only slowly working out the kinks (and having all sorts of hidden kinks we’re supposed to be extending and pretending to deal with), it’s not like he could have presto magico won the midterms. Not even the Wisc. Court election went the right way.


  12. non-hater says:

    That’s an impressive list of attendees – except for serial fuck-up Larry Summers. Somebody should ask him if he’s talked to Brooksley Born lately.


  13. DakotabornKansan says:

    The great economist Paul Samuelson used to say, paraphrasing the physicist Max Planck, that


  14. DakotabornKansan says:

    Joseph Stiglitz on


  15. Dan Kervick says:

    Edward Harrisons’ extremely gloomy 2009 forecast all appears to be coming true:
    What will it take to get the White House to wake up, and stop playing nice with the Republicans’ quack plans?


  16. Dan Kervick says:

    “I’d feel a lot better if some of them had started a business and/or met a payroll just once.”
    … or at least one working person who is actually on a payroll.
    One of the biggest problems, I fear, with current economic thinking is an absence of empiricism. And by “empiricism” I don’t just mean the kind of empirical information economists do like to capture – statistical measures of macroeconomic aggregates – but rather the kind of detailed empirical understanding, *verstehen* that comes from a close and intimate acquaintance with particular systems or sectors or divisions in our economy.
    The art of mechanical engineering is not the same thing as the science of physics. What we probably need are more competent and practical economic engineers, and fewer abstracted economic theorists.


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