The discussion starts with some of Pete's memories working with the late, great James Buchanan. (Which I have an inordinate amount of difficulty spelling.) Some very nice stories and reminiscences. One key point, and one that I think is critical to the overall talk (and the ensuing controversy that apparently sprung up) was that Buchanan believed himself to be firmly in the traditions of Adam Smith, David Hume, J.B. Say and others in his work on Public Choice. This segued into a discussion of Smith and how the notion that self interest on the part of individuals leads to better or worse outcomes largely as a function of the institutions they work in. Over all it led to a discussion that I found interesting, and not particularly controversial, but then I generally like what Pete has to say.
Instead of describing what happened, let me instead put forth my understanding of what Boettke was getting at. I haven't followed the tempest that apparently followed in the blogosphere; my favorite tea pot has a little cow face for the spout and contains no abnormal atmospheric events what so ever, and I like it that way. From my second hand understanding, however, it seems that the key grumble was Boettke's quote (itself paraphrasing David Friedman) that
The difference between economists like us and other economists is that we are not 9-to-5 economists. We are 24-7 economists; we think about it all the time.
He and Russ then clarified that he didn't mean that they were doing research when they should be playing with their kids, but rather that thinking about institutions and rules leads them to be constantly thinking of economics and how people interact.
In fact, that is the difference he thinks is most important, and the focus of the talk: some economists, he calls them "mainline", think mainly in terms of rules and institutions, with the relevant propositions at their core, while others he calls the "mainstream" focus on "an institutionally antiseptic theory." This latter group disagree on the propositions, with the examples of Stiglitz and Lucas, and only agree on the methodology, which is to say "lots of math." The interesting point is that the math can absorb a lot of propositions, so much so that you can basically create any outcome you want with some tweaking, with just the small problem that certain propositions like 'everyone has different preferences' or 'people have different views on the future' make the math impossible to solve. (Enter multi-agent computer modeling, but so far the mainstream economics journals have not published much of it.) To paraphrase Bryan Caplan "If you assume the economy works just like the requirements of this construct, the construct gives you a great answer. If it doesn't, then you are back to nothing."
Effectively, mainline economics entails thinking of institutions and individual behavior, micro explanations and solutions to macro problems, and mainstream entails looking for macro answers to macro problems, without considering how and why those problems emerged from the behaviors of individuals. Boettke further summarized it as mainline considers the state a referee while the individuals play the game, while mainstream considers the state a player as well.
So, why don't I think this should be controversial? Because I see the economics that is taught at the big schools, the papers that make it into the big journals, the economists with big names, and you generally don't hear them saying "Well, in reality the economy is a hell of a mess and far too complicated for us to really understand deeply, much less control easily, and so it is best just to step back and let people do their thing, and so long as we keep them from directly hurting each other, everything will work out pretty well." Mainstream economists generally say just the opposite, something along the lines of "We can make all the outcomes better, if only you give us the power to make it so!" Which is probably why they are so popular; as much as people need to be reminded there are some problems that we can't try to fix without causing more damage, we love those who tell us otherwise, whether it actually works out or not. And getting back to the 24-7 vs 9-5 point, if you think of economics as the behavior of large aggregates, it is hard to imagine that you are applying those ideas to many different areas of your life.
Any road, definitely listen to this Econtalk. Boettke has a lot of good things to say, not only about how we think about economics, but how we teach it to others.
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