The primary problem with mainstream economics

3 Oct, 2019 at 09:31 | Posted in Economics | 10 Comments

Jamie Morgan: To a member of the public it must seem weird that it is possible to state, as you do, such fundamental criticism of an entire field of study. The perplexing issue from a third party point of view is how do we reconcile good intention (or at least legitimate sense of self as a scholar), and power and influence in the world with error, failure and falsity in some primary sense; given that the primary problem is methodological, the issues seem to extend in different ways from Milton Friedman to Robert Lucas Jr, from Paul Krugman to Joseph Stiglitz. Do such observations give you pause? My question (invitation) I suppose, is how does one reconcile (explain or account for) the direction of travel of mainstream economics: the degree of commonality identified in relation to its otherwise diverse parts, the glaring problems of that commonality – as identified and stated by you and many other critics?

einstein1988berlinLars P. Syll: When politically “radical” economists like Krugman, Wren-Lewis or Stiglitz confront the critique of mainstream economics from people like me, they usually have the attitude that if the critique isn’t formulated in a well-specified mathematical model it isn’t worth taking seriously. To me that only shows that, despite all their radical rhetoric, these economists – just like Milton Friedman, Robert Lucas Jr or Greg Mankiw – are nothing but die-hard defenders of mainstream economics. The only economic analysis acceptable to these people is the one that takes place within the analytic-formalistic modelling strategy that makes up the core of mainstream economics. Models and theories that do not live up to the precepts of the mainstream methodological canon are considered “cheap talk”. If you do not follow this particular mathematical-deductive analytical formalism you’re not even considered to be doing economics …

The kind of “diversity” you asked me about, is perhaps even better to get a perspective on, by considering someone like Dani Rodrik, who a couple of years ago wrote a book on economics and its modelling strategies – Economics Rules (2015) – that attracted much attention among economists in the academic world. Just like Krugman and the other politically “radical” mainstream economists, Rodrik shares the view that there is nothing basically wrong with standard theory. As long as policymakers and economists stick to standard economic analysis everything is fine. Economics is just a method that makes us “think straight” and “reach correct answers”. Similar to Krugman, Rodrik likes to present himself as a kind of pluralist anti-establishment economics iconoclast, but when it really counts, he shows what he is – a mainstream economist fanatically defending the relevance of standard economic modelling strategies. In other words – no heterodoxy where it would really count. In my view, this isn’t pluralism. It’s a methodological reductionist strait-jacket.

Real-World Economics Review


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  1. Economics is a social science and is embedded within human social networks and societies social institutions which includes the political realm. It is a false dichotomy that thinks economics can be separated from the political and that somehow doing so is true “science.” This is really scientism masquerading as science and attempting to treat the social science of economics with the same assumptions and methodologies as those used in the physical sciences (natural science). It is referred to within the literature as physics envy. Such naļve philosophical reductionism won’t sit well with the younger generation I suspect.

    The desire to separate out economic behaviour from its wider human context so as to make it amenable to grand totalizing theoretical/mathematical constructions is more utopian than pragmatic; more pseudo-science than science. No “theory” about human economic behaviour that dismisses real human behaviour that substantively impacts economic outcomes and future economic behaviour simply because it is not mathematically tractable (e.g., politics, interest-group lobbying, etc.) or because it doesn’t fit into one’s stereotyped understanding of what it means to be “scientific” (scientists across diverse fields have differing views) will likely offer pragmatic real world solutions to humanities pressing problems.

    • Economics was NEVER and still ISN’T a science. It’s a discipline that originated from moral theology and philosophy and graduated to Political Economy up to the middle/late 19th century to early 20th century. In the post WW2 period economists involved in putting together and building on the neo-classical synthesis, were fooled into believing that they had created a “science” simply because of the mathematised models they conjured up.

      • You make a valid point Wayne, but the question of whether economics is a “social science” or not depends upon, at least partially, how one defines “science.” I agree, indeed, it did start off as a form of moral political economy and that those who were its founders were Christians, but that fact alone doesn’t make it “theology” and that is were I quibble to differ with you. But that is another story that takes far more time than I have. Thank you for your insightful comment.

    • Sorry, I meant moral political philosophy. But I note that the distinction between philosophy and science as we understand it today is very different than it was understood at the time. But one think I don’t agree with; Adam Smith and such were NOT consciously trying to do “theology,” albeit their philosophy and theology and moral and political philosophies most certainly influenced how they thought about economics.

  2. Economics doesn’t even trouble itself with definitions. So let’s trouble the economic minds with one: Economics is the science of humanity’s metabolism with nature by (social) labor. And as humanity is divided in socio-economic classes, there can’t be any unified theory of economics.

    • I have a rather huge collection from my reading of economists prividing definitions of economics. Care to guide how much they agree?

      • Care to guess … Misspelled by fat fingers in tiny keyboard, but better than short fingers on fat demagogue 🙂

        • Qua tRump.

      • When reading a bit about the earliest documented economic/mathematic thinking – cuneiform – I get the impression that the very advanced mathematics used was mostly a way to hide the decisions in the skies. Mathematics is “truth” and “fairness” as long as one doesn’t go outside itself and it was probably in early Mesopotamia a part of the religion. The extreme, socially counterproductive levels of surplus extraction then prescribed by mathematics was from time to time also used by the decisionmakers as populist politics. Jubilees.

        • Thanks, that was interesting.

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