Toxic Textbooks: Part I – Mankiw’s Neo-Platonism is anti-science
from Edward Fullbrook
Thanks to Harvard students, Greg Mankiw’s approach to teaching economics was international news last week and continues to be so today. A couple of years ago I contributed a short essay, “Toxic Textbooks” to Jack Reardon’s The Handbook of Pluralist Economics Education. My essay’s paradigm of a toxic textbook is Mankiw’s Principles of Economics. Someone has suggested that I make the essay available online in the current flow of news on this overdue public controversy. So I am splitting the essay into four parts which will appear here this week on consecutive days beginning with this post.
Part I – Mankiw’s Neo-Platonism is anti-science
No discipline has ever experienced systemic failure on the scale that economics has today. Its fall from grace has been two-dimensional. One, economists oversaw, directly and through the prevalence of their ideas, the structuring of the global economy that has now collapsed. Two, except for a few outcasts, economists failed to see, even before the general public saw, the coming of the biggest economic meltdown of all time. Never has a profession betrayed the trust of society so acutely, never has one been in such desperate need of a fundamental remake.
As an epistemological event, the 2008 meltdown of the global financial system ranks with the observation of the 1919 solar eclipse. If professional practice in economics resembled, even in the slightest, that in the natural sciences, then in the wake of today’s global disaster economists would be falling over each other to proclaim the falsity of their theories, the inadequacy of their methods and the urgent need for new ones.
It is now evident to nearly everyone except economists, and increasingly even to many of us, that our collective failure to see the calamity before it occurred and the fact that the system that collapsed had been tailored to fit mainstream teachings means that we, the textbooks we use, and the courses that we teach harbour fundamental misconceptions about the way economies, most especially their markets, function. And in economics nothing is more important than teaching, because, as Galbraith senior once observed, economics is primarily a teaching profession. This makes economics pedagogy a natural starting point for both an analysis of how economics went so horribly wrong and how it might be made less a facilitator of human disaster in the future. Gregory Mankiw’s Principles of Economics, in its five versions, has internationally been the dominant basic text for more than a decade. Also its author, as chairman of President Bush’s Council of Economic Advisers from 2003 to 2005, was directly involved in the engineering of the disaster. So Mankiw’s textbook seems an ideal place to look for clues as to how both the economics profession and the public which it educates became so ignorant, misinformed and unobservant of how economies work in the real world.
Because we are dealing with a systemic failure, in what follows I am concerned not with specific issues covered by Mankiw’s text. Instead I want to consider its general approach to understanding economic phenomena and, no less important, how the author treats the position of trust that he enjoys vis-à-vis the student.
A defining characteristic of traditional or orthodox economics is that it subscribes to a Neo-Platonist theory of truth, i.e., it holds its basic tenets or propositions from which it then deduces everything else, to be self-evident. This quaint epistemological doctrine was notably enunciated for economists by Lionel Robbins in his 1932 An Essay on the Nature and Significance of Economic Science. He wrote:
. . . the propositions of Economics are on all fours with the propositions of all other sciences. As we have seen, these propositions are deduction from simple assumptions reflecting very elementary facts of general experience. [p. 104]
In Economics, as we have seen, the ultimate constituents of our fundamental generalisations are known to us by immediate acquaintance. In the natural sciences they are known only inferentially. There is much less reason to doubt the counterpart in reality of the assumption of individual preferences than that of the assumption of the electron. [p.105]
To a real scientist, of course, economics’ Neo-Platonism is anathema. For example the eminent physicist JP Bouchaud [2008, 9. 291] recently commented:
To me, the crucial difference between physical sciences and economics or financial mathematics is rather the relative role of concepts, equations and empirical data. Classical economics [meaning today’s mainstream] is built on very strong assumptions that quickly become axioms: the rationality of economic agents, the invisible hand and market efficiency, etc. An economist once told me, to my bewilderment: These concepts are so strong that they supersede any empirical observation.”
This doctrine, which alone radically separates economics from the scientific tradition, shapes Mankiw’s textbook from cover to cover. As one would expect, it performs heroics at the book’s beginning. With a real science its basic principles, rather than being its beginning, are its highest achievement. But on the second page under the heading HOW PEOPLE MAKE DECISIONS, Mankiw unveils his “four principles of individual decision making”. At no point does he allude to how his basic principles were discovered. No names, no dates and no processes of discovery are mentioned. Instead he seeks, by appeal to folksy stories to persuade the student to accept them on faith. Only a confirmed Neo-Platonist or a snake oil salesman would think to begin an epistemological exercise that way.
Tomorrow: Part II – Mankiw’s use of emotionality and bullying