Seminar on Topics in a New and Humanistic Economics

Economic 594 (#16857, or it seems 32925)

Deirdre N McCloskey

Department of Economics, [email protected] deirdremccloskey.org

Mondays 6:00-8:30.

First meeting Lincoln Hall 103; subsequently 720 S Dearborn St

I am working on a new, third edition of an old textbook of mine, The Applied Theory of Price (1985), which gives students who work through the problems a grasp of Chicago-style microeconomics, as against the Mas-Colell-or-Varian-style formalism that currently dominates graduate education. We give an intense reading of it, and you are strongly advised to work through the problems in groups of students. (The 1985 version of the book is on line as a pdf, with all the diagrams, at my website, deirdremccloskey.org, and is also available second hand: don’t pay a lot for it!). You will be tested in every week’s meeting on the economics you learn from the text, so come every week ready to talk through the answer to a problem.

In other words, you will be asked each week to review in the textbook and in what you can bring from your other studies of conventional economics a bit of the Samuelsonian Max-U techniques and the characteristically Chicago-School, Marshallian entry-and-exit techniques usual in the field, to understand price theory. Don’t worry about your English: that’s not the point. I will be very patient with imperfections in it (as a lifelong stutterer, after all, should be)! But silence gets a C, which is failing grade for a graduate student, so speak up! I want you to learn to talk about economics, which you will find brings the field to life, and into your own life. But there will be a tough final exam as well, all the questions drawn from the problems in the book. If you work through the answers you will get an A!

In aid of a third edition of the book, further, the Applied Theory reading will be mixed in with various readings from what we are calling “humanomics,” that is, economic thinking beyond the Max U, Samuelsonian thinking that dominates much of economics nowadays. You will be asked in the same week, and every week, to overstand, as a graduate student should: that is, to see (so to speak from a height above it) price theory as a partial account of human behavior, which can be fruitfully supplemented by insights from the other social sciences (thus behavioral economics and the new economic sociology and economic history and law and economics) and especially from the humanities, that is, the university departments of art,

1 literature, philosophy. I intend to rewrite the Applied Theory with allowances for humanistic insights: philosophy, stories, metaphors, categorization, movies, rhetoric, symbolism, values, ethics, meaning.

You will be responsible for preparing every week a little written memorandum to me about how humanomic ideas might be brought into The New Applied Theory. The plan is for me to work on Applied Theory’s MS in an orderly way throughout the term, with your advice, due every week in detail as memos of suggestion. Every week. No exceptions! By the end of the term I will therefore have 14 memos from each of you (one for every week after the first, since we meet on Martin Luther King Day) stacked up before me, each memo referring to a group of chapters in the old Applied Theory. (Your grade will therefore be a composite of your performance on the final exam, your weekly contributions to the talk, and the surpassing excellence of your written memos.)

The verbal portions of the memos should be ready to be sent to me on Blackboard after each meeting (so that you can revise them in view of the discussion and we can all read them), with any diagrams or math written out on paper (and then put in my box in Economics for xeroxing and distribution), and should be clear and page-specific, so that I can sit at my computer and revise the book with their help. (Most of the revisions will, alas, have to come from my own mental sweat, but I do hope to get many from you!) You personally, and the students who worked with me last year on the book, will receive acknowledgment in the new edition. If you do a stellar job the acknowledgment will be on the title page of the new book, and can be added to your own CV as an item. The book will therefore be a UIC graduate- student project in part, raising the profile of our fine applied department.

Each week you will have read and digested the assigned chapters in The Applied Theory and the humanomics suggestions. Feel free to go beyond the suggested reading into the wider literature, and sometimes find substitutes for what I have spotted—after all, it is a central economic idea that there are substitutes for everything! Especially I am interested in suggestions for new ideas in economics—well, “new” since 1985!—that might make interesting and educational problems and paragraphs in the new book.

We’ll have the seminar, starting with the second class on 21 January, at my home 720 S Dearborn Street, Unit 206 (entry code to the building is *00040). Every L line runs through my “Printers’ Row” neighborhood, which is a mile due east of campus (LaSalle on Blue, Harrison on Red, Library on all the others), and many buses. Street parking is ample, though not cheap. I’ll feed us soup and bread.

2 Get my book, or prepare to use the on-line pdf, right away. There will be an editable copy up on Blackboard. I give some rough suggestions on the supplementary material. I will add the humanomical material later, probably copied into Blackboard: stay tuned.

14 January, Monday evening, 6:00-8:30, first introductory class, at Lincoln Hall 103.

21 Jan, Monday (even though it’s Martin Luther King Day, with respectful apologies to MLK; the trouble is we have only 15 meetings and a lot to cover), 6:30- 8:30 in my home, 720 South Dearborn Street, Unit 206, code for entry *00040. Please arrive on or before time, so as not to disturb the discussion. We’ll eat bread and soup, provided. Chp. 1, The budget line, and Chp. 2, The consumer’s choice. Humanomics on taste-formation; Bart Wilson on the location of a taste for equality (for example)

28 Jan, Monday, at 6:00-8:30 pm Chp. 3, Measurement of utility and risk, Chp. 4, Indifference curves and demand. McCloskey, “Happyism,” The New Republic, 2012 and works on happiness mentioned there.

4 Feb, Monday Chp. 5, Trade, Chapter 6, Using supply and demand, Chp. 7, Measuring supply and demand. Humanomics: experimental articles on markets by Vernon Smith, Bart Wilson, and others, showing that the Walras-Arrow-Debreu assumptions are beside the point.

11 Feb, Chp. 8, Production possibilities, Chp. 9, The economics of welfare and politics, Chp. 19, Consumers’ surplus. Humanomics: Public choice (Buchanan), justice (Nussbaum, Sandel)

18 Feb, Chp. 9, The firm, Chp. 10, Cost curves. Humanomics: Managerial theories, especially narrative; the case for and against agency theory.

25 Feb, Chp. 13, Competitive industry, Chp. 14 Long-run supply. Humanomics: evolutionary economics, analogies with evolutionary biology

4 Mar, Chp. 16, Property rights. Humanomics: Recent histories of property (North, Acemoglu, Robinson) and their frailties. Austrian theories of invention. The new literature on patents for invention and other intellectual property.

11 Mar Chp. 17, Behavior of monopoly, Chp. 18, Measuring monopoly, Chp. 19, Welfare of monopoly. Humanomics: Origins of hostility to markets.

18 Mar Chp. 20, Monopolistic competition, Chp. 21, Competition among the few. Humanomics: language and equilibrium.

[Spring Vacation]

1 Apr Chp. 22, Marginal productivity, Chp. 23 MP in use, Chp. 24 Misallocation in factor mkts Humanomics: the persistence of controversies in economics about the minimum wage.

3 8 Apr Chp. 25, Supply of labor. Humanomics: the meaning of work

15 Apr Chp. 24 Capital theory. The meaning of expectations and the future. Keynes, Shackle, Kirzner, McCloskey on prediction. Motto from Yogi Berra: “It’s hard to predict. Especially about the future.”

22 Apr, New chapters in price theory: Information, language

29 April Last Class, Full humanism in aid of economics