Thanksgiving, in some perspectives, is a celebration of gluttony. The iconic scene which springs to mind is a family and friends sitting around a large table piled high with food. We eat and drink and chat and, after loosening our belts, eat and drink some more. Our gut becomes so full that a nap in front of the TV is almost as habitual as carving the turkey.
Our full guts (helped, no doubt by tryptophan in turkey and the spike in blood insulin levels as we digest our huge meal) put us to sleep. I trust this physics based opening won't put my economic view searching readers to sleep as well. Bear with me, there's some meat for you here.
That, however, is not the gut to which I mean to refer. This essay will focus on mental G.U.T.s (Grand Unification Theories), which, in my view, are even more effective at putting adherents to sleep, and for far longer than the typical post Thanksgiving nap.
Some physicists look beyond their GUT at their TOE (Theory of Everything)- the view that all fundamental interactions in nature can be explained by a single model.
For our purposes, I mean GUT to refer to any theory which is held as the final word on phenomena in any field.
To illustrate, in Psychology there are (among others) Jungians and Freudians, those who alternatively hold that Jung or Freud accurately (and among radicals, completely) described the workings of the human psyche. Jungians and Freudians, depending on their degree of adherence to their respective master, often find the views of the "other side" foolish.
Similar groupings have emerged in Economics wherein one finds Keynesians, Austrians, Marxists, and Monetarists, etc. Whereas in pre-modern times political contests (whether coercive, as in war, or persuasive, as in elections) were often, at least ostensibly, based on religion- e.g. Christianity vs. Islam, Catholicism vs. Protestantism- in modern times support of this or that view of political economy is more often the ostensible basis.
The Cold War was, in a sense, a war between Capitalism and Communism. The US Civil War was, in a sense, a war between Industrial Corporatization and (slave labor driven) Agrarianism. More recently, the US Election of 1932 was the culmination of a long battle between laissez faire Industrialists (children of those who won the Civil War) and pro-government regulation and redistribution Democrats.
Even more recently, the US election of 2008 can be seen as a victory of Keynesianism reconstituted over laissez-faire financial corporatization. The current crisis, aver the ascendant Keynesians, is proof that the doctrines of laissez faire financial corporatization are false. The new New Deal of President-elect Obama will, Keynesians like Paul Krugman assert, set the stage for a return to prosperity.
Sadly, I fear the Keynesian Triumphalism of Mr. Krugman will prove as harmful as that of the laissez-faire financial corporatists who claimed the "victory" over communism as their own. History didn't end, as Fukuyama argued, when the Soviet system collapsed, nor will it end now.
The basis of my view- there is no GUT of Economics just as there is no GUT of Physics.
As David Bohm argued in "The Qualitative Infinity of Nature": Any given set of qualities of properties of matter and categories of laws that are expressed in terms of these qualities and properties is in general applicable only within limited contexts, over limited ranges of conditions and to limited degrees of approximation.
If the above is assumed to be true in Physics, which need not take into account the beliefs of particles under study in explanatory models as social scientists must (to wit, a stone's confidence in the theory of gravity has no impact on its acceleration while a human's confidence in the economic system within which he lives has a substantial impact on his saving and consuming decisions) surely it will be more true in the social sciences.
In other words there are varying degrees of truth to be found in many schools of thought, depending on, inter alia, context and perspective. I've learned from Marx and (Adam) Smith, Keynes and Friendman, etc. To me, recurring financial crises are proof that there is no GUT, not that we were following the wrong GUT.
Those, unlike myself, who believe in a GUT, either, when in the minority, see the ills of the world as flowing solely from the prevailing GUT (i.e. they fight), or, when in the majority, work to assert the truth of their GUT, often arguing that untoward events are a function of deviation from the pure view. In that mode they can be seen to "sleep"- unaware of the phenomena of the world except as it fits into their dream.
Lost amidst the GUTS, it seems to me, is the object of the research- how to foresee economic outcomes of political economic policies, avoid or mitigate unwelcome events and generate welcome ones. The lens of the GUT obscures that which it purports to explain.
As a practical matter, a shift away from GUT faith would lead to less dogma. We could, for instance, do away with the view that deregulation (or regulation), less taxation (or more taxation), privatization (or publicization, if you will) etc. are unalloyed goods. Understanding contexts and limits, as Bohm argues, is key to foreseeing outcomes.
I'll close with a concrete example of a GUT in action.
In today's NYTimes Paul Krugman argues: Right now there’s intense debate about how aggressive the United States government should be in its attempts to turn the economy around. Many economists, myself included, are calling for a very large fiscal expansion to keep the economy from going into free fall. Others, however, worry about the burden that large budget deficits will place on future generations.
But the deficit worriers have it all wrong. Under current conditions, there’s no trade-off between what’s good in the short run and what’s good for the long run; strong fiscal expansion would actually enhance the economy’s long-run prospects.
Admittedly, I too am in favor of a policy of substantially expanded public works not because it is Keynesian (and, thus, it seems, in Krugman's view, right) but rather it seems to potentially offer a far better return on investment that current policy of corporate globalization, financial market imperialism and war.
Let's take a chance and redirect the flow of funds towards the US real sector. It might work, assuming, inter alia, the pigs at the new trough aren't as voracious as those at the old trough. If there aren't too many leaks in the financial pipes, real sector bricks and mortar efficiency improvements in the US may be sufficient to compensate for the increased fiscal drag, particularly when inflation and borrowing rates rise. Given the context of aging, and due to expected increased competition for energy resources, obsolete, US infrastructure, this plan might work- not because it's Keynesian, (I think it would have been much better to spend the Clinton-era surplus, leaving aside discussion of its existence, thusly and avoid the need for massive fiscal expansion under the view that funding investment from profits is better than funding it through borrowing) but because of the context.
Policy chosen on the basis of Keynesian-ness, rather than context, will soon have us wishing for a bigger whip with which to flog the dead horse. It wasn't that long ago that Greenspan's financial laissez-faire polices were considered unalloyed goods, which may well have been true in the context of the 70s and 80s, but became untrue as that context changed.
A side benefit might be a better understanding of economics itself.