Knowledge that Transforms

Uskali Maki read three books by McCloskey on the "rhetoric of economics" with sympathy. But he wants McCloskey to choose between a coherence and a correspondence theory of truth. McCloskey notes in reply that modern epistemology - by contrast with the analytic philosophy circa 1955 that many philosophers of economics espouse - rejects the choice. Modern epistemology would say that economic scientists argue in many legitimate ways, governed by ethics. In brief, as Maki agrees, economics has a rhetoric. Rhetoric is a better guide than 1955-style analytic philosophy.

ECONOMIC POLICY in the 1980s may eventually become the most studied and hotly debated of any in United States history, even including the 1930s. Popular writings about the 1980s economy already abound in hundreds of op-ed pieces, columns, editorials, and books. However, polarization rather than consensus seems to characterize most of these popular writings as witnessed by such contrasting books as Robert Bartley's The Seven Fat Years (1988) with its praise for the policies of the and Paul Krugman's Peddling Prosperity (1994) which finds little if any good that came from them. In fact, most writers have been in one of two camps, either filled with mockery and scorn for the greed decade of the 1980s and the economic policies which define it, or filled with unwavering admiration for the polices of the 1980s which saved America from the ruin caused by the malaise decade in the 1970s. For many there appears to be no more consensus about these policies than at the time they were put into place. Most of the writers on either side of the debate seem to be talking past each other. The 823 page National Bureau of Economic Research Conference volume, American Economic Policy in the 1980s, edited and partly written by Martin Feldstein takes a different approach. It brings together in a single volume a total of 39 economists and policy makers to analyze, discuss, critique, and rebut each others views of U.S. economic policy in the 1980s. What emerges is a thorough and fascinating survey of facts and ideas from this important period in U.S. history. The book deserves to be studied carefully by anyone with a serious interest in economic policy, much like an earlier National Bureau of Economic Research volume-Milton Friedman and Anna Schwartz's A Monetary History of the United States, 1867-1960-it is essential for those interested in earlier periods in the history of U.S. economic policy.

The main theme of David Card and Alan Krueger's book, Myth and Measurement: The New Economics of the Minimum Wage, is that the data do not support the view that minimum wages reduce employment. The most important chapter considers data for the fast food industry, where it is suggested that recent minimum wage increases may actually have increased employment, contrary to the standard theorem that labor demand curves slope down. A more reasonable view of the evidence, in this book and in many other studies going back to 1915, is that the employment effects of minimum wages are small, and difficult to detect in the noisy data available.

The paper ranks Departments of Economics in the U.S., based on publications in a set of eight "Blue Ribbon" journals during the period 1987-91. We adjust for variation in character and page size across the journals, allow for differences in journal quality and deal with changes in department composition over the period by assigning affiliation at the time of assessment rather than at the date of publication. Alternative journal set specifications are examined to test the sensitivity of the composition of the top 25 departments.

This article applies economic analysis to rural households in poor countries to see what one may mean by a "population problem." It is argued that there is a serious population problem in certain regions of the world, and that it is in varying degrees linked to poverty, to gender inequalities in the exercise of power, to communal sharing of child-rearing, and to an erosion of the local environmental-resource base. It is argued that some of the links may, to an extent, be synergistic. One manifestation of the problem is that very high fertility rates are experienced by women bearing risks of death that should now be unacceptable. An argument is sketched to show how the cycle of poverty, low birth-weight and stature, and high fertility rates can perpetuate within a dynasty. The one general policy conclusion that emerges is that a population policy in these parts should not only contain such measures as family-planning programs, improved female education, and employment opportunities, but also those measures that are directed at the alleviation of poverty, such as improved credit, insurance, and savings opportunities, and a ready availability of basic household needs, such as potable water and fuel. It is argued that these latter measures lower the net private benefits of procreation.

Monopolistic competition models have frequently been applied in macroeconomics, growth and development, and international and interregional economics. The three features of monopolistic competition, the monopoly power of producers, the lack of strategic interaction, and endogenous product variety, make it a useful framework to examine the aggregate implications of imperfect competition, increasing returns and incomplete markets. This papers presents a highly selective review in this area, with special emphasis on complementarity and its role in generating multiplier processes, business cycles, clustering, underdevelopment traps, regional disparities, and sustainable growth, or more generally, what Myrdal (1957) called the principle of circular and cumulative causation. (This abstract was borrowed from another version of this item.)