Freshwater Economists, Austrian Economists and Popular Opinion

The previous chapter began an overview of opinions about the financial and economic crisis and its resolution, with particular attention to two ‘saltwater’ economists who have been media stars: Paul Krugman and Joseph Stiglitz. It should be noted that the younger generation of saltwater economists are less strident in their differences of opinion with ‘freshwater’ economists, who supposedly omit the ‘synthesis’ from what Samuelson called the ‘neoclassical synthesis’ that brought Keynes into the stream of neoclassical economic thought. In point of fact, the freshwater stream of thought operated a major progress in macroeconomic thinking in the 1970s, keeping much of Keynes’ approach using mathematical models and examining aggregated behaviour, but correcting much of his method and conclusions. The younger generation of saltwater economists consults and incorporates the work done by freshwater economists to a greater extent than economists who studied before the research work of the 1970s reached the classrooms.