Paradigm Lost?

from Peter Radford

The story so far:

Robert Locke asserts that neoclassical economics never attained paradigm status and thus cannot be seen as about to be dethroned from its exalted perch. He also decries the failure of mainstream economics to discuss its failures. This only a few months after an interview conducted by Paul Rosenberg with Edward Fullbrook in the RWER issue #66 in which he discussed the contrast between new and old paradigms in economics, and I may have stirred things up when I used a Thomas Kuhn quote to begin one of my own articles earlier this month.

So is there? Or isn’t there?

Let me try to square the circle.

Clearly there exists in economics some center of gravity. Indeed this center is so large that it appears to engulf most else around it. Economists either acknowledge that the discipline is rife with many voices – these seem to be in the minority – or they simply behave as if the big questions have been settled and that what they do is “economics” without the need to give a more precise definition. These latter are what I suspect Locke would refer to as the “mainstream”.

Equally clearly, at least to those who occupy the center, mainstream economics is a coherent whole. It isn’t just the degree of mathematical formality with which it is expressed, it isn’t just a methodology, nor is it just a set of “laws”, insights” “tools” and what have you. It is all of these packaged together. If a person doesn’t conform to this package then he or she is outside the mainstream and will find it hard, often impossible, to advance professionally or participate in the major arguments of the day.

The boundaries of the center are malleable to a degree. There are factions within it so it is not thoroughly homogenous. But there are sufficient shared traits that, to someone on the outside looking in, the center is manifest. It is manifest enough to exert enormous power over what is or isn’t published. It is manifest enough to dominate what is taught in most schools and universities. It is manifest enough to dominate policy circles and other domains that require input from economists.

It is manifest enough to deserve to thought of as  a paradigm.

Whether this rises to the level Locke seems to need it to before he acknowledges its existence is obviously something he contests, but for most economists who sit outside it mainstream economics has paradigm-like qualities. And, as the saying goes: if it quacks like a duck …

Besides, Locke himself lashes at the “mainstream” for its lack of self-criticism. Were it not manifestly an entity of itself and recognizably coherent how could it possibly indulge in self-criticism? There would be no center of discussion. There would be no central principles to critique, bemoan, or otherwise bash away at. It would be like kicking rice pudding, it would stick to your shoe but not go anywhere. There would be no argument to advance because there would be nothing to argue about. Or, conversely, there would be everything to argue about and hence no direction to the debate.

Perhaps the paradigm is vague because the crowd outside is so diverse that the mainstream appears from a distance to be just one aspect of that diversity. Obviously I disagree with such a view. Were this true it would be much more easy for a Locke-like dialog to take place about the mainstream’s many and, to me, fatal flaws. The center of gravity would be insufficient to quell argument and any consequent criticism that had merit would be more easily taken up even within the mainstream.

But the mainstream in economics is distinguished by its enormous resistance to criticism and its almost pathological resistance to empirical contradiction. Whilst Kuhn may not have talked much about these qualities I think they are key attributes of a paradigm.

Why?

Precisely because the coherence of mainstream economics is both its key strength and its key weakness.

It is a strength because it allows a believer to avail themselves of an established, widespread, body of thought, tools, and support that is instantly recognizable and accepted by like minded analysts. Insiders can thus communicate amongst themselves without fear of misunderstanding; they can identify those who excel because of their mastery of the thought and tools; and they can approach common problems from similar positions and thus share issues, data, and other paraphernalia of intellectual discourse without resorting to the need for interpretation.

This is a paradigm by any other name.

Perhaps not “Kuhnian”, but a paradigm nonetheless.

The weakness is that this commonality is based upon the supreme fit between the parts. Subject any one part to destructive criticism and not just the part, but the whole, collapses. This results in that defiance I mentioned above. Mainstream economists can brook no critique of their failures, nor take on board the lessons of history, because to do so would undermine the entire enterprise. They would be left with nothing. Fearing this, they plod on regardless and invent ever more epicycles to keep their theory as close to reality as it can possibly be. That their theories are now separated from reality by vast tracts of magic and mystery is testimony to their dogged willingness to keep their ideas together rather than accept revision. They would prefer to look foolish rather than have to change their minds in order to be closer to the truth. They have so much invested in, and extract so much prestige from, their errors that they have to fight to preserve their mainstream despite what, presumably, Locke sees clearly as its error.

This too defines a paradigm.

And it is why I chose to quote Kuhn in my article. True believers need to believe. They cannot accept alternative dogma without it being equally strong as the belief they are being asked to disavow. It must have the same look and feel as their old faith. Hopefully it might answer one or two more questions, but the pivotal moment of desertion from one faith to another, from one paradigm to another, only comes when the new faith delivers the same sense of security, completeness, and structure as the old one.

Which brings me closer to the topic I take more seriously than worrying about precise definitions of paradigms. There is no such coherent alternative extant in modern economics. Keynesian thought is the closest, having a clear defining boundary in its treatment of uncertainty. But there too lurks the mirage of equilibrium to distort our ability to press its ideas against reality. Of course there are sundry others, but all seem to be niches and not complete schemes. At least at the moment. So the mainstream can rumble on. It gives us outsiders something to laugh at, but it leaves economics as a discipline horribly exposed to ridicule. Which is something I wish were  not true.

Economics is too important to be left to the high priests of orthodoxy, but they have their hands on it at the moment, paradigm or not.

Which is what I think needs reform.