Chapter Introduction

Wise-crackers sometimes say that "if all the economists in the country were laid end to end, they would never reach a conclusion." The point is that economists don't agree on some of the things that matter most, so non-economists can't rely on the profession for consistent advice. A similar wisecrack that economists use on one another is that controversy among economists "produces more heat than light." The common theme of these two wisecracks -- that economists engage in unproductive controversy -- deserves to be looked at carefully.

Controversy can be productive. If we take the approach of the Reasonable Dialog, a discussion with the common objective of increasing understanding, we would expect that the controversy generally will be productive. The Reasonable Dialog will not necessarily lead to agreement, but even if it does not, the hope is that each side will go on with a better understanding of both views and of the common principles that underlay them. (If you don't remember about the Reasonable Dialog, you might want to reread Chapter 1).

But controversy, including Reasonable Dialog, is a kind of economic activity and, like other forms of economic activity, it is subject to the economic principles of opportunity cost and diminishing returns. We might ask just how much controversy would be economically efficient, when we balance the diminishing benefits against the opportunity cost. From that point of view, it is possible that we have too much controversy and too little agreement, as the wisecracking critics say. But it could be the other way around, too. We might find that we have too much agreement and not enough productive controversy. I lean toward that opinion, myself -- I see conformism, not disagreement, as the problem. But, of course, that's just my opinion. You're free to disagree with it.

Anyway, macroeconomics has had more than an equal share of the controversy in economics in the period since World War II, and we will conclude this text by surveying three great controversies in recent macroeconomics. They are

This order is not strictly either logical or chronological. The Monetarist-Keynesian Controversy came first in time, and the latter two grew out of it, but the latter two developed at more or less the same time and have been interdependent. However, the Controversy over Policy Ineffectiveness arises more directly from the Monetarist Controversy, and has to do with some of the same issues, so we will group them together in this chapter, and end up with the Unemployment Controversy in the last chapter.

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