Talking about vs. doing economics
from David Ruccio
In attacking Austrian economics (and other schools of heterodox economics), John Quiggin invokes the mainstream distinction between talking about economics—so-called meta-issues—and doing economics.
A focus on meta-issues is a characteristic problem for heterodox schools of all kinds, but Austrian economics takes it to an absurd extreme. At some point, surely, they need to stop worrying about methodology and history of thought and start actually doing some economics.
Leaving aside the obvious silliness of worrying about epistemology in the context of a massive financial crisis. . .
Such a position is exactly what mainstream economists pronounce, since they have little use for such topics as history of economic thought, economic methodology, epistemology, and so on. Little use, at least officially, but of course they invoke such topics all the time: in their obsession with science and formal methods, in presuming that economic agents have full and certain knowledge, in presenting contemporary economics as an “improvement” over previous economic discourses, and so on.
Quiggins fails to understand that such “meta-issues” are crucial, in at least three senses: First, they’re central to Austrian economic theory, in that the Austrian economic agents have limited and local knowledge. Second, all heterodox economists have an interest in undermining the hegemony of mainstream economics and creating a space for alternative theories—and addressing topics such as epistemology, methodology, and the history of economic thought is a way of doing that. Finally, those topics ARE central to a discussion of the current crises of capitalism, precisely because the hegemonic theories (within both academic and everyday economics) created the conditions—of inequality, financial speculation, and so on—that led to the crisis.
In short, what Quiggin seems not to be able to understand is that talking about economics IS doing economics.
The problem with Austrian “economics” is the same as the problem with academic philosophy as a whole — it has followed its own tail down the rabbit hole, and spends all its time chasing imaginary rabbits that are in fact its own tail end, completely abandoning anything that might qualify as “real life” in its pursuit of an abstract model that has little applicability to any real-life problem. Talking about abstract problems that have no applicability to real life, such as philosophy’s preoccupation with the metaphysics of perception, has little to say to policy makers or to the average individual on the street who knows he has real problems — he doesn’t have a job, his income has declined over the past ten years, etc. — and simply isn’t interested in all that tail-chasing. We have a scientific method that is an answer to those pesky metaphysical questions. We know it works — you’re looking at its product, the computer that you’re reading this text with. We don’t need to talk about a scientific method that we know works. It just isn’t useful.
For example, we know how to end a depression characterized by a Fisher-style debt-deflation spiral. Just stage a massive inflationary event where every government on the planet is forced to print massive amounts of money in order to produce huge amounts of economic output in order to create full employment, output that is then blown up rather than purchased by consumers. We know this is true because, well, it happened — we saw it happening, between 1939 and 1945. If we ever have a massive deflationary event like a Great Depression again, we thus know how to get out of it — hopefully without the 40,000,000+ dead bodies this time. What does Austrian economics have to say about this simple observation of the reality that we live in? What theory do the Austrians present to explain how this phenomenon operated? What does Austrian economics have to say about when this kind of intervention in the economy should start? Nothing. Less than nothing — indeed, they appear to deny that this massive inflationary event even happened or that it ended the Great Depression, because it doesn’t fit anywhere into their abstract philosophical models. Rabbit holes. Just sayin’.
‘in presuming that economic agents have full and certain knowledge’
Interesting. Most of my theoretical work for the last thirty years has been devoted to examining how and why that presumption fails, and the implications for such things as consumption and production choices, environmental policy and so on. And I’m currently writing a book on the exact topic of how dominant economic theories “created the conditions—of inequality, financial speculation, and so on—that led to the crisis.”
Of course, discussing the issues raises all kinds of philosophical/epistemological problems, and I haven’t shied away from them. But I don’t think, as you appear to suggest, that it’s sufficient to talk about philosophical issues so as to “create a space for alternative theories”, unless, at some point you actually start producing the alternatives to occupy that space.
Badtux, maybe I misunderstand you, but what you’re arguing is that some empirical fact validates an alternative theory to that which is espoused by Austrians. In so doing, though, you’re arguing from a specific position on the methodological spectrum. Many economists don’t even like to acknowledge there is such a spectrum let alone reflect on their position on it – I think this is what David Ruccio is trying to grapple with. He’s arguing that as soon as we take a position on an economic theory then we have – either implicitly or explicitly – taken a methodological stance whether we know it or not. This applies equally to the meta-theoretical questions he addresses. For your case, you’re arguing that at one point in time and space one solution (that is, one data point about one treatment) worked. That doesn’t generalize.
Secondly, claiming that ‘We don’t need to talk about a scientific method that we know works. It just isn’t useful.’ isn’t useful and doesn’t seem carefully considered. Moving away from theory, have you read Philip K. Dick’s Man in the High Castle or Kingsley Amis’s The Alteration? I love both of those novels because you can get a sense of how the manifestations of science might turn out under different methodological practices and beliefs because of the histories the authors create. Alternatively, think about Lysenkoism under the soviets: a dominant paradigm can and will affect how people think science is done and the material objects it manifests, such as your computer. It takes certain institutions to promote science and innovation, the only way we can know which institutions work and the methods to adopt to do such investigations is to ‘chase our tails’ a bit.
Get in where you fit in, maybe the topics are not for everybody, but they are valuable + important work, especially now.
The mind & body are connected. When there is sickness, yes you could go to the hospital & get on drugs, & get better, but then, what other ways are there to get better, what if the problem is part mental, what if the patient is an addict, mentally ill? Those problems must be addressed.
To examine the crisis without political philosophy or epistemology would be boring.