Home > Uncategorized > A perverse intellectual hierarchy

A perverse intellectual hierarchy

In the sense that there now exists in the economics profession an implicit and perverse intellectual hierarchy which is premised on the understanding that the less of what you do is related to the real world, the cleverer you are. So, if you are really clever, you would do mathematical modelling of a kind that has nothing to do with the real world. You would do something on the Turing machine [a theoretical computing device] or on information cascade or some such thing. If you are a little less clever, you would do econometrics, and if you are not even that clever, you would work on monetary policy or development economics. And, if you are not even that good, you would do economic history. But if you are the worst, you would go around factories interviewing managers. So, the leadership of the profession is moving towards abstraction for the sake of abstraction.

This has resulted in the shutting down of courses such as the history of economics, history of economic thought, philosophy of economics and other such fields. Basically, teaching economics has become like one of the other trades, like becoming a plumber or a bricklayer, as if it is about providing students with a set of skills which they can apply. There is no encouragement of critical thinking or teaching of real-world issues.

Ha-Joon Chang

  1. Tom Welsh
    February 28, 2015 at 4:50 pm

    Actually the suggestion you advance, “that the less of what you do is related to the real world, the cleverer you are,” is supported by what we see in many walks of life. The manager who spends his time at a desk or in meetings, juggling abstractions like budgets and strategies, is thought to be worth far more than anyone who does useful work – even if they were Edison or Einstein himself. I recall a story about how Alan Turing incurred the wrath of his university establishment by sitting with menial mechanics and electronics specialists to help build his new computer. A professor of mathematics might, perhaps, be allowed to dabble in designing a computer. But to touch screwdrivers and soldering irons – to get his hands dirty – was beyond the pale. And mixing on equal terms with his social inferiors was even worse. In deference to your profession, I shall say nothing about economics as a calling!

  2. Tom Welsh
    February 28, 2015 at 4:54 pm

    There was also, I think, a funny story about Sir James Jeans the physicist (on whose book “The Mysterious Universe” I cut my teeth at the age of 9). Being offered a teaching post at a good US university, he was asked what topic he would like to choose. On reflection, he decided on group theory, on the grounds that it would never have the slightest practical applicability! (As it turned out, I think group theory was extensively used in the development of nuclear weapons among other VERY practical applications).

  3. March 1, 2015 at 6:24 am

    Since existing theory is completely un-informed about history, and completely blind to real world issues, it is easy to attack in real world examples. I have found this an effective strategy to use in courses and lectures. For example, my lectures on macroeconomics integrate the emergence of the subject with the historical context and show that economic theories can only be understood within their historical context. See for example my lecture on core macroeconomic concepts:
    The point is that the fantasy world of economic theory is a big weakness, and therefore provides a great opportunity for a well conceived counterattack. I believe that one of the biggest problems of the heterodoxy has been too much respect for the orthodoxy — a point which was stated by Fred Lee in his paper “The Incoherent Emperor: A heterodox critique of neoclassical microeconomic theory”. Even those who come to realize that heterodox formulations are wrong do not have the courage to reject it completely, lock, stock and barrel and start over from scratch. I believe that the work of Polanyi provides a good alternative starting point, I have provided a new approach to methodology, radically at variance with contemporary, based on his work:
    http://ssrn.com/abstract=2457299 {The Methodology of Polanyi’s Great Transformation}
    Thomas Kuhn said that paradigm shift ONLY occurs when a new and better paradigm emerges — At present there is a wide variety of proposed alternatives to conventional economics, but no consensus on any particular approach. Without creating some focal points of consensus, we cannot create the desired transformation. I have mentions THREE GOALS for pedagogical change in a post on the Pedagogy Blog.
    If we could achieve consensus on the direction for change, then we could put up a viable alternative to conventional thought.

    • March 1, 2015 at 1:18 pm

      Yes, Orthodoxy is incoherent but, unfortunately, Heterodoxy also
      Comment on Asad Zaman on ‘A perverse intellectual hierarchy’

      “Thomas Kuhn said that paradigm shift ONLY occurs when a new and better paradigm emerges — At present there is a wide variety of proposed alternatives to conventional economics, but no consensus on any particular approach. Without creating some focal points of consensus, we cannot create the desired transformation.” (see intro)

      This, of course, is absolutely correct and the curious thing is that it is long known among economists.

      “The moral of the story is simply this: it takes a new theory, and not just the destructive exposure of assumptions or the collection of new facts, to beat an old theory.” (Blaug, 1998, p. 703)

      What the history of economic thought tells us is that Heterodoxy never had a clue how to perform the required paradigm shift. The heterodox approaches are themselves incoherent. Because of this, Heterodoxy pleads for pluralism. This means, it has given up the idea that there is something like a true economic theory. As soon as all are content with the pluralism of false theories there is no longer any need for a paradigm shift. Decorative innovation consists of a bit more commonsensical realism here and the application of a fancy new tool there.

      It is a fact that economists cannot explain how the economy works. In technical terms, the fatal methodological defect of Orthodoxy is that it is based on behavioral axioms. Yet, no specific behavioral assumption whatever can serve as a starting point for economic analysis. From this follows for Constructive Heterodoxy that the subjective axiomatic foundations have to be replaced. This is what a paradigm shift is all about. Based on a set of objective axioms all economic conceptions have to be reconstructed from scratch.

      The reconstruction of the foundations of economic theory is already on course:

      Essentials of Constructive Heterodoxy: the market

      Essentials of Constructive Heterodoxy: Say’s Law

      Essentials of Constructive Heterodoxy: aggregate demand

      Essentials of Constructive Heterodoxy: money, credit, interest

      Egmont Kakarot-Handtke

      Blaug, M. (1998). Economic Theory in Retrospect. Cambridge: Cambridge University
      Press, 5th edition.

  4. March 7, 2015 at 10:07 am

    Economics has been dominated by individuals who think they are the masters of the game.when an opinion emanates from none other than these individuals it becomes invalid and it is this monopoly that must be broken before economics can move forward

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