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Krugman on Heterodox Economics

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I thought fellow Austrians would be interested in an excerpt from Krugman’s 1997 paper in Foreign Affairs, “Is Capitalism Too Productive,”

Heterodox doctrines, in economics and elsewhere, often fail to get adequately discussed in their formative stages. Both the intellectual and the political establishment tend to regard them as unworthy of notice. Meanwhile, those doctrines can seem compelling to large numbers of people, some of whom may have considerable political clout, financial resources, or both. By the time it becomes apparent that such influential ideas — say, supply-side economics — demand serious attention after all, reasoned argument has become very difficult. People have become invested emotionally, politically, and financially in the doctrine, careers and even institutions have been built on it, and its proponents can no longer allow themselves to contemplate the possibility that they have taken a wrong turn.

Some people might be wondering why Krugman spends so much time (relatively speaking) on criticizing Austrian doctrines (even though his perception of Austrian economic theory is deeply flawed by his own misunderstandings). Krugman believes in squashing upstart economists at birth. In case of the Austrians, though, it seems as if Krugman’s strategy has backfired. If anything, all the attention on Austrian ideas has driven more people to research what they actually are, instead of taking Krugman’s word for it.

All the same, someone could probably level the same accusations against the economics of Krugman: namely, “[p]eople have become invested emotionally, politically, and financially in the doctrine, careers and even institutions have been built on it, and its proponents can no longer allow themselves to contemplate the possibility that they have taken a wrong turn.”

(Cross-posted at Economic Thought)

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