Comment on Bernard Guerrien’s Essay

May I comment on Bernard Guerrien’s essay in Issue 12, March 15, 2002 in which he has some disagreement with what he alleges I argued in Issue 11? There I set out what I think is happening in modern mainstream microeconomic theory, for example, that the general equilibrium model is the basis for descriptive analysis of competitive markets instead of being at best, as is conceded by the most thoughtful general equilibrium theorists, e.g. Frank Hahn, a reference point. Guerrien says I agree with this. If he had any knowledge at all about what I have argued for many years now, he would not have advanced such a canard. In fact, as with Joan Robinson, I do not even accept the distinction between micro and macro as valid or useful; and I have doubts about whether general equilibrium is a reference point and certainly it is not descriptive analysis.

I also tend to think that game theory may not be that much use in thinking about non-competitive market structures. But I am re-examining this long held view, following re-reading Ken Arrow’s masterful obituary of John Harsanyi and his contributions (Economic Journal, 111, 2001, F747-52). Minds should never be closed even in your 71st year! (I do not know how old Bernard Guerrien is.)

Guerrien quibbles with my (implicit) description of Akerlof, Spender and Stiglitz’s findings as “new”, arguing that they are just presenting some very old ideas in a mathematical form. He is right about the latter; but then I never claimed the findings were new. Mainstream economists think it is helpful to establish rigorously by maths, if at all possible, the arguments for conjectures, old and new. I think that there is a limited place for this approach in economics. Moreover, if it helps to illuminate the understanding of people who find thinking in this way useful, no harm is done, provided that this way of proceeding is not regarded as the only way of proceeding, and its advocates do not insist on a monopoly. I argued this in my first essay in this review (issue 6) (and in many other places). Finally, Amartya Sen is a real force for good in our discipline and the award of the Nobel Prize to him is a positive signal, to be embraced, not belittled.