August 28, 2015

Whatever it is, let's call it conservatism

Comment on David Glasner on ‘Romer v. Lucas’


You write: “The reason economists keep teaching economics, despite its many shortcomings, is that we don’t have anything that is clearly better to replace it with. That’s too bad, but for the time being at least, we are stuck with the economics we have.”

In fact, that is not so terribly bad. Economists are rather comfortable with the status quo. “Yet most economists neither seek alternative theories nor believe that they can be found.” (Hausman, 1992, p. 248)

There are two great puzzles here:
(i) Why are economists retelling theories knowing very well that what they keep alive is pseudo-scientific junk?
(ii) Why can Heterodoxy not take advantage of Orthodoxy's openly admitted shortcomings.

The answer is that we have political economics and theoretical economics and, unfortunately, the former has hijacked the latter.

“A genuine inquirer aims to find out the truth of some question, whatever the color of that truth. ... A pseudo-inquirer seeks to make a case for the truth of some proposition(s) determined in advance. There are two kinds of pseudo-inquirer, the sham and the fake. A sham reasoner is concerned, not to find out how things really are, but to make a case for some immovably-held preconceived conviction. A fake reasoner is concerned, not to find out how things really are, but to advance himself by making a case for some proposition to the truth-value of which he is indifferent. (Haack, 1997, p. 1)

It seems that all camps lack genuine inquirers. Yet, an even better answer is provided by elementary economics, viz., economists stick ‘with the economics we have’ as long as there are bigger fools who happily buy the stuff. And, no surprise, economists can explain everything economically.

“Gary Becker has suggested that a substantial resistance to the acceptance of new ideas by scientists can be explained by two familiar economic concepts. One is the concept of specific human capital: the established scholar possesses a valuable capital asset in his command over a particular body of knowledge. That capital would be reduced if his knowledge were made obsolete by the general acceptance of a new theory. Hence, established scholars should, in their own self-interest, attack new theories, possibly even more than they do in the absence of joint action. The second concept is risk aversion, which leads young scholars to prefer mastery of established theories to seeking radically different theories. Scientific innovators, like adventurers in general, are probably not averse to risk, but for the mass of scholars in a discipline, risk aversion is a strong basis for scientific conservatism.” (Stigler, 1983, p. 538)

Yes, let us simply euphemize ‘sticking to clearly refuted theories’ as conservatism. It is not that economists are scientifically incompetent and it is not that they have achieved nothing — the truth is that reality is complex. “Given these difficulties it is extraordinary that economics has achieved as much as it has.” (Dow, 2006, p. 51)

OK, then, standing ovations for sticking conservatively to pseudo-scientific junk.

Egmont Kakarot-Handtke

Dow, S. C. (2006). Economic Methodology: An Inquiry. Oxford: Oxford University Press.
Haack, S. (1997). Science, Scientism, and Anti-Science in the Age of Preposterism. Skeptical Inquirer, 21(6): 1–7. URL
Hausman, D. M. (1992). The Inexact and Separate Science of Economics. Cambridge: Cambridge University Press.
Stigler, G. J. (1983). Nobel Lecture: The Process and Progress of Economics. Journal of Political Economy, 91(4): 529–545. URL

Preceding 'Economics and the litmus test of science' and 'United in confusion'. See also 'Mental messies and loose losers' and 'Secular intellectual stagnation'.