Home > Uncategorized > Studying economics — a total waste of time

Studying economics — a total waste of time

from Lars Syll

obscurant-1One may perhaps, distinguish between obscure writers and obscurantist writers. The former aim at truth, but do not respect the norms for arriving at truth, such as focusing on causality, acting as the Devil’s Advocate, and generating falsifiable hypotheses. The latter do not aim at truth, and often scorn the very idea that there is such a thing as the truth …

These writings have in common a somewhat uncanny combination of mathematical sophistication on the one hand and conceptual naiveté and empirical sloppiness on the other. The mathematics, which could have been a tool, is little more than toy … Hard obscurantist models, too, may have some value as tools, but mostly they are toys.

Jon Elster

It’s hard not to agree with Elster’s critique of mainstream economics and its practice of letting models and procedures become ends in themselves, without considerations of their lack of explanatory value as regards real-world phenomena. The message writes itself: If you’re really interested about what goes on in our economies — stay away from economics!

Many mainstream economists working in the field of economic theory think that their task is to give us analytical truths. That is great — from a mathematical and formal logical point of view. In science, however, it is rather uninteresting and totally uninformative! The framework of the analysis is too narrow. Even if economic theory gives us ‘logical’ truths, that is not what we are looking for as scientists. We are interested in finding truths that give us new information and knowledge of the world in which we live.

Scientific theories are theories that ‘refer’ to the real-world, where axioms and definitions do not take us very far. To be of interest for an economist or social scientist that wants to understand, explain, or predict real-world phenomena, the pure theory has to be ‘interpreted’ — it has to be ‘applied’ theory. An economic theory that does not go beyond proving theorems and conditional ‘if-then’ statements — and do not make assertions and put forward hypotheses about real-world individuals and institutions — is of little consequence for anyone wanting to use theories to better understand, explain or predict real-world phenomena.

Building theories and models on unjustified patently ridiculous assumptions we know people never conform to, does not deliver real science. Real and reasonable people have no reason to believe in ‘as-if’ models of ‘rational’ robot-imitations acting and deciding in a Walt Disney-world characterised by ‘common knowledge,’ ‘full information,’ ‘rational expectations,’ zero  transaction costs, given stochastic probability distributions, risk-reduced genuine uncertainty, and other laughable nonsense assumptions of the same ilk. Science fiction is not science.

Much work done in mainstream theoretical economics is devoid of any explanatory interest. And not only that. Seen from a strictly scientific point of view, it has no value at all. It is a waste of time. And as so many have been experiencing in modern times of austerity policies and market fundamentalism — a very harmful waste of time.

  1. Mr. T
    October 14, 2020 at 10:17 pm

    I agree with you. But does this not also apply to some heterodox ‘schools’? And apart from that: How can this be changed?

  2. Ikonoclast
    October 15, 2020 at 1:40 am

    I agree, but where is our “Francis Bacon” of economics? Bacon himself wrote key words which modern conventional economists appear to have completely forgotten.

    “For in the ordinary logic almost all the work is spent about the syllogism. Of induction the logicians seem hardly to have taken any serious thought, but they pass it by with slight notice, and hasten on to the formulae of disputation…

    The syllogism consists of propositions; propositions of words; and words are the tokens and signs of notions. Now, if the very notions of the mind (which are as the soul of words and the basis of the whole structure) be improperly and over-hastily abstracted from facts, vague, not sufficiently definite, faulty in short in many ways, the whole edifice tumbles.” – Bacon.

    Truly, the conventional economists are the alchemists of our era. Their alchemy turns nothing to gold though it concentrates what passes for gold in surprisingly few hands. Their alchemy turns all else to dross, both human hopes and the natural world.

    But where is our “Francis Bacon”? Where is our polymath thinker or more likely the cross-disciplinary team necessary for a “Great Instauration” (great renovation and renewal) of economics?

    At some point, one must stop merely criticizing extant economics (flogging a dead horse with a view to killing it) and propose new directions. The best possibilities for new directions will come from;

    (a) philosophers (and scientists) who criticize the ontology of conventional economics AND can propose a new science-congruent and empirical ontology of economic objects and processes (so far as it can be proposed with empirical justification and no further);

    (b) moral philosophers, ethicists and leading theologians of all the major religions/stances including Christian, Moslem, “Unaffiliated” including atheists and agnostics, Hindu, Buddhist, Folk and Native peoples religions, Sikhism and Judaism.

    (c) complex systems scientists and biophysical economists;

    (d scientists in the impact sciences like ecology and climate science;

    (e) key modern heterodox thinkers in the economics space with the most radical theories (relative to current orthodoxy).

    An extended symposium system would be necessary where each group worked for up to a year on a position statement. Then the groups would come together via leading representatives. Personally, I would call it “The Council of Wisdom to Save Earth and Humanity” but some might find that twee. That is essentially what it would be: a last roll of the dice at the moral philosophy and science-theoretic level.

    I actually think an astonishing amount of consensus would be arrived at. The value of each person and the value of the earth and the need for earth’s stewardship, for example, are values common to all life-affirming religious and ethical systems. Only death-cults like Nazism and capitalism (to name two) reject such life-affirming values for all life, human and non-human.

    Virtually all conventional economists (using a broad definition of conventional) would be expressly excluded. They have a thousand other forums and many millions of dollars in funding and support to buy their compliance and hire their intellectual guns out for the current system. They have also fully demonstrated, in actual empirical practice and outcomes, the hope-destroying, life-destroying, environment-destroying and collapse-bound nature of their advocated system and done so beyond all empirical doubt. They deserve no entry to any council of wisdom. Posterity will denounce them.

    • Meta Capitalism
      October 15, 2020 at 7:41 am

      The best possibilities for new directions will come from;

      (a) philosophers (and scientists) who criticize the ontology of conventional economics AND can propose a new science-congruent and empirical ontology of economic objects and processes (so far as it can be proposed with empirical justification and no further);

      (b) moral philosophers, ethicists and leading theologians of all the major religions/stances including Christian, Moslem, “Unaffiliated” including atheists and agnostics, Hindu, Buddhist, Folk and Native peoples religions, Sikhism and Judaism.

      (c) complex systems scientists and biophysical economists;

      (d scientists in the impact sciences like ecology and climate science;

      (e) key modern heterodox thinkers in the economics space with the most radical theories (relative to current orthodoxy). ~ Ikonoclast

      Synthesis is the key.
      Humankind certainly does need an updated and re-integrated “concept of morality based upon a continually updated synthesis of science, philosophy, and religion” utilizing the most progressive elements available today of three broad domains—science, philosophy, and religion. The spirit of the Golden Rule and Golden Rule thinking span all three domains cutting across religious and non-religious worldviews alike being rooted in the human fundamental recognition of of reciprocity and fairness.
      Anyone who has engaged first-hand in enough child-care knows that the first promptings of a child’s moral nature have not to do with sex, guilt, or personal pride, but rather with impulses of justice, fairness, and urges to kindness—helpful ministry to one’s fellows. Anyone who retains this sense of basic human fairness recognizes the failure of modern capitalism’s systemic inequality and social and economic unfairness and systematic violation of the laws of fair play and competition. Cooperation, trust and fairness are essential not only to a healthy social fabric but essentially for capitalism to survive. Unrestrained ruthless competition will destroy the very institutions and social fabric it depends upon to survive. Upon the impartiality, fairness, and integrity of its courts the endurance of a nation depends. Without justice and fairness no nation can long endure.
      Economics without morality and ethics, which are after all discerned through philosophy, is bankrupt and will only lead to its own ruin and the ruin of humankind and the planet we live upon. When anyone disdains science and/or philosophy and/or religion they are denying the synthesis that once was front and center in the thought processes of scientists and philosophers and religionists (in the best sense of the terms, not fundamentalism or dogmatism).

      The Rule Replaced by Principles of Reason: Immanuel Kant

      Immanuel Kant (1724– 1804) was reared in a pietistic atmosphere and worked for decades within the framework of traditional philosophy until David Hume’s skeptical writings roused him, as he said, from his “dogmatic slumber.” Kant rejected not only theological ethics, however, but also the new empirical ethics of feeling; and he set forth morality as primarily an affair of rationally chosen universal principles, not desires, not even well-regulated or benevolent desires. If Kant’s ideas are correct, both the golden rule (in its original formulation) and its religious foundation are obsolete. (Wattles 1996, 83-84)

      He proposed three rational principles as formulations of one supreme moral principle, “the categorical imperative” (unconditional command). The first principle is that one should act only on principles that one can rationally will for everyone to act on (“ Act only according to that maxim whereby you can at the same time will that it should become a universal law). 32 The second principle affirms a certain respect for humanity: “Act in such a way that you treat humanity, whether in your own person or in the person of another, always at the same time as an end and never simply as a means.” 33 The third principle invites the agent to imagine himself as a citizen of and legislator for a conceivable advanced civilization, a worldwide, even a universal community of truly moral agents; this principle voices “the idea of the will of every rational being as a will that legislates universal laws,” that is, laws for a union (“ kingdom”) of all rational beings. (Wattles 1996, 84)
      (….) A concept of morality based upon a continually updated synthesis of science, philosophy, and religion—pioneered by Philo and Augustine and Aquinas—was eclipsed during the Reformation and the Enlightenment. Religion would pull apart from science. Science, in modern psychology, would pull apart from religion and philosophy. Philosophy would pull apart from religion and science. An apparent counterexample, Hegel’s synthesis of science, philosophy, and religion, would truncate religion and submerge the golden rule in the context of a ethic of social, corporate, and political organizations; Hegel compromised the golden rule’s moral universality in order to avoid its postnationalist political implications. Nietzsche would then denounce the religious ethic of service as weak and submissive and animated by the very will to power that this ethic aspired to transcend. In the coming chapters, I indicate that contemporary scientists, philosophers, and religious thinkers, functioning separately, tend to make up tacitly for the grand synthesis they had apparently left behind. How could anyone write about morality without making assumptions and assertions, empirical, philosophical, and religious (or antireligious)? And how can the full, vital spectrum of meanings in the golden rule be rehabilitated without a team effort to synthesize threads of science, philosophy, and religion? (Wattles 1996, 88-89)
      — Wattles, Jeffrey. The Golden Rule. New York: Oxford University Press; 1996; c1996 pp. 83-84, 88-89.

    • Craig
      October 15, 2020 at 6:54 pm

      Ikonoclast and Meta,

      Completely agree. And as love is the pinnacle religious/spiritual value and its active form is grace-graciousness, systemic policy philosophically aligned with that value, specifically in the money system and finance, would seem to be the logical thing to do.

      And if applying grace as in gifting at the point of retail sale empirically resolves individual monetary scarcity, systemic austerity and creeping inflation all in one fell swoop…why not give it a try?

    • Yoshinori Shiozawa
      October 16, 2020 at 7:11 am

      I have posted a comment on Craig’s idea here. I believe that the comment also applies to Ikonoclast.

    • Meta Capitalism
      October 16, 2020 at 11:00 am

      There are many examples in the modern world showing how this doctrine of the free market—the pursuit of self-interest—has worked out to the disadvantage of society. —CAMBRIDGE PROFESSOR JOAN ROBINSON, 1977

      The approach used here concentrates on a factual basis that differentiates it from more traditional practical ethics and economic policy analysis, such as the “economic” concentration on the primacy of income and wealth (rather than on the characteristics of human lives and substantive freedoms). —NOBEL LAUREATE AMARTYA SEN, DEVELOPMENT AS FREEDOM”

      Buddhist Economics: An Enlightened Approach to the Dismal Science” by Clair Brown – https://a.co/6KktcdD

  3. Yoshinori Shiozawa
    October 15, 2020 at 5:59 am


    • Yoshinori Shiozawa
      October 15, 2020 at 6:00 am

      I agree with Ikonoclast except for some details.

      John Elster wrote in his conclusion to his book Expalining Social Behavior (2015), “Rational-choice theory turns into hard obscurantism when it ceases to be a tool-box and becomes a toy-box.” (p.459)

      I agree with Elster that rational choice theory should be abandoned as main tool of economics. I have many reasons to contend so. Firstly, it overestimates our capability of rationality. We, economic persons, are an entity bounded by three limits of our capabilites: myopic sight, bounded rationality and limited range of (direct) effects of our actions. I have explained these ideas in detail in my chapter 1 that has the same title as our book Microfoundations of Evolutionary Economics.

      In the following chapters except one, we have presented theories on price determination and quantity adjustment process without appealing to rational choice. The second chapter of our book is titled “A large economic sytem with minimally rational agents”. Even if humans are rational animal, economic system works depending on very weak rationality such as habitual behaviors and routines. Our book takes the complexity of economic systems and the boundedness of our rationality seriously. Human behavior evolves by trials and errors and by the aid of economic institutions. This is the reason why we have named our book “Microfoundations of Evolutionary Economics”. It draws on totally different economic thought than neoclassical economics and it gives a new understanding on how our economy (the real world if you like) works. We have also proved that rational expectation of firms (foresee the trend of future demand for their product) makes the quantity adjustment system unstable (See Morioka’s chapters, in particular Chapter 4).

      By reading John Elster’s paper, Lars Syll concluded that

      The message writes itself: If you’re really interested about what goes on in our economies — stay away from economics!

      He makes two mistakes in this conclusion:

      (1) Mainstrean economics is only a part of economics, even if it is strong and powerful. To ask “stay away from mainstream economics!” is a correct conclusion, but he has illogically extended the range from which we should stay away. He has incorrectly concluded that there are no theories that can contribute to understand “what goes on in our economies”.

      (2) Elster rejected hard obscurantism and rational choice theory in particular. If he knows the existence of an economic theory that does not assume rational choice of agents, he must have excluded the theory among the hard obscurantism. Elster had no chance to know the existence of our theory, but Lars Syll knows it because I have repeatedly noticed it. He must have an obscure habit to ignore all non-mainstream efforts. Probably it is not convenient for his economic methodology. He must be an obscurantist who does not aim at truth in Elster’s classification of two kinds of obscurantists.

      I wonder why Syll could not add a word “mainstream” in his title. Rejectiong all economics is to fall in the obscurantism. We should reject bad economics but we cannot understand the real economy without economics. As I have written in another recent post of mine, we need not mainstream economics but we need economics. If Syll does not understand this simple fact (but very important fact for any philosophy of sciences including social sciences and economics), his methodology is completely bankrupt.

  4. October 15, 2020 at 12:48 pm

    Thanks Lars for confronting me with obscurity, Ikonoclast for his lack of it and Meta for his summary (“We need a synthesis”). Yoshinori is surely right about Lars needing to reject only “mainstream” economics; what he doesn’t seem to understand is that his seeing economics in terms of price adjustments leaves HIM “mainstream”and (probably inadvertently) obscurantist.

    Has even Ikonoclast seen that Francis Bacon’s deductive “syllogism” is about rationality and his “induction” about statistics? What with Copernicus, C S Pierce’s “retroduction” and Kuhn’s “revolutionary” scientific paradigm changes, philosophy of science has moved on since 1600.

    Having made the synthesis Meta called for, I must acknowledge my own obscurity before defending myself against Jon Elster’s objection to it in Lars’ contribution. What Ikonoclast did not pick up was Francis Bacon seeking not only to discover and uncover the still hidden but to teach others via a compendium of knowledge. This bore fruit not only in Harvey’s discovery of the circulation of blood but in Newton’s laws of motion. These are not going to change, but discovering them changes the way we do things: Kuhn’s “revolutionary” paradigm changes.

    What has crept into Elster’s objection is Kuhn’s other term, “normal”. Obscure writers, he says.

    “aim at truth, but do not respect the norms for arriving at truth, such as focusing on causality, acting as the Devil’s Advocate, and generating falsifiable hypotheses”.

    To cut a long story short, how can a writer not seem obscure to a reader who doesn’t know what he is talking about: the hidden blood flows; the synthesis of many topics about most of which he is ignorant? The answer I discovered was the reference system. One can point to examples (paradigms), but the obscurity remains until the reader has taken the trouble to look for himself. “It takes two to tango”.

    Hence Ikonoclast’s call for a symposium. However, it worries me that he still hasn’t included the key topic of the interpretation of (as against agreement on) language.

  5. October 18, 2020 at 3:54 pm

    Economics has become a prime target for sophists. We forget that ‘sophistication’ used to be to obscure facts with inappropriately complex and rambling arguments. Mathematical models are constructed precisely for this purpose. We even give ‘Nobel’ prizes to those most successful at pulling the wool over our eyes.


    Attested about 1400 in the sense “make impure by admixture”, from Medieval Latin sophisticatus, past participle of sophisticare (see sophistication). From about 1600 as “corrupt, delude by sophistry”; from 1796 as “deprive of simplicity”. Related: sophisticated, sophisticating. As a noun meaning “sophisticated person” from 1921.

    sophisticate (plural sophisticates)

    A worldly-wise person.
    sophisticate (third-person singular simple present sophisticates, present participle sophisticating, simple past and past participle sophisticated)

    (transitive) To make less natural or innocent. quotations ▼
    To practice sophistry; change the meaning of, or be vague about in order to mislead or deceive. quotations ▼
    (transitive) To alter and make impure, as with the intention to deceive. quotations ▼
    (transitive) To make more complex or refined.”


  6. Ken Zimmerman
    November 12, 2020 at 12:17 am

    Cambridge University economist Ha-Joon Chang posted this to the Zero Hedge website back in 2014.

    And here they are… the 5 things they don’t tell you about economics…

    1. 95% of economics is common sense

    You don’t need a degree to understand it

    We’ve got this profession wrong; a lot of professional economists think what they do is too difficult for ordinary people. You’d be surprised how often these people are stupid enough to say things, at least in private, like ‘you wouldn’t understand what I do even if I explained it to you’. If you cannot explain it to other people, you have the problem.

    People express strong opinions on all sorts of things despite not having the appropriate expertise: climate change, gay marriage, the Iraq War, nuclear power stations. But when it comes to economic issues, many people are not even interested, not to speak of not having a strong opinion about them. When was the last time you had a debate on the future of the Euro, inequality in China or the American manufacturing industry, despite the fact that these issues can have a huge impact on your life, wherever you live?

    2. Economics is not a science

    Despite what the experts want you to believe, there is more than one way of ‘doing’ economics

    People have been led to believe that, like physics or chemistry, economics is a ‘science’, in which there is only one correct answer to everything; thus non-experts should simply accept the ‘professional consensus’ and stop thinking about it.

    Contrary to what most economists would have you believe, there isn’t just one kind of economics – Neoclassical economics. In fact there are no less than nine different kinds, or schools, as they are often known. And none of these schools can claim superiority over others and still less monopoly over truth.

    I accept that being suddenly asked to taste nine different flavours of ice cream when you had thought that there was only one plain vanilla can be quite overwhelming. In order to help, I attach here a simple table that will help you overcome your initial fear. (note: the table is not attached to the posting I review)

    3. Economics is politics

    Economic arguments are often justification for what politicians want to do anyway

    Economics is a political argument. It is not – and can never be – a science.

    Behind every economic policy and corporate action that affect our lives – the minimum wage, outsourcing, social security, food safety, pensions and whatnot – lies some economic theory that either has inspired those actions or, more frequently, is providing justification of what those in power want to do anyway.

    Only when we know that there are different economic theories will we be able to tell those in power that they are wrong to tell us that ‘there is no alternative’ (TINA), as Margaret Thatcher once infamously put it in defence of her controversial policies.

    4. Never trust an economist

    It is one thing not to foresee the financial crisis; it’s another not to have changed anything since

    Most economists were caught completely by surprise by the 2008 global financial crisis. Not only that, they have not been able to come up with decent solutions to the ongoing aftermaths of that crisis.

    Given all this, economics seems to suffer from a serious case of megalomania.

    The financial crisis has been a brutal reminder that we cannot leave our economy to professional economists and other ‘technocrats’. We should all get involved in its management – as active economic citizens.

    5. We have to reclaim economics for the people

    It’s too important to be left to the experts alone

    You should be willing to challenge professional economists (and, yes, that includes me). They do not have a monopoly over the truth, even when it comes to economic matters.

    Like many other things in life – learning to ride a bicycle, learning a new language, or learning to use your new tablet computer – being an active economic citizen gets easier over time, once you overcome the initial difficulties and keep practicing it.

    Unless you are willing and able to challenge the professionals, challenge the experts, what’s the point of having a democracy?

    There is no excuse for complacency. If you organize and demand reforms then a lot of amazing things happen, but it won’t come easy – we have to fight for it.

    I have disagreed with Chang on several areas. But on this posting he and I are in 100% agreement.

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