I'll leave the last -- hermeneutical -- word in the Walker/Devine exchange
on the Phillips Curve to Robert Leeson's commentary:
"In the macroeconomic creation myth, wage cutting (Pigou)
was defeated by aggregate demand management
(Keynes); in the monetarist counter-revolutionary creation myth,
neglect of inflationary expectations and confusion between real
and nominal wages (Phillips) was defeated by rigorous
microeconomic foundations (Friedman); in the New Classical
counter-revolutionary creation myth, the unwarranted extrapolation
of zero-inflationary structure into inflationary scenarios
(Phillips et al.) was defeated by the awareness that structure is
not policy invariant (Lucas). So compelling are these pedagogical
fairy tales that it is unlikely that they will ever disappear from
the textbooks; but the Phillips curve is very informative about
what passes for historical knowledge among mainstream economists. . ."
"The usual propositions of the standard story about Phillips are that:
1. Phillips had no adequate theory;
2. Phillips was ignorant of inflationary expectations;
3. Phillips confused real and nominal wages;
4. Phillips implicitly advocated that tolerating permanently high
levels of inflation could permanently solve unemployment.
"The evidence can sustain none of these propositions, but evidence is
sometimes not required to sustain received textbook opinion.
"Textbooks can define the boundaries of a subject and opinions are
handed down (and textbooks often written) by those who Chapple (1996a,
228) calls "the best minds in the profession". In this hierarchy,
professional respectability is acquired by deferring to those
opinions."
Tom Walker
