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An Interview with Yanis Varoufakis
April 2, 2012 4:20 AM   Subscribe

The New Priesthood - "The hapless economist uses the same tools as acclaimed physicists and astronomers. She has trained for years to speak precisely the same language as them, to understand the same advanced mathematics, to deploy most complex statistical methods which are an essential part of the scientific toolbox. It is, understandably, incredibly difficult to accept that her work is a form of higher order superstition; a religion couched in the language of mathematics and statistics. Tragically, this is precisely what it is."
E.E. Evans-Pritchard (the famous anthropologist) once offered a brilliant insight into the social success of the priesthood within the Azande society. The question he asked is similar to yours (regarding economists): If they get it so wrong so often, how should we explain their continuing dominance? When the Azande priests and oracles failed to predict or avert disasters, why did people continue to believe them? His explanation of the Azande's unshakeable belief in witchcraft, oracles and magic goes like this:

"Azande see as well as we that the failure of their oracle to prophesy truly calls for explanation, but so entangled are they in mystical notions that they must make use of them to account for failure. The contradiction between experience and one mystical notion is explained by reference to other mystical notions..."
Yanis Varoufakis: Part II - "What can be salvaged from the theoretical wreck that is economics? My answer is: The process of discovering the limits of analytical reason. By studying critically all models, we end up none the wiser about quantitative outcomes but much, much smarter about the complexities of really existing capitalism... while we shall not have a determinate model of prices and quantities, we shall be much more appreciative of capitalism's motivated irrationality, its penchant for surprising even the powers that be, its capacity to create incredible wealth and untold suffering by means of precisely the same process..." [1,2]

How Alchemists Invented Modern Finance - "The amazing capacity of credit to create value -- and to destroy it -- has often been compared to alchemy. After the alchemists failed in their search for the philosopher's stone, the mythical substance that could turn ordinary metals into gold, the power of creating something out of nothing has come to rest solely in the hands of the financiers... it turns out that there is a much deeper connective bond between alchemy and modern finance, dating back to the 17th century, when the modern financial system was just forming. The big problem facing England at the time was a scarcity of money. Because the country lacked an adequate circulating medium, commerce was lagging, textile manufacturing was in a tailspin and various unemployment-related social problems kept on increasing... social reformers, scientists and political economists -- gathered around the London-based Prussian emigre Samuel Hartlib. The Hartlib Circle, as they became known, wrote and disseminated advice on how to transcend nature's scarcity by advancing agriculture, horticulture, botany, mechanics, manufacturing, chemistry, fishing and so on. They hoped to spark a process of infinite improvement that would gradually eliminate all social, economic and political problems and eventually establish a kingdom of heaven on Earth... They published the first proposals for a generally circulating credit currency, which provided the basic inspiration for the eventual creation of the Bank of England in 1694."
posted by kliuless (169 comments total) 91 users marked this as a favorite

 
If you use the tools of physics to create lots of money from nothing you're also going to create lots of anti-money too.
posted by Chekhovian at 4:24 AM on April 2, 2012 [42 favorites]


From the article: Yanis Varoufakis is a Greek economist who currently heads the Department of Economic Policy at the University of Athens. From 2004 to 2007 he served as an economic advisor to former Greek Prime Minister George Papandreou.

An alternative would be that Varoufakis is just a lousy economist who's advice resulted in the ongoing Greek debt crisis.
posted by humanfont at 4:31 AM on April 2, 2012 [12 favorites]


Excellent post. economics (something I studied for quite a while) needs to be seriously debunked - and debunked far more than it has been in the past. How many people, for instance, know that the Nobel Prize for Economics was established by Swedish banking influence, in order to give Economics the status of science. The latest hype is around "behavioral economics". Hogwash! Just list "behavioral economics" under the rubric of "decision making", and there you have it. Economics is a derivative discipline that masks its incompetence with quantitative theory.

I always thought that the analytical side of the discipline was studded with erroneous presumptions. Economists should be required to read Gödel's Incompleteness Theorems, before reading for the Ph.D.
posted by Vibrissae at 4:39 AM on April 2, 2012 [10 favorites]


I've read a lot of Varoufakis (in Greek). He's a typical Greek academic: long on verbiage, references and quotes from textbooks but short on actual analysis and data. Unfortunately, due to a strong command of English and massive 12,000 word blog posts, he has become the international voice of Greek economics in this crisis. His analyses (much like that of the Papandreou government he advised) seem to be based on wonderful theoretical models that sadly, have little to do with reality on the ground.

Aristos Doxiadis is far more reality-based and he actually backs up his positions with, you know, data...
posted by costas at 4:45 AM on April 2, 2012 [5 favorites]


An alternative would be that Varoufakis is just a lousy economist who's advice resulted in the ongoing Greek debt crisis.

Actually he has been one of the most visible critics of the current handling of the situation. Note that he was an advisor to Papandreou up to 2007: Papandreou lost that election, but won the next one in 2009, largely on the reassurance that "the money exists". I don't know much about actual economics, but I don't think Varoufakis is the one to blame.
posted by Dr Dracator at 4:49 AM on April 2, 2012 [1 favorite]


Just because higher level math and statistics are hard to grasp it doesn't mean that the science of economics has no validity; I think the problem is that it has been woefully misused to concentrate wealth amongst those who have no real need to accumulate that much at the expense of the common man.
posted by Renoroc at 4:55 AM on April 2, 2012 [2 favorites]


A big ol' post about how economists are charlatans dressed up with the tools of hard science and not even a mention of Nassim Taleb?
posted by indubitable at 4:57 AM on April 2, 2012 [10 favorites]


It seems odd for an economist to make these claims because an economist ought to know that economics is very careful about forecasting in term of acknowledging the difference between risk and uncertainty. So while it would indeed be disturbing to continually expect accurate predictions from economists, what we actually get are warnings about the unpredictability of most economic outcomes. Even the efficient market hypothesis, which seems to be the target here, says that you can't predict the future on the basis of current prices, because new information could lead to new prices.

I suppose that prediction of unpredictability does continue to hold true. But I'm not sure how it constitutes a priesthood.
posted by anotherpanacea at 5:01 AM on April 2, 2012 [4 favorites]


If you use the tools of physics to create lots of money from nothing you're also going to create lots of anti-money too.

I sometimes imagine the subprime bubble as a successful attempt to turn lead into gold: because it was successful, all it did was drive down the value of gold.
posted by gauche at 5:05 AM on April 2, 2012 [5 favorites]


I think there is also the problem that science is driven primarily by prestige -- being the first one to figure something out, to get a good publication credit, to be able to attract and keep grad students and grants. There is money there, but it's at a remove, even considering patents and the like. With economics, the money is always right next door, and where there is money, there are people eager to jump at any chance to make a little more. So, even if economics is completely valid, the fruits of economics will always be gather up for sale whether they are wholesome or rotten, on the theory that someone will buy, at least once.....
posted by GenjiandProust at 5:25 AM on April 2, 2012 [1 favorite]


If you use the tools of physics to create lots of money from nothing you're also going to create lots of anti-money too.

We could call it R-money, pronounced Romney.
posted by localroger at 5:26 AM on April 2, 2012 [2 favorites]


"economists are charlatans dressed up with the tools of hard science"

Yes, that would be the entire econ faculty at Chicago.
posted by bardic at 5:31 AM on April 2, 2012 [3 favorites]


Economics is as much a social science as it is a theoretical/mathematical one. It is, after all, about modeling the behavior of people based on how they spend their money. It is almost a type of sociology.

And, like many other sciences, there are credentialed sharlatans who use their tools to further their own agendas. Whether it is selling books or getting on TV or amassing wealth.

Further, while many economists will proclaim that their preferred model is always correct, all the models that we have yet had are just models that try to reflect the results of billions of individual decisions. When an economist starts getting religious, they aren't really being economists any more.

Also, economics != finance.
posted by gjc at 5:34 AM on April 2, 2012 [3 favorites]


The concentrated wellspring for this movement can be found here:

http://www.paecon.net/

(...where much of the above discussion is already covered in detail)
posted by Reasonably Everything Happens at 5:45 AM on April 2, 2012 [2 favorites]


The thing is, there's actually something to economics. Bad money really does drive out good. Inventing fanciful forms of credit really does lead to collapses. Replacing funding for education with loans really does have long term consequences, in ways not at all dissimilar to a government living off of loans instead of revenue.

The music does in fact eventually stop.

The proper way, I believe, to see economics is through the lens of regulatory capture. Imagine if there was money in E not actually equaling MC^2. There'd be an awful lot of well funded physicists, now wouldn't there...
posted by effugas at 5:50 AM on April 2, 2012 [8 favorites]


Physics is blessed with an object of study – let’s call it Nature – that does, normally, not give a damn about the physicists’ theories of it (the Heisenberg Principle excluded). This means that Nature provides an impassionate assessor of the physicists’ models. If their models have been ‘closed’ in a manner that defies logic (i.e. by means of illegitimate hidden axioms), then Nature will expose them. It will defy their predictions in the laboratory (or thought the telescope) in a manner that forces the physicists back to the drawing board. So, if a particular model cannot be ‘closed’ (because it is not solvable), Nature will ensure that the physicists come clean and admit that this is so.

Economics on the other hand, by virtue of being a social science, is caught up in the famous infinite regress problem. What this means is that there exists no neat separation between (a) the economists’ object of study and (b) our theories about it...

...How do their account for the fact that when their model had left no room for it? The fascinating answer is that they assume the crisis to have been the result of a random ‘disturbance’...The process of adjustment to the shock of the crisis is best left to the markets which, prior to the crisis, were assumed incapable of causing a crisis!

...Is it that economics attracts the less cooperative, more ruthless young persons? Or is it that exposure to economics makes them relatively more ruthless, pessimistic and aggressive?



Thanks for this posting.

Economics is one of those fields where the thing being studied – people, essentially, human behavior – is absolutely not rational, yet is assumed to be rational in the predictive models. Economists' models do not predicting how human beings will behave, they predict how rational human-like robots that buy and sell things will behave, and they program those robots to behave however they want. In public discourse, we talk about economic models like they're didactic little parables, stories about how to past has been and how the future will undoubtedly be, and we choose whichever one from which we can extract the cultural values and assumptions about government that we already hold. But it's hard to argue against someone citing Dr. Longname, the economist at Prestigious University – it works. Economics provides a cheap and durable tool for shutting up political dissent.
posted by deathpanels at 5:50 AM on April 2, 2012 [1 favorite]


Just because higher level math and statistics are hard to grasp it doesn't mean that the science of economics has no validityJust because higher level math and statistics are hard to grasp it doesn't mean that the science of economics has no validity

This is correct. The science of economics has no validity for entirely different reasons.

Namely, it is not at all scientific in that none of its theories are actually testable.
posted by srboisvert at 5:51 AM on April 2, 2012 [7 favorites]


Aristos Doxiadis is far more reality-based...

i just watched his TED talk where he also talks about reconciling failed models with 'reality' and advocates a back-to-basics (micro) approach... which brings to mind varoufakis in part 2:
Starting with John Locke (who argued that property rights emerge when human labour is blended into a piece of land, thus producing property rights over the latter), classical economists (Smith, Ricardo, Malthus, Marx) also assumed that labour breathes 'life' into things, turning them from 'things' to 'valuable things'. Then they asked a series of organic or systemic questions: How does this value determine the relative prices of these things? How is it distributed across society? How does it grow? Under what circumstances can it go into reverse (recessions and crises).

When the marginalists arrived on the scene some time in the 1870s (who later turned neoclassical, with the exception of the Austrians who resisted that 'transformation'), they treated the notion of value with contempt; as a relic of romantic hocus pocus. In its place, they put another notion: utility. All human activity was to be explained not in terms of the value that labour breathes into things but in terms of the satisfaction of some well-defined preference ordering of human consumers. The main and profound difference between them and the classics was their ambition to pose self-contained models of the individual...
not even a mention of Nassim Taleb?

here you go...
Taleb on Antifragility [1,2]
posted by kliuless at 5:55 AM on April 2, 2012 [1 favorite]


Economics is one of those fields where the thing being studied – people, essentially, human behavior – is absolutely not rational, yet is assumed to be rational in the predictive models. Economists' models do not predicting how human beings will behave, they predict how rational human-like robots that buy and sell things will behave, and they program those robots to behave however they want.

Some predictive models assume rationality; others do not. Upthread people are scoffing at the notion of behavioral economics, which is a set of models that do not assume rationality at all. Some economic models predict things very well, others do not. Some once predicted real-world outcomes well, and now they do not; the world changes.

People seem to grasp the uncertainty inherent in other social sciences. Why not economics?
posted by downing street memo at 5:59 AM on April 2, 2012 [8 favorites]


If you use the tools of physics to create lots of money from nothing you're also going to create lots of anti-money too.

Your anti-money is called Debt and anthropologist David Graeber just wrote the book on it. (Along the way he punked Adam Smith's whole theory of how money arose from barter, and reamed out much of modern economics as a side-effect.)

The academic bloggers at Crooked Timber held a seminar on "Debt" here. Vital reading if you don't have time to wade through a magisterial doorstep with 200 pages of endnotes.
posted by cstross at 5:59 AM on April 2, 2012 [16 favorites]


Throughout my undergraduate studies in Economics, I kept saying: but does that really work with humans who are not homoeconomicus?

My instructors just told me it was good for modeling and worked in public policy spheres. I never bought it.
posted by AndrewKemendo at 6:01 AM on April 2, 2012


On one side you have economists with their models and assumptions and caveats.

On the other side you have entrenched interests that work very hard (pragmatically and effectively) to skirt each and every one of those models and assumptions.

Which side do you think's gonna win?
posted by Benny Andajetz at 6:05 AM on April 2, 2012


The Evans-Pritchard quote is highly salient. "Economics" is just an abstraction of "society" or "culture" thought of as behavioral adaptations (including those passed on through human culture, as well as those based on (biological) neuro-cognitive and somatic evolution).

Every culture contains within it a perfectly hermetic cosmology that explains itself to itself. Economics is ours.
posted by spitbull at 6:06 AM on April 2, 2012 [4 favorites]


Yeah, that's how save a field mired in accusations of promoting ideological bullshit. Remove all rigor and fall back harder on ideological bullshit.
posted by 0xdeadc0de at 6:10 AM on April 2, 2012


How are we talking about this and not talking about Mirowski?
posted by valkyryn at 6:11 AM on April 2, 2012 [1 favorite]


Are you saying, for example, that Evans-Pritchard was not a rigorous social scientist? Not all rigor is mathematical rigor.
posted by spitbull at 6:19 AM on April 2, 2012 [2 favorites]


And actually there is quite a body of economic anthropology -- one can argue it starts with Marx and Weber -- and even now quite a bit of work in economics proper that calls attention to the fact that our "economies" are cultural constructions of a few basic modes of subsistence into elaborate ethical and narrative and cognitive structures which we come to view as natural facts.

Call it what you want, it's social science same as yours.
posted by spitbull at 6:21 AM on April 2, 2012 [5 favorites]


Evans-Pritchard may have been a rigorous and methodical anthropologist, but his methods and conclusions would appear highly dubious today. He is of mainly historical interest. I am not at all sure why his writing is being used as some kind of touchstone of credibility here.
posted by Nomyte at 6:23 AM on April 2, 2012


Azande people make up the majority of Western Equatoria State in South Sudan. Which is kind of famous right now due to Joseph Kony 2012!!!

ohhh yeah it is all connected.
posted by tarvuz at 6:26 AM on April 2, 2012


Good lord.

There's an entire branch of the history of science to invoke here, but I'm late for work.
posted by spitbull at 6:26 AM on April 2, 2012


But even as I am literally out the door, I will point out that Evans-Prtichard's work on Azande witchcraft was fundamental to the rationality debates in British and Continental philosophy of science in the 1960s-70s, and those debates were foundational in turn for how modern historians of science think about the question of science's cultural bias. Robert Ulin wrote a nice little book on those debates in the 80s called "Understanding Cultures."

I'll come back and argue it later.
posted by spitbull at 6:34 AM on April 2, 2012 [6 favorites]


effugas: "Imagine if there was money in E not actually equaling MC^2. There'd be an awful lot of well funded physicists, now wouldn't there..."

Funny you mention this, because I have this idea about money not fully formed. The idea sprang from "Trickle Down" and we like to say how it doesn't trickle down it trickles up, but what if it DOES trickle down, and we're looking at it the wrong way. Money doesn't aggregate to people it aggregates to money (yes - part of that is due to the way we have interest rates and punitive measures for people who have zero/negative money (see: fees for overdrafts)) but picture money as MASS, a gravity generating thing, then watch as more money starts to go "down" towards the center of the mass.

Then I saw something on boingboing regarding the money and energy (a book that i can't recall right now and don't have time to look up) which got me pondering of money as energy (and labor power, right, that's another form of energy), and then about entropy and mass and black holes, and what if we had economic entropy or entropic economics... And low and behold Someone apparently invented thermoeconomics (though I'm not sure how much it relates to my thoughts)...

Analogies will always break down at some point. But just an idea I had.
posted by symbioid at 6:37 AM on April 2, 2012 [4 favorites]


People seem to grasp the uncertainty inherent in other social sciences. Why not economics?

Because social science does not tend to lead to catastrophic failures in global economic systems that causes the suffering of untold millions?
posted by LN at 6:37 AM on April 2, 2012 [7 favorites]


"Namely, it is not at all scientific in that none of its theories are actually testable."

You don't think so? I'm pretty sure they could be. The tests would require some seriously fascistic social regulation, and they'd be neither ethical, brief, nor easy, but, they could be done. We could, for example, create two states (we'll split S. Dakota in half) with almost exactly the same population demographics and starting conditions (i.e. same businesses, same laws, etc.). We could then change one thing—let's change the way they fund education SD1 gets a state funded system, while SD 2 gets a market driven system (nothing but private schools). Then we just wait to see how things shake out in a few generations. (Perhaps we refuse to let them alter any laws for the first 25 years. That way any legal changes are pursued only after things in the artificial states have come to seem normal to its inhabitants and one whole generation has gotten through college.) Economists would be asked to submit predicted outcomes based on their preferred models, then, several decades later, we'd see which ones did a better modeling job.

And there you have it, empirical verification. (Sure this isn't perfect, the conditions are highly artificial, but that doesn't invalidate the test any more than artificiality of tests invalidates psychology or cognitive science.)
posted by oddman at 6:39 AM on April 2, 2012 [1 favorite]


Because social science does not tend to lead to catastrophic failures in global economic systems that causes the suffering of untold millions?

Other social sciences can't cause untold suffering? I mean, if we're going to equate (unfairly) science and its practitioners, then something like the eugenics movement or the retaliatory and predatory nature of some mid-20 c. mental asylums (not to mention lobotomy) would be tough to explain. There are lots of things you could blame on social science. Almost anything can be put to a use that we find repugnant today.
posted by Nomyte at 6:46 AM on April 2, 2012 [2 favorites]


Sure this isn't perfect, the conditions are highly artificial, but that doesn't invalidate the test any more than artificiality of tests invalidates psychology or cognitive science

Or, rather, it invalidates economics just as much as the artificiality of tests invalidates psychology and cognitive science.

Not only is what you suggest quite impossible, but it introduces so many variables which are uncontrolled as to make any findings completely useless. If nothing else, the geography is different. And so are the people. Certain gross demographic similarities does not mean that the populations will behave in similar or even predictable ways. And you'd never be able to tell whether your results are based on an intended difference in the two territories or the artificial differences you imposed as testing conditions. Any or all of those things could have dramatic effects on the outcome, and you've got no way of controlling for any of them.

And this has nothing to do with whether what you're trying to test is even quantifiable anyway. We've got no idea how to measure educational outcomes. Test results? Feh. We can't even tell what constitutes a "good teacher" and only a slightly better idea of what constitutes a "bad teacher." Graduation rates? Cook the numbers. No, whether or not someone is an educated person isn't something to which a numerical value can be assigned. It's a qualitative, not a quantitative property.
Economics is people arbitrarily, or as a matter of taste, assigning numerical values to non-numerical things. And then pretending that they haven't just made the numbers up, which they have. Economics is like astrology in that sense, except that economics serves to justify the current power structure, and so it has a lot of fervent believers among the powerful. --Kim Stanley Robinson
posted by valkyryn at 6:46 AM on April 2, 2012 [9 favorites]


Because social science does not tend to lead to catastrophic failures in global economic systems that causes the suffering of untold millions?

It does if politics can be counted as a result of failed social sciences, which I think is a fairly reasonable statement. Humans are not very good at long term decision making across the board, and while I wouldn't call economics alchemy, we need to understand (as a society) that the equations are built for idealized pretend environments. If we wanted to create the most just market where all players have equal information and equal resources, fundamentalist capitalism is the last economic system we should be using.
posted by deanklear at 6:54 AM on April 2, 2012


it doesn't mean that the science of economics has no validity

Ahh, yes. The controlled conditions and repeatability that is a hallmark of SCIENCE!
posted by rough ashlar at 6:54 AM on April 2, 2012 [1 favorite]


In other words, the economics profession concentrates its rewards (tenured positions, large research grants etc.) onto the economists whose models subscribe to certain norms. The most important of these norms is that the truth of the offered economics be self contained within ‘closed’ models whose ‘solution sets’ are rather narrow. To meet this demand economists must ensure that their models leave no room for inconveniently open-ended phenomena like… crises.

The way that economics as a profession is structured doesn't have much to do with the validity of economics as science. Further on he even mentions that economists who work after Marx and Keynes account for crises, so the last quoted sentence doesn't stand.

To do this, they need to assume a particularly narrow minded form of rationality (which I call ‘instrumental rationality’): you are rational to the extent that you deploy your means efficiently in the pursuit of given objectives. When a young person is told repeatedly that to be rational means to be ruthlessly instrumental (i.e. to treat others as a means to one’s own ends), and that contributing in this game is for sissies (or, more ‘scientifically’, irrational), is it any wonder that a training in economics makes young persons more brutish and nastier?

Non sequitur since 'given objectives' can include cooperation, helping others and there are many such examples in Greece. It would be nice if he cited the study he talks about, but when it comes to Greece I doubt studying economics has such a pernicious effect on students compared to watching the country stagnate for over a decade and facing the prospect of underpaid work in an environment that often rewards whom you know instead of how much you know.
posted by ersatz at 6:55 AM on April 2, 2012 [1 favorite]


The controlled conditions and repeatability that is a hallmark of SCIENCE!

Geologists, astrophysicists studying the big bang, and evolutionary biologists also lack controlled conditions and repeatability.
posted by shivohum at 7:00 AM on April 2, 2012 [7 favorites]


Thing is right? There has been no long term runaway successes in economics. It feels like we are all just balancing on a thin ledge with blindfolds on and trusting "experts" that no really the ledge is safe and continues on and on. Stable economics seems to be small scale economics, and we don't live in a small scale world.
posted by edgeways at 7:00 AM on April 2, 2012


Definitely in favor of adopting some of the tenets of post-autistic economics. The calculus is fun and all but at a certain point in time it's obfuscating the ability to follow the actual logic behind an economic model.

Economics has some value but unfortunately way too many economists focus on these fantastically complex models without necessarily having a secure and solid foundation on which to balance those airy equations.

Because mankind often fails to measure up to the mathematical models in many ways there is always going to be a risk inherent in basing models that predict human behavior as being inherently rational.

It seems like there is a new grouping of economists in the neo-classical school that are willing to go back and re-examine some of the basic tenets of their work but it seems like outside of a few graduate programs. The orthodoxy is still dominant at most programs.
posted by vuron at 7:04 AM on April 2, 2012


Because social science does not tend to lead to catastrophic failures in global economic systems that causes the suffering of untold millions?

Yeah, sorry to say, economics didn't do that either. There's a pretty rich economic literature on asset bubbles, you might want to check it out.

(this thread should be proving something to those insisting that progressives are just inherently more scientific than conservatives.)
posted by downing street memo at 7:06 AM on April 2, 2012


So I guess Meteorology isn't a science either then? They use complex models with a bunch of built in assumptions to predict future behavior of complex systems and, at least here in Minnesota, they're wrong most of the time especially when they try to predict out past more than a few days.

I think that part of the problem is that people listen to an economist say what might happen or what they think there is a chance of happening and they hear what the economist says WILL happen.
posted by VTX at 7:11 AM on April 2, 2012 [1 favorite]


It is, understandably, incredibly difficult to accept that her work is a form of higher order superstition; a religion couched in the language of mathematics and statistics.

Um, no, it's not. In fact, to the rest of the world, it's incredibly easy to accept this. The burden of proof rests on you, the outlier (and implicitly, all economics studies) to prove that they are appropriately using the tools science traditionally uses, and not just running numbers to support their pet theories.

Applying a chi-squared test and regression analysis to Time Cube Theory doesn't make Time Cube Theory any more valid.
posted by IAmBroom at 7:13 AM on April 2, 2012 [1 favorite]


Even if most economics is pseudoscience, that doesn't imply that economics as such is pseudoscience. If it does, then there are no genuine scientific fields, because most published research findings are false.

If the foundational concepts of economics are unscientific, that would plausibly make it a pseudoscience. There is, however, much disagreement on what to count as a foundational concept. Perhaps most would count "markets set the prices of goods according to the ratio between supply and demand" as a foundational concept, but certain highly visible economists interpret this to mean that supply and demand are the most significant contributors to the price of goods in all cases, which is antithetical to the field of behavioral economics.

The theories of behavioral economics actually are testable. They've been tested. The "Free!" effect, for instance, predicts that people will reflexively collect anything offered them for free, even when the priced option gives better value, and even when taking the free thing ends up costing you money in shipping and whatnot. The test was to set up a business selling chocolate and vary the prices of different sized batches, keeping them the same amount of money away from one another, but whenever the cheaper one got to "free" they saw a big spike in orders for it. Easy, right? [p.49]

I can understand the hatred of the alleged scientists who inform our policy makers. I can understand being suspicious of the field they work in. But unilateral dismissal of the whole field is sloppy and, well, irrational.
posted by LogicalDash at 7:34 AM on April 2, 2012 [9 favorites]


Lots of very left-wing people don't like economics not because they have thoughtful, well-reasoned, well-read opinions about its validity and flaws but simply because economics often comes to political conclusions they disagree with.

They couch their political disagreement in supposedly intellectual attacks on the field as a whole.
posted by shivohum at 7:39 AM on April 2, 2012 [3 favorites]


I always thought that the analytical side of the discipline was studded with erroneous presumptions. Economists should be required to read Gödel's Incompleteness Theorems, before reading for the Ph.D.

Okay, this may be a derail, but what? What possible connection is there between econ and Gödel incompleteness?

posted by nebulawindphone at 7:39 AM on April 2, 2012 [2 favorites]


jesus christ 'post-autistic' economics

i mean someone actually thought that would be a good thing to call their movement that they ostensibly want to become successful

the fuck
posted by This, of course, alludes to you at 7:52 AM on April 2, 2012 [5 favorites]


Lots of very [left/right]-wing people don't like [noun] not because they have thoughtful, well-reasoned, well-read opinions about its validity and flaws but simply because [noun] often comes to political conclusions they disagree with.

It's scary how often that comment is true.
posted by VTX at 7:52 AM on April 2, 2012 [2 favorites]


There is, however, much disagreement on what to count as a foundational concept. Perhaps most would count "markets set the prices of goods according to the ratio between supply and demand" as a foundational concept, but certain highly visible economists interpret this to mean that supply and demand are the most significant contributors to the price of goods in all cases, which is antithetical to the field of behavioral economics.

Um, is it not also a possible mark of pseudoscience (or at least, not very reliable science) that there doesn't even appear to be consensus about what the foundational concepts of the purported science are?

Could Calvin Ball be considered a scientific field if someone said it was?

but simply because economics often comes to political conclusions they disagree with.

No, the issue many have is that economics seems to be frequently abused to give what are ultimately social and political decisions a scientific-looking imprimatur--that is, economics makes a lot of unexamined assumptions about what the goals and objectives of a society should be, wraps them up in some inscrutably complex math, and then declares that there is only one correct answer to every economic problem. Bad economics pretends to reduce to math the meaning and purpose of all human activity and human life, and casts what are actually very subjective social/political choices and objectives that serve various political and social priorities and interests to differing degrees, as the inevitable outcomes of the application of rigorous science.
posted by saulgoodman at 7:53 AM on April 2, 2012 [9 favorites]


deathpanels: "Physics is blessed with an object of study – let’s call it Nature – that does, normally, not give a damn about the physicists’ theories of it (the Heisenberg Principle excluded). This means that Nature provides an impassionate assessor of the physicists’ models. If their models have been ‘closed’ in a manner that defies logic (i.e. by means of illegitimate hidden axioms), then Nature will expose them. It will defy their predictions in the laboratory (or thought the telescope) in a manner that forces the physicists back to the drawing board. So, if a particular model cannot be ‘closed’ (because it is not solvable), Nature will ensure that the physicists come clean and admit that this is so."

Whoa, whoa, whoa.

As a (former) physicist, I have to call extreme bullshit on this one. He's got a glorified and almost completely-incorrect view of how physics research works.

To start, consider the motivation behind Physics research for the past 100 years or so: Weapons and Energy. Even the most naive and optimistic political observer could conclude that there are some incredibly heavyhanded politics surrounding both of those topics.

Similarly, New Physics represents an inconvenient conundrum. It usually means that the Old Physics were wrong. Although a healthy dose of skepticism is necessary for the scientific process to function, the scientific community has historically been known for going well beyond that healthy dose, in an attempt to save face and career for having been wrong in the past. Major new breakthroughs are often not accepted until quite some time after they have been thoroughly proved and tested (sometimes the old generation refuses to accept them at all). There were some very intelligent physicists who, right up until their deaths, refused to acknowledge Heisenberg's principle, or refute the existence of aether, long after both of those things had been proven beyond a doubt.

Also consider that the people funding large Physics experiments often have an extraordinarily poor grasp of the physics themselves. If you look at the politics behind funding Fusion Power research, you'd almost be forced to conclude that the current patterns of funding were established to guarantee continued employment for Tokamak physicists/engineers, and prevent a commercially-viable plant from ever operating. (Which is not to say that non-Tokamak designs haven't had their share of debacles; the amount of money that got dumped into NIF is crazy, considering the machine's dubious value for anything other than nuclear weapons research; undoubtedly, the amount of money spent compared to the lack of results will be used to derail future funding for fusion research)

Your reference to hidden axioms was also a curious one. Most of the "New Physics" of the 20th Century was very difficult to sell, because it completely altered our understanding of the basic nature of matter, space, and time. Almost all of these breakthroughs were not immediately demonstrable on any sort of human scale or by a direct observation; QM even required us to rethink our ideas about making observations in the first place. Up until the 20th Century, the physics models used were almost perfectly good for understanding and observing any human-scale events. Newtonian Physics worked, the Bohr Model was adequate for 99% of chemistry, and we thought we had a pretty good grasp on electromagnetism.

Fast-forward a few years, and Einstein taught us that time does not always proceed at a constant rate, and established some of the first hard-limits of the boundaries of physics (nothing; nothing can move faster than the speed of light). Einstein also taught us that energy and matter are more or less the same thing. Crazy. The icing on the cake for counterintuitive and upending physics, however, was undoubtedly Quantum Mechanics. Heisenberg and QM taught us that particles and matter are not necessarily fixed points in space and time, and cannot be observed with infinite accuracy. Not only that, it completely upended our philosophical understanding of causation. I can say without hyperbole that the discovery of QM is possibly the biggest 'leap' that humanity has ever taken in our understanding of the universe. It changed everything, and even Einstein was very reluctant to accept it.

All of these discoveries violated and changed the basic laws of nature and the universe as they were previously understood. Calling this a "tough sell" is a massive understatement. Furthermore, these new theories often don't have a whole lot of data to back them up when they're first postulated. I can't help but think that I'd also write off Quantum Mechanics as pseudoscience if I were a physicist around that time. It's just too wild and implausible, next to the very-well-grounded theories that had previously been established and proved beyond what was then considered to be any reasonable doubt.

It's also not like we can't go back and establish the historic accuracy of economic models. We've got a lot of old models and lots of data that we can use to test things. Yes, perhaps economics is a social science that sometimes gets treated a bit too much like a physical science, but that doesn't mean that we can't apply mathematics to make predictions of human behavior, or that we can't use data to establish/undermine the validity of those mathematical models. Bad scientists can also cherrypick data to make bad conclusions about physics, just as much as economists can make bad or biased conclusions by picking bad data themselves.

So, no. Physicists don't all gather around a single computer printout, look carefully at the numbers, and unanimously declare "Thus it is so!" The process is a whole lot messier than that.
posted by schmod at 7:57 AM on April 2, 2012 [28 favorites]


Okay, this may be a derail, but what? What possible connection is there between econ and Gödel incompleteness?

Economists like to pretend they are studying logically complete formal systems. They ignore the externalities to these systems and they also like to pretend their models are both complete and self-consistent, which is impossible. Modern economics on value is particularly circular: value is what the market says it is. Human desires, interests, feelings, social values and passions don't factor into the calculus that determines economic value at all, and shouldn't, from an economists standpoint. Economic value is just whatever gets spit out of the model. Never mind that our markets can influence our social values, and vice versa, non-linearly.
posted by saulgoodman at 8:00 AM on April 2, 2012 [3 favorites]


The laws of economics, they are four in number:

All economic growth assumes an economic paradigm.
All economic paradigms will be gamed.
All gamed economic paradigms deliver disaster.
All disasters destroy economic growth.
posted by storybored at 8:00 AM on April 2, 2012 [4 favorites]


I am between meetings, so still unable to make my larger case, but to be clear, I am not dismissing the scientific character or utility of economics per se, I am calling attention to the culture-and-ideology-and-interest bound character of science as an actual field of modern practice. In saying so, I am running with the majority pack of leading modern historians and philosophers of science generally, and pointing out something that a significant number of quite eminent and rigorous (quant even) social scientists (including economists) would also broadly endorse. The point is not that this invalidates a science or dismisses all rigorous modeling as merely ideological storytelling, but to figure out how to account for the force of ideological and cultural bias. This goes in two directions: tunneling into the neuroscientific and evolutionary bases of behavior and cognition, and comparing different human societies and institutions over time and across cultural boundaries.

All humans do science. Or rather, Science. The modern institutionalization of it is unquestionably a powerful technological application of our faculty for logical inference and pattern recognition and perception. The proof is that we have, for the first time, overcome our nature and acquired significant enough abilities to end life on earth or intervene at the level of the genome as such that we are in historically uncharted seas.
posted by spitbull at 8:01 AM on April 2, 2012 [3 favorites]


neurological, not neuroscientific
posted by spitbull at 8:03 AM on April 2, 2012


Economists like to pretend they are studying logically complete formal systems. They ignore the externalities to these systems and they also like to pretend their models are both complete and self-consistent, which is impossible. Modern economics on value is particularly circular: value is what the market says it is. Human desires, interests, feelings, social values and passions don't factor into the calculus that determines economic value at all, and shouldn't, from an economists standpoint. Economic value is just whatever gets spit out of the model. Never mind that our markets can influence our social values, and vice versa, non-linearly.

Mathematicians also like to pretend that their systems are complete and self-consistent, and good mathematics gets done. Godel proposes that sufficiently advanced systems have a "flaw" (which I put in quotes because it is only anthropically a flaw) at a very, very low-level. It doesn't have any relationship to what economists are doing on a high level.
posted by TypographicalError at 8:06 AM on April 2, 2012 [3 favorites]


Note that you don't have 'schools' of science. You have physics, you have archaeology, and so on... you have specialities. You do not have groups of people gathering around certain pronouncments from authority figures, as you do in economics -- the Austrian School, the Chicago school, the monetarists, the Keynesians.

If economics were a science, it would be largely unified, perhaps with some points of disagreement. It would have real, actual Theories. But the various priesthoods disagree on the most fundamental tenets of this so-called science. And people, especially politicians, choose economic schools that tell them what they want to hear. You shop for religions and economic theories in much the same way -- which ones will let you behave how you want to behave?

Since the Federal Reserve funds almost all economic 'research' in this country, for instance, you'll find it damnably hard to find anyone who thinks the Federal Reserve is a bad idea working in mainstream economics. People who have those ideas mysteriously fail to find employment. Funny how that happens. (Additional reading: Priceless: How The Federal Reserve Bought The Economics Profession.)

It's not just a bunch of sects in a religion, it's a bunch of corrupt sects in a religion. The researchers deliver results that the people funding them like, and it's almost impossible to prove them wrong, so they keep drawing a paycheck, they keep toeing the party line, and the people paying them stay in charge.... even while the country is falling to fiscal ruin all around them. It doesn't matter how good your math is, when your givens are wrong... all you get is exteremely sophisticated, mathematically perfect ideas, which are also wrong.
posted by Malor at 8:12 AM on April 2, 2012 [6 favorites]


Seconding the recommendation of Graeber's Debt. My only problem with it was that I felt snowed under by the number and depth of citations, so that checking his claims seemed like a hopeless task. But it was an immensely enjoyable and informative read.
posted by Coventry at 8:13 AM on April 2, 2012 [1 favorite]


Um, is it not also a possible mark of pseudoscience (or at least, not very reliable science) that there doesn't even appear to be consensus about what the foundational concepts of the purported science are?

What are the foundational concepts of sociology? Of anthropology? Of political science?

Economists like to pretend they are studying logically complete formal systems. They ignore the externalities to these systems and they also like to pretend their models are both complete and self-consistent, which is impossible. Modern economics on value is particularly circular: value is what the market says it is. Human desires, interests, feelings, social values and passions don't factor into the calculus that determines economic value at all, and shouldn't, from an economists standpoint. Economic value is just whatever gets spit out of the model. Never mind that our markets can influence our social values, and vice versa, non-linearly.

Have you ever met an economist? Read an economics textbook?

The strawmanning in this thread is seriously out of control.
posted by downing street memo at 8:15 AM on April 2, 2012 [4 favorites]


Note that you don't have 'schools' of science.

LOL
posted by downing street memo at 8:15 AM on April 2, 2012


From a Russian blog that collects depressing comments about the Russian public's trust in medicine:

"Вообще, врачу своему доверяю, он меня никогда таблетками не пичкал, всегда только гомеопатия и физиопроцедуры..."

"In general, I trust my doctor, he's never fed me pills, he always sticks to homeopathy and hydrotherapy…"

"Про мумие не знаю, а вот гомеопатия точно помогает, говорю вам как врач, полностью разочаровавшийся в традиционной медицине и перешел в ряды гомеопатов…"

"I don't know much about Ayurvedic tar, but homeopathy definitely helps, and I speak as a doctor who has become completely disenchanted with traditional medicine and has joined the ranks of homeopathy practitioners…"

I think writing off entire fields of inquiry, which is what several users do above, is intellectually arrogant and encourages unexamined trust in fringe practices and theories.
posted by Nomyte at 8:16 AM on April 2, 2012 [1 favorite]


Even if most economics is pseudoscience, that doesn't imply that economics as such is pseudoscience. If it does, then there are no genuine scientific fields

Right, but isn't the object of Varoufakis's argument actually "most economics," not "economics as such," in these terms? Presumably, as someone who continues to teach and write in a field he calls political economics, Varoufakis doesn't think all possible forms of studying the economic world ("economics as such") are equally pseudoscientific, and isn't necessarily condemning heterodox economics — rather, he's arguing that the mainstream of the profession of economics (the people he calls "the economists") uses its institutional standing and its veneer/self-image of mathematized precision in order to create an outsize appearance of unquestionable empiricism, as a means of enhancing the credibility of its political-ideological prescriptions. He's not arguing that nothing about the economic world is actually knowable, only that "the economists" pretend to know empirically things that they've actually presumed as axioms, for ideological reasons.
posted by RogerB at 8:21 AM on April 2, 2012 [2 favorites]


"this thread should be proving something to those insisting that progressives are just inherently more scientific than conservatives."

Yep.

...and:

"Lots of very left-wing people don't like economics not because they have thoughtful, well-reasoned, well-read opinions about its validity and flaws but simply because economics often comes to political conclusions they disagree with."

...but this is true of the right, as well, as we can see recently with regard to macro.

But downing street memo is right — my lay competence is pretty strong in science, philosophy, the classics, and some other areas; but the one subject about which I notice that mefites really know a lot less than we collectively think we do, is economics. It's disconcerting. And it clearly involves a political factor, where people who otherwise feel obligated to know something about, say, astronomy and literature and history eschew knowing much of anything about economics because, essentially, it's politically incorrect.

I'm ambivalent about this. On the one hand, I'm totally offended by it because it's a form of willful ignorance. There's a whole host of comments above that are effectively trumpeting ignorance for all the world to see. On the other hand, pretty much all the criticisms here and elsewhere against economics applies to either a minority or even a majority of economists and the larger portion of the institutional structures within which economics as an object of study exists. Economics is the most blatantly politically partisan of all the major disciplines. It is a field in intellectual disarray. It is a field more than almost any other captured by powerful interests who distort it.

It's also a relatively immature field; and the sophisticated mathematical tools that it has embraced in the last thirty years are, basically, tools that it's not quite mature enough to wield.

But all these flaws are quite a different thing than the claim that it has no scientific validity at all...or that it couldn't in principle have any scientific validity, which is just wrong. Furthermore, it's not as monolithic as either its more fervent supporters or its more fervent critics claim. It's really a number of related but distinct fields. Micro is not macro is not behavioral is not developmental. And it's certainly not finance. All sorts of good work has been done in each of those subfields, as well as a lot of bad work, too.

A lot of good discussion can and should be had about how economics as an academic and scientific research discipline relates to, and is distorted by, the powerful interests of government and industry. And a lot of good discussion can and should be had about its quest for firm mathematical foundations, its physics envy, and whether it should have more discourse with the other social sciences than it presently does. But such discussion can only occur within a context where the people having the discussion know such fundamental things as the difference between micro and macro and, for that matter, have read or know some history of the discipline (that many economists know little about the history of their own discipline is relevant, too).
posted by Ivan Fyodorovich at 8:21 AM on April 2, 2012 [7 favorites]


The problems with orthodox and heterodox economic thinking in economics programs are definitely worrisome. If the majority of economics programs are neo-classical and your only way to succeed in the profession is to practice neo-classical economics and a failure to do so means that you will probably not get a tenure track position at a university it's very easy to enforce orthodox thinking in the form of nearly blind obedience to specific schools of economic thought.

This is getting compounded by the increasing impact of targeted donations to Business schools to fund chairs and professors that take exceedingly political stances in terms of economic policy and public policy in general.

The overdependency on mathematical models that might or might not have any real world predictive power whatsoever is just masking the problem with the lack of dissenting voices within the world of neo-classical economics. Even those individuals that are considered to be outliers tend to still be operating under the baseline assumptions of Neo-classical economics and are required to use math to back up their work so to speak.

This has created a really insular culture in the world of economic academia as there seems to be a lack of engagement with alternative economic explanations whatsoever. There are some heterodox programs out there but they are few and they aren't exactly a good way to build a solid academic career.
posted by vuron at 8:26 AM on April 2, 2012


It's also not like we can't go back and establish the historic accuracy of economic models. We've got a lot of old models and lots of data that we can use to test things. Yes, perhaps economics is a social science that sometimes gets treated a bit too much like a physical science, but that doesn't mean that we can't apply mathematics to make predictions of human behavior, or that we can't use data to establish/undermine the validity of those mathematical models.

The problem is there are already other sciences that can study all the scientific kinds of problems economics might address scientifically.

In many cases, all that economics has to offer are certain normative claims about what economic systems should do, dressed up as descriptions of natural realities.

In order for economics to really be a science of the predictive kind, our economic activities would have to be shaped and determined solely by hard features of the natural world rather than by various complex social mechanisms and conventions. And the aims of human activity would have to be well understood and obvious. Neither of these will ever be true.

Godel proposes that sufficiently advanced systems have a "flaw" (which I put in quotes because it is only anthropically a flaw) at a very, very low-level. It doesn't have any relationship to what economists are doing on a high level.

I disagree. If economists are making non-trivial claims based on mathematical models, those models cannot be self-consistent and complete, and yet, economists talk as if they are. If economic models have any descriptive power at all, incompleteness applies.

I think writing off entire fields of inquiry

I don't think anyone is doing that. What's being questioned is the presumed authority and scientific validity of a field of inquiry. In the same way that it's not intellectually arrogant to write off phrenology, alchemy or astrology, it isn't necessarily intellectually arrogant to write off a field like economics. Though I don't personally think economics is as shady as palmistry, I'm not sure it's nearly scientifically sound enough to trust as a predictive science or primary basis for public policy.
posted by saulgoodman at 8:27 AM on April 2, 2012 [2 favorites]


This is getting compounded by the increasing impact of targeted donations to Business schools to fund chairs and professors that take exceedingly political stances in terms of economic policy and public policy in general.

No kidding. A friend of mind is in the economics dept at FSU, where the Koch brothers recently gave themselves the power to screen economics candidates for their fealty to their preferred, neo-liberal economic orthodoxy.

See, the Koch brothers know that the study of economics is ultimately a political game. People on the left who're in denial about that are losing the game.
posted by saulgoodman at 8:31 AM on April 2, 2012 [3 favorites]


"Note that you don't have 'schools' of science. You have physics, you have archaeology, and so on... you have specialities. You do not have groups of people gathering around certain pronouncments from authority figures, as you do in economics -- the Austrian School, the Chicago school, the monetarists, the Keynesians."

Good grief, this is so untrue (about the fields you endorse as "science") that it's a pretty amazing assertion. It's as if you both don't know anything about contemporary physics or archaeology, which you use as examples, but also that you know nothing of the history of basically all scientific disciplines. There have always been "schools" and schisms and controversy and politics and vast divides.

"Okay, this may be a derail, but what? What possible connection is there between econ and Gödel incompleteness?"

This is useful in that whenever anyone invokes Gödel Incompleteness in an argument that doesn't involve number theory, you can automatically assume it's bullshit.
posted by Ivan Fyodorovich at 8:33 AM on April 2, 2012 [12 favorites]


Geologists, astrophysicists studying the big bang, and evolutionary biologists also lack controlled conditions and repeatability.
So I guess Meteorology isn't a science either then?


Don't forget epidemiology, history, psychology, ...

The fact is there's more than one way to know something rationally and (relatively) confidently.

Mathematical knowledge (2+2 = 4) isn't derived from controlled experiments.

Knowledge that the Statue of Liberty is located on Ellis Island is not derived from controlled experiments.

Knowledge that Abraham Lincoln was the 16th president of the USA is not derived from controlled experiments.

Knowledge that it's not going to snow tomorrow in Phoenix, AZ is not derived from controlled experiments.

And depending on the method, we have varying levels of confidence about this knowledge. We have some knowledge about the relationship between smoking and lung cancer. Some knowledge about how many people currently plan to vote for Obama in November. Some knowledge about the nature of agoraphobia and how to treat it.

So the question is not "Is economics a Science or not?" The question is what do we know about economics and how confidently do we know it?
posted by straight at 8:35 AM on April 2, 2012 [2 favorites]


Okay, Ivan, but since when do wealthy billionaires offer funding to schools of physics that are contingent on whether or not they support the Copenhagen interpretation of the uncertainty principle?
posted by saulgoodman at 8:35 AM on April 2, 2012


Economics is the most blatantly politically partisan of all the major disciplines.

I suspect that were MeFilter right-centric rather than left-centric you would replace Economics with Sociology or Anthropology, or some other academic discipline.

Okay, Ivan, but since when do wealthy billionaires offer funding to schools of physics that are contingent on whether or not they support the Copenhagen interpretation of the uncertainty principle?

Physics ( and Math) probably not the best counter arguments here - but there is a lot of politically motivated funding going on in Climate Science, Biology, Healthcare, Education, etc, etc.
posted by JPD at 8:38 AM on April 2, 2012


In order for economics to really be a science of the predictive kind, our economic activities would have to be shaped and determined solely by hard features of the natural world rather than by various complex social mechanisms and conventions. And the aims of human activity would have to be well understood and obvious. Neither of these will ever be true.

No social science I'm aware of achieves this level of rigor. I do know that economics - and, increasingly, political science - come closest.

Economics is generally capable of suggesting useful ways to improve public policy but the direction of "improvement" depends on the aim of the policy - which is strictly a political domain. Your beef is with the politicians and ultimately, with people themselves.
posted by downing street memo at 8:40 AM on April 2, 2012


This is useful in that whenever anyone invokes Gödel Incompleteness in an argument that doesn't involve number theory, you can automatically assume it's bullshit.

You're right that incompleteness isn't strictly applicable (since economics doesn't create new arithmetic systems), but presumably, what economists are working toward is some kind of complete formal description of human economic activity that offers predictive explanatory power--but I'll let it drop, because it is a stretch to connect the two in anything more than an allegorical way. FWIW, Goedel himself believed his results on incompleteness had implication far beyond their strict number-theoretical implications. So, BS maybe, in this context, but it's also not quite that simple.
posted by saulgoodman at 8:41 AM on April 2, 2012


This is useful in that whenever anyone invokes Gödel Incompleteness in an argument that doesn't involve number theory, you can automatically assume it's bullshit.

Now now, they could also reasonably be discussing computability theory, proof theory, or some other dreadfully low-cardinality system...
posted by ead at 8:41 AM on April 2, 2012 [2 favorites]


Okay, Ivan, but since when do wealthy billionaires offer funding to schools of physics that are contingent on whether or not they support the Copenhagen interpretation of the uncertainty principle?

This is not relevant to your original assertion, which is that economics is not a science.

Obviously, since the discipline studies exchange and decision-making, and has an influence on policy-making, folks are capital-i Interested in research results. That doesn't invalidate the entire discipline (although it perhaps discredits researchers who accept such money).

presumably, what economists are working toward is some kind of complete formal description of human economic activity that offers predictive explanatory power

Yeah, that's not really true either.
posted by downing street memo at 8:43 AM on April 2, 2012


michael sandel on economics as a science versus 'moral and political economy', cf. Philosophy and social knowledge & What Money Can't Buy: The Moral Limits of Markets, viz. What Isn't for Sale?
posted by kliuless at 8:44 AM on April 2, 2012 [1 favorite]


(And for all that, Goedel himself thought he had proved the independent existence of mathematical reality. His own interpretation of his own work would set off BS-alarms around here.)
posted by saulgoodman at 8:44 AM on April 2, 2012


"Okay, Ivan, but since when do wealthy billionaires offer funding to schools of physics that are contingent on whether or not they support the Copenhagen interpretation of the uncertainty principle?"

I think I acknowledged repeatedly that economics has a problem in that it's deeply influenced by the powerful interests with a stake in what the discipline sees as orthodoxy. You'll get no argument from me about this being a Bad Thing.

On the other hand, schmod's and spitbull's comments are helpful in disabusing the notions that many have about how science is actually done and what it actually is. You use physics as an example, but as any physicist will tell you, it's not nearly as "pure" in the way you are implicitly arguing as you think it is. This is especially true when it intersects with technology in general, and especially so with energy and military applications. But a whole bunch of other "respectable" sciences are even more deeply influenced by powerful interests.
posted by Ivan Fyodorovich at 8:44 AM on April 2, 2012


saulgoodman: "Okay, Ivan, but since when do wealthy billionaires offer funding to schools of physics that are contingent on whether or not they support the Copenhagen interpretation of the uncertainty principle?"

When it supports energy research that will either benefit them, or will stall/discredit alternative technologies.

See my above example about fusion research; it's been politically manipulated to death, and the current funding cycle is spending a lot of money on projects that we already know will not work. What's the desired endgame with ITER? We build a plant that we know (through lots and lots of experience) will not work, but hopefully discover a breakthrough along the way that will allow us to (economically) build another one that might work? You don't need to be a cynic to notice that something is very awry here...

Also, various industries happen to stand to benefit from various physics breakthroughs. The defense industry gains if physicists figure out how to build bigger bombs. If you own a niobium mine, or supply cryogenic equipment, it's also in your best interest for the scientific community to be doing more accelerator-based research.

These interests admittedly are not as strong as those guiding economics (except perhaps for the defense bit), but they're still there.
posted by schmod at 8:46 AM on April 2, 2012


Yeah, that's not really true either.

Well, then explain to me the insistence economists seem to have on defining economic value as strictly a product of markets? It's the most asinine part of economics from where I sit: pricing is circular

You use physics as an example, but as any physicist will tell you, it's not nearly as "pure" in the way you are implicitly arguing as you think it is.

Well, sure, nothing is "pure." But what is the goal of economics in the first place? What is it supposed to be describing/predicting? Economic activity? What is that other than a very small branch of anthropology and/or sociology? Economics as a discipline seems to assume there's a natural phenomena of some independent kind to be studied where I'm not sure there really is one.
posted by saulgoodman at 8:50 AM on April 2, 2012 [1 favorite]


But a whole bunch of other "respectable" sciences are even more deeply influenced by powerful interests.

I think the examples you mean here are important to a pivotal distinction in this conversation.

By illustration, the science around chemistry is relatively definitive even if the scientists working on it are often employed by powerful pharmaceutical companies. Ie, the manipulation comes in the exploitation of the application of science, not the development of the science itself. Economics suffers from the latter.
posted by Reasonably Everything Happens at 8:51 AM on April 2, 2012 [1 favorite]


ugh. "a natural phenomenon." i quit.
posted by saulgoodman at 8:51 AM on April 2, 2012


As a (former) physicist, I have to call extreme bullshit on this one. He's got a glorified and almost completely-incorrect view of how physics research works.

You're missing the point. True, physics as it currently exists is both esoteric and rife with internal controversy. But it's reached that state having enjoyed enormous, unparalleled success at describing the physical world. Even the advance of modern medicine pales in comparison with the success of physics.

I'm not talking about particle physics or quantum physics here, things which a lot of modern physicists spend time on. I'm talking about gross Newtonian mechanics. Even if there are some physicists that are pushing the boundaries of these things, they work so remarkably well as rules of thumb that it's possible to talk about laws of physics. Indeed, it was from physics that we got that way of talking.

Put yourself back in the seventeenth and eighteenth centuries. Our knowledge of the physical universe is only starting to take any kind of coherent shape. Most people still believe in the Four Elements/ Humorism was still the dominant medical model until well into the eighteenth century, and despite Vesalius coming along in the sixteenth century, Galen, from the second century BC, remained the dominant anatomical work.

Then comes Galileo, Copernicus, and Newton. They're able to account for the motions of heavenly bodies with precision and accuracy heretofore undreamed of. And they're also able to predict and describe the motion of terrestrial bodies with equal accuracy. Newton and Leibniz invent an entirely new mathematical toolbox which lets them solve problems which had plagued natural philosophers for centuries. For the first time in history, the world is really starting to look as if it can be described rationally.

And you know what? Extremes aside, it can. As a model for describing the world we experience, Newton's Principia pretty much does the trick. It should come as no surprise that anyone wanting to do scholarly research should want to replicate this absolutely astounding success in his own field.

Which is the origin of "physics envy." Economics is rife with it. My link to Mirowski above should include a link to his More Heat Than Light: Economics as Social Physics, Physics as Nature's Economics, which describes in exacting detail just how closely the discipline of economics has emulated physics, right down to the kinds of models chosen.

At each step of the game, economic models have been based on the most exciting physics models, right down to the machines in question. The classical economists thought of the economy as basically a system of fluid dynamics, circulating a concrete store of "value" through the various sectors of the economy. And hey, fluid dynamics was really exciting in the eighteenth century. The neoclassicals basically treat value as a field, where supply and demand intersect in much the same way as a particle being acted upon in a magnetic field. The models for calculating supply and demand are explicitly and self-consciously based on the equations for calculating magnetic moment.* And with the advent of computers, cutting edge economists have moved on to modeling the economy as an information processing machine. Information theory is really big, and the whole "efficient markets hypothesis" is an example of this sort of thing. At every step, you see economists trying to latch on to whatever happens to be sexy in the harder sciences.

And at every step you see them fail miserably. Mirowski actually goes back and does the math, and not a single economic model is remotely successful by its own terms. Take the first modern example of an economic model, Quesnay's Tableau economique. Math doesn't work. It's supposed to come up with a self-perpetuating system with no growth or decline. It produces a surplus. Or take Marx's labor theory of value. Turns out he can't make the units work. So he just fudges it. Once we get into information theory, Mirowski has actually suggested that it's actually trying to solve non-computable problems, as the models involved are inherently Turing incomplete.

So yes. Physics research does do what these guys think it does. The basic, historic, large-scale successes of physics are now taken so much for granted that most modern physicists don't really deal with them anymore. They're settled. Economics has had no such success, despite trying desperately for the last three and a half centuries.

*If I remember correctly. Been a few years.
posted by valkyryn at 9:02 AM on April 2, 2012 [21 favorites]


"And for all that, Goedel himself thought he had proved the independent existence of mathematical reality. His own interpretation of his own work would set off BS-alarms around here."

I have a soft spot for mathematical platonists, though I think they're mistaken. A mathematician I read many years ago confessed that most mathematicians are secretly, deep in their hearts, idealists; though most are nominally formalists. I interpreted this more with Socrates in mind — Socrates is very, very careful about declaring the limits of his knowledge and that his ignorance is vast; and yet, for example, when he discusses love he is quite content to talk about what the oracles have said and he makes it clear what he believes, all without attempting anything like a rational argument. Contemporary mathematicians intuit and feel an ineffable platonic truth like Socrates did; but they, like Socrates, are extremely careful to elide this intuition from their rigorous work. As well they should. So, strictly speaking, they are formalists, mostly. But deep in thought, they are lost in the music of the spheres, which surely exists. So to speak.

Hofstadter was as strong an early intellectual influence on me as anyone. I can't help but believe that Gödel's proof tells us something deep and wide-ranging. However, in these last thirty years (almost) and my later, deeper acquaintance with the proof, I've rarely found Gödel being invoked in a way that is supportable. And it's usually by those whose knowledge of the proof is third-hand, or worse.
posted by Ivan Fyodorovich at 9:02 AM on April 2, 2012 [5 favorites]


Ii>And it clearly involves a political factor, where people who otherwise feel obligated to know something about, say, astronomy and literature and history eschew knowing much of anything about economics because, essentially, it's politically incorrect.

Consider the lay understanding of economics, and a great example of this is the raising of the minimum wage. Tell people that we're going to raise wages and they salivate say "Inflation!" but the historic example is for goods to go flying off shelves, factories to increase production which leads to more workers being hired, etc. Inflation only comes when factories are at peak production and can't make more. Does anyone believe we're running at peak production right now? Does anyone believe there aren't people in the economy right now who, if they had more money wouldn't spend it? And yet look at the rhetoric every time the minimum wage is mentioned.

If it's politically incorrect to have a low tolerance for wasting ones time on made up bullshit then let me be politically incorrect.
posted by Kid Charlemagne at 9:03 AM on April 2, 2012 [3 favorites]


Well, then explain to me the insistence economists seem to have on defining economic value as strictly a product of markets?

Again, this is a strawman. Who, exactly, believes in such a simplistic model?
posted by downing street memo at 9:04 AM on April 2, 2012


I can't help but believe that Gödel's proof tells us something deep and wide-ranging. However, in these last thirty years (almost) and my later, deeper acquaintance with the proof, I've rarely found Gödel being invoked in a way that is supportable.

Agreed.

Again, this is a strawman. Who, exactly, believes in such a simplistic model?

It's not a strawman. It's one of the basic assumptions of neo-liberal economic theory (which is dominant in policy-making circles and in the media right now). "Value" is literally nothing according to that view but what the markets say it is in terms of price.
posted by saulgoodman at 9:10 AM on April 2, 2012 [1 favorite]


It seems that all the anti-economics arguments here boil down to the fact that there isn't a single strong result in the field - some result that's universally true and has survived a lot of aggressive testing, like Newton's Laws(*), Natural Selection, the periodic table or that sort of thing.

If this is not true, it should be pretty easy for the "economics is a science" people to exhibit their strong truths. The one thing I can think of that is both universally applicable and universally accepted is Arrow's Theorem - but I frankly never understood why this was considered "economics" since it has nothing whatsoever to do with money, production, goods or services...

(* - Einstein's work certainly does not invalidate Newton's laws, but simply shows why they are an approximation that's extremely good at human-level scales but gets worse at extremely high speeds and other extreme conditions.)
posted by lupus_yonderboy at 9:11 AM on April 2, 2012


"And yet look at the rhetoric every time the minimum wage is mentioned.

If it's politically incorrect to have a low tolerance for wasting ones time on made up bullshit then let me be politically incorrect."


This is a good example of both sides of this argument. On one side, it's not the case that the entire economics profession is agreed that raising the minimum wage will everywhere and always necessarily result in inflation. So your argument about this is flawed. On the other side, it's the case that the portion of the economics profession that is inclined to be simpleminded about raising the minimum wage is utilized by powerful interests to make the authoritative argument that doing so will necessarily result in inflation, which then a portion of the public (with a vested interest of some variety against raising the minimum wage) rallies around.

In a nutshell your example demonstrates both that economics is not always what people think it is, but also that it's distorted by powerful interests.
posted by Ivan Fyodorovich at 9:13 AM on April 2, 2012


"It's not a strawman. It's one of the basic assumptions of neo-liberal economic theory (which is dominant in policy-making circles and in the media right now). 'Value' is literally nothing according to that view but what the markets say it is in terms of price."

See, here is an example of how I don't really know how to engage you about this. It's tautological out of necessity. Value in this context is a term of art. You see this kind of thing everywhere when you formalize something.
posted by Ivan Fyodorovich at 9:20 AM on April 2, 2012


> Value in this context is a term of art. You see this kind of thing everywhere when you formalize something.

Is that true? What about mathematics, IMHO the most formal of the sciences? Or, physics? Is "acceleration" or "mass" a "term of art"?
posted by lupus_yonderboy at 9:23 AM on April 2, 2012 [1 favorite]


There's a number of "nice sciences" that have made more than an embarassing mistake.

Consider, for instance:

1. Fukushima Nuclear Reactor: designed to be earthquake resistant and tsunami resistant, it withstood the quake, but not an "unexpected" (read, too high) tsunami wave, who (it appears) went over the -existing- antitsunami walls, flooded the backup diesel electricity generators, which were located in the basement, thus disabling the entire backup system, causing the reactor cooling system to fail...and the chain goes on up to the explosions etc.

In hindsight (which is always 20/20) it's rather easy to affirm that:
1. they should have built an higher wall;
2. they shouldn't have built generators in floodable locations.

Now, if by chance an economist/analist/accountant/whathaveyou money boy was found to be the cause of this poor (again, in hindsight) design choice, and that he was motivated by his own personal career ambitions, manifested in containing costs for the sake of increasing profits, he would have been crucified; and his profiteering managers as well.

But, what if the engineers/architects/physicists that were consulted during the design phase simply ignored the problem, or more likely, discarded the possibility of an higher-than-normal tsunami as an "unlikely" event?

Or what about the designerd of the Tacoma Narrows Bridge, who possibly didn't know much or anything about resonance?

Or what about the statements, allegedly made by experts, that the WTC towers should have withstood an impact with a plane? (yes I know, conspiracy theory et al, that's not my point)

Or what about an huge scandal in the antrophology community?

Not to mention psychologists not actually trying to set their patients "free" in order to milk them thorougly of all their money, by letting them become dependant on their advice? Or doctors prescribing unnecessary or expensive medications, when a less expensive medication is available? There's no use mentioning Wall Street and politicians, for they did the work themselves.

The list could go on, but my point isn't casting shit on any profession on the globe, or incensing anybody against somebody else, or demonstrating that, given that there are failings everywhere, therefore economists are not to be criticized vehemently.

Rather, it seems more interesting to me to seek the sources of these failures, regardless of the profession or "label" identifying a set of people in time.
posted by elpapacito at 9:24 AM on April 2, 2012 [1 favorite]


And I have to say that if definitions for your field's most basic concepts (like "value") are a) not universally accepted b) "a term of art" then you're going to have trouble convincing me, at least, that your field is a "science".
posted by lupus_yonderboy at 9:26 AM on April 2, 2012


I frankly never understood why this was considered "economics" since it has nothing whatsoever to do with money, production, goods or services...

Actually, that one makes some sense. "Economics," as originally conceived, as a species of moral philosophy. The Wealth of Nations is of the same genre as The Prince, i.e., a work of moral and political philosophy couched as instructions for a young ruler. While Machiavelli was concerned with the acquisition and maintenance of power, Smith was concerned with the acquisition and maintenance of relative degrees of wealth in society. Machiavelli was asking "Why do some princes maintain power and others lose it?" Smith was asking "Why are some countries rich and others poor?" Smith started trying to apply some "scientific" principles to that discussion, but his project was basically the same as Machiavelli's. Seriously, The Wealth of Nations was Smith's second work. The first was The Theory of Moral Sentiments. Shows you what kind thing Smith otherwise thought he was up to.

In short, in its early life, "economics" had less to do with "money, production, goods or services" and more to do with the orderly and proper arrangement of society. Smith's innovation was to add the production of wealth to that otherwise entirely political and moral discussion.

This doesn't help the economics-as-science camp very much though.
posted by valkyryn at 9:27 AM on April 2, 2012


It's not a strawman. It's one of the basic assumptions of neo-liberal economic theory (which is dominant in policy-making circles and in the media right now). "Value" is literally nothing according to that view but what the markets say it is in terms of price.

It's a strawman because you assert that there's no awareness that markets can act in a recursive way (i.e. "Human desires, interests, feelings, social values and passions" inform market prices, which in turn inform "Human desires, interests, feelings, social values and passions"). Look up Veblen goods.

Also, what Ivan Fyodorovich said. I am very, very doubtful that there's a single economist in the world who posits that all societal value (which you're referring to) can be captured with a market model.
posted by downing street memo at 9:29 AM on April 2, 2012


I frankly never understood why this was considered "economics" since it has nothing whatsoever to do with money, production, goods or services

This is because you, like most laypeople, fundamentally don't understand what economics is about. Economics isn't about money. Not about production or goods and services.

It is the study of choice under constraint. Arrow is directly relevant because his theorem is about the impossibility of any coherent collective choice.

If you want foundational statements of economics, they might boil down to:
(1) People generally make choices that they think will get them more of what they think they want.
(2) People can't satisfy all their desires simultaneously.
(3) People can exchange things.
posted by ROU_Xenophobe at 9:32 AM on April 2, 2012 [13 favorites]


elpapacito:

None of your examples are "science". You have not understood the difference between science and technology, which is dramatic.

But, what if the engineers/architects/physicists that were consulted during the design phase

I can assure you that the number of physicists consulted in the construction of the Tacoma Narrows bridge was zero.

The collapse of a building or bridge does not invalidate any branch of science.

> Or what about an huge scandal in the antrophology community?

This is a discussion of whether individual anthropologists victimized native communities. Again, it has nothing to do with science being correct or not.

> Or doctors prescribing unnecessary or expensive medications, when a less expensive medication is available?

This has nothing to do with science.
posted by lupus_yonderboy at 9:33 AM on April 2, 2012 [3 favorites]


Good grief, this is so untrue (about the fields you endorse as "science") that it's a pretty amazing assertion. It's as if you both don't know anything about contemporary physics or archaeology, which you use as examples, but also that you know nothing of the history of basically all scientific disciplines. There have always been "schools" and schisms and controversy and politics and vast divides.

Sure, but if a 'school' is proven wrong in scientific fields, it goes away. That's not a school, that's just people who believe in a hypothesis/theory... if it's overridden with new data, they stop believing it. You have lots of string theorists, for instance, but if the LHC comes up with data that shows string theory can't work, they'll argue about it awhile, but eventually will give up, and go into something else. Same with archaeology... if someone digs up a Rosetta Stone that proves that "objects of religious significance" were actually pornography, well, then any hypotheses about the content of that ancient religion will be discarded. It'll probably take some kicking and screaming, but the bad ideas will eventually go away.

No economic school that I'm aware can ever be disproven. We don't have control economies. I personally, for instance, think the Austrian School has a great deal going for it, and correctly pointed at the bubbles and crashes we're getting now, but yet we still have monetarism and Keynesianism. Even as governments all over the world are struggling with insane debt loads, and in some cases collapsing outright, Keynes' ideas thrive perpetually. I think it was because Keynes was wrongheaded, that he didn't understand that pain is how economies adjust, that the downtimes are critical to economic health. Keynesians think that's ludicrous. But even with the world blowing up, there's no data that will shake them out of their beliefs.

If it's not falsifiable, it's not science.

Additionally, it's also very unlikely that any model can successfully predict the behavior of a system that includes itself. That is, any economic theory that gets into wide use will change the behavior of the intelligent agents in the economy, inevitably changing the modeled behavior. To a lesser or greater degree, this will render some or all of the model untrue. The model can be updated to include those effects, but each additional layer of complexity that gets added, to deal with the last set of changes, will have new ancillary ripple effects. You'll see wave after wave of increasing model sophistication, new unforeseen consequences as economic actors adopt the model, new adjustments to the model, and so on.

It's likely that the only way to get really good results would be by never telling anyone in the economy about your theory. That might make it true, but it would be useless.

But even then, we still don't have control economies to experiment with, so even if your model seemed to have good predictive power, how would you conclusively test it?
posted by Malor at 9:34 AM on April 2, 2012 [1 favorite]


Value in this context is a term of art.

Not really. It's had several definitions over the course of economic history, and even today, it has several different meanings.

The neoclassicals mean, more or less, "What a good or service can bring on the open market." They only got going in the late nineteenth century.

But the classicals, i.e., Quesnay, Smith, and Ricardo, etc., are about a century earlier, and thought "value" was intrinsic to goods. Quesnay went so far as to equate "value" with "agricultural production," and Ricardo lent that way. Smith wanted to include manufacturing too, but they all were pretty insistent that "value" meant "material commodities".

Marx wants to add in labor somehow. He never can quite make the math work, but he introduces the distinction between "use value," "labor value," and "exchange value."

The marginal theory of value also goes way back, sort of a competing thread from the early eighteenth century.

So "value" is only a term of art if you're specific about which of these competing definitions--or some other one--you're talking about. All saulgoodman is doing is actually saying that hey, maybe another definition of "value" which the economics profession has already contemplated is a better definition than what the neoclassicals would prefer.
posted by valkyryn at 9:34 AM on April 2, 2012 [1 favorite]


"Is that true? What about mathematics, IMHO the most formal of the sciences? Or, physics? Is 'acceleration' or 'mass' a 'term of art'?"

Yes, yes, yes, yes, and yes. You're not aware that technical terms, especially those used in reference to mathematical abstractions, do not mean what they mean in common language and quite often are ultimately tautological?
posted by Ivan Fyodorovich at 9:36 AM on April 2, 2012


> "Economics," as originally conceived, as a species of moral philosophy.

That was a long time ago. All contemporary definitions of economics talk about money, goods, services, production, distribution, that sort of thing - I couldn't find any definitions of economics that used the term "moral philosophy".
posted by lupus_yonderboy at 9:36 AM on April 2, 2012 [1 favorite]


Ain't about the mathematics : The Black–Scholes pricing formula is simply the natural interpretation of the heat equation evolving backwards in time. Gödel's incompleteness theorem discusses highly formalized systems, not the experimental world. And even about the Heisenberg uncertainty principle doesn't apply here.

There is an infinitely simpler problem that's nothing to do with mathematics :

Academic mathematicians and hard scientists explore what looks like truth according to the scientific or mathematical method. Industrial scientists and engineers explore the physically viable according to real world constraints. An awful lot of social sciences explores the world according to the bounds of what is moral, liberating, etc., or at least interesting and not harmful. All these constraints are reinforced by a community that ultimately controls promotion and financing, somewhat limiting abuse.

There are far more corrupting external demands on the economics community however. You analyze corporate mergers demonstrating that they usually hurt the shareholders, employees, and consumers, while only benefiting the executives. Or you demonstrate that all privatization have gone badly for the public and/or investors. Wonderful, publish that bitch! Oh, you're next consulting job offer will be explaining why the next asinine corporate merger or privatization is a special snowflake though.
posted by jeffburdges at 9:41 AM on April 2, 2012 [1 favorite]


lupus_yonderboy: ""moral philosophy""

Building on ROU_Xenophobe's excellent comment above, even today, economics is ultimately about choices.

At the most basic level, morality comes down to a set of choices. Even though the verbeage is a bit antiquated, I think that "moral philosophy" still adequately (but perhaps not completely) describes economics.
posted by schmod at 9:42 AM on April 2, 2012


"economists are charlatans dressed up with the tools of hard science"

Yes, that would be the entire econ faculty at Chicago.
posted by bardic

YOU TAKE THAT BACK!!
posted by a shrill fucking shitstripe at 9:42 AM on April 2, 2012


> You're not aware that technical terms, especially those used in reference to mathematical abstractions, do not mean what they mean in common language and quite often are ultimately tautological?

I have a degree in mathematics. My favorite example is that a simple group is one without any proper, normal subgroups, and I am aware that neither "simple", "group", "proper" and "normal" do not have meanings in mathematics that have anything at all to do with what they mean in common language.

But all mathematicians agree on what a group is. I could create some structure or concept and present it to mathematicians and (assuming it was clear enough they could understand it), all of them would agree on whether it was a group or not.

As to your "tautological" argument, I completely disagree. Consider, again, the definition of a group. How is this by any stretch of the imagination tautological?
posted by lupus_yonderboy at 9:42 AM on April 2, 2012


That was a long time ago. All contemporary definitions of economics talk about money, goods, services, production, distribution, that sort of thing - I couldn't find any definitions of economics that used the term "moral philosophy".

That gets at the heart of my whole position right there: Economics is still a species of moral philosophy at heart, but that fact is hopelessly obscured by the scientific-looking clothes it dresses up in.
posted by saulgoodman at 9:42 AM on April 2, 2012 [1 favorite]


lupus_yonderboy
Is that true? What about mathematics, IMHO the most formal of the sciences? Or, physics? Is "acceleration" or "mass" a "term of art"?
I can comfortably say that "inertia" is a "term of art" in essentially all cases. In my professional field (computer science, computational methods, controls) you run into other cases. See: random, computable, deterministic, etc.
posted by introp at 9:45 AM on April 2, 2012


Now, if by chance an economist/analist/accountant/whathaveyou money boy was found to be the cause of this poor (again, in hindsight) design choice, and that he was motivated by his own personal career ambitions, manifested in containing costs for the sake of increasing profits, he would have been crucified; and his profiteering managers as well.

I seriously doubt it - more likely he would have been given a fat paycheck and sent off to cool his heels in some less dangerous position. The difference being, when a scientist or engineer is wrong everybody agrees they are wrong because shit blows up. If the Fukushima disaster was managed by economists, half the crowd would be advocating letting it burn as a natural adjustment in the cycle of shit blowing up.
posted by Dr Dracator at 9:47 AM on April 2, 2012 [4 favorites]


even today, economics is ultimately about choices.

At the most basic level, morality comes down to a set of choices. Even though the verbeage is a bit antiquated, I think that "moral philosophy" still adequately (but perhaps not completely) describes economics.

Here's a list of economics journals on the web. All of these appear to be about money, production, distribution and that sort of thing. None of them appear to a moral philosophy about choices.
posted by lupus_yonderboy at 9:47 AM on April 2, 2012


Literally the first thing any professor says, when you sit down in Econ 101, is that economics is the study of choice. That's why Arrow is relevant, that's why Kahneman is relevant.
posted by downing street memo at 9:51 AM on April 2, 2012


elpapacito:
None of your examples are "science". You have not understood the difference between science and technology, which is dramatic.

Dramatic indeed, but please don't waste your time on ignoramuses like me.

Rather, consider, if you will, what if people ( I mean masses, the same masses that may buy into creationism science) didn't know the difference, but instead....uhm...considered all other people doing something "scientific" stuff equally as "guilty" as economists of whatever it's told them they are guilty of?

What if, for instance, we blame programmers for helping quants developing irrational financial models by lending them their programming expertise? After all programmers are mighty intelligent, aren't they? Didn't they notice anything wrong in these models ? Or are they merely witless implementers of algorithms invented by far smarter people?
posted by elpapacito at 9:53 AM on April 2, 2012


> I can comfortably say that "inertia" is a "term of art" in essentially all cases.

This boggles my mind. What could possibly lead you to the idea that something that is precisely and mathematically defined by Newton's laws, can be measured to an extremely great degree of precision, and is universally agreed upon by professionals in physics, a "term of art"?


> In my professional field (computer science, computational methods, controls), you run into other cases.

> See: random,

Random has a specific, agreed-upon, technical meaning in mathematics. Because there is no way to algorithmically create random numbers, and because it is not yet known how to prove that a sequence of numbers is "random", computer scientists use the term informally as a short-hand for the correct phrase, "pseudo-random numbers".

This has been common knowledge since Knuth

> computable,

Computable is a technical term that has a strict, operative definition.

I think your issue is that these terms have precise, technical definitions, and then there are also informal, everyday meanings - not meanings that people use in published papers, and not really technical terms, however.

For example, there are many problems which are technically computable, by which we mean that there exists a Turing machine that calculates the result, but aren't practically computable, which means that "we couldn't actually work out the result with today's computers."
posted by lupus_yonderboy at 9:57 AM on April 2, 2012


The criticism of economics is not so much that it gets some things wrong. As has been correctly and repeatedly pointed out, this is common to all fields of study. The criticism is that there is no consensus as to what, if anything, it has gotten right. Despite years of data, of crashes, of booms, of market successes and failures, you can still pick and choose the theory that provides the answer you want. I can assure you, even if you want to call a bridge collapse a failing of physics, no one still thinks that is a good way to build a bridge.
posted by Nothing at 9:59 AM on April 2, 2012 [5 favorites]


"If it's not falsifiable, it's not science."

I really wish that no one outside of philosophy had ever heard of this idea of Popper's. It's done more harm than good. As philosophy, this claim is very contestable. As a practical matter, it's simply wrong.

"As to your 'tautological' argument, I completely disagree. Consider, again, the definition of a group. How is this by any stretch of the imagination tautological?"

It's not. But that's not a good example. A better example would come from early mathematics, like Euclid, where what's happening lies right at the intersection of intuitively familiar ideas and the formalization of those ideas into an abstracted structure. This has happened in physics over and over again. Physics is full of terms that are only ultimately mutually defined. I think you'll find you have trouble showing how physics defines mass in a way any more acceptable and concrete to lay intuition than does economics define value.

What is gravity in Newton?

It seemed to me that the original objection was that defining value as a market price was circular (value is market price is value) and therefore without reference to anything outside the theory. Thus my use of tautology. I didn't need a link to the definition of the word, thanks ever-so-much.
posted by Ivan Fyodorovich at 10:07 AM on April 2, 2012


"This boggles my mind. What could possibly lead you to the idea that something that is precisely and mathematically defined by Newton's laws, can be measured to an extremely great degree of precision, and is universally agreed upon by professionals in physics, a 'term of art'?"

It's become apparent that you probably don't know what a term of art is. Would you like a helpful link to a definition?
posted by Ivan Fyodorovich at 10:11 AM on April 2, 2012


Not read all the links yet, but sounds like it covers similar ground to Ben Fine and Dimitris Milonakis, From Political Economy to Economics: Method, the social and the historical in the evolution of economic theory [PDF]
posted by Abiezer at 10:13 AM on April 2, 2012 [1 favorite]


This is precisely my point! "Term of art" is something which has a specific meaning in a field which doesn't have that meaning in common space. "Random" in common use has a clear (true randomness) meaning. "Random" to someone in the computational methods field has a meaning so significantly more nuanced as to almost mean something different.

"Inertia," likewise. My two physicist friends use the word in a completely different fashion than I (an engineer) do. My wife uses it in a completely different fashion than any of the rest of us. It is something that is both very well-understood by the average person, is also used in a number of non-physics ways, and it terribly not-well-understood by even the smartest physicists.
posted by introp at 10:13 AM on April 2, 2012


Sure, but if a 'school' is proven wrong in scientific fields, it goes away.

This is assuming that the two "schools" are actually fundamentally incompatible -- that if one is right, the other is wrong. Especially in a field that uses a lot of mathematical modeling, neither of two schools may be "right", but results from both may be useful in different contexts.

Also, I can't speak for econ, but in my experience academics often split along lines like mechanistic vs. holistic, qualitative vs. quantitative, etc. They are more differences in approach than anything else. Unfortunately, these differences often seem to be accompanied by mutual distrust and suspicion.
posted by en forme de poire at 10:15 AM on April 2, 2012


re: Arrow impossibility, from the 'superstition' link in the FPP...
Or consider the famous "impossibility theorem," developed by the economist Kenneth Arrow, which shows that no single voting system can simultaneously satisfy several important principles of fairness. There is no need to test this model with data — in fact, there is no way to test it — and yet the result offers policy makers a powerful lesson: there are unavoidable trade-offs in the design of voting systems.

To borrow a metaphor from the philosopher of science Ronald Giere, theories are like maps: the test of a map lies not in arbitrarily checking random points but in whether people find it useful to get somewhere.
but as people have been implying, for whom? which people, where to and who gets to say? amartya sen kind of touches on both -- identity politics & 'map'-making -- while mencius moldbug helps puncture the veil of comfortable assumptions, not just "the goal of economics," but that of nation-states: "The goal is to design a way for humans to interact, on a planet of remarkably limited size, without violence." [sans prisons, police & armies?]

altho if you're like neal stephenson, you're aiming higher, where 'big stuff' -- "hieroglyphs—simple, recognizable symbols on whose significance everyone agrees" -- can get done...
posted by kliuless at 10:20 AM on April 2, 2012 [4 favorites]


I think you'll find you have trouble showing how physics defines mass in a way any more acceptable and concrete to lay intuition than does economics define value.

Mass can be very precisely described. It's the degree to which gravity and inertia interact with an object. We're not sure why objects have it, but we can describe it down to a gnat's eyebrow.

Value, being an idea that is non-concrete (ie, imaginary) can't even remotely be held as being in the same class. There is nothing in the real world that you can point at and say, 'that is value'. It's a word with the same basis as 'justice' or 'beauty'. If you want to base a system of thought on an imaginary definition you've assigned to 'justice', well, you can certainly do that. But it's not science.

If you can actually, seriously think that 'value' is remotely close to being as valid and predictive as 'mass', then you are lost in your theories, and have come unstuck from the real world. You know, out here, where mass exists, and is measurable even by laypeople, using weight as a proxy.

I submit that there is no way for a layperson to look at anything and independently determine the 'value' it carries. Value is imaginary. And a school of thought based on the definition of value must, therefore, also be imaginary. We have a word for this kind of thinking: religion.
posted by Malor at 10:23 AM on April 2, 2012 [2 favorites]


Dramatic indeed, but please don't waste your time on ignoramuses like me.

I'm sorry if I'm being harsh, but you're claiming that a bridge collapse somehow invalidates science.

Rather, consider, if you will, what if people ( I mean masses, the same masses that may buy into creationism science) didn't know the difference, but instead....uhm...considered all other people doing something "scientific" stuff equally as "guilty" as economists of whatever it's told them they are guilty of?

Because many people, people who believe that creation is a science, also confuse technology with science, then...?

What if, for instance, we blame programmers for helping quants developing irrational financial models by lending them their programming expertise? After all programmers are mighty intelligent, aren't they? Didn't they notice anything wrong in these models ? Or are they merely witless implementers of algorithms invented by far smarter people?

How is this at all relevant?

I think you'll find you have trouble showing how physics defines mass in a way any more acceptable and concrete to lay intuition than does economics define value.

Why is "acceptable and concrete to lay intuition" any sort of criterion at all? Most people think that mathematics is a form of accounting, for example.

Physics is in very strong agreement on how mass is measured and represented. Yes, we don't yet know why mass is the way it is, but that doesn't mean that the concept of "2 grams of metallic sodium" is one whit ambiguous.

In economics, on the other hand, the definition of value is so in flux that what is positive value to one economist is negative to another.

It seems to me that all these arguments appear to be, "Words are imprecise; therefore we can't say anything definite at all."

I must, however, apologize - I did have the concept "term of art" wrong. It still doesn't mean that these terms are imprecise, or poorly defined - simply that there are somewhat different meanings in different fields - but, in these technical fields, these terms are still well-defined, and universally agreed-upon.

There is a profound dispute over the meaning of "value" in economics - to the point that there isn't even a standard definition.

To claim that there is a comparable dispute over the meaning of "inertia" is simply not so. Bridges don't fall down because two engineering firms have different definitions about what mass, inertia or even more technical things like "stiffness" are. (They might make mistakes - for example, accidentally switch units, perform a calculation incorrectly, or a host of other things... but that's a different issue.)

(I'm curious - what are these different meanings of "inertia" you keep telling me about?)
posted by lupus_yonderboy at 10:28 AM on April 2, 2012 [6 favorites]


I just did a few minutes' research into inertia and now I'm deeply curious about this statement:

My two physicist friends use the word in a completely different fashion than I (an engineer) do.

Can you explain this? I didn't find any examples of this, or any discussion of the question, or anything at all that led me to believe that there are possibly two incompatible definitions of this word.
posted by lupus_yonderboy at 10:34 AM on April 2, 2012


"There is a profound dispute over the meaning of 'value' in economics - to the point that there isn't even a standard definition.

To claim that there is a comparable dispute over the meaning of 'inertia' is simply not so."


I made no such claim. Your confusion about "term of art" caused a cascade of confusion about who is arguing what. All I argued was that a) defining value as a market price is not equivalent to defining common-language "value" as market price; and b) in that the definition is circular, it's very much in keeping with historical precedent of abstracting common-language things into something formalized that is not externally defined.
posted by Ivan Fyodorovich at 10:46 AM on April 2, 2012


There's actually to different meanings of mass: inertial mass (a measure of resistance to change in velocity) and gravitational mass (a measure of attraction by gravitational fields, in Newtonian terms). The two are exactly proportional, as far as we know - which means we can get away with only having one "mass", but there's no theoretical reason they have to be.
posted by Dr Dracator at 10:48 AM on April 2, 2012


could someone just figure out what all the money's doing

also then give their ideas a name that's not like "non-mongoloid money theory"
posted by This, of course, alludes to you at 10:54 AM on April 2, 2012


Finance and economics are not the same thing, at all.
posted by anigbrowl at 11:00 AM on April 2, 2012


Ivan Fyodorovich:

I generally have a great deal of trouble understanding what point you're trying to make.

Are you claiming that there is a universal agreement amongst economists as to the meaning of the term "value" comparable to the idea of "mass" - yes or no?

Dr Dracator:

Yes, I thought of putting that additional explanation in but I didn't see that it would help the issue one bit. This distinction is made clear in second- or third-year physics, everyone learns it, and we also learn that in all observed cases so far the two are exactly identical, so it's perfectly all right to talk about "mass" without a qualifier.

In fact, this is again one of those cases that seems to be evidence of the great precision of words as defined in physics - compared with the lack of precision in economics.

Here are two concepts that are extremely similar, and in fact turn out in practice to "work out the same". Physics is not happy with that, is very careful to make specific definitions of these two separate terms and to theoretically separate them, and then to make a bevy of experiments of all types to provide extremely strong evidence that measuring "inertial mass" and "gravitational mass" give exactly the same results.

I sometimes had trouble explaining this to non-physics students back in school - "What a waste of time, doing experiments to prove something as obvious as that."

As I said, "The essence of science is that you have to be absolutely super-precise, and if there's some possible ambiguity in a definition, you need to follow it down until you've completely cleared it up."

This is why a lot of people think economics is not a science (which is what we're arguing about, right?)

I again ask - is there one commonly accepted result in economics as it pertains to money, production, distribution and that sort of thing? (At this point, I'm starting to wonder if there even a commonly accepted word definition in the subject!)
posted by lupus_yonderboy at 11:01 AM on April 2, 2012


Actually, "precision" can be a false idol. Many of the greatest errors in the history of science -- those with the worst consequences, social and natural sciences alike -- have come from premature or false precision, a fetishization of method over theory, etc. (see the recent thread about non-reproducibility of much basic cancer research).

In my view, science needs to be as "precise" as it *can* be about any given phenomenon or object or theoretical metalanguage, but that depends on how much we understand about basic principles and patterns, knowledge which is always changing and developing. Mistaking mere quantification for "precision" is a common error, and an ideologically potent method for deploying science as a political tool.
posted by spitbull at 11:05 AM on April 2, 2012 [1 favorite]


What if, for instance, we blame programmers for helping quants developing irrational financial models by lending them their programming expertise? After all programmers are mighty intelligent, aren't they? Didn't they notice anything wrong in these models ? Or are they merely witless implementers of algorithms invented by far smarter people?

LY:How is this at all relevant?

What I am trying, and possibily failing to do in the best possible way, is to suggest that the thread starts with this which seems like a dangerous provocative title to me: "The hapless economist uses the same tools as acclaimed physicists and astronomers."

It's suggestive, but not explicitly so, that there are at least two classes, the hapless economist(s) and the acclaimed physicists and astronomers; the dimwits and the know-it-all, other may think.

Before commenting on the contents of the article, which are interesting, I focused on this hasty generalization, which I recognize as a provocation, for I happen to know people who study economy who don't automatically agree with anything "mainstream/well known" economic "schools" utter.

Unlike the author, who claims "Suddenly, the models begin to shape the modellers, rather than the other way round. It is a subtle process of change that turns economists into simulacra of themselves in a hopeless pursuit of ‘closed’ models that validate their own sad ‘conversion’ ".

And this is a property of economists? And only economists? Or maybe is this a common human trait that can be found in other sets of people who are so much "in love" with their models they start discarding evidence that would invalidate it, or not allow them to "close" it?

If this is a covert blame game, this game possibily extends to almost any profession, exactly because falling in love with one's model isn't an exclusive characteristic of economists; hence, if the models developed by economists are instrinsically flawed because of their "delusions" or by misunderstaings, what does that says of people who aid and abet economists, while having a "perfect" knowledge of their miserable "condition"?

That's what I meant when I said , why do, for instance, programmers, help quants develop their models by lending their programming expertise to them, so that they can compute with relative ease tons of data, reaching GIGO (garbage in garbage out) conclusions? Don't the "other" allegedly "not delusional" expert see the folly of the economist "class", and refuse to help them?

And what if their choice not to stop this madness is determined by a semblace of an "utility maximizing behavior", or in other words, I helped them because they paid me, regardless of the fact I knew it's bullshit....
posted by elpapacito at 11:10 AM on April 2, 2012


It's not simply a matter of precision, and this is very close to the heart of the issue: We have two different definitions for mass in physics because a definition has to be operational: You haven't defined anything if you do not have a way to objectively measure the quantity (assume appropriate statistical handwaving for quantum measurements). It turns out you have two different ways of measuring how massive something is: putting it on a scale, or trying to push it. There's no a priori reason the two measurements will be the same, so in fact you have two different quantities.
posted by Dr Dracator at 11:10 AM on April 2, 2012


Dr Dracator: I agree with you completely, I was trying to say much the same thing in my response - I also agree that precision wasn't a good choice of words.

Can we get back to discussing economics, please?
posted by lupus_yonderboy at 11:12 AM on April 2, 2012


Don't the "other" allegedly "not delusional" expert see the folly of the economist "class", and refuse to help them?

Not if they still want to get paid they don't.

posted by saulgoodman at 11:13 AM on April 2, 2012 [1 favorite]


Economists like to pretend they are studying logically complete formal systems.

Citation needed, saulgoodman.
posted by IAmBroom at 11:16 AM on April 2, 2012 [2 favorites]


"Inertia," likewise. My two physicist friends use the word in a completely different fashion than I (an engineer) do.

Then, quite simply, you are using it incorrectly, introp. I am an engineer, and none of the engineers I know and work with disagree about it's meaning, or dispute the "physicist definitions".

It's not just doctors; engineers need to stay current on their education, too.
posted by IAmBroom at 11:19 AM on April 2, 2012 [1 favorite]


Citation needed, saulgoodman.

Well, mainstream economic theory sometimes entertains the idea of the complete market.
posted by saulgoodman at 11:44 AM on April 2, 2012


I again ask - is there one commonly accepted result in economics as it pertains to money, production, distribution and that sort of thing? (At this point, I'm starting to wonder if there even a commonly accepted word definition in the subject!)

To my best knowledge, it's primarily differences in belief about what those words mean that have given rise to the various schools of economic thinking. And this is why I call it a religion; it's like schisms over passages in the Bible. Nobody can be proved right, nobody can be proved wrong, so the sects/schools continue forever, as long as they can find new adherents.

Modern economics seems to be primarily building extremely intricate mathematical structures on shoddy, imaginary foundations, and then wondering why the world economy is going insane when people follow your obviously clearheaded and truthful advice.
posted by Malor at 11:45 AM on April 2, 2012


I want to correct myself, because, well, I'm like that.

Above I wrote:
"Economics" is just an abstraction of "society" or "culture" thought of as behavioral adaptations (including those passed on through human culture, as well as those based on (biological) neuro-cognitive and somatic evolution).

The subject of that sentence should be "Economy," not "Economics." (However, I also believe that all human societies practice social science just as they practice natural science, that these are both human faculties, essentially the faculty of abstraction and a product of consciousness itself.)

And to add value to this neurotic afterthought, may I recommend Raymond Williams' famous critical etymology of the concepts of economy, society, and culture in Culture and Society 1780-1950, from 1958, but still a critical landmark for any serious intellectual history of the social sciences.

The shorter version is in Marxism and Literature (1977).
posted by spitbull at 11:52 AM on April 2, 2012 [1 favorite]


I think it is a shame that this conversation seems to have become a debate about whether or not economics should be called a science. Philosophical conversations about the true meaning of the word "science" or about how to classify disciplines seldom get anywhere - I am pretty sure that the Philosophy of Science has no very good answers to these questions, despite having worked on the problem for over a century or several thousand years, depending on your perspective. All they do is to distract attention from the more substantial criticisms of modern neoclassical economics.

It would be better to cite actual examples of critics and their criticisms and then examine those. For example, there is the Australian economist Steve Keen, whose book, Debunking Economics, spends four chapters attacking the logical and mathematical foundations of neoclassical economics, then another six chapters outlining important issues "omitted from standard courses". His youtube lectures on this subject are here.

One might disagree with Keen - many do - but I do not think that his criticisms are fundamentally political. The accusation that lots "of very left-wing people don't like economics not because they have thoughtful, well-reasoned, well-read opinions about its validity and flaws but simply because economics often comes to political conclusions they disagree with" does not apply to him - or to many other critics of economic theories.

Also, note that Steve Keen draws on a number of other economists who have, at one time or another, criticised the foundations of the subject.

The lead writer of the blog linked to in the FPP, Yves Smith, has also written a more popular book attacking neoclassical economics, called Econned. Here is a blog post by her, in which she talks about how she worked on the chapter on the foundations of modern economics with a Ph.D. mathematics student, in order to study how credible the mathematical assumptions were (it would seem that that mathematician, at least, concluded that they were not very credible at all).

So: there is the mathematical critique.

This is quite apart from the argument mentioned upthread, advanced by David Graeber in Debt, that neoclassical economics is a terrible account of human society, being too limited in its idea of human nature or social relationships to provide anything like a useful or meaningful model. (And this is also a good line of argument, in my opinion). Again, it would probably be better to engage with what critics in this tradition actually say and not some loose, dismissive right-wing strawman.

Finally, a note on the labour theory above: Marx was not the only thinker to use it and indeed was refining an earlier labour theory of value developed by Adam Smith and Ricardo. See here.
posted by lucien_reeve at 12:35 PM on April 2, 2012 [4 favorites]


Some of the things being said here are just fucking ming boggling. Is it not clear that an economy is a human creation - a complex, self-reinforcing/evolving shared concept/system that we use to help understand and structure our world? As such, like any similar human social creations - political systems and bureaucracies, corporate hierarchies, traffic dynamics, urban planning - it's both true that insightful observations and useful heuristics and frameworks and jargon can be developed to help understand and communicate about and improve on that social system, while being simultaneously absurd to write hard science-y "rules" and paper everything in truckloads of post-calculus math that tries to "prove" what choices individual humans will or should make based on ludicrously simplistic, internally incoherent and wholly discredited models of human decision making

On top of that, economists serve as very useful idiots for the many people who have a self-interest in believing and embedding into our culture the idea that a "free market" is some inherent part of the natural world, like gravity or the speed of light, to such an extent that it becomes difficult for anyone suggesting even modest modifications to the "maximizing GDP is priority #1" orthodoxy to be taken seriously. What might once have been an honest inquiry into the myriad complexity of real economic systems and actions in the real world seems mostly to have become men in magic robes touching their magic wands to the shoulders of rich and powerful people and telling the world, "their greed is good for all"
posted by crayz at 12:51 PM on April 2, 2012 [3 favorites]


lucien_reeve - Yeah. My list would be Yves Smith/Susan Webber, John Quiggin, Graeber, Modern Monetary Theory ... to some extent even Krugman/Keynes. I'm not familiar with Keen, but it seems even from a fairly layman's perspective that there's been a very thorough debunking of the core foundations of economics from a number of different angles. Taken together it's devasting, and I think the ultimate solution is that economics and the other social sciences need to largely re-integrate, because the lines different fields of study drew between each other are becoming more and more apparently false in the real world, and myopically unhelpful when used to build what are meant to be predictive frameworks
posted by crayz at 1:03 PM on April 2, 2012 [1 favorite]


Well, mainstream economic theory sometimes entertains the idea of the complete market.

This seems like a non-sequitur to me. "Completeness" in mathematical logic has to do with whether certain mathematical propositions can be proven true or false. "Completeness" in economics has to do with whether people can do business without incurring transaction costs. Yes, okay, the two concepts have been tagged with the same English name. But that's a coincidence — and beyond that coincidence, I don't see how there's any connection between them.

I'm not defending economic theory here. It seems like it does involve a lot of silly assumptions. (Assuming that complete markets exist, for instance, is a pretty damn silly thing to do if you're trying to describe the real world — where you obviously can't just make any deal or trade you want, with anyone in the world, without incurring any transaction costs.) My only complaint is that the silliness of economic theory has nothing to do with Gödel one way or another.

Anyway. Sorry. I seem to have a pet peeve here. I guess this is how physicists feel when someone tries to invoke "quantum physics" in a conversation about free will or psychic abilities or something.

posted by nebulawindphone at 2:15 PM on April 2, 2012 [3 favorites]


This seems like a non-sequitur to me.

It really is and I apologize for that, nebulawindphone--that comment ended up being kind of a lame attempt at a joke. I'd had a more sensible comment about how my criticism of economic theory on that point was less to do with any particular economic doctrine or dogma and more to do with the way economic ideas are presented to the public (almost as if economists operate from models that are complete and self-consistent), but then I got crazy and decided to see if I could find an example of economists literally claiming their models offered complete, self-consistent descriptions of the world. Then somehow I settled on that best-of-no-worlds, middle-brow muddle of a comment instead.

posted by saulgoodman at 2:24 PM on April 2, 2012 [1 favorite]


The real question is not whether a particular model of economics is perfect. Clearly, no model is. Every model simplifies. Like a map, it leaves things out. Like a map, that's what makes a model useful.

The question is, compared to any given model, whether or not there is a superior model. Is there anything that's competitive with mainstream economics -- modified with certain insights from behavioral economics and so on -- yet for giving an account of how the economy works, for generating testable predictions, for suggesting hypotheses, for analyzing data, for guiding decision-making.

Most of the critiques of economics as far as I can tell tend to criticize it away and offer no replacement, except perhaps their own unfalsifiable religion-like tenets for how things work (e.g. marxism, anarcho-capitalism, etc.)
posted by shivohum at 2:26 PM on April 2, 2012


Also, note that Steve Keen draws on a number of other economists who have, at one time or another, criticised the foundations of the subject.

Yes, and like Bertrand Russell or Wittgenstein did to formal logic years ago, there is a movement afoot amongst a number of good economists to really deconstruct the field and start challenging the basic tenets of the field.

Paul Ormerod and Steve Keen are two very good economists who I look up to; they're convinced that too much of the field has been unproven and needs to be addressed or eliminated.

On top of that, economists serve as very useful idiots for the many people who have a self-interest in believing and embedding into our culture the idea that a "free market" is some inherent part of the natural world, like gravity or the speed of light, to such an extent that it becomes difficult for anyone suggesting even modest modifications to the "maximizing GDP is priority #1" orthodoxy to be taken seriously.

That's an extremely broad brush you're painting with; there are many, many economists who don't fit this absurdly reduced view of the field. I know because I am one.
posted by Rodrigo Lamaitre at 2:47 PM on April 2, 2012 [1 favorite]


If economics in general is bogus, but certain subfields of economics are not, then economics is not a pseudoscience. Not a science, either, because it's not a field. The alleged subfields do not have much in common given these assumptions.
posted by LogicalDash at 2:49 PM on April 2, 2012


As far as evidence-based economics is concerned and if making actual predictions is a large part of a scientific outlook, I invite people to check out Varoufakis' blog posts over the past 2 years. He has had a batting average in predicting aspects of this crisis that, if not perfect, is vastly (*vastly*) better than any of his critics, or indeed any of the international "experts" who are running Greece as a protectorate ever since and to an unprecedented disaster.

And he is epistemologically competent, a rarity.
posted by talos at 3:11 PM on April 2, 2012


embedding into our culture the idea that a "free market" is some inherent part of the natural world

In Oregon, a cyclical explosion in the pine butterfly population has denuded over 400 square miles of forest (PBS newshour story). Positive feedback loops and incidence of massive volatility - characteristic of unregulated markets - most certainly are an inherent part of the natural world. Even simple physical systems like pendulums can exhibit chaotic behavior; take an iron bolt, some thread, and three magnets and you can explore the emergent complexity of Newton's method for yourself. I have pointed out before that thanks to a quirk of regulatory history, there is a ban on futures trading for onions - and yet the price of onions is as volatile as anything traded on the derivative exchanges.

I suggest that the onus is on the proponents of regulation who preach the virtue of a steady-state economy to show a theoretical foundation for their beliefs, since IMO the empirical evidence strongly favors the market model, volatility and all.
posted by anigbrowl at 3:43 PM on April 2, 2012


a shrill fucking shitstripe: ""economists are charlatans dressed up with the tools of hard science"

Yes, that would be the entire econ faculty at Chicago.
posted by bardic

YOU TAKE THAT BACK!!
"

Eponysterical.
posted by symbioid at 4:02 PM on April 2, 2012 [1 favorite]


I submit that there is no way for a layperson to look at anything and independently determine the 'value' it carries. Value is imaginary. And a school of thought based on the definition of value must, therefore, also be imaginary. We have a word for this kind of thinking: religion.

Uh, indipendently from what? Maybe you meant "instric value", as a property of an object that "is" (a property that exists) without the need of assesment from an human being and that cannot be changed by a human being?

If so, If my memory serves Kant has "solved" this dilemma for us: how do I get to know the instric, human indipendet "true" properties of anything? We just can't, here a quick explanation , comments and extensions by philosophers welcome!

It has also been argued that one needn't have a concept of "value" to conduct an exchange of goods; I am sorry I don't have a link handy, but I remember reading about a relatively "primitive" society (Indonesia, possibily) in which goods were exchanged among tribes as a mere gesture of good will on a need-to basis: if one needed, for instance, a pig, he would have asked somebody who got (not necessarily "own" in a legal sense) a pig, maybe in some other tribe. That act of "kindness" was later reciprocated and breaking this reciprocation rule wasn't seen as a good idea. Somekind alike an unwritten code of conduit, with no value attributions attached.
posted by elpapacito at 4:30 PM on April 2, 2012


anigbrowl: I don't get how you go from butterflies in Oregon to non-linear dynamic systems to the "naturalness" of free markets - positive feedback loops are also part of, say, electronic engineering and that is not an inherent part of our physical world.
Even more I don't understand in this context what you mean by "free markets"...
posted by talos at 5:11 PM on April 2, 2012 [2 favorites]


Somekind alike an unwritten code of conduit, with no value attributions attached.

Except that the actions have value; providing the pig provides value (i.e., future benefit from the society when you need it) and not providing the pig also has a value (probably negative.) So while there is no money exchanged or direct goods bartered at that time, one could certainly argue that societies that operate in this fashion only do so because the value of participating is greater than what the individual could accomplish on their own. They're still maximizing utility, same as in basic economic theory.

Also, this type of situation only really works when there's limited or no scarcity; if there's sixty people who want the pig, all for different reasons (i.e, one wants a pet, one wants bacon, etc.) how do you reconcile this?
posted by Rodrigo Lamaitre at 5:11 PM on April 2, 2012


There's plenty of weaker sciences…if he spent some time among nutritionists he'd gain a whole new respect for economics.
posted by chrisgregory at 6:34 PM on April 2, 2012 [2 favorites]


Imagine a remote human tribe that values generosity and fellowship within society far more highly than ours does. In fact, let's go further and postulate that this culture's religious belief systems and social institutions strictly forbid opportunistically seeking to gain financial advantage over one's fellow citizens in the conduct of commerce and encourage active generosity to the community even up to the point of self-sacrifice. Is it impossible to imagine that such a society might collectively decide that, in their own markets, what we would consider the normal rules of supply and demand should be inverted?

So for instance, in my imaginary tribe's markets, raising prices in response to greater public demand for a good (in the absence of other costing factors like changes in the cost of production, etc.) might be viewed as an offense to the tribe--bad social etiquette, like when one child on the playground realizes another child wants to hold a certain toy very badly, and so for her personal amusement, plays even harder at not letting the other child have a turn with the toy.

It's not even an impossible stretch to suppose that, given the right set of shared cultural values, the tribe might embrace the opposite principle to our view of supply and demand: when social demand for a good increases, all else remaining the same, the tribe's retailers might by social convention actually lower their prices in order to make desirable goods more accessible to their less wealthy tribesmen (so they won't be excluded from the benefits that have created so much demand in society).

I realize that just imagining such a scenario is plausible doesn't make it so, and that this scenario might not scale up well, but I can't for the life of me imagine a realistic model of the world at large that doesn't at least theoretically allow for the possibility of economic systems that function as described in this thought-experiment, and so it seems to me perfectly clear that even some of the most basic axioms of orthodox economic theory aren't strictly speaking laws of nature and are culturally informed in ways that the natural sciences are not.
posted by saulgoodman at 9:16 PM on April 2, 2012


I can't for the life of me imagine a realistic model of the world at large that doesn't at least theoretically allow for the possibility of economic systems that function as described in this thought-experiment

But if that society existed and there were decent records of it, it would just have been another chapter in Doug North's book. Analysis of the effects of institutions (such as shared sets of cultural values) is commonplace. It's certainly a different kind of work from work on equilibria in notionally pure markets, but clearly related in the same way that a physics model that abstracts away friction is related to some different model that is specifically of the underlying forces that create friction.

Also, AFAIK there are more or less standard models of gift economies.

raising prices in response to greater public demand for a good (in the absence of other costing factors like changes in the cost of production, etc.)

But increases in the cost of production are normally why prices increase when demand rises in market models. Price = marginal cost.

posted by ROU_Xenophobe at 9:56 PM on April 2, 2012 [1 favorite]


It really is and I apologize for that, nebulawindphone--that comment ended up being kind of a lame attempt at a joke.

I HEREBY ACCEPT YOUR LAME JOKE. God damn it's nerdy in here.

posted by nebulawindphone at 10:46 PM on April 2, 2012 [1 favorite]


saulgoodman, the idea of pushing prices in the opposite direction to see what happens is one of those things every student of economics does right after getting a handle on drawing curves. And it rapidly becomes obvious that where demand outstrips supply and price controls are in place, you end up with long queues instead. Which is exactly what happened in the 1970s with gasoline price controls, USSR supermarkets, Cuba etc..

Now, you could posit that members of this ideal society wouldn't hold each other up by standing in line unless they needed to, but hey, everyone needs things like gasoline, bread and so on. So sooner or later you['ll have queues. Obviously, people of differing skills will have to stand in line for the same length of time, so overall productivity will go down, and thus, so will average wealth. You're maximizing one positive (equality of access to desirable goods irrespective of wealth), but the net cost is higher in the aggregate than it is under a price system. Trotsky realized this back in 1923 or so and got kicked out of the USSR for suggesting that markets might actually be the most efficient resource allocation mechanism available.
posted by anigbrowl at 10:50 PM on April 2, 2012


It's certainly a different kind of work from work on equilibria in notionally pure markets, but clearly related in the same way that a physics model that abstracts away friction is related to some different model that is specifically of the underlying forces that create friction.

In the absence of any other physical differences, friction could never stop having the specific effects it has in a particular physically identical situation. Its specific effects in a specific scenario should always be reproducible. No change in cultural attitudes could alter a repeatable scientific result if the steps are carried out properly, even if you change interpretive models halfway through the experiment. Are there any economic ideas that are unique to economics and absolute in the same way?

Also, AFAIK there are more or less standard models of gift economies.

Sure, and to be fair, for my part, I love economic theory when it acknowledges the limits of the field and isn't held up (either explicitly or implicitly) as some kind of deterministic social or other value arbiter. It's when it's used to make hard claims about what we should or shouldn't value--what our big picture priorities should and shouldn't be--that I get nervous and start

Now, you could posit that members of this ideal society wouldn't hold each other up by standing in line unless they needed to, but hey, everyone needs things like gasoline, bread and so on. So sooner or later you['ll have queues... Trotsky realized this back in 1923 or so and got kicked out of the USSR for suggesting that markets might actually be the most efficient resource allocation mechanism available.

"Market" seems to me too general a term for that statement to be sensible, though. There are all kinds of markets, and not all of them are efficient at allocating resources. Some of them lead to hording of natural resources and other attempts to create artificial scarcity for economic profit. There have been examples of markets ruined by cheating throughout history. And those markets, too, can lead to people standing in long lines for goods. It's all the various forms of the assumption that markets can in the absence of social and legal constraints work these miracles of efficiency all by themselves that I reject.
posted by saulgoodman at 11:00 PM on April 2, 2012


that I get nervous and start...

Trailing off elliptically...? Worrying about the future? I dunno. It's late.

posted by saulgoodman at 11:04 PM on April 2, 2012


But now we've gone from markets with price controls, which are well known to be dysfunctional, to the idea of totally unregulated markets, which are also dysfunctional but which nobody was proposing in the first place. So (probably without meaning to) you've just beaten down a straw man here. Give Trotsky's 'Soviet Economy in Danger' a read, which makes a great case for markets as a price discovery mechanism without any goal of personal profiteering.
posted by anigbrowl at 11:25 PM on April 2, 2012 [1 favorite]


So while there is no money exchanged or direct goods bartered at that time, one could certainly argue that societies that operate in this fashion only do so because the value of participating is greater than what the individual could accomplish on their own. They're still maximizing utility, same as in basic economic theory.

So you gather: the society enacts the X behavior because X is an useful behavior. So, they display an useful behavior because it's useful.

Or to paraphrase Joan Robinson,

"Utility is the quality in commodities that makes individuals want to buy them, and the fact that individuals want to buy commodities shows that they have utility"

change commodities with behavior

"Utility is the quality of a behavior that make individuals enact a behavior, and the fact that individuals want to enact that behavior shows that the behavior have utility"

Uh? Isn't it a bit circular?
posted by elpapacito at 5:50 AM on April 3, 2012 [1 favorite]


I am amazed that no one, not even Varoufakis, has mentioned the most evident critique of neoclassical economics in the light of a century of basic physics. I hope this little dialogue helps to shed some light about it:
“If it is very easy to substitute other factors for natural resources, then there is in principle no ‘problem’. The world can, in effect, get along without natural resources.” (Robert Solow)

One must have a very erroneous view of the economic process as a whole not to see that there are no material factors other than natural resources. To maintain further that “the world can, in effect, get along without natural resources” is to ignore the difference between the actual world and the Garden of Eden. (Georgescu-Roegen, 1975, p. 361)
As the economist Herman Daly says (PDF), "neither Solow nor Stiglitz has ever replied to Georgescu-Roegen’s critique.

Here's Georgescu-Roegen talking about how he, an economist, felt increasingly dissatisfied with traditional economics:
The idea that the economic process is not a mechanical analogue, but an entropic, unidirectional transformation began to turn over in my mind long ago, as I witnessed the oil wells of the Ploesti field of both World Wars' fame becoming dry one by one and as I grew aware of the Romanian peasants' struggle against the deterioration of their fanning soil by continuous use and by rains as well. However, it was the new representation of a process that enabled me to crystallize my thoughts in describing for the first time the economic process as the entropic transformation of valuable natural resources (low entropy) into valueless waste (high entropy). I may hasten to add . .. that this is only the material side of the process. The true product of the economic process is an immaterial flux, the enjoyment of life, whose relation with the entropic transformation of matter-energy is still wrapped in mystery. (Georgescu-Roegen 1976a: xiv)
In my opinion, this is the real crux of the problem of modern economics.
posted by samelborp at 7:23 AM on April 3, 2012 [2 favorites]


"Utility is the quality of a behavior that make individuals enact a behavior, and the fact that individuals want to enact that behavior shows that the behavior have utility"

Uh? Isn't it a bit circular?


No. I don't especially enjoy brushing my teeth (for example), but it has utility because it prevents tooth decay and so on. That's an obvious examlpe of utility. Or there might be activities whose payoff isn't obvious but that I do for simple pleasure; watching movies, say. The utility here can be inferred from the measurable value of other utility I give up to do so.

One must have a very erroneous view of the economic process as a whole not to see that there are no material factors other than natural resources. To maintain further that “the world can, in effect, get along without natural resources” is to ignore the difference between the actual world and the Garden of Eden.

How many resources were used up in the creation of the code that runs MetaFilter? Solow isn't saying that we don't actually need natural resources, he's pointing out that the inputs to production aren't fixed in stone, and a lack of raw materials can often be offset by change in some other input, such as productivity or technology. 100 years ago shooting a movie required lots and lots of expensive celluloid. Now you can store all your imagery on small wafers of silicon. Many critiques of economics over look the role of technology, as do those who reject innovations in other fields, eg handwashing in medicine.
posted by anigbrowl at 12:33 PM on April 3, 2012


how to account for the force of ideological and cultural bias

i like the way gellner put it: "locate the well of truth outside the walls of the city"

speaking of the history/philosophy of science, kuhn's paradigms (or like the baroque cycle/anathem ;) reflect that dynamic i think...

re: keen

i thought these were helpful:
-A Primer on Minsky
-Economics in the Age of Deleveraging
-The Future of Economics

plus all these other ones on MMT (cf. market monetarism)
-Functional Finance and Exchange Rate Regimes: The Twin Deficits Debate
-Milton Friedman's 1948 Functional Finance Proposal
-MMT for Austrians

and on the graeber seminar (there were a couple of straggler posts as well) graeber finally responded! matthew yglesias has reserve currency issues...

the post i thought most of -- in terms of balancing the "three competing moral principles: communism, exchange, and hierarchy" -- was Money out of place? "Debt" and Incentives:
How can we state the "money out of place" argument clearly? There are various objections we can make: for instance, that incentives make people do the right thing for the wrong reason, or that they "drive out" non-monetary motivations, or that they reward weakness of will in a few while not benefiting responsible conduct in the many, and so on. But when we sort out these objections, reject those without empirical support, and focus on the arguments which are specific to the use of money as such, we come down to two basic claims. First, we should not use money in this context; and second, this is because this context involves a form of relationship to which money is or should be alien and which will be displaced or corrupted if money is introduced.

The value of David Graeber's work in this debate is that he gives us two things. The first thing he gives us is an historical anthropology of money which denaturalises its role in human societies. One difficulty with establishing the "money out of place" arguments in the incentives debate is that this debate is dominated by economists and psychologists who simply cannot see or understand any form of behaviour other than response to reward and satisfaction of consumer preferences. There is a conceptual blindness which means that they cannot even "see" evidence which might unsettle the frameworks from within which they organise their experimental and theoretical work. So one thing David Graeber enables us to do is show the many myriad ways in which societies are and have been organised without money, or without money being central, or with money used for quite different purposes to those with which "we" are familiar. We don't, after Graeber, have to take money for granted, either as a real medium of exchange (etc.) or as the fundamental unit of theory within the human and behavioural sciences. It may be that much of what economists and psychologists say of money incentives is true; but this then becomes a sociological observation rather than a discovery about Human Nature.

The other thing that David Graeber's work can directly contribute to the debates about personal incentives is the close attention to the meaning of money in specific settings. He shows very convincingly that money is not one thing, and that while there may be dominant meanings of money in particular times and places, meanings so dominant that they become "obvious", "natural" and hegemonic, these are nevertheless local, contextual and can only predominate through hard pratical and discursive work. Thus, in the incentive debates, we need to pay close attention to what meanings attach to money, payment, exchange and so on... So David Graeber's book prompts me to think we need a better anthropology of incentives.
which for me brings to mind the current 'uncanny valley' relationship 'the market' has taken on wrt a moral society...

anyway, here's another post from understanding society with more context and detail:
In the original position, representative individuals are asked to deliberate behind a veil of ignorance about what principles of justice they would choose to regulate their social cooperation and competition. Individuals are presumed to be mutually disinterested, and their sole concern is to adopt principles that they can live with in the resulting society. But what are their interests? Rawls says that the participants in the OP are interested in a set of primary goods: material resources and liberties, essentially. These are "things which a rational man wants whatever else he wants" (TJ:92).

So Rawls's definition of the situation of deliberation within the original position is one that focuses on primary goods, not subjective utilities. And this sounds much closer to a classical assumption about economic interests and the human good than it does a modern assumption. It offers an objective and realistic assumption about what people need in order to live decent lives.
also btw more on 'the pope' and if tyler cowen had 'his way' [1,2,3], which would still leave technological unemployment... and abundance?

another chapter in Doug North's book

cf. francis fukuyama on acemoglu & robinson: "They are making almost the identical point to the one made in the 2009 book Violence and Social Orders by Douglass North, John Wallis, and Barry Weingast (NWW), who argue that most underdeveloped societies are what they term 'limited access orders' in which a rent-seeking coalition limits access to both the political and economic system. Indeed, I see no real difference between the 'extractive/inclusive' distinction in AR and the 'limited/open' access distinction in NWW."
posted by kliuless at 1:49 PM on April 3, 2012 [3 favorites]


so i guess in the amoeba wars it's 'limited/extractive' versus 'open/inclusive' while paying attention to 'map'-making as our guide and expanding 'the circle' (of factualness)...
posted by kliuless at 8:33 AM on April 4, 2012 [1 favorite]


anigbrowl: How many resources were used up in the creation of the code that runs MetaFilter?

Inarguably a non-zero amount: power generated, gas spent in commuter traffic, capital base of computers necessary as a pre-condition.

Solow isn't saying that we don't actually need natural resources, he's pointing out that the inputs to production aren't fixed in stone, and a lack of raw materials can often be offset by change in some other input, such as productivity or technology. 100 years ago shooting a movie required lots and lots of expensive celluloid. Now you can store all your imagery on small wafers of silicon.

And Georgescu-Roegen isn't denying this. However, there's no technology coming around the corner that will reduce demand on natural resources to zero... and any economic model that assumes Malthusian doom can't happen is headed for disaster.
posted by IAmBroom at 8:47 AM on April 4, 2012 [1 favorite]


We should clearly inform you about the "I got mine" theory of economics, IAmBroom, very popular model that one.
posted by jeffburdges at 11:13 AM on April 4, 2012 [2 favorites]


I suggest that the onus is on the proponents of regulation who preach the virtue of a steady-state economy to show a theoretical foundation for their beliefs, since IMO the empirical evidence strongly favors the market model, volatility and all.

Is does not equal ought. Forest fires occur in nature and yet we still fight them. Surely the fact that something can go wildly and dangerously out of control suggests that it should be monitored and managed, not allowed to do as much damage as it can.

Also, you are neglecting the fact that neoclassical economics has done a very bad job of predicting crises - this is why we are discussing it. The proponents of less regulation cannot now claim to speak for nature better than their rivals, having failed so clearly and significantly.

There are certainly those, among them Steve Keen, who argue that economics would be in much better shape if those who studied it had an accurate understanding of the scientific principles you describe.
posted by lucien_reeve at 10:40 AM on April 6, 2012


also btw...
-When safe assets return (via)
-Because the stakes are so small? (via)
-Testing Your Theories Is Not a Matter of "Envy" (via)
posted by kliuless at 7:21 AM on April 9, 2012 [1 favorite]


-World Without Money Reconsidered (via)
-Why Economics Needs Data Mining (via)
posted by kliuless at 4:19 PM on April 9, 2012 [1 favorite]


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