Warming Up for Life

David Colander is a member of a rare and valuable tribe — an insider to economics who speaks clearly and introspectively to outsiders about what the insiders are doing.  As the author of several textbooks, the Middlebury College professor has thought deeply about what teaching economics reveals about its research enterprise — that is, about its attempt to explain the world.

His just-published “The Stories Economists Tell,” (a book so new, alas, that it cannot be found anywhere on the Web) contains sixteen essays that constitute a capstone course,  of sorts, in teaching economics.  Colander tackles many of the most pressing questions we have about the discipline: the role of formalization, the limitations of current theory, the place in history of John Maynard Keynes, the trade-offs between the creation of new knowledge about the economy and the conservation of the considerable store that has already been won.

The results are always interesting and often persuasive, and his central metaphor — the calisthenics of much classroom instruction vs. the “play” of really doing economics — is a durable one.

Sound like a blurb?  It is — one I furnished many months ago. I could go on. I will go on. Colander is an old friend whom I have known for more than twenty years. Books tumble out of him in a continuous stream. Often we disagree about what significance to ascribe to the developments he is describing. But there is hardly anyone I would rather see coming down the pike.  Not so much for the news he brings, though he certainly does bring news.  For not only does Colander work hard to keep in touch with developments at the frontiers of his sprawling field (and, often enough, from their far side as well). He is also a prominent representative of another clan, the enthusiastic and committed teachers of undergraduates.

Members of this clan are not so rare, being fairly freely distributed in colleges and universities around the world, but they are always to be found in the best economics departments among the best American small colleges — such as Swarthmore, Wellesley, Williams, Amherst, Grinnell, Carleton, Pomona and, in his case, Middlebury.

“Research is nice,” says Colander, “but good teaching is priceless.”

Colander had an unlikely beginning as a graduate student, at Columbia University, in the early 1970s with two brilliant advisers, William Vickrey and Edmund Phelps.  Two-thirds of the way through a standard dissertation on optimal taxation, a hot topic then as now, Colander began a third essay, describing a system of the price-increase permits designed to be traded among firms under a system of global caps whose purpose would be to combat inflation.

“I gave it to Vickrey, and he said it was a brilliant paper,” Colander remembers. “He never said that about anything else.”  So suddenly the student was off to the races. He wrote up his idea in a single year, submitted it as his thesis, and then to the American Economic Review — and promptly found himself clobbered by the profession. What might have been rewarded in war as audacity was punished as hubris in science. “It was clear I wouldn’t find work as a professor at a respectable institution. I started looking for jobs at consulting firms.

It was Abba Lerner who redeemed him. A larger-than-life character who had played a supporting role in the formalization of economics in the 1930s and 1940s, Lerner was widely acknowledged to have an original intellect — original, often, to a fault. Not long after being hired by Columbia  in 1937, Lerner set off  from New York in an old car to persuade the exiled Leon Trotsky in Mexico City that the Russian Revolution could still succeed if only it were based on marginal principles — that is, if it were to become a truly marginal revolution.

There followed for Lerner a long series of short appointments:  Johns Hopkins, the University of Kansas, the New School for Social Research, Roosevelt University, Michigan State, Queens College of the City University of New York, the University of California at Berkeley and, finally, Florida State University, where he was when he took Colander under his wing.  Together the two men produced a book in 1980, MAP: A Market-Based Inflation Plan, which was sufficiently ingenious to redeem Colander’s professional reputation.

“[Lerner] was always full of schemes and proposals, which others usually found unworkable, if not abstruse,” wrote historian of thought Jurg Niehans many years ago. “He was also a talented artist, whose moving wire sculptures were intuitive mathematics in the same sense as his economics.” Colander, too, is skilled with his hands. The home he shares with his physician-wife and their children is constructed with many recycled parts on the site of a former movie drive-in, with fruit trees planted where speaker-stanchions once stood.

But as if to prove he could hold a job, Colander promptly settled down at Middlebury in the early 1980s and has been there ever since,  teaching undergraduates to view the models that they learn in class as warm-up exercises instead of game plans. “Although they do not prepare students to understand economic reality, they do provide the training that eventually will help them understand the issues better.”

For a time, Colander the researcher concerned himself with the interpretation of the work of John Maynard Keynes and the inconsistencies and ambiguities with which it was rife.  Today he writes, “The debates resulting from… various interpretations have consumed a large portion of many brilliant researchers’ time. I [now] avoid these debates completely. Quite honestly, I don’t care what Keynes said when and I don’t care whether what I call Keynesianism is what Keynes really meant, and I don’t think students care either. I’m not sure that even Keynes really knew what he meant.”

Instead, Colander has moved on to what he calls “the complexity story,” in contrast to the story of the efficiency of competition developed with such precision by economists over the course of the last century. The complexity story is about the process of competition, he says, of an evolutionary economy operating over time, “drifting along on a slowly moving river with occasional rapids, none of which are directly controlled, or controllable.”  The resulting system is to be admired not so much for its efficiency as for its very existence.

The work he cites as representative of the new complexity tradition may be esoteric — the agent-based modeling of Leigh Tesfatsion and Blake LeBaron, the power law studies of Xavier Gabaix— but the underlying intuition of an economics of natural selection is deeply appealing.  So what if it takes a few more decades to come clear? Colander is working on a book about its analytic underpinnings with his friend, University of Wisconsin professor William “Buz” Brock. “We may never finish,” he grins.

Meanwhile, there is teaching to be done.  As the author of a pair of successful introductory texts — one a principles of economics, the other an introduction to social science generally — Colanders continues to advocate powerfully for the instruction in a handful of basic ideas that are the essence of any college course in economics course.  The gap between what research economists are doing, and what college professors are teaching is surely growing, he says.  It would be disappointing if it weren’t.

But the principles course still has enormous strengths, says Colander. The “no-free-lunch” lesson alone is one of the most important lessons a student can learn. So in the end, one of economics’ most persistent critics remains one of its staunchest advocates.  Says Colander, “Teaching, like the economy, is a complex system, and our fate in both is to muddle through as best we can.”