Economists — dangerous arrogants

23 February, 2016 at 12:39 | Posted in Economics | 1 Comment

In advanced economics the question would be: ‘What besides mathematics should be in an economics lecture?’ In physics the familiar spirit is Archimedes the experimenter. aaaaafeynBut in economics, as in mathematics itself, it is theorem-proving Euclid who paces the halls …

Economics … has become a mathematical game. The science has been drained out of economics, replaced by a Nintendo game of assumption-making …

Most thoughtful economists think that the games on the blackboard and the computer have gone too far, absurdly too far. It is time to bring economic observation, economic history, economic literature, back into the teaching of economics.

Economists would be less arrogant, and less dangerous as experts, if they had to face up to the facts of the world. Perhaps they would even become as modest as the physicists.

D. McCloskey

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  1. Economists who faced up to the facts of the world would be in for a rude awakening. There are few actual markets in “the market economy” they prattle on about mindlessly. Prices are administered by bureaucratic organizations, and cost structures are typically such that marginal price is less than average cost and declining over the relevant range of output. Not only is there no market, nothing like a market equilibrium in price is even possible. The administered schedule of prices must be discriminatory to realize sufficient revenue to recover costs and finance sunk cost capital investments, and every transaction price is married to contingent promises such as warranties of quality. The money economy we see running on about us has been shaped by the necessity of acting on limited knowledge in a sea of ignorance. A primary focus of economic behavior is achieving and managing a technical efficiency scarcely acknowledged in the textbooks.
    .
    Facing the facts of the world would expose the theoretical game as an idle pastime. Far from qualifying as “rigorous”, economic theorists have been using ignorance of the world as a badge of honor, as a perverse form of expertise, and bypassing critical thought, an essential component of any science, in the process.


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