Home > Uncategorized > Mainstream flimflam defender Wren-Lewis gets it wrong — again!

Mainstream flimflam defender Wren-Lewis gets it wrong — again!

from Lars Syll

flimflam-2Again and again, Oxford professor Simon Wren-Lewis rides out to defend orthodox macroeconomic theory against attacks from heterodox critics.

A couple of years ago, it was rational expectations, microfoundations, and representative agent modeling he wanted to save.

And now he is back with new flimflamming against heterodox attacks and pluralist demands from economics students all over the world:

Attacks [against mainstream economics] are far from progressive.

[D]evoting a lot of time to exposing students to contrasting economic frameworks (feminist, Austrian, post-Keynesian) to give them a range of ways to think about the economy, as suggested here, means cutting time spent on learning the essential tools that any economist needs … [E]conomics is a vocational subject, not a liberal arts subject …

This is the mistake that progressives make. They think that by challenging mainstream economics they will somehow make the economic arguments for regressive policies go away. They will not go away. Instead all you have done is thrown away the chance of challenging those arguments on their own ground, using the strength of an objective empirical science …

Economics, as someone once said, is a separate and inexact science. That it is a science, with a mainstream that has areas of agreement and areas of disagreement, is its strength. It is what allows economists to claim that some things are knowledge, and should be treated as such. Turn it into separate schools of thought, and it degenerates into sets of separate opinions. There is plenty wrong with mainstream economics, but replacing it with schools of thought is not the progressive endeavor that some believe. It would just give you more idiotic policies …

Mainstream economics is here depicted by Wren-Lewis as nothing but “essential tools that any economist needs.” Not a theory among other competing theories. Not a “separate school of thoughts,” but an “objective empirical science” capable of producing “knowledge.”

I’ll be dipped!

Reading that kind of nonsense one has to wonder if this guy is for real!  

Wren-Lewis always tries hard to give a picture of modern macroeconomics as a pluralist enterprise. But the change and diversity that gets Wren-Lewis approval only takes place within the analytic-formalistic modeling strategy that makes up the core of mainstream economics. You’re free to take your analytical formalist models and apply it to whatever you want — as long as you do it with a modeling methodology that is acceptable to the mainstream. If you do not follow this particular mathematical-deductive analytical formalism you’re not even considered doing economics. If you haven’t modeled your thoughts, you’re not in the economics business. But this isn’t pluralism. It’s a methodological reductionist straightjacket.

Validly deducing things from patently unreal assumptions — that we all know are purely fictional — makes most of the modeling exercises pursued by mainstream macroeconomists rather pointless. It’s simply not the stuff that real understanding and explanation in science is made of. Had mainstream economists like Wren-Lewis not been so in love with their models, they would have perceived this too. Telling us that the plethora of models that make up modern macroeconomics are not right or wrong, but just more or less applicable to different situations, is nothing short of hand waving.

Wren-Lewis seems to have no problem with the lack of fundamantal diversity — not just path-dependent elaborations of the mainstream canon — and vanishingly little real world relevance that characterize modern mainstream macroeconomics. And he obviously shares the view that there is nothing basically wrong with ‘standard theory.’ As long as policy makers and economists stick to ‘standard economic analysis’ everything is just fine. Economics is just a common language and method that makes us think straight,  reach correct answers, and produce ‘knowledge.’

Just as his mainstream colleagues Paul Krugman and Greg Mankiw, Wren-Lewis is a mainstream neoclassical economist fanatically defending the insistence of using an axiomatic-deductive economic modeling strategy. To yours truly, this attitude is nothing but a late confirmation of Alfred North Whitehead’s complaint that “the self-confidence of learned people is the comic tragedy of civilization.”

Contrary to what Wren-Lewis seems to argue, I would say the recent economic and financial crises and the fact that mainstream economics has had next to nothing to contribute in understanding them, shows that mainstream economics is a degenerative research program in dire need of replacement.

No matter how precise and rigorous the analysis is, and no matter how hard one tries to cast the argument in modern ‘the model is the message’ form, mainstream economists like Wren-Lewis do not push economic science forwards one millimeter since they simply do not stand the acid test of relevance to the target. No matter how clear, precise, rigorous or certain the inferences delivered inside their mainstream models are, they do not per se say anything about real world economies.

 

Brad DeLong isn’t too happy either about  some of Wren-Lewis’ dodgings :

Simon needs to face that fact squarely, rather than to dodge it. The fact is that the “mainstream economists, and most mainstream economists” who were heard in the public sphere were not against austerity, but rather split, with, if anything, louder and larger voices on the pro-austerity side. (IMHO, Simon Wren-Lewis half admits this with his denunciations of “City economists”.) When Unlearning Economics seeks the destruction of “mainstream economics”, he seeks the end of an intellectual hegemony that gives Reinhart and Rogoff’s very shaky arguments a much more powerful institutional intellectual voice by virtue of their authors’ tenured posts at Harvard than the arguments in fact deserve. Simon Wren-Lewis, in response, wants to claim that strengthening the “mainstream” would somehow diminish the influence of future Reinharts and Rogoffs in analogous situations. But the arguments for austerity that turned out to be powerful and persuasive in the public sphere came from inside the house!

  1. April 2, 2017 at 7:44 pm

    “[D]evoting a lot of time to exposing students to contrasting economic frameworks (feminist, Austrian, post-Keynesian) to give them a range of ways to think about the economy, as suggested here, means cutting time spent on learning the essential tools that any economist needs … [E]conomics is a vocational subject, not a liberal arts subject …”

    Oh my god! You didn’t just go there. I get it. You are hurt that people think you are creating fiction, but when what you are doing is essentially creating fiction, then as the alcoholics say, you can’t get help until you admit there is a problem.

    ” There is plenty wrong with mainstream economics, but replacing it with schools of thought is not the progressive endeavor that some believe. It would just give you more idiotic policies …”

    I don’t believe that it is physically possible to come up with a more idiotic economic policy than the one we used in 2003 that jacked up unemployment from the 20s to the 40s and that jacked up the number of people shooting at us from the 10s to the 10s of thousands.

    “If you haven’t modeled your thoughts, you’re not in the economics business.”

    Actually I am a fan of modelling. But modeling has to have success criteria. Only falsifiable models are useful and from what I can tell, it looks like mainstream economic models tend to not be falsifiable (which I guess is pretty similar to the point you make following this).

    ” But the arguments for austerity that turned out to be powerful and persuasive in the public sphere came from inside the house!”

    Exactly.

  2. April 2, 2017 at 9:05 pm

    Economics, as practised by Wren-Lewis, is not a science. It is as he says a vocation or a strong feeling of suitability for a particular career or occupation. Science is about explaining the world. Scientists find an explanation and then do their best to disprove it so they can make the explanation better. Wren-Lewis has an explanation and now spends his time trying to fit the world to fit the explanation.

    The musings of economists would not matter except economists meddlings cause unnecessary suffering. Economics is about the interactions of humans for survival both personal and as a species.

    Most economic explanations assume that the increase in profit in a society is a measure of success. Profit is the bit left over when a money transaction is made. The more profit on a transaction the greater the amount of money in society. The greater the amount of money the higher the cost-benefit ratio for each project and the higher the GDP.

    This is wrong. For a society, the greatest value comes from having the lowest profit. That after all is what free markets are meant to achieve; the lowest price that satisfies both buyers and sellers.

    Economics, as practised by Wren-Lewis, measures success by the increase in profit but the main economic tool attempts to minimise profit. It is no wonder it has difficulty predicting anything.

  3. April 3, 2017 at 6:43 am

    Some humans seek peace, some seek knowledge, some seek strong communities, some seek wealth. The question is how to prioritize these. There is no reason to assume, as economists do that the pursuit of wealth should be first, and all the others below it. That’s the great sin of economics. It has the answers it wants even before it asks any questions. This is not science. This is propaganda and serving the interests of those who have wealth and want to protect and increase it. This is not just culturally stagnating, but is a threat to knowledge, community, and prosperity. Plus, it’s a waste of time and resources that could be put to better use.

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