Talking About a Revolution
How the late Kelvin Lancaster helped transform economics.
Alas, golden ages do end. By the early 1990s, the thrill of increasing-returns economics was fading. It wasn't just the inexorable working of the law of diminishing disciples. There was a deeper problem: The new ideas were immensely liberating, but at some point you can get too liberated. In international trade, people started to joke that a smart graduate student could come up with a model to justify any policy; similar sentiments were felt in many fields. In short, we all got tired of clever analyses of what might happen; and throughout economics there was a shift in focus away from theorizing, toward data collection and careful statistical analysis.
But it was a golden age--a time of innovation and intellectual excitement, when all of economics seemed up for reinvention--and Kelvin Lancaster was one of those who made it so. Let us honor his memory.
Paul Krugman writes a twice-weekly column for the New York Times and is professor of economics and international affairs at Princeton University. His home page contains links to many of his other articles and essays.