The sins of the economics profession

Deirdre McCloskey is the author of several important books, she is an economist of renown, and she is a proud defender of the bourgeois deal: you get to keep what you make and you are allowed, indeed encouraged, to innovate. She locates several inadequacies in the mindset of economists, in a little pamphlet available off the Intertubes. I recommend it, especially if you are economist. She describes her fellow practitioners in the following terms.

  • Economists, for example, are Institutionally Ignorant,which is to say that they don’t have much curiosity
    about the world they are trying to explain. For example—this will surprise you—academic economists, especially since Samuelsonianism took over, have come to think it is simply irrelevant, a waste of time, to do actual field work in the businesses they talk about.
  • Outsiders would likewise be amazed at the Historical Ignorance of the economist. They think that the scientific evidence about economies before the past few years would surely figure in an economist’s data. It doesn’t…. People call themselves economists who have never read a page of Adam Smith or Karl Marx or John Maynard Keynes. It would be like being an anthropologist who had never heard of Malinowski or an evolutionary biologist who had never heard of Darwin.

     

  • The more general Cultural Barbarism of economists is well illustrated by their Philosophical Naïveté. Few economists read outside economics. It is unnerving to gaze about the library of a distinguished professor of economics and find no books at all except on applied math and statistics: these are the worldly philosophers who run our nation? Uh-oh. So naturally the professors of economics have childish ideas about, say, epistemology….

    The economists know nothing of the main finding of linguistics, philosophy, and literary criticism in the twentieth century, namely, that we have ways of world making, language games, senses of an ending that cannot be reduced to formal grammars, even in principle (economists have themselves stumbled on analogous findings in their own highly non-humanistic work,such as the finding of “rational expectations” or “the cheap talk paradox”).
  • And economists are tempted to arrogance in social engineering….
  •  And I have to mention finally the very widespread opinion that economists are prone to the sin of pride: personal arrogance. Some names that come up in this connection are: Paul Krugman (gold medal in this category), Robert Lucas (Nobel 1995), and Deirdre McCloskey (bronze). Lots of intellectual professions are arrogant. Physicists, for example, are
    contemptuous of chemists, whom they regard as imperfect versions of themselves. In fact physicists are  contemptuous of most people. But when a physicist at North Carolina named Robert Palmer went in 1989 to a conference in which physicists and economists were to educate each other he remarked, “I used to think that physicists were the most arrogant people in the world. The economists were, if anything, more arrogant.” I’m afraid he’s right on this score. Though of course in general he’s a dope: a mere physicist.

McCloskey’s deepest argument with her profession is that it neither theorizes nor observes, though it believes it is doing both. The arguments are longer than are suitable for this space, and I commend you to read The Secret Sins of Economics in its brief entirety. In essence she says it is not enough to demonstrate whether some thing has some effect, you have to ask how much is the effect. How much? is the critical question, not whether? Most economists avoid interrogating the real world in all its messiness to find out. Her conclusions are:

 

  • Until economics stops believing, contrary to its own principles, that an intellectual free lunch is to be gotten from
    qualitative theorems [whether questions] and statistical significance it will be stuck on the ground waiting at the cargo-cult airport, at any rate in its high-end activities uninterested in (Really) How Much. High-end theoretical and econometric papers will be published. Careers will be made, thank you very much. Many outstanding fellows (and no women) will get chairs at Princeton and Chicago. But our understanding of the economic world will continue to be crippled by the spreading, ramifying, hideous sins.
    Woe, woe is me.
    Oy vey ist mir.
    Pity the poor economists. The sins of economics come from pride in formalization, the making of great machines and
    monsters.

 

A sample of McCloskey is found at Youtube:

 

Gernot Kofler

Good posting by you on DM
She has long been my favourite economist. What I find amazing and admirable about her is that in her fifties, she decided to be what she felt herself to be, which is a woman. She was captain of the men’ soccer team and had fathered a family and was a very successful economist. After being a good boy for fifty years, she decided that was enough.
I am surprised that DM has not referred to Jane Jacobs Systems of Survival, as far as I know. Dignity for the bourgeoise is well explained in the Jacobs model of guardian and commercial moral syndromes. The model can make transparent how using well, the two ways of making a living, taking and trading, led to the great enrichment. I must have cited and referenced Albert O. Hirshman and William Baumol a half dozen times to you. Hirshman chronicled the acceptance and rejection of capitalistic modes of making a living and talking over time and Baumol said we always have entrepreneurs among us, but their number and kind depend on the rules of the game. The rules may favour military, administration or commerce as avenues for entrepreneurship. For both papers I found instructive references to traders as being base or dignified at various times and places and what that meant for creating wealth.

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