When I see Delong more or less indiscriminately trashing everyone at Chicago, or Krugman trashing Barro, etc., what doesn’t arise in my mind is a sense that some of these guys really know what they’re talking about while some of them are idiots. What arises in my mind is the strong suspicion that economic theory, as it is practiced and taught at the world’s leading institutions, is so far from consensus on certain fundamental questions that it is basically useless for adjudicating many profoundly important debates about economic policy. One implication of this is that it is wrong to extend to economists who advise policymakers, or become policymakes themselves, the respect we rightly extend to the practitioners of mature sciences. There is a reason extremely smart economists are out there playing reputation games instead of trying to settle the matter by doing better science. The reason is that, on the questions that are provoking intramural trashtalk, there is no science.
I'd hypothesize that the reason for this is that economics is not merely not a science, but that any given school of economic thought or tradition of inquiry and research merely reifies the circumstances and conditions of a previous era, policy framework, or set of conundrums, whereas all of these things are much more circumscribed, historically speaking: things work, or don't, until they don't, or do, and the permutation space of possible Lessons of Economic History is rather smaller than anyone wishes to believe.
(HT: Jim Manzi.)
Comments (12)
I thought Wilkinson's series of posts on the fundamental limits of economics smart and thought-provoking. Of course, Will and I and just about every single academic economist worth their salt would ALL agree that globalization has increased aggregate well-being enormously around the world, including here in America. Or to put it another way, I dare you to find me one single academic economic paper that doesn't come to the conclusion that free trade between nations increases aggregate welfare on both sides. Ricardo's difficult idea is one of those "Lessons of Economic History" that Maximos refuses to appreciate or apparently to understand.
Posted by Jeff Singer | February 3, 2009 6:26 PM
The problem is that economics is a social science, and so deals with things too complicated to lend themselves to a reliably predictive theory, at least where discreet circumstances are concerned. Just like international relations theory, none but the most general guidance can be offered to policymakers who wish to avoid calamitous and obvious errors. But for the most part, the texts consist of massive re-constructions of "what has happened," with explanations that are so overdetermined and thoroughly shot through with caveats that they become finally useless in concrete circumstances. (A great example is the work done on the effect of uncertainty on international affairs, which contains so many caveats and references to exceptions drawn from experience that one wonders what use it's all supposed to be, other than to the people who make a living writing such stuff.)
Posted by Sage | February 3, 2009 7:20 PM
I should say that my experience of "social sciences" is that the "science" part is all pretense, a symptom of the total triumph of empiricism and scientism in intellectual life.
Posted by Sage | February 3, 2009 7:22 PM
Nice threadjack, Jeff.
Also, nice insinuation that those who dissent from your dogmas are not merely mistaken, but either morally compromised (refuses to appreciate) or stupid (apparently to understand).
The fetish that has been made of free trade is a perfect illustration of economics as political philosophy by other means, as it has been, at a minimum, since the 1830s when the Manchester Liberals articulated their doctrines of free trade explicitly as a form of secular utopia, promising the withering away of all national and religious antagonisms and the dawning of a cloudless epoch of peace and prosperity. This is still political philosophy because, no matter how many theorems, no matter how much algebra or calculus one attaches to the discussion, one is still implicitly arguing for a certain specifiable conception of obligation - and it is over this that free-traders and their opponents differ, as we have discussed at length in the past. Aggregate well-being is just that - aggregate - and is perfectly compatible, as in actually-existing America, with both relative and real declines in the well-being of identifiable groups.
Moreover, the citation of Ricardo - and here I must asseverate that free-traders fashion idols of their heroes in much the same fashion as do ideological Darwinists, as illustrated by the very title of the linked paper - also illustrates the tendency to reify historically contingent and conditioned doctrines, such that free trade is no longer some historical practice with specifiable origins, presuppositions, and requirements - and thus, limits - but Free Trade, which everywhere, always, and at all times Acts to Deliver Maximal Prosperity to All. Ricardo's theory presupposes, among other things, more labour mobility within a national economy than ever actually obtains, and has nothing to say concerning the unprecedented mobility of capital in our globalizing world, which means that the 'comparative advantage' of one nation can be replicated, to a large degree, in another country. The only true comparative advantage remaining lies in the skill and cunning of the professed meritocrats in any given country, who either game the system or devise means of profiting from its instabilities and capital flows.
Until those loosely grouped on the right evince as much suspicion of the ready recourse to free-trade ideologues, or to dead economists whose doctrines are applicable in certain circumscribed conditions, and not elsewhere, as of citations of The Communist Manifesto, it will remain the case that the whole right lieth under the darkness of ideology.
Posted by Maximos | February 3, 2009 7:48 PM
Sage's comments remind me of a pet theory of mine, to the effect that most modern political theorizing represents a sustained attempt to construct systemic and ideological templates as substitutes for the prudential application of, say, natural law principles to ever-shifting circumstances. Political modernity is seized by a high holy terror of prudential reason, judgment, undecidability, the underdetermined. There must be a Blueprint, whether that blueprint is free-trade, Keynesianism, planning, non-planning, monetarism, etc.
Posted by Maximos | February 3, 2009 7:55 PM
How can one actually think (especially one of Maximos' intellectual caliber) that such prudentia as even the latter could be applied (and, moreover, successfully) if the arcana of Economics is such that its amorphous nature would seem to render it untamable even perhaps under these conditions?
Posted by aristocles | February 3, 2009 8:35 PM
Until those loosely grouped on the right evince as much suspicion of the ready recourse to free-trade ideologues, or to dead economists whose doctrines are applicable in certain circumscribed conditions, and not elsewhere, as of citations of The Communist Manifesto, it will remain the case that the whole right lieth under the darkness of ideology.
Whether unrestricted free trade is a net benefit to society can be debated. In fact, I don't think it is. What can not be denied, however, is that free trade engenders wealth and productivity, whereas the doctrine of The Communist Manifesto, to put it mildly, doesn't.
Therefore, since the subject of economics is the production of wealth, that which engenders this production should naturally be accepted as a basic principle of the science. This is not ideology.
Only if free trade didn't cause wealth could free-trade economists be considered ideologues.
Posted by George R. | February 3, 2009 8:48 PM
Ari, I humbly submit that the application of prudence to economic concerns will become easier, and that our facility in it will increase, in direct proportion as we cease focusing upon the utilitarian ends modern economic "science" assigns itself, and focus instead upon the persons and goods economics is meant to serve. An economy ordered towards the good of the family will look markedly different from the one that we have.
Posted by Maximos | February 3, 2009 8:49 PM
"Ricardo's theory presupposes, among other things, more labour mobility within a national economy than ever actually obtains, and has nothing to say concerning the unprecedented mobility of capital in our globalizing world, which means that the 'comparative advantage' of one nation can be replicated, to a large degree, in another country."
Ricardo's theory doesn't presuppose any of the above. And since the 1830s, it is true that many "identifiable groups" have suffered various economic declines, as these same groups have suffered from the dawn of civilization. When man competes for scarce resources, some will win and some will lose (Christ enjoins the winners to help the losers, but says nothing about forcing your neighbor to help his neighbor, which is basically what government regulation of the economy, beyond contract enforcement, is all about). What is interesting about the past 170 years or so, to a student of both history and economics, is how much more indiviudal human flourishing has occurred under a increasingly free global trade.
Finally, I thought a comment directly applicable to the topic at hand was not a "threadjack", but apparently I was wrong.
Posted by Jeff Singer | February 3, 2009 8:50 PM
Only if free trade didn't cause wealth could free-trade economists be considered ideologues.
If free trade is not an unmitigated good for a society, and it would seem that we are in agreement that it is not, then there is no sense in accepting it as a fundamental principle of the "science". Better to admit that it obtains under certain limited conditions, and not otherwise, and leave things there. Moreover, the question of whether free trade constitutes an ideology is not one of whether free trade or communism generates wealth, but of whether free trade is always, in all circumstances, in all times, for all peoples, the Answer.
Posted by Maximos | February 3, 2009 8:55 PM
Of course it presupposes those things. If labour is not significantly mobile then it is entirely possible in reality for the sorting predicted by the theory to yield an increase in aggregate efficiency at the expense of large segments of a population. Which leads to my second point which is that the theory of comparative advantage requires revision to account for, well, the modern industrial, global age, and specifically, to account for the actuality of zero-sum exchanges.
What this means, taken in combination with the obligations we have towards neighbours, and not towards statistical aggregates, is not only that there are winners and losers, but that the winners have obligations to the losers that the government may, under defined conditions, compel them to fulfill.
Posted by Maximos | February 3, 2009 9:17 PM
What is interesting about the past 170 years or so, to a student of both history and economics, is how much more indiviudal human flourishing has occurred under a increasingly free global trade.
That this is so is an article of faith on the part of the free traders. But there is precious little empirical evidence to support that assertion. Great Britain did not become great via free trade, but via the exact opposite. The same is true for the US to a great extent. And the various Asian countries which have risen into the top tier of world economies in the last sixty years have done so by thumbing their noses at the whole concept of free trade.
A Korean economist has written a book exploring how his country, and others, have become wealthy. It's "Bad Samaritans" by Ha-Joon Chang, a professor at Cambridge.
Posted by Jon Sandor | February 17, 2009 5:44 PM