Jean-Paul Fitoussi "honorary professor"
For his fundamental contribution to the development of the modern macroeconomic theory and for his social engagement
by K. Vela
Velupillai, University of Trento, Department of Economics
The time has not come for a survey of Fitoussi’s varied and multi-faceted contributions to Macroeconomic Theory and Economic Policy; he is in full flow and his interests are veering towards the Social Philosopher whose reasoning is underpinned and informed by serious economic theory at the frontiers. Instead, [I will ...] attempt to chart the rough contours of parts of the formative years and, perhaps, to provide enough of that background to enable one to understand the passions that motivate this consummate macroeconomic theorist and policy activist, who is also becoming a social philosopher of considerable influence, at least in European academic intellectual circles.
Jean-Paul Fitoussi was born on 19 August 1942 in La Goulette, Tunisia, the youngest of four children. He gives handsome credit to two of his teachers, from his undergraduate and doctoral years in Strasbourg and Paris, for the lifelong passion for rigorous economic thinking and macroeconomics: Paul Chomley and Paul Coulbois. The former, a professor in the faculty of law and economics, was instrumental in teaching Jean-Paul the importance of money and trade. His lectures and reasonings were, as Jean-Paul recalls, models of clarity, rigour and displayed great and deep learning and familiarity with the classics. Paul Coulbois taught macroeconomic theory and economic policy. It was from him, during the dawning years of Lucasian macroeconomics, that Jean-Paul Fitoussi learned the classical theory of economic policy. That learning seems to have left an indelible mark on Fitoussi’s way of thinking about policy, tempered by a respect for the informing hand of history that was the message of Chomley.
The economic-philosophic bent, inherited from Paul Chomley, the quantitative talents, descending from Paternal influences, the pamphleteering penchant, a possible talent from the Maternal lineage, a passion for logical and rigorous reasoning, an autonomous development and a concern and a conviction of the efficacy and desirability of active macroeconomic policy, deeply influenced by the teachings of Coulbois, have all, each in their own small way, gone into the synthesis that is Jean-Paul Fitoussi.
But the more explicit macroeconomic concerns, above all with feasibility of full employment in civilised societies, after Keynes, was to become a perennial issue in the intellectual and professional life of Fitoussi.
Fitoussi entered the macroeconomic arena at an opportune time. The mid-60s initiated the period of turmoil and dissatisfaction with the tranquil era of the Neoclassical Synthesis. Clower had just unleashed his series of challenges to Neowalrasian complacencies and Leijonhufvud’s own magnum opus was about to be completed. The second edition of Patinkin’s MIP had also just been published. And, of course, the series of papers by Phelps had immediate impact on Fitoussi, as well as Hahn’s piece in the same IEA volume in which one of Clower’s contemporary classics had appeared. The Phillips classic and, some time later, Lipsey’s analytic piece in the Phillips Memorial Volume outlining the theoretical genesis of the Phillips curve, also made a deep impression on Fitoussi. I must, however, mention that, over the years, Fitoussi has consistently maintained that Arrow’s extraordinarily perceptive paper in the Bernard Haley Festshcrift was one of the great eye-openers for him.
This was also a time of great revitalisation of various French traditions in economic theory. For years the macroeconomic mantles at the frontiers had been worn by the Anglo-Saxons, the Swedes and the Austrians. Although the microeconomic and general equilibrium theoretic traditions seem always to have had a French presence and component, the macroeconomic and macrodynamic lineage had by-passed French circles during the consolidation of the Neo Classical Synthesis, even though there was a clear neowalrasian element in that synthesis - as Clower, more than anyone else, took great pains to point out.
With Malinvaud’s influential and deceptively simple Yrjö Jahnsson Lectures, synthesising diverse contemporary French traditions in macroeconomic theory and microeconomic foundation, there was a veritable blossoming of French Keynesian Macroeconomics that literally took the macroeconomic profession by the proverbial storm. Fitoussi, of course, was ideally placed and well-equipped, intellectually, to be at the frontiers of this revival of French Macroeconomics. Almost all his work prior to that particular event could, with hindsight, even be said to have been a presaging for it. He embraced the framework suggested by Malinvaud, extended it in various imaginative ways, and took it upon himself to codify it - even as a pedagogical synopsis.
This led to that amazing tour de force of the early 80s, when he was a professor at the European University Institute in Florence, and undertook a comprehensive survey of the state of macroeconomic theory and produced what many regarded as a masterpiece: Modern Macroeconomic Theory: An Overview . The clear and unambiguous message in that majestic paper was that the business of microeconomic foundations of macroeconomics was too complex to be left to the general equilibrium theorists; that there were many ways to look for foundations and one would need a metatheory - which we neither had nor had the remotest idea how to go about devising one - to choose between them. Fitoussi reiterated Keynesian and Hicksian wisdoms: there was an independent and autonomous macroeconomic logic that had to be pursued in its own way, on the basis of its own accounting categories.
Throughout the 80s and early 90s, in spite of the increasing dominance of New Classical macroeconomics, Fitoussi continued his macro-theoretical work with a series of innovative approaches to unemployment and fluctuations – particularly the European slump of the 80s. The paper with Georgescu-Roegen broached several seminal directions and re-emphasised earlier concepts that Fitoussi himself had developed in related contexts. Thus long before the emergence of a codified ‘New Keynesian School’ of macroeconomics, Fitoussi had worked into a model of unemployment, elements of asymmetries due to irreversibilities and sought in these elements the essential ‘local-global’ divide without which interesting dynamics is impossible. This was also prescient in its embryonic discussion of concepts of emergence, a term that has become fashionable in so-called ‘complexity circles’, and attempts to incorporate it in the context of Scumpeterian innovations.
Then there was the attempt, this time jointly with Phelps, to try to provide a theoretically satisfactory and empirically implementable explanation of the slump in Europe in the 1980s - especially the persistence of unemployment. It was a book discussing disemployment, i.e., disinflation + unemployment, as against the, by then, orthodox problem of stagflation, i.e., inflation + unemployment. The authors went about devising an interesting impulse-propagtion framework with an ingenious mechanism for the lower turning point in a model of fluctuations.
There were many other forays into theoretical questions but, in a sense, the die had been cast with the move from purely Professorial duties at the European University Institute to the joint duties of Professor and a full-time administrator at two prestigious Institutes in Paris: Professor of Economics at the Institut d'Etudes Politiques de Paris and, first Director of Research and, then, Président of Observatoir Francais des Conjonctures Economiques. I believe he had to develop a wholly different vision and attitude to economics and economic theory as a result of close encounters with people who were the architects of national and international policy proposals and with people who had to implement them. This is, of course, a phase of his life that has, in a sense, only just begun and it would be foolish to try to detect a pattern or infer a contour. I shall, therefore, only scratch a surface that is very much in the making and try to provide a glimpse of the forces that may be driving towards becoming almost a veteran social and economic philosopher.
Almost all of Fitoussi’s polemical writings and pamphleteering since about the mid-90s, right up to his most recent publications [Le Nouvel Age des Inégalités, Le Régle et la Choix], are best understood in this light. Fitoussi’s basic point is that […] the task of good government was not to enforce policies that would force institutions to conform to the straitjackets of the textbook paradigms but to enlarge, broaden and modify the textbook representations to reflect new realities. As [Fitoussi argues] in one of his most recent papers, reflecting an underlying philosophy in the other writings and pamphlets of the last decade or so, and drawing on parallels for public or aggregative policies from one of Akerlof’s imaginative pieces:
"Norms constraining public behaviour have rather their origin in some economic doctrine considered as true at a moment in time, regardless of its short term economic consequences. In other words, ‘Private social customs’ are grounded on rules of fair behaviour, whereas ‘Public-social customs’ are supposed to be consistent with dominant economic doctrine"
Thus, in addition to the simple observation that a ‘dominant economic doctrine considered as true at a moment in time’ may no longer be relevant at another ‘’moment in time’, Fitoussi broadens the underpinnings of his wide ranging criticisms of the pervasive economic and social policies of the EU and other national and international organs to include other elements that go beyond the capabilities of a narrow economic theory, of any variety, to be able to justify.
Jean-Paul Fitoussi, a Consultant Administrator and a Pamphleteer, in addition to being an intellectual of great power and considerable reputation, and a University Professor at a French Institution of impeccable and international standing and fame, in the grand tradition that Schumpeter extolled, continues to take courageous stands and speak out against obdurate policies, the designing of untenable and unfair Institutions and the ahistorical practices and narrow visions of policy makers and their handmaidens - whether it be outdated theories or ignorant advisors, whatever their reputation. Inequalities of every sort, the erosion of evolved practices of social cohesion, the preservation of traditions that foster social norms, the inequities that are foisted on unborn generations due to unenlightened interest rate policies, are the broad canvasses on which he has begun to draw his visions for a just, democratic and prosperous society. I cannot but recall, in conclusion, the contextually apt and poignant words with which Keynes, from whom Fitoussi continues to draw much of his inspiration, himself ended his own great manifesto against the obduracy of an earlier generation, [G. T., pp. 383:
"[T]he ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is rules by little else. Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas. Not, indeed, immediately, but after a certain interval; for in the field of economic and political philosophy there are not many who are influenced by new theories after they are twenty-five or thirty years of age, so that the ideas which civil servants and politicians and even agitators apply to current events are not likely to be the newest. But soon or late, it is ideas, not vested interests, which are dangerous for good or evil."
Precisely the message Fitoussi, as a social and economic philosopher, with a solid understanding of the history of economic theory and its contextual developments, has been trying to tell the ‘civil servants, politicians and even agitators’ who ‘apply to current events’ theories distilled ‘from some academic scribbler of a few years