John Cassidy: Gary Becker and the Economics Revolution That Wasn’t 

To some extent, this inertia is inevitable. In economics, progress has always been gradual. Some years ago, in a study of how American economists reacted to the Great Depression, Barnard’s Perry Mehrling questioned the common perception that there was a sudden and mass conversion to Keynesianism. The reality, Mehrling discovered, was that most economists continued to teach what they had always taught. For Keynesianism to take the ascendancy, it needed a new generation of economists to mature.

Sometimes there are good, practical reasons for sticking with the old thinking, or some of it. When Becker, Milton Friedman, and other members of the Chicago School reminded other economists that price systems convey valuable information, and that incentives matter, they were imparting important truths. But they took the laissez-faire arguments too far, and many of their followers went even further, denying the very possibility of market failure and pillorying virtually any form of government intervention as counterproductive.

That was ideology rather than sound economics. Compared to ten or fifteen years ago, some progress has been made. Even at economics conferences, you can’t get very far these days by saying that markets, particularly financial markets, are invariably “efficient,” and that we can’t hope to improve on their results. The passage of the Affordable Care Act was an acknowledgement that the health-care market wasn’t working in the interests of the uninsured. The current debate about inequality reflects a widespread belief that compensation and rewards aren’t wholly correlated with productivity, which is what orthodox economics would tell us; it also underscores the lopsided distribution of power and access.

These are encouraging signs. But, over all, Becker was right: the revolution in economics didn’t happen. Or, at least, it hasn’t happened yet.

Vir: John Cassidy, The New Yorker