Where economics went wrong

29 Oct, 2019 at 11:27 | Posted in Economics | 3 Comments

colDavid Colander and Craig Freedman’s Where Economics Went Wrong is a provocative book designed to inspire economists to serious reflection on the nature of economics and how it is practiced. It is a book to that seeks to stimulate discussion about the current state of the discipline; it should be read by anyone who categorizes what they do as applied policy work. I agree with much – though not all – of what Colander and Freedman’s write … Reliance on mathematics has obscured much of the assumed structure that economists work from, leaving us unable to clearly articulate assumptions or identify our often normative precepts. Adoption of the scientific method has resulted in the belief that economic theory can deliver useful, practical knowledge. However, this belief has not been tempered by a corresponding understanding of the limits of theory in a complex world where people do not always behave as rational actors, but are influenced by culture, society, history, and government structure. In this review essay, I explore some aspects of the Chicago-School story to illustrate why shifting the profession to Colander and Freedman’s vision of a Classical liberal attitude is likely to be a difficult task – and why the effort is valuable.

Marianne Johnson

A book well worth reading, although yours truly have to confess of not being convinced that it really is possible — or even desirable — to separate ‘positive economics’ from ‘normative economics’. With the background of this year’s ‘Nobel prize’ in economics, it would certainly also have been interesting to evaluate what the ‘randomistas’ revolution with its (alleged) abandonment of theory for experiments means for the authors’ thesis on the separation between ‘science’ (theory) and its ‘application’ (policy).

3 Comments

  1. Every other input in “thinking” – is an input well made; without a discussion nothing… happens?

    Comment by ceciliawetzel— 29 Oct, 2019 #

  2. One of the great social scientist of the 2000 century C.Wright Mills In Sociologial Imagination wrote that : “All students of man and society assume and imply moral and political decisions”
    C. Wright Mills explains at the beginning of the chapter on practicality. Although some social science practitioners attempt to assume a neutral position, to do so is to abdicate responsibility, since others will assign moral or political value to their work anyway.
    Whenever social scientists choose a problem to study, they are already in the realm of values. As far as possible, they should attempt to use value-neutral terms in their conceptualizations or otherwise make explicit any moral or political implications of their terms. In choosing problems, they should be clear about the values that inform their choices and do their best to avoid bias in evaluation, even if the result ends up in an unpalatable moral or political solution. Some social scientists fear making a passionate commitment to a moral or political stance, but in fact, these disciplines need more commitment rather than more so-called scientific objectivity.

    Social research now is used to support the agendas of various bureaucratic institutions, such as the military, social service agencies, schools, corporations, or prisons. The demand for ideological justifications has increased because of the growth of new institutions with enormous power. These institutions need to be legitimated, and social research can play a role in that process. Specifically, the social scientist cannot help but enact a bureaucratic or ideological role in history itself is sometimes rewritten to serve current ideological purposes…Along with this trend, bureaucratic institutions have become more dominant power structures.

    Human relations in industry follow the new sociological approach, which translates into keeping workers happy, efficient, and cooperative through manipulation. If managers understand workers and can keep up their morale, companies can avoid labor organizing against them and ensure that business runs smoothly…

    Sociologists’ participation is partly a response to new job opportunities. The growth in bureaucracy in business and government naturally leads to increased demands for experts, both inside and outside the universities. Inside academe, more and more social scientists become apolitical technicians. Such consultants can further their careers in the university by securing prestige in outside organizations…
    ike grand theory, abstracted empiricism narrows the scope of social science inquiry, says C. Wright Mills, to the detriment of a wider and deeper understanding of society. The sources of data for abstracted empiricism are interviews with individuals based on one set of questions. People are chosen for interview through a sampling procedure. Most studies for social-science purposes fall under the rubric of public-opinion surveys, and results are organized into a statistical framework. However, “the problems of social science cannot be stated within the scope and terms of abstracted empiricism as now practiced.” For example, a practitioner cannot study the effects of mass media simply by sorting people according to their exposure. It is also necessary to understand the structural setting, or milieu, in which people are exposed to media.

    The more salient characteristic of abstracted empiricism is its administrative apparatus and “types of intellectual workmen it has recruited and trained”— intellectual administrators and research technicians rather than professors and scholars. This mode of inquiry takes on a veneer of a science, perhaps to mask the fact that the studies themselves are short on substance. Moreover, the practitioners of abstracted empiricism “seem more concerned with the philosophy of science than with social study itself.” The scientific method as defined by abstract empiricists determines the problems to be studied. They seek to adopt the philosophy of natural science for the purpose of creating a body of work in social science.

    Mills uses the work of Paul Lazarsfeld (1901–76), a respected proponent of social research, as an exemplar for what is wrong with the methodological approach. In Lazarsfeld’s view, sociology is a methodological specialty that should organize the knowledge of all other social sciences. “Sociology, then, as midwife to a series of specialized ‘social sciences’ stands between any topical area that has not yet become an object of The Method and ‘the fully developed social sciences,'” says Mills, partially quoting Lazarsfeld. The method of abstracted empiricism does not require traditional scholarly knowledge because the sociologist takes on a scientific and administrative role. The job of a sociologist in Lazarsfeld’s view is to transform philosophy into science with the help of statistics. Social theory then “becomes a systematic collection of concepts” or “variables useful in interpretations of statistical findings.”

    Two defenses against criticisms that abstracted empiricism is short on results are (1) good studies require money and time, which are often in short supply, and (2) significant findings require a long timeline to come to fruition. Mills does not deny that studies are expensive and adds that because this is the case, practitioners of abstracted empiricism often find themselves caught up in commercial or bureaucratic uses of their work, since they need organizations with deep pockets to fund their studies. Regarding the second defense, Mills disagrees with Lazarsfeld’s idea that a large number of small studies, taken together over time, will add up to an integrated social science. The problems of social science are related to sociohistorical structures, and studies not directly connected to such structural problems are unlikely to shed light on them. Moreover, because empirical research yields only information, studies will be useful only to the degree they are set up as checkpoints in the construction of a larger framework…
    Like grand theory, abstracted empiricism narrows the scope of social science inquiry, says C. Wright Mills, to the detriment of a wider and deeper understanding of society. The sources of data for abstracted empiricism are interviews with individuals based on one set of questions. People are chosen for interview through a sampling procedure. Most studies for social-science purposes fall under the rubric of public-opinion surveys, and results are organized into a statistical framework. However, “the problems of social science cannot be stated within the scope and terms of abstracted empiricism as now practiced.” For example, a practitioner cannot study the effects of mass media simply by sorting people according to their exposure. It is also necessary to understand the structural setting, or milieu, in which people are exposed to media.

    The more salient characteristic of abstracted empiricism is its administrative apparatus and “types of intellectual workmen it has recruited and trained”— intellectual administrators and research technicians rather than professors and scholars.

    This mode of inquiry takes on a veneer of a science, perhaps to mask the fact that the studies themselves are short on substance. Moreover, the practitioners of abstracted empiricism “seem more concerned with the philosophy of science than with social study itself.” The scientific method as defined by abstract empiricists determines the problems to be studied. They seek to adopt the philosophy of natural science for the purpose of creating a body of work in social science.

    Mills uses the work of Paul Lazarsfeld (1901–76), a respected proponent of social research, as an exemplar for what is wrong with the methodological approach. In Lazarsfeld’s view, sociology is a methodological specialty that should organize the knowledge of all other social sciences. “Sociology, then, as midwife to a series of specialized ‘social sciences’ stands between any topical area that has not yet become an object of The Method and ‘the fully developed social sciences,'” says Mills, partially quoting Lazarsfeld. The method of abstracted empiricism does not require traditional scholarly knowledge because the sociologist takes on a scientific and administrative role. The job of a sociologist in Lazarsfeld’s view is to transform philosophy into science with the help of statistics. Social theory then “becomes a systematic collection of concepts” or “variables useful in interpretations of statistical findings.

    Mills himself started his career as a researcher on an empirical study. He was initially recruited to Columbia University by Paul Lazarsfeld, whose abstracted empiricism he denounces in The Sociological Imagination. Lazarsfeld, a mathematician and social psychologist who established the Bureau of Applied Social Research at Columbia in 1945, hired Mills to supervise a research study in Decatur, Illinois.

    Mills does not object to empirical research, per se, but objects to research that confines itself merely to numbers and statistics. According to 21st-century academic Christopher Simpson, quoted in Summers’s article, 75 percent of the funding for Lazarsfeld’s Bureau of Applied Social Research came from military and government propaganda agencies, thus confirming Mills’s charge that bureaucracies rather than sociologists were setting the agenda for research. Mills was also concerned about how these bureaucracies might use research results. For example, the State Department used Lazarsfeld’s work in psychological warfare campaigns in the Middle East and the Philippines, according to Simpson

    Applied social science research does not address the public, but rather specific clients, thereby undermining its objectivity. As the cost of research—now carried out by a team—increases, the corporation or other power structure takes more control over the division of labor. The old idea of a university as a circle of peers and apprentices practicing their craft is replaced with a set of research bureaucracies, “each containing an elaborate division of labor, and hence … intellectual technicians … [who] codify procedures” for easier learning.

    The new model of social science gives rise to what Mills calls “a strange new kind of bureaucrat” or “executives of the mind, public relations men specializing in foundations.” This model lends itself to large-scale projects, easily apportioned in pieces and thus easily administered and monitored. This model of social science fosters pedestrian research, seemingly scientific but often trivial, and discourages both original thinking and projects that do not fit into the cookie-cutter approach of the bureaucracy. Mills says many technicians involved in such bureaucratic research have been poorly trained and educated and are incapable of acquiring the sociological imagination.

    Academic cliques in universities, Mills continues, set the agenda for social science research. The cliques advise younger social scientists, provide job offers and recommendations for promotion, assign books to reviewers, accept articles and assign books to reviewers, accept articles and books for publication, allocate money for research, and decide who sits on editorial boards of professional journals”.
    https://www.coursehero.com/lit/The-Sociological-Imagination/chapter-3-summary/

    Comment by Jan Milch— 29 Oct, 2019 #

  3. My two cents: Even if one doesn’t agree the overall message of the book, it is filled with lots of interesting material about various mainstream economists views – esp. the Chicago School (a speciality of one of the co-authors, Craig Freedman). The footnotes are full of delicious morsels.

    Comment by Edward Mariyani-Squire— 29 Oct, 2019 #


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