Part IV: Eleven ways to think like a post-crash economist
from Edward Fullbrook
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.
JP Bouchaud , “Economics needs a scientific revolution”, real-world economics review, issue 48, December, p. 291.
John Dewey , “Rationality in Education”, The Social Frontier, December, Vol. lII, No. 21, pp. 71-73.
Yves Gingras , “Beautiful Mind, Ugly Deception: The Bank of Sweden Prize in Economics Science”, Real World Economics, edited by Edward Fullbrook.London: Anthem.
Gregory Mankiw , Principles of Economics, 4th edition, Thomson.
Lionel Robbins , 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 , Economics: A New Introduction,London, Pluto.