that few consumers can understand. (The alternative view is that
consumers' behavior can be consistent with the model even if they
don't understand it.) The book includes some interesting rhetorical
sniping by members of the two schools. Lucas observes at one point:
"I don't think that Solow, in particular, has ever tried to come to
grips with any of these issues except by making jokes." In his own
conversation, Solow acknowledges the jokes but insists that he has
his reasons for not getting into detailed arguments. "Suppose," he
says, "someone sits down where you are sitting right now and
announces to me that he is Napeoleon Bonaparte. The last thing I
want to do with him is to get involved in a technical discussion of
cavalry tactics at the Battle of Austerlitz. If I do that, I'm
getting tacitly drawn into the game that he is Napoleon
Bonaparte."
Despite these quite fundamental disagreements about what's going
on in the real world, the economists represented in
Conversations agree on more issues than a non-economist
might suppose. For example, economists today generally agree that
there is no long-run trade-off between inflation and unemployment.
At the peak of their prestige in the Sixties, the Keynesians
insisted that the trade-off was real and argued that high but
steady inflation rates could produce low unemployment rates. But
the Seventies--a period of both high inflation and high
unemployment--led most Keynesians to change their perspectives.
Robert Solow, for example, says that his belief in a stable
trade-off "was very badly damaged by the data of the Seventies,"
which led him to change his mind.
Klamer's economists are also pretty well
agreed on the harm done by many government policies. Monetarists
and economists working in the classical tradition have long
believed that price controls create shortages without reducing
inflation rates. But most Keynesians now oppose controls too. About
the only Keynesian still advocating them is James Tobin, Yale's
Nobel laureate. And Tobin admits that the case for controls "is not
an argument to which most members of the profession would
agree."
To be sure, there are important differences of emphasis on the role of government.
Solow and Blinder support more government interventions, and Solow says he
would be willing to see democratic socialism given a try. Even so
he acknowledges the danger of socialism," which is "the
concentration of political and economic power in the same hands."
Blinder identifies himself as one whose bedrock belief is sympathy
for the underdog--and opposes the minimum wage precisely because it
hurts society's underdogs (by reducing job opportunities for
unskilled workers).
Even where they disagree, the
Keynesians and the more classical economists aren't as far apart as
many might suppose. Question: why are workers laid off during
recessions? The supplied by both sides is that layoffs occur
because wage rates don't fall along with the demand for labor. The
view that employment depends on wage rates, although foreign to
most educated Americans, is second nature to economists. The issue
that remains contentious among them is why wages don't fall
along with demand. Or, more precisely, why have they fallen at some
times but not others? Lucas notes that they fell by about half
between 1929 and 1933; he adds that he is puzzled by their failure
to fall further during the years of high unemployment in the later
Thirties.
However, several of the economists represented in
Conversations think they know why wages tend to be rigid
during downturns. Tobin, Modigliani, and Taylor, all Keynesians,
attribute wage rigidity to the existence of long-term union
contracts. This hypothesis is also supported by two of Klamers's
more classical scholars, Sargent and Robert Townsend (of
Carnegie-Mellon). Klamer often seems to be trying to emphasize the
differences among his 11 economists, but many readers will surely
be struck by the extent of the agreements.
The agreements do not extend to the two radicals among the eleven.
David Gordon, one of the best-known
radical economists in the U.S. today, goes so far as to challenge
the view that consumers have choices. According to Gordon, people
in fact have few choices to make because so many of them live
at subsistence levels. You have to marvel at the ability of some
sophisticated economists to hold beliefs so palpably at odds with
reality.
Leonard Rapping, the other radical
economist interviewed, attributes his present posture to his
experiences during the Vietnam war. Rapping, now based at the
University of Massachusetts, began as a free-market economist but
says that he rejected the "Chicago School" because his teacher,
Milton Friedman, "never mentioned anything about foreign policy or
defense." What this seems to mean is that Friedman's failure to
discuss issues on which he was not an expert led Rapping to doubt
the validity of Friedman's views in areas where his expertise was
unquestioned. The non sequitur here seems bizarre, and it is
interesting to contrast Rapping's experience with that of Thomas
Sargent, who became more of a free-market believer because of
Vietnam. Sargent tells us that he left Berkeley and Harvard
believing strongly in government interventions. During the war he
served for a time in the Pentagon, where his tour of duty left him
broadly doubtful about the effectiveness of government
policymakers.  For many readers, one of
the rare pleasures offered by Conversations with Economists
is the book's high-level presentations of issues in a format free
of equations. You do not have to be a specialist in the humanities
to worry that modern ecomomics is too mathematical. Two of the 11
economists interviewed--Blinder and Karl Brunner, the eminent
monetarist from the University of Rochester--express concern that
valuable insights are sometimes ignored because it is difficult or
impossible to express them in quantitative terms. Brunner worries,
for example, about the conviction of many younger economists "that
whatever is not explicitly and rigorously formalized does not
count, and cannot possibly contribute any relevant knowledge."
Klamer's book shows that even at the theoretical heights, economic
knowledge can be conveyed in plain English.