Back in 2011 The Economist ran a piece talking about the rise of heterodox economics. They discussed the rise of three schools of economics – Austrian Economics, Post-Keynesian Economics (and its subset MMT) and Market Monetarism. But since then none of these schools has had much of an impact on the public discourse. In fact, they’ve all been marginalized back to what they always were – fringe schools that never quite fit into the salt water and fresh water schools.
In fairness, Market Monetarism is gaining some prominence. But I think The Economist was wrong to call them heterodox to begin with. Market Monetarism is largely just old school Monetarism with a new policy target. There’s nothing all that heterodox in their views. In fact, their leading voices regularly agree with mainstream economists and we are seeing more and more old school Monetarists lift the MM banner as the original Monetarism slowly dies off and gets rebranded.
Austrian Economics torpedoed itself in recent years. A series of very bad predictions about QE, deficits in the USA, hyperinflation, gold prices, the dollar, bond yields, etc have all led to what I think is a nearly unrecoverable collapse in credibility. The theory is so jammed full of extremist politics and operational inaccuracies that it has become difficult to take seriously.
The Post-Keynesians are a more curious case. I’ve referred to my views as Monetary Realism over the years which has a good deal of overlap with many of the Post-Keynesian views. Aside from the MMT folks I am probably one of the more vocal PK advocates on the internet. But MMT, MR and PKE don’t seem to be gaining much ground. Which is weird because this perspective has helped me make some pretty good calls on the economy and the markets. My approach, focusing on operational realities seeks to describe the world for what it is and little more. And it’s worked better than most other views because I am not speaking from an ideological or theoretical perspective. I am simply understanding the monetary world for what it is and assessing probable outcomes. But accurate predictions obviously aren’t enough. You need stature and acceptance from your peers. And the Post-Keynesians, no matter how right they’ve been, will always be viewed as outsiders looking in.
I have my own theories on why this is. Some PKE advocates are excessively political (I’ve said this about the MMT folks), some are too good at making mainstream enemies and there’s a good bit of disagreement within PK economists. And that’s too bad because I think Post-Keynesian economics has quite a bit to contribute to the world and to economics.