It's the Water

5 June 2016

In the '70s or earlier, it was noticed that, in America, academic departments of economics that were located at or near the Atlantic or Pacific Ocean tended to have one set of attitudes about macrœconomics, while those away from the oceans and in particular near the Great Lakes tended to have another. From this, they were grouped as saltwater and as freshwater (or as sweetwater), respectively.

The distinction was most widely recognized in macrœconomics, with the freshwater departments arguing for founding macrœconomics in micrœconomics considerations (especially in the theory of individual decision-making under uncertainty), for using dynamic models, and for quantification. However, though (or perhaps because) they emphasized the importance of micrœconomic considerations for the development of macrœconomic theory, the freshwater schools seemed more content with standard micrœconomic theory than were the saltwater schools, where non-standard decision-theory was more investigated (while being regarded as less important to macrœconomics).

It has been claimed that the distinction between these groups has faded to irrelevancy, with younger economists having adopted insights from both, and with older disputants having departed. However, since the on-set of the most recent financial crisis, old-fashioned Keynesians have become more vociferous, if not actually much more numerous. (Paul Krugman no longer takes any water with his salt.)

It occurs to me that, for one group of heterodox economists, we might refer to the Wien, or … to the Danube. So … blue-water? (Blauewasser?) Indeed, as one branch of that school-of-thought tends to represent itself as definitive for the whole school, perhaps blue-water could be the more inclusive term.

Meanwhile, through Cambridge runs the River Cam. There's something in that water. Something bad.

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