The triumph of the death of methodology and the history of economic thought
from David Ruccio
Just this past semester, students in one of my classes wanted to know why they hadn’t been taught anything about economic methodology or the history of economic thought in any of the other courses they’d taken in economics.
The explanation I gave them was similar to what my colleague Philip Mirowski has recently written:
After a brief flirtation in the 1960s and 1970s, the grandees of the economics profession took it upon themselves to express openly their disdain and revulsion for the types of self-reflection practiced by ‘methodologists’ and historians of economics, and to go out of their way to prevent those so inclined from occupying any tenured foothold in reputable economics departments. It was perhaps no coincidence that history and philosophy were the areas where one found the greatest concentrations of skeptics concerning the shape and substance of the post-war American economic orthodoxy. High-ranking economics journals, such as the American Economic Review, the Quarterly Journal of Economics and the Journal of Political Economy, declared that they would cease publication of any articles whatsoever in the area, after a prior history of acceptance.
Once this policy was put in place, and then algorithmic journal rankings were used to deny hiring and promotion at the commanding heights of economics to those with methodological leanings. Consequently, the grey- beards summarily expelled both philosophy and history from the graduate economics curriculum; and then, they chased it out of the undergraduate curriculum as well. This latter exile was the bitterest, if only because many undergraduates often want to ask why the profession believes what it does, and hear others debate the answers, since their own allegiances are still in the process of being formed. The rationale tendered to repress this demand was that the students needed still more mathematics preparation, more statistics and more tutelage in ‘theory’, which meant in practice a boot camp regimen consisting of endless working of problem sets, problem sets and more problem sets, until the poor tyros were so dizzy they did not have the spunk left to interrogate the masses of journal articles they had struggled to absorb.
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Real-World Economics Review Blog 
I simply find it pointless to engage in discussions about the epistemology of orthodox economics. I don’t think this because I know the methdology is right. I know it isn’t. Derman and Wilmott stated it better than I can in The Financial Modelers Manifesto (2009). It opens with words reminiscent of Karl Marx: “A specter is haunting markets – the specter of illiquidity, frozen credit, and the failure of financial models.” Then follows a great doubt::
“Physics, because of its astonishing success at predicting the future behavior of material objects from their present state, has inspired most financial modeling. Physicists study the world by repeating the same experiments over and over again to discover forces and their almost magical mathematical laws. … It’s a different story with finance and economics, which are concerned with the mental world of monetary value. Financial theory has tried hard to emulate the style and elegance of physics in order to discover its own laws. … The truth is that there are no fundamental laws.”
Enough said about that. But then, why bother with “economics?” The answer has nothing much to do with economics as a discipline or its “truth” as science. We face a serious social crisis in our world, brought on by the maldistribution wealth. Orthodox economics as institutionalized in educational establishments has become the spokesman for social injustice. That is why its pernicious influence must be fought at every turn. It is not about science but the politics of injustice.
I entirely agree when you say – in concluding your comment – «It is not about science but the politics of injustice»…
However I think it is still important – crucial – to try and explain to other citizens/voters/workers/cadres the intellectual fraud behind the official/institutionalized teaching of «Economics».
….and so the market is capable of corrupting ideals and the University system itself has gone corporate stratified and hierarchical…and we poor sheep from economics and anthropology and perhaps philosophical margins are outside the closed corporate community that hoards the market. Anarchist by choice, or outcast by decision? Exiled none the less from the recognizable attributes that make a higher calling …just that…”higher!”
Yet here we sit all stranded and separated from each other…all highly trained experts in process, method, models and coordinated sequence patterning…unable to pull an alternative systemic into being? Is it, after all, simply all about finance? If science were a self organizing organic selective mechanism than it would all be a “market” of truth seeking.
Unfortunately, we can cry in our soup all day…but like it or not we still have a voice. Pay or no pay the independent voice will still turn the tide…but we all know how disadvantaged it is to attempt to work outside the resource pools and peer support of a nice position at a University. So unless we can establish an alternative systemic…mutual support…than the brutal reality is that it is not what actually happens that counts…it what goes down as record. In fact, these days…it doesn’t even have to happen…as long as some well positioned paper says it did. The consensus is fiction and the fiction is feeding the royal societies that we wish to join? Maybe we are more lucky than we realize???
Happy New Year!
Bruce Lee_Be Water My Friend
May I add a couple of points to this important post? There is a good reason why mainstream economics refuses to accept the usefulness of methodology. Not one of its operational ideas respects fundamental principles of logic. The logic of economics is the logic of balancing contradictions.
Pardon the second intervention, but I think issues need to be discussed at this historical juncture (with a new World Economics Association, and new journals coming on line).
Let’s start with the assumption that there is no science of economics. All we have is the history of the science (what people say it is not what it is). If we begin there, then the history should be an important focus in our investigations. This history is excluded by the people who took over the discipline in the 1960s and 1970s – like the Pope excluded discussion of the Copernican view (poor Galileo). But not an exact analogy because the astronomers did have an alternative scientific paradigm to replace the geometric. Since there is no alternative paradigm to orthodox economics (which is wrong), then all we have in economics is its history.
That history might be ignored by orthodoxy, but it has been studied. I wrote two chapters in a 1989 book about it. One, called the “New Paradigm,” discussed the neo-classical-econometric takeover, the other “The New Paradigm Revisited” (in the same book) doubts about the validity of the New Paradigm that people had raised. My work was sketchy. Khurana’s 2007 history of US business schools went into much more detail about the politics of the “takeover.” It’s a splendid historical narrative. But he did not discuss the “doubts” very much.
We know two things. 1 – that the epistemological foundation of orthodox economics rests on feet of clay; and 2 — that we have studies (not by economists) on how the new postwar orthodoxy “triumphed” in the halls of academic and outside. That story had much more to do with the Cold War than economics.
So as far as I am concerned only the history of the discipline produces rational discussion; the rest is ideology and self-interest, which, of course, is important in the history.
Discussing about the “methodology” of neoclassical economics is deeply frustrating and practically useless because the things that make neoclassical theory false are painfully obvious.
A theory that contradicts itself is false.
Axioms that are false lead to a false theory.
Neoclassical theory uses both: false axioms and flawed logic. What is there more to say. I would not call it a theory. It is a religion or more precisely an ideology.
The development Mirowsky describes then becomes totally understandable. The faith has to be protected from heretics.
What is interesting about Mirowsky’s description is that it is a study on the methods used by neoclassical theorists to protect their faith. A “methodology” of a different kind, so to say.
A sarcastic remark, if I may… I was commenting on this post with my wife (a retired fashion consultant, with no specific academic background in social, biological or physical sciences…) and her comment was «They have ruled out the study of the ‘History of Economic Thought’ simply because that way the students would not have to read about Marx»…
Pardon me for a third intervention on this topic…
Please someone tell me this post by David Ruccio is an exaggeration or just a localized situation. That there are many universities in the world at large where the issues of research methodology and history of thought are mandatory components of economists formal training. It just is inconceivable that scientists do not study methodology… Physicists, chemists, biologists, sociologists do it… And how can anyone pretend to be a PhD («philosophiae doctor»…) without including the study of epistemology as applied to their specif field of knowledge ?!… Sorry, this just cannot be true.
Now, I have recently turned 70 and I am a retired computer bussiness person. Having spent some thirty years in a very large multinational, I come from the world of business management rather than from academia, and I only got my first Msc at the ripe old age of 52. Interestingly enough, what set me off track (by choice) from further career development in management and set me on a «grail of discovery» in Political Economy, was a book by the late Ronald Meek (of Leicester University) titled «Economics, Ideology and Other Essays». In preparing an essay comparing Marx and Keynes approaches, I am now re-reading that book. Published in 1967, it should be mandatory reading for all who are concerned with the subject matter of «the scientific study of the economy» and, quite naturally, it does consider the issues of methodology at length.
Maybe this will help. Remember that we have to make a distiction between economics in Departments of Economics and “economics’ in what used to be called schools of commerce (now called business schools). By far most of the people who study economics and finance in universities do it, in the US at least, in business schools. When people were grounding business schools in the US in the first two decades of the 20th century Thorstein Veblen in a 1918 essay on “Higher Education” analyzed the effect that schools of commerce might have within the American university and, by consequence, their potential effect on the society as a whole. Veblen’s asserted that “the college of commerce if it is to live and thrive, may be counted on to divert a much larger body of funds from legitimate university uses, and to create more of a bias hostile to scholarly and scientific work in the academic body, than the mere numerical showing of its staff would suggest.” [Veblen, 1918, p.157] Furthermore, he writes about the consequences that an “habitual pursuit of business” has on the ideals, aims and methods of the scholars and schools devoted to “the higher learning”. “The consequences are plain. Business proficiency is put in the place of learning.” Veblen’s concern was echoed through academia in Europe and America — that is why in Germany the study of business was not considered to be a scientific subject — and hence not fit for inclusion in universities (which had to be dedicated to Wissenschaft). The issue then is not a scientific one but a sociological one, the purpose of study. If it isn’t for the development of a legitimate science, it has no place in universities. That issue is still very much with us today because the attempt to control what is taught in economics has more to do with business’ agenda than that of institutions of higher learning.
Actually I think business economics is far more practical and far less ideological than economics. (And for a reason. A business following the advice of economist would probably go bankrupt very quickly.)
IMHO the problem is not that neoclassical economists are only devoted to making money. They are not. The problem is that while they want to be scientists they are ideologically blinded in a way that they don’t even see that they are not following the scientific method at all. They are in love with their model of a perfect, self regulating economy in which total freedom leads to maximum prosperity. Unfortunately that model has nothing to do with our reality and by following the advices economists derive out of their model the real economy gets worse. But economist love their model so much that they are too blind to see it.
Very pertinent comments, indeed… I do understand that the institutions of higher learning have been instrumentalized by the powers that be, in order to protect the establishment. In «The Social Function of Science», Bernal provides a good example of how that is valid for all branches of science and not just the social sciences. But I honestly did not expect that bias to go as far as «expelling» from normal degree programs (curricula…) the study of «History of Economic Thought» and/or «The Methodology of Economics»…
This is really a sad state of affairs and an indication of how long and hard the struggle will have to be.
“I do understand that the institutions of higher learning have been instrumentalized by the powers that be, in order to protect the establishment.”
That is an excellent point of view. The only cynical and acid exposure of the conflict of interest in the economic departments in some universities in US was the movie “Inside Job”. Those who decide the curricula of a school of economics are on big fat payroll of Corporate America (in this case big banks). At least that was the point of view of the movie. But, like I said, it is the only source I have.
I started an MA in Economics in Germany after I had completed my studies in Scholastic Philosophy, and I am so glad that it is all over. The funny thing is, though, I am more interested in Economics now than ever. I wish I had known about the RWE movement during my studies.
As with philosophy it is so much easier to understand a system of thought if you actually know where it is coming from. History of any science is just as important as its body of knowledge. In fact, not only does it comprise the whole of a science’s body of knowledge, it also points out the theoretical origin of each of the body’s parts.
In any case, it truly is a sad state of affairs. All you can do is find open-minded student groups at universities and promote different ideas. With more openings for junior professors, current students are still the best shot at a change in thought. Most tenured professors do not seem to be able to take a different stand within the “scientific community”. (It is quite refreshing to see so many on RWER.) As I have just recently graduated, I still know a lot of the younger students from my university, many of whom would be very pleased to listen to some thought-provoking ideas.
@ Cristi C Great documentary. Every economics student should see “Inside Job” by Charles Ferguson. http://www.youtube.com/watch?v=1505DBTp2eE
The “programing of Economics as an industry cannot be separated from the historic context of digital and metric market colonization. Formal “market” categorization frames the questions and determines the lexicon…controlling policy and generally the “terms” of what is normative practice and what is ideologically based legitimation economics:
Worth viewing: a serious lecture from Chomsky,
Is this a good description?
“Dry labbing is when one claims to do research, but in reality just guessed the conclusion, or you copied the results of someone who actually did research and said they were your own. If you are dry labbing, you are cheating.”
http://wiki.answers.com/Q/What_does_dry_labbing_mean