On the persistence of science-fiction economics

6 Aug, 2016 at 11:49 | Posted in Economics | 3 Comments

9781107763111iObscurantism is sustained by the self-interest of non-obscurantist scholars. To be effective, an attack on obscurantism has to be well documented and well argued. Mere diatribes are pointless and sometimes counterproductive. Yet scholars have a greater personal interest in achieving positive results than in exposing the flaws of others, not only because of the reward system of science, but also because achieving positive results is intrinsically more satisfying. On grounds of self-interest, therefore, many schoars will hesitate to take time off from their main work and hope that someone else will do the cleaning … The highly regarded economist Ariel Rubinstein has offered rare insider criticism of mainstream economics, commenting, for example, on a ‘as-if-rationality’ that “it ultimately became clear that the phrase ‘as if’ is a way to avoid taking responsibility for the strong assumptions upon which economic models are founded” …

When Joseph Stiglitz was asked at a private dinner party how economists can make repeated falsified claims without having their careers terminated, he reportedly answered: “I agree with you, but I don’t understand why you are so puzzled. What you should be assuming is that — as is done by most economists — economics is really a religion. So why should you be puzzled by the fact that they cling to and never give up their views despite frequent falsification?”

Confronted with the critique that they do not solve real problems, mainstream economists often react as Saint-Exupéry‘s Great Geographer, who, in response to the questions posed by The Little Prince, says that he is too occupied with his scientific work to be be able to say anything about reality. Confronting economic theory’s lack of relevance and ability to tackle real probems, one retreats into the wonderful world of economic models. One goes in to the shack of tools and stays there playing with the ‘toy-box’. While the economic problems in the world around us steadily increase, one is rather happily playing along with the latest toys in the mathematical toolbox.

Modern mainstream economics is sure very rigorous — but if it’s rigorously wrong, who cares?

Instead of making formal logical argumentation based on deductive-axiomatic models the message, we are better served by economists who more  than anything else try to contribute to solving real problems.


  1. This is the true challenge! Demonstrating the wrongness of economics, daily, might be satisfying. But explaining and ending the persistence of economics is the job of someone interested in improving the lives of fellow human beings.
    I suspect that, at bottom, there is only one answer to the question.
    Why does wrong economics persist?
    Because the organization of the 21st Century university–including the incentives of money, prestige, and self-esteem–make it impossible to dislodge.
    That is: as long as universities continue in anything close to their present form, economics will be wrong. Efforts to bring in diversely voices such as the students in Manchester, do nothing to change this reality. A diverse variety of wrongness is worse than the current situation.

  2. Not an economist. From what I understand, economists are trained to ignore banking hence, for example, Paul Krugman’s long adherence to the now discredited “loanable funds” theory.

    Of course since many economists are hired by banks, it’s no wonder they dare not bite the hand that feeds them.

  3. I think it has something to do with a culture that finds mathematical expression very clever, even if it has little relevance and actually distracts us from really understanding what we need to know. Unless something is dressed up as a mathematical model it is not science, it is as if they believe the two things are one and the same. I find it interesting that often the people least impressed the use of mathematics in economics are real mathematicians themselves.

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