The Political Polarization of Economics: Debunking the Dichotomy Between Keynesian and Chicago Economists
Do Keynesian and Chicago School economists stand in stark opposition politically in the United States?
Understanding the Dispute
It appears that the dialogue around the political polarization of economics is more complex than it seems. While there is certainly a difference in the economic philosophies and policies advocated by these two schools, it is a misnomer to label them as entirely polarized. Over the past 20 to 30 years, many of the central insights of the Chicago School have become mainstream within the academic community. Additionally, the conservative political movement has been gradually moving away from the Chicago School, embracing more Austrian economic ideas.
Academic Consensus vs. Political Arbitration
Discussion on this topic must differentiate between the academic discipline of economics and the political application of its theories. In academia, economists argue for and against various theories based on rigorous analysis, empirical data, and logical reasoning. Politicians, however, often pick and choose elements from different theories that align with their core values and political objectives. This selective picking and choosing does not supplant the broad agreement on fundamental economic principles.
As an example, Paul Krugman, a renowned economist and author, discusses this in his book End This Depression Now!. He outlines how there is surprisingly strong consensus among economists from MIT (specifically focusing on Keynesian coastal economists) and UC Berkeley (mainly the Chicago School of economics). The differences are often nuanced and debated in academic discourse, but the core principles remain largely agreed upon by a majority of economists.
Core Values and Economic Philosophy
A significant factor contributing to the perceived polarization is the alignment of economic theories with fundamental political values. Conservatives often fear collectivism and state intervention, values closely tied to Hayekian views that emphasize the role of the free market. Conversely, Progressives advocate for government spending as a means to achieve social and economic goals, a view that aligns with Keynesian thinking.
Stake and Ideological Impact
The debate between Keynesian and Chicago economists is in essence a contest of political ideologies and core values. The stakes are high, with significant economic and social consequences for both sides. Funding policies, regulatory approaches, and fiscal strategies all have profound implications for the distribution of wealth, market stability, and overall economic performance.
While it is true that the political landscape is fraught with rhetoric and selective economic arguments, at the academic level, there is a strong consensus on how economies function. The dichotomy often seen in politics is a reflection of the broader societal divide, rather than a fundamental disagreement within the field of economics itself.