I’m a bit busy today but there are a few interesting things in the media this week that I wanted to highlight. First of all is a piece by me on research being done in University College London (UCL) about decision-making under uncertainty. I am fascinated by this work for a number of reasons. First of all, it is actual true empirical work into decision-making under uncertainty. This has led the researchers to undertake the bold step to actually formulate a true measure for ‘animal spirits’.
Secondly, the project is headed by David Tuckett. He is a psychoanalyst that is quite consciously opposed to what is being done in behavioral economics. This is a breath of fresh air for me for two reasons. Firstly, because I am very keen on psychoanalysis and dynamic psychology. And secondly because I think behaviorism is pretty awful. Finally, I am enthused that the Bank of England and the European Central Bank are very interested in this work.
Anyway, I have a four-page feature article commissioned on this topic which will explore it from a more journalistic angle. For now, here is the op-ed that went up today.
Volatile emotions are driving the world economy
Also in the media this week was an extensive interview with the institutional economist Bill Lazonick on Sam Seder’s Majority Report. I have not written much on Lazonick’s work before because institutional economics is not really my field. But I think that his is some of the most important work out there. The interview starts around the 6 minute mark.
Anyway, hope that’s enough to keep you occupied over the weekend.
Very interesting approach of animal spirits behaviour in economic system, now in asiatic crisis in 90’s, a economist said in Wall Street Journal investigating causes of crisis that Chase Menhattan Bank was loaning to real state especulators in Korea before crisis. This can be a animal spirit or in other case a rational activity to gain some power or other benefit for bank actor. After this report and other we see this newspaper to change of hands to Murdock.
” He is a psychoanalyst that is quite consciously opposed to what is being done in behavioral economics. This is a breath of fresh air for me for two reasons. Firstly, because I am very keen on psychoanalysis and dynamic psychology. And secondly because I think behaviorism is pretty awful.”
I think you have your terms confused here. Behavioural Economics’ psychological content is derived from *cognitive* psychology with a dash of social psychology. The “Behavioural” part simply signifies that the economics uses large amounts of psychology in its analysis. It has nothing to do with the psychological school of behaviourism.
As for psychoanalysis, I am with Popper on this one. Is psychoanalysis testable? If Post-Keynesianism is supposed to be after realism then psychoanalysis is a very strange bedfellow.
Post-Keynesianism does not adhere to fasificationist criteria. Most PKs are critical realists. Keynes himself was clear that, due to the nature of the material we are dealing with, economic theories are not as such falsifiable. Keynes believed in induction. Popper rejected it. I do not know of any Post-Keynesian methodologists that support Popper’s criteria for economic theory. Even in the philosophy of science these days Popper’s criteria are recognised to be old hat (Lakatos, Feyerabend etc.).
Besides Popper’s criticisms of psychoanalysis and historicism were always vague. Which part of psychoanalysis was unverifiable? He was never clear. For example, is the idea that certain words trigger ‘complexes’ and emotions falsifiable? Yes. Jung’s experiments in the early 1900s showed clearly that it was accurate. What about Freudian slips? Yes, this is easily verifiable.
I think that Popper was attacking a crude form of pop Freudianism that became popular with leftists in the 1920s and 1930s. You can say the same for his attacks on historcism which were really aimed at dogmatic forms of Marxism.