Dani Rodrik’s pseudo-pluralism (III)

17 Dec, 2015 at 15:20 | Posted in Economics | Comments Off on Dani Rodrik’s pseudo-pluralism (III)

In Dani Rodrik’s Economics Rules the proliferation of economic models during the last twenty-thirty years is presented as a sign of great diversity and abundance of new ideas:

economists-do-it-with-modelsRather than a single, specific model, economics encompasses a collection of models … Economics is in fact, a collection of diverse models that do not have a particular ideological bent or lead to a unique conclusion …

The possibilities of social life are too diverse to be squeezed into unique frameworks. But each economic model is like a partial map that illuminates a fragment of the terrain …

Different contexts … require different models … When models are selected judiciously, they are a source of illumination …

The correct answer to almost any question in economics is: It depends. Different models, each equally respectable, provide different answers.

But, again, it’s not, really, that simple.

Just as Colander, Holt, and Rosser argued twenty years ago in “The Changing Face of Mainstream Economics” (RPE, vol. 16, 2004), Rodrik also wants to purvey the view that mainstream economics is an open and pluralistic “let thousand flowers bloom” science.

But in reality it is rather “plus ça change, plus c’est la même chose.”

Pruning2.jpgWhy? Because almost all the change and diversity that Rodrik applauds only takes place within the analytic-formalistic modeling strategy that makes up the core of mainstream economics. All the flowers that do not live up to the precepts of the mainstream methodological canon are pruned. You’re free to take your analytical formalist models and apply it to whatever you want – as long as you do it (Colander et al., p. 492) “with a careful understanding of the strengths of the recent orthodox approach and with a modeling methodology acceptable to the mainstream.” If you do not follow this particular mathematical-deductive analytical formalism you’re not even considered doing economics. “If it isn’t modeled, it isn’t economics.” This isn’t pluralism. It’s a methodological reductionist straightjacket.

So, even though we have seen a proliferation of models, it has almost exclusively taken place as a kind of axiomatic variation — where the core assumptions (CA) are usually untouched —
within the standard ‘urmodel,’ which is always (following an unwritten, but impregnable rule) used as a self-evident bench-mark. Seen from the perspective presented here, that is actually just another variant of theory immunization. When the preferred axiomatic specification fails (we obviously don’t have a case of perfect competition (auxiliary assumption AAi)) — just switch from AAi to AAj (e. g. monopolistic competition).

In Rodrik’s world (p. 71) “newer generations of models do not render the older generations wrong or less relevant,” but “simply expand the range of the discipline’s insights.” I don’t want to sound derisory or patronizing, but although it’s easy to say what Rodrik says, we cannot have our cake and eat it. Analytical formalism doesn’t save us from either specifying the intended areas of application of the models, or having to accept them as rival models facing the risk of being put to the test and found falsified.

The insistence on using analytical formalism and mathematical methods comes at a high cost — it often makes the analysis irrelevant from an empirical-realist point of view.

Applying closed analytical-formalist-mathematical-deductivist-axiomatic models, built on atomistic-reductionist assumptions to a world assumed to consist of atomistic-isolated entities, is a sure recipe for failure when the real world is known to be an open system where complex and relational structures and agents interact. Validly deducing things in models of that kind doesn’t much help us understanding or explaining what is taking place in the real world we happen to live in. Validly deducing things from patently unreal assumptions — that we all know are purely fictional — makes most of the modeling exercises pursued by mainstream economists rather pointless. It’s simply not the stuff that real understanding and explanation in science is made of. Had Rodrik not been so in love with his smorgasbord of models, he would have perceived this too. Just telling us that the plethora of models that make up modern economics  “expand the range of the discipline’s insights” is nothing short of hand waving.

No matter how many thousands of models mainstream economists come up with, as long as they are just axiomatic variations of the same old mathematical-deductive ilk, they will not take us one single inch closer to giving us relevant and usable means to further our understanding and explanation of real economies.

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