I don't know when the quest for micro foundations could have been a serious enterprise. I perceived it to be completely absurd nonsense 30 years ago.
No Robert, that is not a serious position. The "microfoundations" research programme in the 1970s and early 1980s was focused on answering the fundamental questions of macroeconomics, originally posed in the General Theory by Keynes. How could a capitalist market economy settle on extremely inefficient outcomes, or states, such as equilibria (or disequilibria) with high unemployment and low output? How do market economies coordinate (or fail to coordinate) in the absence of the Walrasian auctioneer? Why might a market system fail to coordinate the actions of heterogeneous individuals? Etc.
Robert Lucas, perhaps surprisingly, put it very well in a 2008 lecture in Italy (http://faculty.chicagobooth.edu/brian.barry/igm/ditella.pdf ). Referring to 34% decline in real output in the USA from 1929 to 1933 he asks: "Why did we, collectively, choose to reduce production by 1/3, with no change in available resources?" He describes these events as "frightening precisely because they are so mysterious."
Since the early 1980s economists have made literally no progress in understanding these fundamental questions of macroeconomis. But to dismiss the attempt as "absurd nonsense" is, well, absurd nonsense. Perhaps macroeconomics is just too complex and difficult, forcing us to rely on more or less ad hoc aggregate models which seem to have some predictive power (although we are not sure why). But should economists really give up on any attempt to reach a deeper understanding of the questions posed in the General Theory?
PS Lars P Syll is clearly right that a big part of this is dealing with risk versus uncertainty, and moving away from the inappropriate use of Baysian reasoning in "large world" contexts, a subject recently taken up at length in Ken Binmore´s book Rational Decisions.
The comment by "anonymous" enraged me. I will try to respond semi rationally here.
First some things which might be of interest to people other than me.
The normal usage of "micro foundations" does not refer only to efforts to find micro foundations for Keynesian models, as anonymous asserts without any evidence or any qualification. Some participants in the effort aimed to develop realistic consistent models with aggregate implications inconsistent with Keynes's views. It was partly because economists didn't agree about what would happen that the argument that they needed better theory was so convincing.
The idea of abandoning the assumption that agents are Baysian (sic) is not, to my mind, a new approach to micro foundations. A large part of what has been meant by "micro foundations" at least since 1985 (when I became an economist) is that one must assume that agents are Bayesian. For many years it was further required to assume that we have rational expectations.
The huge advance of considering the possibility that we are not Bayesian, if widely accepted, would bring the profession part of the way back to Keynes who wrote a treatis on probability.
Now I don't think that no possible quest for micro foundations can ever be serious. I would tend to guess that psychologists will have something useful to teach economists (in fact I think they already do). But my expression of ignorance about a serious period in the past referred to the past and, in particular (following an unquoted comment above mine) to a period which has ended during which, it was alleged, the quest for micro foundations was seroius. That means a period during which finding micro foundations meant reconciling the macro evidence with assumptions about psychology which everyone agreed were false. That doesn't seem to me to be a serious endevor.
This doesn't mean that I consider all micro founded macro equally worthless. It is clear that some people believe that the core (false) assumptions including rational expectations have policy relevant implications. Finding examples in which agents are rational and the policy implications are the opposite of what these people imagine can prevent the quest for micro foundations from doing damage -- prevent it from leading us astray by preventing it from leading us. If this is the way things are, then the combined impact of the better and worse micro founded research is exactly nothing.
Note it begins with an attack on me. Anonymous notes that my view as of 30 years ago was not a serious contribution to economic thought. Wow. 30 years ago, I was trying to be a biologist. I had no responsibility to make serious contributions to economics. Today, I am accurately reporting what I thought then. I don't think that an accurate report of a fact can be "not a serious position."
I assume that "anonymous" does not claim to have more expertise on the thought of Robert Waldmann in 1982 than Robert Waldmann. Evidently "anonymous" must consider it to be "not ... serious" to report a fact.
The other part of the claim which anonymous denounces as "not a serious position" begins "I don't know ..." Does anonymous assert that I do know and know not that I know ? I assure anonymous that I am more expert on my lack of knowledge than he or she is.
The claim that micro foundations were added to achieve publishability is a paraphrase of something which Paul Krugman wrote (no link yet I'm working on it). He described conversations with people he knew at MIT. He has won the Nobel memorial prize for extremely micro founded international and has made highly influential contributions to extremely micro founded macroeconomics. He knows what he wrote about. He didn't name the friends at MIT, but I would guess that they are rather in the thick of things too.
Since anonymous is anonymous, I have no idea if he or she has reason to claim to understand the motivations of leading economists better than Paul Krugman. But frankly, I don't think that anyone in any position to contest Krugman's views of what motivates those who move the economics profession would comment on my blog. I did not provide a link in a comment on my blog, but the assumption that I based my claim on nothing was uncharitable to put it mildly.