Further to Ian Bruff's post about the Ignoble Prizes for Economics, I'm supporting the attached call to mobilise votes for Richard Portes, for the reasons given in Alan Freeman's message to our colleagues in the Association for Heterodox Economics (AHE).

Note that one can vote for three candidates, so voting for Portes does not preclude one from also pinning responsibility on other (dis)favoured candidates.

I'd be interested to hear list members' arguments for other candidates.

For myself, I strongly believe that one cannot overlook the Black-(Sc)holes formula for crushing wealth into an indefinitely small value, but I am hovering between also recognising Milton Friedman (for his phenomenally silly contribution to philosophy of science) and Robert Lucas, for providing (in the form of rational expectations theory) a phenomenally silly practical application of Friedman's idea.

Julian Wells


Dr Julian Wells

staff web-page: http://fass.kingston.ac.uk/staff/cv.php?staffnum=287
personal web-site: http://staffnet.kingston.ac.uk/~ku32530

Senior lecturer in economics
School of Economics
Faculty of Arts and Social Sciences
Kingston University
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-----Original Message-----
From: Alan Freeman [mailto:[log in to unmask]]
Sent: 02 February 2010 16:50

Subject: Why I am calling for a vote for Richard Portes in the Real World Economic Review's Ignoble Economics Prize contest

I personally will vote for Richard Portes; of course, list members are
free to vote as they will (and others on this list may have their own
reccomendations). However, I think it would be particularly appropriate,
from the AHE's point of view, for the prize to be awarded to the
best-known representative of the Royal Economic Society and I am taking
the unusual step of urging AHE members to cast their first vote for him.

This is not a personal matter: it is an institutional one. The AHE was
actually formed because of the RES, under Portes' Secretary-Generalship,
persistently turned down heterodox papers for its annual conference, and
refused the reasoned request of our founders for heterodox economists to
be involved as such in selecting papers which, they rightly argued, were
not within the sphere of competence or expertise of mainstream
economists to pass judgement on.

Richard Portes, in his recent valedictory speech, articulated the
truculent resistance both heterodoxy and pluralism that the RES has
maintained ever since. A number of protesting letters from our members
were actually published in the RES bulletin, to its credit, which may be
consulted. We dissected the errors in Portes' reasoning in our article
for the IREE special issue on pluralism in Higher Education (which can
be found at http://www.economicsnetwork.ac.uk/iree/v8n2/freeman.pdf).

The RES persists in its obdurate opposition to all things heterodox and
pluralist and this should, I think, be reflected in the outcome of the
prize. Arising from the IREE special edition and our submissions on the
UK economics subject benchmark (SBSE), we proposed a panel at the
forthcoming RES conference on pluralism in economics education and the
subject benchmark - an issue one might have thought of interest to
economics, not to mention the public. This was even supported formally
by CHUDE, the representative body of economics teaching in the UK, which
is formally responsible for the subject benchmark.

The RES turned down this proposal, a decision which I find absolutely
extraordinary. It appears like the Bourbons to forget nothing and learn
nothing.

Portes' record has something to teach it. Those who wish to follow the
Icelandic episode to which the Real World Review refers should read the
excellent article in Challenge by Robert Wade. I cannot think of any
episode in the present crisis more damning to the reputation of our
profession. It is an extraordinary thing that any person, let alone a
person who by virtue of his status and office is an acknowledged
representative of the economics profession, should produce a report
exonerating the financial system of a country which went bankrupt within
months of his judgement, and follow this up by writing letters to the
Financial Times impugning the reputation of a colleague with the
temerity to question his judgement.

I have said that this is an institutional matter. I urge a vote for
Richard Portes in this poll not simply because I believe this conduct
reflects great discredit on economics, but because the Royal Economic
Society, the principal body reflecting the professional opinion of
economists in the UK, with great authority in the world, does not
deserve this authority and does not deserve to represent us. It has been
questioned even by the sovereign from whom it claims patronage. If the
RES wishes to maintain its claim to represent standards in economics, it
must earn it. A vote for Richard Portes will send to the Royal Economic
Society the signal that we, the economists it claims to speak on behalf
of, think it is time for it to clean up its act.

Alan Freeman



On 02/02/2010 6:07 AM, Wells, Julian wrote:
> Details of this initiative are available here:
>
>       http://rwer.wordpress.com/2010/01/11/announcing-the-ignoble-and-noble-prizes-for-economics-2/
>
> A sidebar at the right of the page (and other related pages) provides access to the voting mechanism and to the evidence pages for the nominees.
>
> Discussion of the nominations is here:
>
>      http://rwer.wordpress.com/nominations-for-the-ignoble-prize-for-economics/
>
>
> Now here is the shortlist (from http://rwer.wordpress.com/short-list-dossiers/):
>
>
> Fischer Black and Myron Scholes
>
> They jointly developed the Black-Scholes model which led to the explosive growth of financial derivatives.  The importance given to their hypothetical calculation of derivative prices was baneful not just because it was bogus, but also because it meant that relevant and often urgent real-world economic research was widely neglected by the profession.
>
>
> Eugene Fama
>
> His "efficient market theory" provided the moral umbrella for all sorts of greed, predatory behaviour and incompetent corporate management.  It also provided the rationale for deregulation.  And his theory's widespread acceptance meant that "discussion of investor irrationality, of bubbles, of destructive speculation had virtually disappeared from academic discourse."  In these three ways Fama's work created the environment which made possible the GFC.
>
>
> Milton Friedman
>
> He propagated the delusion, through his misunderstanding of the scientific method, that an economy can be accurately modeled using counterfactual propositions about its nature.  This, together with his simplistic model of money, encouraged the development of the financial theories with unrealistic assumptions that facilitated the GFC.  In short, he opened the door for everyone subsequently to theorize without fear of having to be attached to reality.
>
>
> Alan Greenspan
>
> As Chairman of the Federal Reserve System from 1987 to 2006, he both led the over expansion of money and credit that created the bubble that burst and aggressively promoted the view that financial markets are naturally efficient and in no need of regulation.  Before a Congressional committee on 28 October 2008 Greenspan confessed that his theoretical beliefs of 40 years were now proven to be without foundation, hence his total confusion and failure at his job.
>
>
> Assar Lindbeck
>
> By working to make the Riksbank Prize in Economic Sciences ("Nobel Prize in Economics") almost exclusively a prize for neoclassical economists, this Swedish economist has contributed significantly to the conversion of the economics profession and of world public opinion to market fundamentalism.
>
>
> Robert Lucas
>
> His development of the rational expectations hypothesis, which defined rationality as the capacity to accurately predict the future, both served to maintain Friedman's proposition that monetary factors do not affect the real economy and, in the name of "rigor", distanced economics even further from reality than Friedman had thought possible.
>
>
> Richard Portes
>
> As Secretary-General of the Royal Economic Society from 1992-2008, he helped suppress worries expressed by non-mainstream economists about developments in the financial sector.  In 2007 he wrote a Report for the Icelandic Chamber of Commerce giving a clean bill of health to Icelandic banks only a few months before they collapsed.  When investigators called attention to the real state of Icelandic banking, he wrote a series of letters to the Financial Times defending the soundness of Icelandic banks and imputing professional incompetence to those who doubted it.
>
>
> Edward Prescott and Finn Kydland
>
> For jointly developing and popularizing "Real Business Cycle" theory, which by omitting the role of credit greatly diminished the economics profession's understanding of dynamic macroeconomic processes.
>
>
> Paul Samuelson
>
> Through his textbook Economics: An Introductory Analysis (19 English language editions and translated into 40 languages), he popularized neoclassical economics, contributing more than any other economist to its diffusion and thereby to the deregulation of financial markets which made possible the GFC.
>
>
> Larry Summers
>
> As US Secretary of the Treasury (formerly an economist at Harvard and the World Bank), he worked successfully for the repeal of the Glass-Steagall Act, which since the Great Crash of 1929 had kept deposit banking separate from casino banking.  He also worked with Greenspan and Wall Street interests to torpedo efforts to regulate derivatives.
>
> ++++++++++++++



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