Home > students, The Economics Profession > Toxic Textbooks: Part I – Mankiw’s Neo-Platonism is anti-science

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]

And:

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

  1. November 7, 2011 at 2:06 pm

    “[quoting Bouchard]…An economist once told me, to my bewilderment: These concepts are so strong that they supersede any empirical observation.”

    “[Mankiw] seeks, by appeal to folksy stories to persuade the student to accept them…”

    As a mathematician turned lawyer friend of mine says when dismissing such incoherence: It must be dialectical ….

  2. November 7, 2011 at 3:01 pm

    What I say three times is true!

  3. November 7, 2011 at 5:03 pm

    Intuitive “truths” are arguably the greatest obstacles to seeing the world as it is.
    We forget that such beliefs are often the result of collective conditioning over a long period of time (“The earth is flat”).
    I still remember being on conducted tour through Moscow in 1971 with a young female tour guide on the bus. We were shown the sites of the city, including the Red Square, Kremlin, etc., and sensing a somewhat reserved attitude on the part of her passengers, the tour guide exclaimed: “Communism is right, because it s the truth!”
    It is easy to mold young minds, if you hold them captive (in a University), make them believe that they are special, and feed them with unsubstantiated axioms upon which a whole edifice of “knowledge” is based.

  4. Allen Cookson
    November 7, 2011 at 11:36 pm

    Neil Postman, in his 1971 book “Teaching as a Subversive Activity”, averred that the proper purpose of teaching should be the the production of crap detectors.
    Joan Robinson put it this way: “The purpose of studying economics is not to acquire a set of ready-made answers to economic questions, but to learn how to avoid being deceived by economists.”
    If only one teacher in a department teaches the skill of crap detection effectively it should serve as a vaccination against infectious delusion. Maybe the skill would transfer between disciplines. That worked for me but my study of economics began after a lifetime in the sciences.
    It appears Mankiw’s and many other economists’ study has afflicted them with permanent brain damage.

  5. November 8, 2011 at 6:33 am

    There is definitely a need to provide an epistemological justification for creating Economic Axioms. In my writing I use what I call a “Dualism Challenge.” I define an argument passing a dualism challenge when no developed line of argument opposes a statement. For instance, stating high interest rates usually discourage borrowing would pass the dualistic challenge, but stating more government spending will decrease unemployment would fail. I think your analysis of Greg Mankiw is on the mark. He makes no effort to justify his ten economic principles. He seems satisfied that their long existence in economic literature justifies their acceptance.

  6. merijnknibbe
    November 8, 2011 at 7:20 am

    “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.”

    It need not be this way. There is a whole science of “çonsumer behavior”.
    * This science delves deeply into anthroplogy, psychology, neurology, history, whatever.
    * It does mention discoveries, names, dates and processes of discovery.

    Not needless to say: though this science tries every method in the books to explain and predict consumer behavior, as long as it works, it does not use the neo-classical ‘utility’ based approach of people like Mankiw, with his four dogma’s of individual decision making. Why not? This approach does not enable scientific investigation and measurement. It just does not work.

    The very least teachers of neo-classical economics should do is to mention this approach and its successes. But they don’t even know it, in my experience.

  7. Bruce E. Woych
    November 8, 2011 at 1:28 pm

    This is a timely and glowing expose. We need to find a way to sustain these insights across the spectrum of comprehensive and integrated sciences, and recognize the impulse and the very pulse of business interests as opportunistic and not in the interest of true foundation and disclosure (jurist level of competency). If we are to gain a solid science from the ashes of today’s realities it must be a total and full spectrum analysis of what economy has become in its fractured and overly specialized parochialism and vested interests. It is telling that these insights have clearly existed but are marginal to the “market” stream. It is telling that a pseudo-Nobel prize was lent to the “specialists” of the kingpin society from a small circle of crony economists. It is shamefull that it took a major collapse before the rest of the intellectual community began to take notice and decipher the false lexicon and taxonomy of a science derailed and captured for special interests. It is telling that it has become the legitimation process of a political economic gravy train in a maximum security containment rationality of humanity itself.

  8. November 9, 2011 at 2:30 am

    “People respond to seat belts as they would to an improvement in road conditions–by driving faster and less carefully.”

    He states this as a fact. I seriously doubt that it is one. I profoundly doubt that that imagined change in behavior suffices to offset the benefits of seat belt laws.

    But I certainly don’t know for certain. I’m quite certain that he doesn’t either.

    • Alice
      November 9, 2011 at 9:08 am

      I totally disagree. When I put on a seatbelt it reminds me to be more careful on the road, not less …but then statements like these from Mankiw bear very little resemblance to the positive statements so beloved by neoclassicals…oh the hypocrisy. When they want students to do economics …they demand evidence but when you are the Professor you can simply make up as many normative statements as you like to push your particular brank of politics (this statement that people respond to seatbelts by driving less safely is really saying – less regulation please… and we all know how that ends after the GFC).

      Alas Mankiw is just another one of the arrogant ecos so horribly wrong. Sad that but then I guess he gets lots of royalties from his creaky book.

  9. November 11, 2011 at 2:18 pm

    ISTM that the greatest danger in giving such supremacy to assumptions is that the assumptions themselves become invisible. Arguments that are obviously circular to an outsider are not seen that way to the practitioner, and the outsider simply “doesn’t understand the complexities.”

    A similar thing happens in theology, at least inasmuch as I am familiar with theology.

    • Dave Taylor
      November 11, 2011 at 5:01 pm

      I think it depends on the type of mind (intuitive/imaginative as against sensory/verbal, and fight versus flight instincts). Compare the reactions of Steve and Alice. These differences, incidentally, are not assumed but the convergent conclusions of Jung’s informed intuition, ongoing Myers-Briggs empirical research and a physiological analysis of the brain’s logical architecture. The assumption, both in Mankiw and in John’s attributing the difference to being “outsiders” and “practitioners” (or theologians), is that we are all the same. We would be, if we were all perfect, but evidently – and for Darwinian reasons of “requisite variety” – we are not.

      Of course, to the sensory, self-defensive type of Right, those of the
      intuitive, analytical Left ARE John’s outsiders. In any case, one cannot SEE circularity in a line of argument, one can only INTUIT or imagine it and find if it checks out.

      Excuse my spelling this out, but people would be key entities in a sane economics, and “homo economicus” is entirely inconsistent with the evidence of our economic specialisation.

    • November 11, 2011 at 6:46 pm

      John, perfectly put.

  10. Bruce E. Woych
    November 11, 2011 at 5:10 pm

    Professional Myopia is not an excuse for intentional ambiguity to askew manipulative motives and outcome based directives. (by the way is “ISTM” = I EstiMate?); I like that!

    Nevertheless, what you say is very true. The problem is that if you scratch the surface of Economics hard enough you will find that this is a different onion in the world of intellectual inquiries. For example, going unmentioned is the fact that there is a wide body of “economists” under an “alternative umbrella” (note that this too is a captured posture that sets the “orthodox” as “mainstream” and definitive core to the discipline)…of heterodoxy.

    Why so? Coherence sells and “mainstream economics” is really a wholesale business that starts at funding (big money funding) and, equally so, what people looking to make a luxurious living career are looking to buy. It is a spurious market of giving people what they want and as soon as you begin to use the standard arguments it only reinforces the “authoritative” dominance position it has captured over the past 20th Century and more. In the meantime, it is really possible to “discover” serious (not so marketable) ideas under an array of headings (social /environmental / evolutionary / critical (general and specific) / development/ historical etc.)
    see:http://www.debunkingeconomics.com/Links/index.htm …as a starter, and this particular site of “Real-World” also demonstrates a critical consciousness …as well as a con-science (conscience in the subjective included) against the self-proclaimed “mainstream” body of stealthy theoretical dogma. It is not a mere matter of “professional myopia” but a deliberate ambiguity. Such calculated and loaded ambiguity serves to blanket cover its tracks in the “real” world and get away with legitimating a political economic market that it serves and a special business sector of socially coercive domination that it services. hence we end up with truly stupid arrangements like “supply” side vintage cognitive dissonance built right into its rational “choice” fallacy of distinction framework, to justify and even give priority directives to hoarding as intelligent design. The market for such authority was politically reinforced by the cold war as economic war, and the class structured dominant categories that brought on bubbles and the great depression since the early 19th century now served as a global soft war weapon of expansion. Colonialism, class war, Marshall Planning and the Cold war commitment to bankrupt all opposition into submission is the operational real politik of “classical” (a captured term itself) institutional economics. It is a well oiled set of slogans, banners and false flags in an ambiguous lexicon that has no real measure, but lends itself to tautology and blames all its failures on the weakness of its opposition…not just demanding…but commanding an intensification of the same practiced confidence gaming. Put in a nutshell of three card Monty, economics becomes anything they want when they want it, and asymmetrical game theories run the roost. The markets for this type of economics is simply where the money is successfully accumulated. Classical main stream Economics, in this perspective, is a class marketed supremacy economics of measured methodology for fueling the furnace of a luxury ship of fools. And that is why it becomes so difficult to understand why we “validate supremacy” every time we attempt to fight back using their own terms.

    While I am a relentless critic of this abusive lineage of self-serving class intellectuals, I hasten to defend the other academic economists who are typically cornered into defending themselves as marginal to this dogmatic voodoo economic market machine.

  11. Dave Taylor
    November 12, 2011 at 1:33 am

    “Professional Myopia is not an excuse for intentional ambiguity [and] going unmentioned is the fact that there is a wide body of “economists” under an “alternative umbrella” … of heterodoxy”.

    Well yes. And while I too “am a relentless critic of this abusive lineage of self-serving class intellectuals”, I am distressed to see “the other academic economists … cornered into defending themselves”. Instead of wasting their time defending their own patch they should be agreeing with each other to attack the falsehoods at their roots with Einstein’s modified version of Occam’s Razor: by agreeing a general model which is “as simple as possible, but not [as the “supply and demand” doctrine is] too simple” (which allows lies to replace deficiences at will). Here’s Edward Fullbrook’s version of that:

    “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”.

    I suggest that, on the contrary, economists should be subscribing to a pragmatic theory of truth, with their basic tenets abstractions (not generalisations) retroduced (Peirce/Critical Realist fashion) from the available data, and thus provisionally consistent with it and with increasingly less abstract models of its structure and parts, similarly derived.

    Thus the cosmos can be derived from matter-less energy and circular attraction (c.f. the attractors of chaos theory); the universe of discourse from a “not too simple” minimal complex – of things, processes and direct representations of these (c.f. nouns, verbs, adjectives and adverbs). Discourse is made possible by the movement of physical representations through [neural] logic circuits (c.f. numerals as against numbers). Pragmatically, Murphy’s Law holds: if anything can go wrong, it will; so error correction logic is also necessary and by now evident. Suitably pragmatic methods of retroduction, symbolic/linguistic reconstruction and error correction (SSADM, Algol68 and parallel logic/cybernetic feedback circuits wherein truth is “complex” – meaning ‘works, with no errors detectable’ – have been available for decades. These would become Lakatos’s “hard core”, replacing Platonic truth, the rules of Aristotelian logic and Hume’s autistic epistemology, while Kuhn’s “paradigm” shift would be from the myth of monetary value in exchange, to a new family of paradigms representing the different functions of circuital flows: distribution of power and/or materials, communication of messages and/or different types of corrective information, and processing of data in Shannon’s switching circuit logics. See Thomas Kuhn’s “The Structure of Scientific Revolutions”; http://en.wikipedia.org/wiki/Imre_Lakatos; http://en.wikipedia.org/wiki/Paradigm_shift).

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