The Route To Normal Science
"Compared with physics, it seems fair to say that the quantitative success of the economic sciences has been disappointing. Rockets fly to the Moon; energy is extracted from minute changes of atomic mass. What is the flagship achievement of economics? Only its recurrent inability to predict and avert crises, including the current worldwide credit crunch...
...Crucially, the mindset of those working in economics and financial engineering needs to change. Economics curricula need to include more natural science. The prerequisites for more stability in the long run are the development of a more pragmatic and realistic representation of what is going on in financial markets, and to focus on data, which should always supersede perfect equations and aesthetic axioms" -- Jean-Phillippe Bouchard, "Economics Needs a Scientific Revolution", Nature, V. 455, 30 October 2008
A few decades previously:
ReplyDelete"we think that to become a science, Political Economy has to be built up in a different way. It must be treated as a natural science, and use the methods used in all exact, empirical sciences." (Kropotkin, Modern Science and Anarchism)
and then there is this classic:
"Political Economy has always confined itself to stating facts occurring in society, and justifying them in the interest of the dominant class . . . Having found [something] profitable to capitalists, it has set it up as a principle." (Kropotkin, The Conquest of Bread)
Not much had changed since the anarchist formerly known as Prince wrote these words...
"The supposed omniscience and perfect efficacy of a free market stems from economic work done in the 1950s and 1960s, which with hindsight looks more like propaganda against communism than plausible science."
ReplyDeleteWhich is a very good point. It reminded me of Marx's comment about how, with the rise of the class struggle between workers and capitalists, economics turned their backs on science and become apologists for the ruling class ("vulgar economics").
Also, someone has posted a relevant article on this subject on another blog: H.L. Mencken Explains Economists
I have to say, with the collapse of neo-liberalism I'm hoping there will an opening (as in the 1930s) for more realistic approaches to the dismal science. Could this be the time for post-Keynesianism?
On the negative side, there is the impact of the think-tanks and corporate funding for free market dogmas. But if things get as bad as the 1930s that could dry-up...
And, obviously, I posted those two quotes by Kropotkin...
Iain
An Anarchist FAQ
I found Bouchard's remarks about developments in the 1950s and 1960s of interest as well. I think he is talking about the Arrow-Debreu model, the first fundamental welfare theorem, and finance models that, I guess, grew out of the Arrow-Debreu model. It seems to me that at least some financial analysts have a self-interest in seeing the world clearly, at least during their day job.
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