Part IV: Eleven ways to think like a post-crash economist
from Edward Fullbrook
Part I – Mankiw’s Neo-Platonism is anti-science
Part II – Mankiw’s use of emotionality and bullying
Part III – Newton, Mankiw and Einstein
Eleven ways to think like a post-crash economist
For the last fifty years economics as a profession has shown exceptional talent for self-promotion. Spurred on by self-delusion, it has persuaded the media to call its Bank of Sweden Prize a “Nobel Prize” and in the main has escaped ridicule even when, like Samuelson and Mankiw, it has represented its pursuits and achievements as resembling those of Newton and Einstein. This self-exaltation has in the main enabled its anti-scientific methodology to escape outside notice, with the result that the broader intellectual community has accepted economics’ self-assessment. But this was not always the case. Four years after Robbins published his essay lauding the methods of economics, the American pragmatist philosopher John Dewey favourably reviewed a book by a zoologist and medical statistician condemning the same. Dewey, after referring to “the conceptions and methods” of economics as “obscurantist and fatally reactionary” quotes from Lancelot Hogben’s The Retreat from Reason. [Dewey, 1936] It pertains as much to our time, especially to Economics 101 and Presidential Advisors, as it did back then.
We can only conclude that economics, as studied in our universities, is the astrology of the Machine Age; it provides the same kind of intellectual relief as chess, in which success depends entirely on knowing the initial definition of moves and proeesses of checking, casting, etc. . . . In science the final arbiter is not the self-evidence of the initial statement, nor the facade of flawless logic that conceals it. A scientific law embodies a recipe for doing something, and its final validation rests in the domain of action.
And the message today from the physicist Bouchaud is much the same.
Most of all, there is a crucial need to change the mindset of those working in economics and financial engineering. They need to move away from what Richard Feynman called Cargo Cult Science: a science that follows all the apparent precepts and forms of scientific investigation, while still missing something essential. An overly formal and dogmatic education in the economic sciences and financial mathematics are part of the problem. Economic curriculums need to include more natural science. The prerequisites for more stability in the long run are the development of a more pragmatic and realistic representation of what is going on in financial markets, and to focus on data, which should always supersede perfect equations and aesthetic axioms. [Bouchaud, 2008, p. 292]
For economics the final arbiter, economic history, has spoken and this time with deafening loudness. Economists in the main may or may not hear, but most of the rest of the educated world has already. Although there is now talk of “intellectual crime”, it would be wrong to punish the guilty. But I plead that everyone, students included, do what they can to reform the teaching of economics, especially at its introductory level. If universities continued to use for nuclear engineering a textbook by an engineer who had headed a team managing a nuclear power plant that without external causes exploded causing huge devastation, there would be an enormous public outcry, including student demonstrations. There should be a similar outcry if Mankiw-type textbooks continue to be foisted on the world’s million or so young people who every year in good faith take up the study of economics. Because of human error propagated by a virulent ideology skilfully camouflaged as science, millions of American families are losing their homes, a 100 million people in the world stand to lose their jobs and a generation has been deprived of the hope it deserves. We cannot undo that, but we can greatly reduce the chances of it happening again if with all possible speed we bring into use pluralist textbooks that look at real-world economic problems from different points of view, that do not make false claims about economic knowledge, and most importantly, that seek not to indoctrinate but to educate. To these ends I offer the following list.
Eleven ways to think like a post-crash economist
1. Don’t try to pass yourself off as a kissing cousin of natural scientists.
2. Don’t speak, except to very small children, of invisible hands and magic.
3. When possible avoid the use of emotive words.
4. Remind yourself every morning that your duty as a teacher is to educate your students, not indoctrinate them.
5. Try to look at economic phenomena from different points of view and teach your students to do the same.
6. Encourage diversity of conceptual frameworks in economic research.
7. Don’t be condescending to your students.
8. Keep your eye on real-world economies rather than imaginary ones.
9. Don’t try to hide the troubled but fascinating history and contemporary diversity of economics from your students and the general public.
10. Avoid cranks and try to avoid becoming one yourself.
11. Never try to pass off ideology as objective truth.
References
JP Bouchaud [2008], “Economics needs a scientific revolution”, real-world economics review, issue 48, December, p. 291.
John Dewey [1936], “Rationality in Education”, The Social Frontier, December, Vol. lII, No. 21, pp. 71-73.
Yves Gingras [2007], “Beautiful Mind, Ugly Deception: The Bank of Sweden Prize in Economics Science”, Real World Economics, edited by Edward Fullbrook.London: Anthem.
Gregory Mankiw [2007], Principles of Economics, 4th edition, Thomson.
Lionel Robbins [1932], An Essay on the Nature and Significance of Economic Science.London: Macmillan.
Söderbaum, Peter (2004) “Economics as Ideology and the Need for Pluralism”, A Guide to What’s Wrong with Economics, edited by Edward Fullbrook.London: Anthem, pp. 158-168.
Hugh Stretton [1999], Economics: A New Introduction,London, Pluto.
Edward, I am far from happy with some of your “eleven ways”.
At #1, where does information science figure in your “natural science”?
At #2, what (other than the “invisible hand”) is there currently in economic theory to connect it with cybernetics, the modern theory of automatic control?
At #9, have Newton, Heaviside, Einstein and Shannon not been considered by the self-righteous to be cranks? Go read Nevil Shute’s “No Highway”.
Bah! “This old man, he played nine”, when he should of course played “At #10 …”. With apologies.
For more than three decades the JOURNAL OF POST KEYNESIAN ECONOMICS has been trying to encourage the development of real world economic theory — based on Keynes’s GENERAL THEORY of how to explain an entrepreneurial economy that operates with money contracts that are used to organize production and exchange transactions. In such a world LIQUIDITY, i.e., the ability to meet one’s contractual commitments as they come due, is an essential aspect of understanding the operation of such an economic system.
I have developed an economics macrotextbook POST KEYNESIAN MACROECONOMIC THEORY, [2nd edition,elgar publisher, 2011] — which would, I think, help students and professors understand the operation of a capitalist entrepreneurial economy, where entrepreneurs engage in money contractual relationships — as do households and governments, and exporters and importers. Interestingly, the first edition of this trextbook was never reviewed by most establishnet economic journals. This second edition also explains why the financial crisis of 2007-8 caused the Great Recession and how Keynes’s General Theory would provide a public policy agebda to recover global posperity.
I then wrote a trade book entitled THE KEYNES SOLUTION: THE PATH TO GLOBAL ECONOMIC PROSPERITY [Palgrave/Macmillan. 2009] which makes this theory, analysis and policy agenda understandable to students and lay persons without all the equations, etc.. It also explains why, because of Samuelson;s mumbo-jumbo about being a scientist, Samuelson never used Keynes’s theory in developing his Neo-Classical Synthesis Keynesianism– and using Samuelson’s own printed words explains why Samuelson found the GENERAL THEORY “unpalatable” andf therefore he just assumed it was a Walrasian system where wages and prices were sticky!!!
Finaly, I also present written documentation from John R. Hicks [ the developer of the ISLM system] where Hicks states that this IS:LM system is not a representation of Keynes’s General Theory — as Hicks renounced the ISLMsystem in a published article in the JOURNAL OF POST KEYNESIAN ECONOMICS. Hicks moreoever has written that he totally endoses the Post Keynesian theory developed in my textbook as the correct representation of Keynes.
So why do not even heterodox economists try using my books in their classes?? I suspect partly because they never heard of these books as the establishment in economics failed even to list the books inthe JOURNAL OF ECONOMIC LITERATURE, etc.
Paul Davidson
Several years ago I entered into a debate through letters to the editor with a local economics teacher at a local university. He finally, in exasperation with me, admitted that economics was not a science. I noted in my final volley that the predictive success of economists was likely comparable to that of reading the entrails of chickens.
At C.O.M.E.R (the Committee Of Monetary and Economic Reform — comer.org) we have long talked about the problem of academic economists and many years ago predicted the collapses that we have been seeing lately because of the banks penchant for gambling in derivatives. However there are some economists that are worthy of respect. The late John Hotson is one of them. Following is my favorite quote from him.
“As every environmentalist knows, over the last few centuries we humans have created an ecologically unsustainable industrial economy. Unless we radically reform our way of doing things and create a sustainable economic system we are doomed to suffer drastic changes.
“What most environmentalists – and indeed most economists – do not know is that over the last few centuries we humans have also created an economically unsustainable financial system. Unless we radically reform this financial system it will recurringly break down and thwart our efforts to heal this planet.
“Our current financial system diverts us from our real problems to ask: ‘where is the money going to come from?’ This should be the least of our worries. As long as we have vast unmet human needs and idle human and nonhuman resources … finance should never be allowed to stand in the way of doing what must be done.
“Could anything be more insane than for the human race to die out because we ‘couldn’t afford’ to save ourselves.”
Dr. John Hargrove Hotson, Emeritus Professor of Economics, University of Waterloo and co-founder of COMER. 1993 [25-1-1930 to 21-1-1996]
A more apt sequel to the book “New Ideas from Dead Economists”, would be “Dead Ideas of New Economists.” A cursory reading of the likes of Schumpeter’s History of Economic Analysis” shows clearly that often was is “new” in mainstream economics, particularly of the neoclassical ilk, is not true; and what appears to be true, is not really new.
The failure of neoclassical economics as meta-theory or as a basis for any kind of effective policy, is really a failure of the whole of acadmia that puts such a premium on ideological cloning; narcissistic mentoring (I want my school of thought to reign supreme by cranking out and cloning students as intellectual and academic toadies and sycophants); notches on the ol CV (quantity not quality); mathurbation and what Schumpeter and others called “scientism” uncritically copying modeling and math constructs of the natural sciences as if that was what makes or does not make economics “scientific”; conference networking; looking down on teaching versus publish or perish; narcissistic use of/focus on own textbooks and work; etc.
Aren’t we just trying to find systems that will work and help us navigate the future without blinders. I am less concerned about indoctrination than I am about flawed thinking. If your ego is inflated by calling yourself a scientist you are on the wrong course. Mankiw is just trying to explain the conventional interpretation of Economists. The strongest criticism of his textbook is that it is just a collection of economic bromides.
“Aren’t we just trying to find systems that will work and help us navigate the future without blinders”?
No. We also have to communicate such findings to influential people and future generations. These will reject them unconsidered if they have been indoctrinated with flawed thinking, for taking for granted that the flawed thinking is sound, anything different is likely to be assumed flawed. Is Mankiw “just trying to explain the conventional interpretation of Economics”? Then the strongest criticism must be reserved for him: a professor, consciously promulgating or uncritically taken in by demonstrably flawed thinking.
Incidentally, I myself am not trying to find systems that work, I know a whole family of them outside economics in terms of which economics can be modelled (e.g. it can be interpreted as a control system). I call myself a scientist because that is what I was trained to be, was and temperamentally am, but I can assure you, the seeming impossibility of communicating highly significant findings to autistic economists and politicians doesn’t exactly inflate my ego.