Economics becomes more precise and rigorous — and totally useless

1 Apr, 2019 at 13:16 | Posted in Economics | 3 Comments

Nowadays there is almost no place whatsoever in economics education for courses in the history of economic thought and economic methodology. The standard view among mainstream economists is that students shouldn’t think about what they are doing, but just do it.

This is deeply worrying.

A science that doesn’t self-reflect and asks important methodological and science-theoretical questions about the own activity, is a science in dire straits. The main reason why mainstream economics has increasingly become more and more useless as a public policy instrument is to be found in its perverted view on the value of methodology.

How did we end up in this sad state?

Philip Mirowski gives the following answer:

philAfter a brief flirtation in the 1960s and 1970s, the grandees of the economics profession took it upon themselves to express openly their disdain and revulsion for the types of self-reflection practiced by ‘methodologists’ and historians of economics, and to go out of their way to prevent those so inclined from occupying any tenured foothold in reputable economics departments …

Once this policy was put in place, and then algorithmic journal rankings were used to deny hiring and promotion at the commanding heights of economics to those with methodological leanings. Consequently, the grey-beards summarily expelled both philosophy and history from the graduate economics curriculum; and then, they chased it out of the undergraduate curriculum as well.

Methodology is about how we do economics, how we evaluate theories, models and arguments. To know and think about methodology is important for every economist. Without methodological awareness, it’s really impossible to understand what you are doing and why you’re doing it. Dismissing methodology is dismissing a necessary and vital part of science.

Already back in 1991, a commission chaired by Anne Krueger and including people like Kenneth Arrow, Edward Leamer, and Joseph Stiglitz, reported from own experience “that it is an underemphasis on the ‘linkages’ between tools, both theory and econometrics, and ‘real world problems’ that is the weakness of graduate education in economics,” and that both students and faculty sensed “the absence of facts, institutional information, data, real-world issues, applications, and policy problems.” And in conclusion, they wrote that “graduate programs may be turning out a generation with too many idiot savants skilled in technique but innocent of real economic issues.”

Not much is different today. Economics — and economics education — is still in dire need of a remake.

Twenty-five years ago, Phil Mirowski was invited to give a speech on themes from his book More Heat than Light at my economics department in Lund, Sweden. All the mainstream professors were there. Their theories were totally mangled and no one — absolutely no one — had anything to say even remotely reminiscent of a defence. Being at a nonplus, one of them, in total desperation, finally asked: “But what shall we do then?”

rethinkYes indeed — what shall they do when their emperor has turned out to be naked?

More and more young economics students want to see a real change in economics and the way it’s taught. They want something other than the same old mainstream catechism. They don’t want to be force-fed with useless mainstream theories and models. Precision and rigour purchased at the expense of usefulness is worthless.

3 Comments

  1. “to go out of their way to prevent those so inclined from occupying any tenured foothold in reputable economics departments …”
    .
    The idea of reputation, of reputability, is the crux of the problem as I see it. What is reputable is fickle and arbitrary, changing over time. Keynes is in fashion, out of fashion, in fashion again. The focus on fashion, as if it is real, is the problem in economics as in every human endeavor except the stubbornly spiritual pursuits.
    .
    The fetish with fickle, arbitrary, feeble consensus reveals the fickle, arbitrary nature of prices, too. Economic valuations as measured by money are as fickle as social valuations. When one realizes the arbitrariness of the world economists uphold as a worthy goal, it makes Kreuger’s way out seem one of the more rational options.
    .
    My solution: recognize that inflation is arbitrary, create money to fund good ideas like basic income, and work on things you want to see done. If you have a green thumb, farm; if you want to automate farming, figure that out …

  2. Reflection on methodology would be appropriate if the discipline’s goal was understanding. It is not. The purpose of neoclassical economics was identified more than a century ago by its principal founding influence, John Bates Clark: to show that all legally obtained wealth is obtained in return for commensurate contributions to production. I.e., to remove the concepts of unearned income and wealth from economics. Since that time, economists have simply obeyed the dictates of their discipline and responded to incentives. I.e., they have purveyed whatever fabrications are deemed most convenient to the financial interests of those who receive wealth and income WITHOUT making any commensurate contribution to production.


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