Chicago economics — where do we unload the garbage?

22 Sep, 2013 at 14:56 | Posted in Economics | 2 Comments

chicagotrashThere is also a practical problem, if economics as a discipline is to survive. There is a huge amount of junk in the peer-reviewed economics literature–the reviewing process is no protection when the reviewers themselves are prejudiced. A comparison that comes to mind is the collapse of “scientific” eugenics. There were vast amounts of that written, and now it is only read as an object example of the capture of a social science by prejudice and authoritarianism. For economists, meantime, there is a huge task ahead: the garbage must be taken out; removed from the field’s teaching, textbooks, and policy advice. It will be a generation at least before this is set right, if indeed it can be set right at all.

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  1. Not sure it can ever be set right. Economics is conceived by most economists on the model of a hard science, which it is not at present, and there is no prospect for it ever becoming a hard science in the foreseeable future. It’s one of those, well, nothing is impossible “in the long run” kind of things.

    Business canned economics as useless long ago. The chief economist at Goldman, Jan Haztius, uses a Godely-based SFC model as a guide to projecting economic contingencies based on various inputs that are continually evolving based on a vast web of behavior, individual, institutional and cultural, that constantly adjusts through feedback.

    From this standpoint, convention economics is finished as a practical discipline. It’s mostly magical thinking based on a priori assumptions without relevance to the real world. At it’s worst it is simply advocacy for interests under the guise of being “scientific.” To paraphrase Ronald Coase, the data can be made to say anything if tortured enough. Mirowski has demonstrated this is in work, for instance.

    The economics profession should just realize that if economic is “scientific” at all it is a social science and not a natural science. There are no “laws of nature” in the social world, which is complex, adaptive, and emergent — non-ergodic, in other words.. If mathematical models are to be at all applicable, they will have to take complexity and evolutionary theory into account, as social and biological scientists like David Sloan Wilson have pointed out.

    Kenneth Boulding pointed the way to economists decades ago when he abandoned conventional economics and adopted a general systems theoretical approach instead. Contemporary economists should just follow him on that.

    Moreover, economics is not totally positive and descriptive and many assume. It is fundamentally normative and prescriptive as well. This means that in addition to having a scientific side it also has a philosophical, because it deals with quality and ends as well as quantity and means.

  2. Lars,

    I don’t know whether the “Chicago school” that arose in the 1930s is part of your definition of the phrase “Chicago economics”, but if it is, I don’t want to see those 1930s ideas chucked overboard.

    Those 1930s Chicago economists were right to point to the fact that giving private banks the right to lend money into existence is a problem: those banks lend money into existence like there is no tomorrow during a boom and exacerbate the boom.
    Then when the crash comes, millions or ordinary depositors lose their savings.

    That is a significant problem.

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