Mainstream economics — an obscurantist and harmful waste of time

15 Jun, 2019 at 15:32 | Posted in Economics | 3 Comments

One may perhaps, distinguish between obscure writers and obscurantist writers. The former aim at truth, but do not respect the norms for arriving at truth, such as focusing on causality, acting as the Devil’s Advocate, and generating falsifiable hypotheses. The latter do not aim at truth, and often scorn the very idea that there is such a thing as the truth …

obscurant-1

These writings have in common a somewhat uncanny combination of mathematical sophistication on the one hand and conceptual naiveté and empirical sloppiness on the other. The mathematics, which could have been a tool, is little more than toy … Hard obscurantist models, too, may have some value as tools, but mostly they are toys.

I have pointed to the following objectionable practices:

2. Adopting huge simplifications that make the empirical relevance of the results essentially nil …

3. Assuming that the probabilities in a stochastic process are known to the agents … or even in some sense optimal …

7. Assuming that agents can choose optimal preferences …

11. Adhering to the instrumental Chicago-style philosophy of explanation, which emphasizes as-if rationality and denies that the realism of assumptions is a relevant issue.

Jon Elster

It’s hard not to agree with Elster’s critique of mainstream economics and its practice of letting models and procedures become ends in themselves, without considerations of their lack of explanatory value as regards real-world phenomena.

Many mainstream economists working in the field of economic theory think that their task is to give us analytical truths. That is great — from a mathematical and formal logical point of view. In science, however, it is rather uninteresting and totally uninformative! The framework of the analysis is too narrow. Even if economic theory gives us ‘logical’ truths, that is not what we are looking for as scientists. We are interested in finding truths that give us new information and knowledge of the world in which we live.

Scientific theories are theories that ‘refer’ to the real-world, where axioms and definitions do not take us very far. To be of interest for an economist or social scientist that wants to understand, explain, or predict real-world phenomena, the pure theory has to be ‘interpreted’ — it has to be ‘applied’ theory. An economic theory that does not go beyond proving theorems and conditional ‘if-then’ statements — and do not make assertions and put forward hypotheses about real-world individuals and institutions — is of little consequence for anyone wanting to use theories to better understand, explain or predict real-world phenomena.

Building theories and models on unjustified patently ridiculous assumptions we know people never conform to, does not deliver real science. Real and reasonable people have no reason to believe in ‘as-if’ models of ‘rational’ robot-imitations acting and deciding in a Walt Disney-world characterised by ‘common knowledge,’ ‘full information,’ ‘rational expectations,’ zero  transaction costs, given stochastic probability distributions, risk-reduced genuine uncertainty, and other laughable nonsense assumptions of the same ilk. Science fiction is not science.

Much work done in mainstream theoretical economics is devoid of any explanatory interest. And not only that. Seen from a strictly scientific point of view, it has no value at all. It is a waste of time. And as so many have been experiencing in modern times of austerity policies and market fundamentalism — a very harmful waste of time.

3 Comments

  1. Wow! Our main man from Malmö gives the anemic modelbuilders a hard time I see!Great, Lars! 🙂

  2. I will defend logical analysis as a necessary and powerful means of attaining knowledge. What is wrong with economic theory is not that economists do analytic theory but that they do it badly, so very badly!
    .
    The fundamental objective of a research program in analysis is to define the necessary and sufficient elements making up a system of functional relations. To take up one obvious example: the traditional textbook analysis of production posits that output is a function of factor inputs. As Steve Keen has quipped, “labour without energy is a corpse, and capital without energy is a sculpture” but that insight has been scorned by the mainstream, which cannot admit that energy and control are necessary elements for production. Energy and control logically entail waste and error alongside useful output, but again, because mainstream economists cannot be bothered for all their love of “rigor” to accept the imperatives of logical analysis, critical thinking is laid waste and the textbooks remain as they are.
    .
    Obscure or obscurantist? Whatever it is, it is not thinking.

    • Astutely observed, Bruce. The most basic error that invalidates effectively all of modern mainstream neoclassical economics as empirical science is the absence of definitions that accurately identify the elements of functional economic relations. This lack was demonstrated more than 50 years ago in the Cambridge Capital Controversy, but neoclassical economists have simply ignored the fact that their discipline (it’s not science) was proved logically incoherent. A genuine empirical science of economics must begin with definitions that correspond to functional economic quantities, and not accept accountants’ definitions just because they are the ones compiling all the data.


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