These days, when people come to me and ask if I will run a reading course for them on Karl Marx, this is what I tend to say:

The world is divided into those who take Karl Marx’s work seriously and those who do not.

On the one hand, those who do not take Karl Marx’s lifetime work-project seriously are further divided into three groups:

1. Those who ignore Marx completely.

2. Those who use selected snippets from his work as Holy Texts, and

3. Those modern “western Marxists” who find inspiration in the works that Karl Marx wrote exclusively before he was thirty.

Of the first group there is, of course, nothing to say.

Of the second group, the late Louis Althusser can serve as our example and principal poster child. And I will leave him to Michael Berube and Bill Lazonick.

Of the third group, Chris Bertram provides as good an example as any:

Start by discussing… the Manifesto… revolutionary nature of the bourgeoisie… their transformation of technology, social relations… global economy… Marx’s belief that… the appearance of freedom and equality… [masks that] some people end up living off the toil of other people… [who] spend their whole lives working for the benefit of others, and [so are not] living truly truly human lives… Marx’s belief that a capitalist society would eventually be replaced by a classless society run by all for the benefit of all…

In short, start with the Communist Manifesto–written when Marx was 30–and then go back to the impenetrable and jargon-filled Economic and Philosophical Manuscripts, “Theses on Feuerbach”, The German Ideology, and “On the Jewish Question” written he was 25-28. Maybe read the Preface to A Contribution to the Critique of Political Economy, written when he was 30-38, maybe not. And add on two paragraphs–ripped from their context–from his written-at-57 “A Critique of the Gotha Program. *The Eighteenth Brumaire–and how its analysis of the relation between economic classes, economic interests, political fractions, and the coming of the Second Empire dictatorship in France over 1848-1852 was wrong? Nope. The Grundrisse? The rest of A Contribution to the Critique of Political Economy? Theories of Surplus Value? Capital, vols. I, II, and III? Not to be wrestled with.

It has always seemed to be that the “western Marxists” still floating around today have decided that Marx’s life and work end at 30. It seems to me that that is as damning a judgment of his lifetime project as the one made by those who ignore him completely.

Then, on the other hand, there is us.

We–people like Joan Robinson, Paul Samuelson, and me–take Karl Marx throughout his life as a mighty and mightily flawed thinker, worth grappling with and treating with respect.

My take, in brief: We need to talk about Marx the moralist-prophet, Marx the political activist, and Marx the economist. Marx did not divide himself into those three. But we find it useful to do so:

Marx the Economist:

1. Among the very first to get the industrial revolution right and understand what it meant for human possibilities and human destiny.
2. Got a lot about the economic history of the development of modern capitalism in England right–very much worth grappling with as an economic historian of 1500-1850.
3. Believed, probably wrongly, that a capitaliist market economy with wage labor is an insult to humanity, delivered low utility, and was sociologically and psychologically unsustainable.
4. Believed, certainly wrongly that a capitalist market economy with wage labor was incapable of delivering an acceptable distribution of income.
5. Among the very first to recognize that the fever-fits of financial crisis and depression that afflict modern market economies were not a passing phase but rather a deep and chronic malady of the system.

Now we modern neoliberals respond that (5) on the business cycle we have economic policy quinine to manage if not banish the disease, (4) Beveridgism or Myrdahlism–social democracy, progressive income taxes, a very large and well-established safety net, public education to a high standard, channels for upward mobility, and all the panoply of the twentieth-century social-democratic mixed-economy democratic state–can keep capitalist prosperity must be accompanied by great inequality and misery, and (3) a market economy can easily be a good thing even if a market society generally is not, and that the forecast of utopia–that we jumped-up monkeys with big brains will become perfectly happy–belongs in the Book of Daniel or of the Apocalypse, not in political economy. Whether our responses are convincing is for you to judge.

Marx the Activist:

Marx the political activist had five reasons he thought it necessary and possible to work to overthrow the capitalist market economy and socialize the means of production, believing that:

1. Technological progress and capital accumulation that raised average labor productivity also lowered the working-class wage.
2. Globalization inherently increased inequality in the world economy’s core and hence raised pressure for working-class revolution.
3. While previous systems of hierarchy and domination had hypnotize the poor into believing that the rich in some sense “deserved” their high seats, capitalism replaced masked exploitation by naked exploitation–and without ideological legitimation, unequal class society could not long survive.
4. Even though the ruling class could appease the working class by sharing the fruits of economic growth, they could not organize themselves to do so. Hence social democracy would inevitably collapse before an ideologically-based right-wing assault, income inequality would rise, and the system would be overthrown. (The Wall Street Journal editorial page works day and night 365 days a year to make this one of Marx’s predictions come true. But I think they will fail.)
5. Factory work would lead people to develop a sense of their common interest and of class solidarity, hence they would be able to organize, and revolt, and establish a free and just society in a way that they could not back in the old days, when the peasants of this village were suspicious of the peasants of the next village. Here I think Marx mistook a passing phase for an enduring trend: active working-class consciousness as a primary source of loyalty and political allegiance was never that strong; nation and ethnos seem to trump class much more often than not.

Thus I conclude that while there is a lot in Marx-the-economist worth grappling with and thinking about, there is very little in Marx the political activist that is worth paying attention to today.

Marx the Prophet:

Let’s listen to a sample:

Great Britain[‘s]… aristocracy wanted to conquer [India], the moneyocracy to plunder it, and the millocracy to undersell it…. Now the… millocracy…intend now drawing a net of railroads over India… [to] extract… the cotton and other raw materials for their manufactures…. The railway-system will therefore become, in India, truly the forerunner of modern industry…. All the English bourgeoisie may be forced to do will neither emancipate nor materially mend the social condition of the mass of the people…. But what they will not fail to do is to lay down the material premises to do so]…. Has the bourgeoisie ever done more? Has it ever effected a progress without dragging individuals and people through blood and dirt, through misery and degradation?…. When a great social revolution shall have mastered the results of the bourgeois epoch… and subjected them to the common control of the most advanced peoples, then only will human progress cease to resemble that hideous, pagan idol, who would not drink the nectar but from the skulls of the slain…

Were live in this fallen sublunary sphere. In it, the New Jerusalem does not descend from the clouds “prepared as a Bride adorned for her Husband.” In it, a Great Voice does not declare:

I shall wipe away all tears from their eyes; and there shall be no more death, neither sorrow, nor crying, neither shall there be any more pain: for the former things are passed away…

But Marx clearly thought at some level that they would.

He never got to the island of Patmos on which John the Divine lived. But there is a sense that he, too, got too much into the magic mushrooms.

And here is more that I at least think is very much worth reading. And if you finish this and still want more, I’ll send you the course reading list:

My Stuff:

• Understanding Karl Marx
  http://delong.typepad.com/20090420_stanford-talk_karl-marx.pdf
  2009-04-20

• Relevance of Marx?
  http://delong.typepad.com/sdj/2014/03/over-at-the-new-york-times-room-for-debate-relevance-of-marx.html
  2014-01-30

• What Was Karl Marx’s Principal Contribution?
  http://delong.typepad.com/sdj/2011/04/what-was-karl-marxs-principal-contribution.html
  2011-04-03

• Marx’s Half-Baked Crisis Theory and His Theories of Surplus Value, Chapter 17
  http://delong.typepad.com/sdj/2011/05/marxs-half-baked-crisis-theory-and-his-theories-of-surplus-value-chapter-17.html
  2011-05-01

• Keynes, Marx, Trotsky, Yglesias
  http://delong.typepad.com/sdj/2007/01/keynes_marx_tro.html
  2007-01-16

• Unstructured Procrastination: Why Is Structural Marxism Desirable?
  http://delong.typepad.com/sdj/2005/08/unstructured_pr.html
  2005-08-11

• The Relevance of Marx http://delong.typepad.com/sdj/2008/03/afternoon-coffe.html) 2008-03-20

• Evaluating Karl Marx as Political Activist
  http://delong.typepad.com/sdj/2008/03/evaluating-karl.html
  2008-03-21

• Introducing Serious, Permanent Bugs into Your Wetware
  http://delong.typepad.com/sdj/2006/08/introducing_ser.html
  2006-08-26

• Why Everybody Should Be Short Louis Althusser and His Intellectual Children
  http://delong.typepad.com/sdj/2007/06/why_everybody_s.html
  2007-06-11

• Lire le Capital: Mail Call
  http://delong.typepad.com/sdj/2005/04/lire_le_capital.html
  2005-04-05

• Department of “Huh?”: In Praise of Neoclassical Economics: Exhibit 1: David Harvey
  http://delong.typepad.com/sdj/2009/02/department-of-huh-in-praise-of-neoclassical-economics-department.html
  2009-01-14 |
  Why, Thank You Mike Begg: Yes, the Argument Back in 2009 That Fiscal Expansion Would Lead to Large Rises in Interest Rates and Be Offset by Crowding Out Was Simply Wrong
  http://delong.typepad.com/sdj/2011/01/why-thank-you-mike-begg-yes-the-argument-back-in-2009-that-fiscal-expansion-would-lead-to-large-rises-in-interest-rates-an.html
  2011-01-05

Other People’s Stuff:

• Leszek Kolakowski:
  Main Currents of Marxism: Leszek Kolakowski tells English historian E.P. Thompson what he thinks of him…
  http://delong.typepad.com/sdj/2006/09/main_currents_o.html
  1974-03-01

• Paul Samuelson:
  On Paul Samuelson on Karl Marx
  http://delong.typepad.com/sdj/2013/10/robert-paul-wolff-on-paul-samuelson-on-karl-marx-thursday-whiskey-tango-foxtrot-bang-query-bang-query-weblogging.html
  http://www.jstor.org/stable/1823476
  1962-03-01

• Joan Robinson:
  Joan Robinson: Open letter from a Keynesian to a Marxist
  http://delong.typepad.com/sdj/2013/07/joan-robinson-open-letter-from-a-keynesian-to-a-marxist-tuesday-sixty-years-ago-on-the-non-internet-weblogging.html
  1953-07-30

• Fred Halliday:
  What Was Communism?
  https://www.opendemocracy.net/article/what-was-communism
  2009-10-16

• Matthew Yglesias:
  Can Social Democracy Explain Its Own Success?
  http://crookedtimber.org/2006/10/31/can-social-democracy-explain-its-own-success/
  2006-10-31

• Karl Marx:
  On Say’s Law: Theories of Surplus-Value, Chapter 17
  http://delong.typepad.com/sdj/2010/03/karl-marx-on-says-law-theories-of-surplus-value-chapter-17.html 1863-01-01

1864 words

…wholesale gasoline distributors… will have to buy… one emissions allowance for every metric ton of greenhouse gases you emit when you burn the gasoline…. At the current price of allowances… that works out to about 10 cents per gallon of gas…. Unfortunately, as the date for expanding cap-and-trade to transportation fuels approaches, both the program’s opponents and supporters have been exaggerating how much or little impact it will have….

The oil lobby… is claiming that the change will raise gas prices 16 to 76 cents… based on two analyses that were done many years ago…. The oil industry knows what allowances actually sell for today…. But they are choosing to stick with the outdated–and scarier–estimates…. Some proponents… are saying that Big Oil is not required by law to raise its prices, so it will be its own choice if it does, not the fault of the cap-and-trade program. This is just as disingenuous….

By establishing a price for emissions, California sends a signal to the rest of the country and the world that we recognize the risk of climate change and are willing to take actions to address it…. No one thinks California’s climate change program alone will solve this global problem, but if advanced economies like ours aren’t willing to step up, there will be no solution at all.

Must- and Shall-Reads:

• Gianfranco Poggi:
  Discussing Karl Polanyi, Understanding the Current Crisis: Reviewing Bloch and Somers “The Power of Market Fundamentalism: Karl Polanyi’s Critique”
• Laura Tyson:
  The Rising Costs of US Income Inequality
• Simon Wren-Lewis:
  Bond market Fairy Tales: Part 1 | Part 2
• Binyamin Applebaum:
  The Vanishing Male Worker: How America Fell Behind
• Tom Vanderbilt:
  The Counterintuitive Science of Traffic
• Erwin Chemerinsky:
  Prosecute John Yoo, Says Law School Dean
• Ron Wyden:
  Torture Rebuttal
• Jacob Schlesinger:
  For Japan’s Shinzo Abe, Now Comes the Hard Part

1. Marcy Wheeler:
   As Last Piece of Business, Carl Levin Reiterates that Dick Cheney Lied Us into War: “Carl Levin… released a letter he received from John Brennan demonstrating what a liar Dick Cheney is…. Levin has been trying to get the CIA to declassify a March 13, 2003 cable…. Brennan still refuses to declassify the cable, but his letter does explain some of CIA’s assessment of that source. ‘On 13 March 2003, CIA headquarters received a communication from the field responding to a request that the field look into a single-source intelligence report indicating that Mohammed Atta met with former Iraqi intelligence officer al-Ani in Praque in April 2001. In that communication, the field expressed significant concern regarding the possibility of an official public statement by the United States Government indicating that such a meeting took place. The communication noted that information received after the single-source report raised serious doubts about that report’s accuracy.’… Brennan’s letter goes on to quote on line from the report. ‘The field added that, to its knowledge, ‘there is not one USG [counterterrorism] or FBI expert that… has said they have evidence of ‘know’ that [Atta] was indeed [in Prague]. In fact, the analysis has been quite the opposite.’ [brackets original] Four days after this report, Cheney fought mightily to make the Atta claim once more…. I raise all this when I should instead be talking about the torture report because it gets to the point…. This all was about exploitation, not intelligence. And for over a year, Dick Cheney’s goal for exploitation was to create a fraudulent case for the Iraq war, whether via torture or dubious single source claims in Prague. As Cheney complains that the torture report (which reported on the anal rape done in the guise of rectal rehydration done on his order) is ‘full of crap,’ we should never forget that one end result of this was the disastrous Iraq war…”
2. Cory Doctorow:
   Reviewing “How We Got to Now: Six Innovations That Made the Modern World”: “In How We Got to Now, [Steven] Johnson picks six profound technologies and follows their path from earliest prehistory to the modern age… glass (from Venetian glassblowers to telescopes and microscopes); cold (from icehouses to modern refrigeration, and the way our food infrastructure, medical science, and geography have been transformed by the ability to manipulate heat); sound (from early chanted ritual to phonographs, to music, urban noise, and radar); hygiene (the key innovations that let cities grow without being destroyed by disease, the germ theory of medicine, and clean rooms in microprocessor factories); time (early astronomy, the age of navigation and the Longitude Prize, the industrial revolution and the timeclock, and microsecond timing in modern computers); and, finally, light (from candles to whaling; the changes to human sleep cycles thanks to artificial light, lasers and electron microscopy). Each of these six lively stories is a tapestry worn of fascinating technical tid-bits and engrossing stories of personal sacrifice, genius, error, foolishness and difficulty from the cluster of inventors who are responsible for each one…”
3. Stanley Fischer:
   Fed’s Stanley Fischer Discusses Big-Bank Political Influence: “Mr. Fischer suggested rules set directly by legislatures can be imperfect, lamenting the role of Wall Street banks in shaping the 2010 Dodd-Frank financial overhaul law. ‘I thought that when Dodd-Frank started, that the banks would not succeed in influencing it, having lost all the prestige they lost,’ he told a crowd of several dozen at the Washington, D.C., think tank. ‘Boy, was I wrong.’ His remarks came less than a day after the House passed a spending bill that included a provision, long sought by banks, to scale back a Dodd-Frank requirement. Mr. Fischer also recalled how… leading the Bank of Israel…. When his central bank colleagues asserted that the institution acted independently of the elected government, his reply was, ‘Yes. And we are two bad decisions away from not being an independent central bank.’ Mr. Fischer said he believes the Financial Stability Board, an organization of regulators set up to coordinate the global response to the financial crisis, has been ‘a great success,’ in part because it has been more inclusive than other international bodies…”
4. Roger Farmer:
   Real business cycle theory and the high school Olympics:
   “I have lost count of the number of times I have heard students and faculty repeat the idea in seminars, that ‘all models are wrong’. This aphorism, attributed to George Box, is the battle cry  of the Minnesota calibrator, a breed of macroeconomist, inspired by Ed Prescott…. The cr  has been used for three decades to poke fun at attempts to use serious econometric methods to analyze time series data. Time series methods were inconvenient to the nascent Real Business Cycle Program that Ed pioneered because the models that he favored were, and still are, overwhelmingly rejected by the facts. That is inconvenient. Ed’s response was pure genius. If the model and the data are in conflict, the data must be wrong…. In a puff of calibrator’s smoke, the history of time series econometrics was relegated to the dustbin of history to take its place alongside alchemy, the ether, and the theory of phlogiston. How did Ed achieve this remarkable feat of prestidigitation? First, he argued that we should focus on a small subset of the properties of the data…. Ed argued that the trends in time series are a nuisance if we are interested in understanding business cycles and he proposed to remove them with a filter… remov[ing] a different trend from each series and the trends are discarded when evaluating the success of the theory…. He proposed that we should evaluate our economic theories of business cycles by how well they explain co-movements among the wiggles. When his theory failed to clear the 8ft hurdle of the Olympic high jump, he lowered the bar to 5ft and persuaded us all that leaping over this high school bar was a success. Keynesians protested. But they did not protest loudly enough and ultimately it became common, even among serious econometricians, to filter their data with the eponymous Hodrick-Prescott filter…. We don’t have to play by Ed’s rules…. Once we allow aggregate demand to influence permanently the unemployment rate, the data do not look kindly on either real business cycle models or on the new-Keynesian approach. It’s time to get serious about macroeconomic science and put back the Olympic bar.”
5. Daniel Davies:
   Reputations are made of…:
   “It is certainly true that one of the benefits of doing something stupid is that it saves you from having to spend money on maintaining your reputation as an idiot. However, is the reputation of an idiot really worth having?… It can be proved… the answer is no. If… being a belligerent idiot with no sensible regard for one’s own welfare was worth the candle… then everyone would want to get that reputation…. But if everyone wanted that reputation, then everyone would know that simply acting like an idiot didn’t mean that you were one, in which case it would be impossible to establish a reputation as an idiot in the first place…”
6. Noah Smith:
   Ross Douthat ponders the Liberal Marriage Hypothesis:
   “Finally, Douthat suggests his alternative to the Liberal Marriage Hypothesis: ‘We may have a culture in which the working class is encouraged to imitate what are sold as key upper-class values–sexual permissiveness and self-fashioning, spirituality and emotivism–when really the upper class is also held together by a kind of secret traditionalism, without whose binding power family life ends up coming apart even faster.’ This would be very convenient for a traditionalist who didn’t want to have to change his view of reality very much!… It sort of sounds like a version of what many traditionalist conservatives say when I bring up the LMH. In one form or another, they tell me that liberalism only works for smart people. Not-so-smart people, they tell me, need simple rules and guidelines, and guiding institutions like churches, in order to live safe, clean, successful, moral, industrious lives. You can’t just give them total social freedom and license and let them figure it all out for themselves, the traditionalists tell me. Well, maybe…. Or maybe… it just takes… a little more time. Maybe the upper class are the first to encounter… and therefore the first to figure out…. Maybe the working class is doing now what the educated class did in the 1970s and 1980s–responding to [the pill and] the advent of the service economy by adopting more equal gender roles…”

Should Be Aware of:

• Nick Szabo:
  The dawn of trustworthy computing
• Catherine Thompson:
  Cheney Throws Bush Under The Bus On Torture Program
• Mark Blaug: The Formalist Revolution of the 1950s
• Magda Fontana:
  The Santa Fe Perspective on Economics: emerging patterns in the science of complexity
• The Top 100 Star Trek Episodes Of All Time!
• [Exit Polls Project Big Win for Japan Ruling Party–AP(http://www.nytimes.com/aponline/2014/12/14/world/asia/ap-as-japan-election.html?partner=rss&emc=rss&smid=tw-nytimes&_r=1)
• Elias Asquith:
  Bush’s Willful Ignorance: Why He Wanted to Know as Little About Torture as Possible
• Jeet Heer:
  Out Here It’s 2014

1. Kathleen Geier:
   The importance of having skin in the game: thoughts on economic diversity and liberal elitism:
   “Human beings’ economic background and experiences shape their political views and priorities in profound ways…. Most liberals freely acknowledge that race and gender diversity are important and that when organizations include women and people of color, they often bring unique and valuable perspectives…. So why are some liberals so resistant to the idea that economic diversity is also important, and for similar reasons?… In the dementedly pompous editors’ letter published last week, ex-TNR staffers proclaimed that their former magazine is ‘liberalism’s central journal’ and ‘a kind of public trust.’ With the shakeup at the magazine, ‘The Promise of American Life has been dealt a lamentable blow.’ Oh my. Yet… for at least as long as I’ve been reading it, the New Republic been a profoundly elitist and insular institution, not just in terms of race and gender, but perhaps even more centrally, in terms of class…. [That] helps to explain why it supported many neoliberal economic policies and did not begin taking economic inequality seriously until recently. But then again, why would you expect them to?… They had no skin in the game…. Trashing welfare, labor unions, and ‘entitlements’ while cheerleading for privatization and ‘free’ trade, the magazine that perennially policed the leftmost bounds of American political expression helped push the terms of the political debate ever rightward…. Take, for example, this snotty editorial about Occupy…. Liberals need to seriously commit themselves to narrowing the economic divide…. And pay your interns a living wage, dammit!…”
2. Ryan Avent:
   Labour Markets: On “Bullshit Jobs”:
   “Why… would firms spend… employing people to do worthless tasks (especially when they’ve shown themselves to be exceedingly good at not employing people)?… Says Mr Graeber: ‘The ruling class has figured out that a happy and productive population with free time on their hands is a mortal danger (think of what started to happen when this even began to be approximated in the ‘60s).’ I am immediately bursting with questions…. How does the ruling class co-ordinate… this?… If much… employment is useless… why not just keep them on during recessions?… As technology has improved, it has become ever easier to dispense with human labour in mechanical processes…. not surprising that employment growth has shifted elsewhere…. Administrative jobs are the modern equivalent of the industrial line worker…. Why today’s workers aren’t rewarded with high wages… one possible answer is that, well, they are. Real wages for today’s clerical workers are far higher than they were for manufacturing workers a century ago…. If firms had to pay more to get a body in the deskchair, they would…. The issue is not that jobs used to have meaning and now they don’t…. The issue is that too little of the recent gains from technological advance and economic growth have gone toward giving people the time and resources to enjoy their lives outside work…”
3. Dara Lind:
   Ted Cruz just did a huge favor for Democrats:
   “The Senate is unexpectedly staying in session over the weekend… thanks to a late-night maneuver by Senators Ted Cruz and Mike Lee…. Because of the extra session over the weekend, Senate Majority Leader Harry Reid is going to be able to secure votes on up to 20 Obama administration nominees… Surgeon General, the head of the country’s chief immigration enforcement agency, and several federal judgeships who Republican senators have been blocking…. What happened?… Last night, the Senate was supposed to pass a bill funding the government through Wednesday. Then, they would adjourn for the weekend, and come back on Monday to… fund most of the government through September, 2015. This plan got worked out by Senate Majority Leader Harry Reid and Senate Minority Leader Mitch McConnell…. Sens. Ted Cruz (R-TX) and Mike Lee (R-UT)… refused to consent to the procedural plan…. Congressional expert Sarah Binder of the Brookings Institution describes the result as ‘full bloom procedural nuttiness.’… At this rate, they’ll be able to start voting for cloture on the nominees on Monday…”

…[Steven] Johnson picks six profound technologies and follows their path from earliest prehistory to the modern age… glass (from Venetian glassblowers to telescopes and microscopes); cold (from icehouses to modern refrigeration, and the way our food infrastructure, medical science, and geography have been transformed by the ability to manipulate heat); sound (from early chanted ritual to phonographs, to music, urban noise, and radar); hygiene (the key innovations that let cities grow without being destroyed by disease, the germ theory of medicine, and clean rooms in microprocessor factories); time (early astronomy, the age of navigation and the Longitude Prize, the industrial revolution and the timeclock, and microsecond timing in modern computers); and, finally, light (from candles to whaling; the changes to human sleep cycles thanks to artificial light, lasers and electron microscopy).

Each of these six lively stories is a tapestry worn of fascinating technical tid-bits and engrossing stories of personal sacrifice, genius, error, foolishness and difficulty from the cluster of inventors who are responsible for each one…

One of the things I have never understood is why Barack Obama and Tim Geithner

Roger Farmer:
Real business cycle theory and the high school Olympics:
“I have lost count of the number of times…

…I have heard students and faculty repeat the idea in seminars, that ‘all models are wrong’. This aphorism, attributed to George Box, is the battle cry  of the Minnesota calibrator, a breed of macroeconomist, inspired by Ed Prescott…. The cry has been used for three decades to poke fun at attempts to use serious econometric methods to analyze time series data. Time series methods were inconvenient to the nascent Real Business Cycle Program that Ed pioneered because the models that he favored were, and still are, overwhelmingly rejected by the facts. That is inconvenient.

Ed’s response was pure genius. If the model and the data are in conflict, the data must be wrong…. In a puff of calibrator’s smoke, the history of time series econometrics was relegated to the dustbin of history to take its place alongside alchemy, the ether, and the theory of phlogiston. How did Ed achieve this remarkable feat of prestidigitation? First, he argued that we should focus on a small subset of the properties of the data….

Ed argued that the trends in time series are a nuisance if we are interested in understanding business cycles and he proposed to remove them with a filter… remov[ing] a different trend from each series and the trends are discarded when evaluating the success of the theory…. He proposed that we should evaluate our economic theories of business cycles by how well they explain co-movements among the wiggles.

When his theory failed to clear the 8ft hurdle of the Olympic high jump, he lowered the bar to 5ft and persuaded us all that leaping over this high school bar was a success. Keynesians protested. But they did not protest loudly enough and ultimately it became common, even among serious econometricians, to filter their data with the eponymous Hodrick-Prescott filter….

We don’t have to play by Ed’s rules…. Once we allow aggregate demand to influence permanently the unemployment rate, the data do not look kindly on either real business cycle models or on the new-Keynesian approach. It’s time to get serious about macroeconomic science and put back the Olympic bar.