The Accidental Theorist
Paul Krugman is the Ford International Professor of Economics at the Massachusetts Institute of Technology (MIT). In 1991 he received the John Bates Clark Medal, awarded by the American Economic Association every two years to the best American economist under the age of forty. Among Krugman’s most recognized books are The Age of Diminished Expectations (1990), Peddling Prosperity (1994), and Pop Internationalism (1997). He writes a regular monthly column, “The Dismal Science,” for the online magazine Slate and frequently writes articles for Fortune, The Washington Monthly, Foreign Affairs, and The New York Times.
Krugman has made it a personal crusade to promote sound economic thinking. Since the late 1980’s he has been pointing out the fallacies of many ideological, fashionable economic ideas, such as the logic of supply-side economics and the evils of globalization. The Accidental Theorist is a collection of twenty-seven of Krugman’s best essays written between the fall of 1995 and the summer of 1997. Although three of the essays are new, more than half were previously published in the online magazine Slate, while many of the others were published in conventional print media, such as The New York Times and USA Today. Krugman’s essays combine his clever wit and clear analysis, applying and illustrating basic economic principles with simple examples and models. In some cases, however, the reader is still left wanting for more practical information about what can be done to resolve some of the exposed economic problems.
In The Accidental Theorist Krugman’s overall goal is to point out that the fundamental concepts of economic theory are actually very simple and that they can be understood by the common public. However, as Krugman explains, the application of these concepts to particular issues, such as the effects of the money supply on economic growth or of technological progress on employment, requires careful, clear thinking, which most economists attempt to back up with specialized jargon and mathematical formulas. Although economic jargon and math sometimes make economic concepts clearer and simpler, in many cases the concepts would be more easily understood if they were stated in plain English. According to Krugman, many economists purposely obscure meaning by using sophisticated mathematical equations and language, which constitutes a form of “technical showboating.” In fact, Krugman candidly states that many influential economists have misrepresented and even invented facts in order to gloss over gaps in their logic, thereby blatantly leading their audiences astray. He is tired of such nonsense. In the essays in The Accidental Theorist Krugman uses clear English interspersed with understandable examples to communicate to the general public simple truths about economic issues.
The essays in The Accidental Theorist are broken up into six major parts: jobs, right-wing wrongs, globalization, delusions of economic growth, financial speculation, and topics beyond the market, including environmental policies, traffic congestion, and medical care. Throughout the book, Krugman introduces thought experiments that help make economic theory more accessible to understanding, pointing out that real economics can be made meaningful only if one is willing to play with simple models in hypothetical settings. Some of Krugman’s essays start with current issues, such as the crisis set off by the monetary policy of Thailand or corporate downsizing, while others expose seemingly plausible ideas as being false, such as blaming America’s economic problems on the internationalization of commerce when they are really due to a failure to resolve domestic policy.
By examining pundits from across the political spectrum, Krugman enlightens the reader about the workings of our national economy. Trying not to take political sides, either left or right, Krugman points out some of the pitfalls of the “supply-siders” of the Reagan-Bush era and those of the “strategic traders” of the Clinton administration. However, it is very apparent that Krugman is more a supporter of the ideas of the left, spending one whole part of the book emphasizing the wrongs of right wingers and then repeating these issues again in a number of other essays later in the book.
In the first essay, titled “The Accidental Theorist,” Krugman uses a change in hot dog technology in a “hot dog/hot dog bun” world to illustrate that the effects of productivity growth in a particular market do not necessarily dictate what happens to the economy as a whole. Indeed, growth in one sector of the economy may lead to job gains in another. Krugman uses this example to point out some serious fallacies in William B. Greider’s book One World, Ready or Not: The Manic Logic of Global Capitalism (1997). Greider, posing as a practical man communicating with the common sense of the common man, tries to demonstrate that global supply...
(The entire section is 2080 words.)