Dani Rodrik disses rethink economics students (IV)

19 December, 2015 at 11:35 | Posted in Economics | 8 Comments

1390045613Economics students today are complaining more and more about the way economics is taught. The lack of fundamantal diversity — not just path-dependent elaborations of the mainstream canon — and narrowing of the curriculum, dissatisfy econ students all over the world. The frustrating lack of real world relevance has led many of them to demand the discipline to start develop a more open and pluralistic theoretical and methodological attitude.

Dani Rodrik has little understanding for these views, finding it hard to ‘understand these complaints in the light of the patent multiplicity of models within economics.’ Rodrik shares the view of his colleauges Paul Krugman, Greg Mankiw and Simon Wren-Lewis — all of whom he approvingly cites — that there is nothing basically wrong with ‘standard theory’ and ‘economics textbooks.’ As long as policy makers and economists stick to ‘standard economic analysis’ everything is fine. Economics is just a method that makes us ‘think straight’ and ‘reach correct answers.’

Writes Rodrik in Economics Rules:

Pluralism with respect to conclusions is one thing; pluralism with respect to methods is something else … An aspiring economist has to formulate clear models … These models can incorporate a wide range of assumptions … but not all assumptions are equally acceptable. In economics, this means that the greater the departure from benchmark assumptions, the greater the burden of justifying and motivating why those departures are needed …

Some methods are better than others … For some these constraints represent a kind of methodological straitjacket that crowds out new thinking. But it is easy to exaggerate the rigidity of the rules within which the profession operates.

Although Rodrik often likes to present himself as a kind anti-establishment economics iconoclast, when it really counts, he shows what he is — a mainstream neoclassical economist fanatically defending the relevance of standard economic modeling strategies.

So, all you young economics students that want to see a real change in economics and the way it’s taught — now you know where you have Rodrik, Mankiw, Krugman & Co. If you really want something other than the same old mainstream neoclassical catechism, if you really don’t want to be force-fed with mainstream neoclassical deductive-axiomatic analytical formalism, you have to look elsewhere.

Heterodox economics, in the first instance, is a rejection of a very specific form of methodological reductionism. It is a rejection of the view that formalistic methods are everywhere and always appropriate.

Tony Lawson

8 Comments »

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  1. i’m still waiting on the heterodox rethink results. I’m still not persuaded they have better to offer!

    • This is what I call the ‘flat earth red-herring’: ‘the flat earth explanation is the best explanation we have, so leave me alone with my models’.

      What a lot of us criticise about the discipline today (post 1948) is that it tries to find answers about how the world in terms of a standardised framework even if it is obviously wrong and/or has no proper justification. It is almost exactly what is not in these models which is the most interesting; to understand that you have to start by putting these models away and go out on the field and also engage with knowledge accumulated outside the discipline. These models do not clarify our understanding, they are clutter which gets in the way. The objective should not be the model; it should be finding practical policy solutions which, despite what people in the discipline seem to think, requires that you have an informed understanding of what actually goes on.

  2. Although Rodrik often likes to present himself as a kind anti-establishment economics iconoclast, when it really counts, he shows what he is — a mainstream neoclassical economist fanatically defending the relevance of standard economic modeling strategies.

    Indeed.

    Being only a casual (and frankly, lazy) observer, who came back to economics on the interwebs years after my undistinguished career as a (non-academic) professional economist ended, I initially presumed, whenever I saw reasonable things being said by Thoma, Krugman, Rodrik, Delong and other econoblog favs that there was a trustworthy, deep understanding behind their musings. I had never seen a DSGE analysis — what did I know? The great economists among my teachers long ago really did seem to have a feel for the relationship of the theory to the actual economy. Some of that nostalgic optimism was a remnant of youthful naivety, no doubt, but over several years, the full horror has revealed itself.

    The multiplication of models, none of which are ever wrong, was an early tipoff. The insistence on analytic formalism to the exclusion of the kind of operational modeling and interpretation of actual institutions, where uncertainty rules, necessary to building understanding of what the existing economy is like — that took a bit longer to make an impression.

    The actual economy is the exact opposite of the Platonic Ideal worshipped in Rodrik’s philosopher’s Cave. While these morons contemplate a system of markets equilibrated in price, we live in an economy of hierarchies, administering price, driven forward by the dynamics of discovery, accumulation and depletion. Of course, the young students want to break the chains that would keep them in the Cave, and walk out and look at the real world in the light of day! New thinking? Any thinking would be a welcome change.

  3. Strange that the guy who treats economists as morons basically has written nothing that would make a neoclassical economist blush!!!! The notion that the economy reflects hierarchies and institutions ….. by gosh, there are models for that!!!! (hehe)

    • There are models for everything. Isn’t that what The Man said?
      .
      What is the world like? That is the question non-morons try to answer.

    • Not strange if you realize that the moron doesn’t have the good sense to be embarrassed. A basic problem in economics is one of bad taste compounding bad judgment as the most basic epistemological considerations are ignored.
      .
      In many respects, my training and modes of thought embody conventional neoclassical economics. But, I include a critical facility that accepts that some models are, in some important sense wrong, and must be discarded or avoided in subsequent argument about the actual economy as a system. If a Walrasian system of Markets cannot reach a general equilibrium as long as one market fails to clear, and in the actual economy many “markets” cannot and do not clear, I would discard poor Walras as an analogy. It is not clear to me that DSGE modelers really “get” this. I know that the production function is not actually a function, because I have thought about it for more than 5 minutes. I would think accepting the theorem of the second best would preclude even casual first-best policy reasoning, but I would be wrong; economists will argue as if the actual economy can be improved by making it superficially more like an imaginary economy of perfectly competitive markets. Knowing that there are few actual markets in the actual economy, I am disinclined to speak mindlessly of a market economy and to explain every shortcoming as a market failure.

  4. “As long as policy makers and economists stick to ‘standard economic analysis’ everything is fine. Economics is just a method that makes us ‘think straight’ and ‘reach correct answers.’

    One hoped that one thing that might have come out of 2008 was a hard look at how economics was done. Perhaps people would start questioning whether the methodological approach of neo-classical theory was the right one – maybe even start asking questions like why do we assume that people have unlimited wants and what exactly is this constraint you talk about and where did it come from?

    But that is not what happened, economists closed ranks, and things quickly returned to business as usual, as this commentator observed:

    http://www.newyorker.com/news/john-cassidy/a-nobel-for-freshwater-economics

  5. A problem is that no or very few universities teach anything else than the standard (and even for neoclassical economics outdated) curricula. The monopoly on the economics education at universities prevents us students from choosing or even knowing that something else exists. Simply being taught at universities gives it the air of authority that it really doesn’t deserve.


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