I Pity The Fool

Apparently, Philip Mirowski is currently researching how economics can inform science and technology policy. Mirowski (2007) is a step in this enterprise. This paper reviews Warsh (2006). Warsh's book is a popular account of economics organized around the history of the idea of increasing returns. Paul Romer is the hero of Warsh's story. Warsh praises, specifically, Romer (1990).

Mirowksi concludes that neither Solovian growth theory nor so-called new growth theory can legitimately say much for science and technology policy, since they are so defective. Basically, Mirowski agrees with me (for example, look here).

Some quotes from Mirowski follow:

"...the entire book is so lacking in any skeptical perspective that would ideally derive from a deep background familiarity with the history of economics, not to mention some modicum of philosophical humility..., that one has to wonder just what Warsh was thinking.

I want to be clear about this, since I honestly think that David Warsh is the best we have in terms of economics journalism in America."

"The problem is not simply a secondary matter of aggregation, as some suggested back during the capital controversies of the 1970s. The entire motivation behind early production functions was to posit a sharp distinction between factor substitution and something more dynamic and pervasive, which for lack of a better term, is still commonly called technological change."

"Yet, economists and journalists alike extol the new growth theory, and there is no denying its popularity in certain circles. ... Rigorous mathematics and assiduous empiricism had little to do with it."

"I pity the poor student of modern economics, trying to make some sense of what can only appear to the outsider as cryptic oracular pronouncements emitted from people who claim to be experts in the nature and validity of knowledge. But when you get your news from Jon Stewart, your history from Paul Krugman, and your research facts from Wikipedia, maybe the nature of knowledge has itself changed.

References

• Mirowski, Philip (2007) "Review Essay: Did the (Returns to) Scales Fall From Their Eyes?", Journal of the History of Economic Thought, V. 29, N. 4 (Dec): 481-494
• Romer, Paul M. (1990) "Endogenous Technological Change", Journal of Political Economy V. 98, N. 5 (Oct): S71-S102.
• Warsh, David (2006) Knowledge and the Wealth of Nations: A Story of Economic Discovery, Norton