Pluralism in economics

1 November, 2016 at 19:32 | Posted in Economics | 1 Comment

Many mainstream economists today try to give a picture of modern economics as a pluralist enterprise. But the change and diversity that gets their approval only takes place within the analytic-formalistic modeling strategy that makes up the core of mainstream economics.logo_netzwerk_500px_transparent You’re free to take your analytical formalist models and apply it to whatever you want — as long as you do it with a modeling methodology that is acceptable to the mainstream. If you do not follow this particular mathematical-deductive analytical formalism you’re not even considered doing economics. If you haven’t modeled your thoughts, you’re not in the economics business. But this isn’t pluralism. It’s a methodological reductionist straightjacket.

To most mainstream economists you only have knowledge of something when you can prove it, and so ‘proving’ theories with their models via deductions is considered the only certain way to acquire new knowledge. This is, however, a view for which there is no warranted epistemological foundation. Outside mathematics and logics, all human knowledge is conjectural and fallible.

Validly deducing things in closed analytical-formalist-mathematical models — built on atomistic-reductionist assumptions — doesn’t much help us understand or explain 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 macroeconomists rather pointless. It’s simply not the stuff that real understanding and explanation in science is made of. Had mainstream economists not been so in love with their smorgasbord of models, they would have perceived this too. Telling us that the plethora of models that make up modern macroeconomics ‘are not right or wrong,’ but ‘just more or less applicable to different situations,’ is nothing short of hand waving.

Take macroeconomics as an example. Yes, there is a proliferation of macromodels nowadays — but it almost exclusively takes place as a kind of axiomatic variation within the standard DSGE modeling framework. And — 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.

Most mainstream economists seem to have no problem with this lack of fundamantal diversity — not just path-dependent elaborations of the mainstream canon — and the vanishingly little real world relevance that characterize modern macroeconomics. To these economists there is nothing basically wrong with ‘standard theory.’ As long as policy makers and economists stick to ‘standard economic analysis’ — DSGE — everything is fine. Economics is just a common language and method that makes us think straight and reach correct answers.

Most mainstream neoclassical economists are not for pluralism. They are fanatics insisting on using an axiomatic-deductive economic modeling strategy. To yours truly, this attitude is nothing but a late confirmation of Alfred North Whitehead’s complaint that “the self-confidence of learned people is the comic tragedy of civilisation.”

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  1. Gee! I didn’t know that I was being comic and tragic together. What else can I be before my self-confidence fails?


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