dismal complaint

Naked Capitalism posts an interview The New Priesthoodwith Yanis Varoufakis, a Greek economist who currently heads the Department of Economic Policy at the University of Athens, in which he criticises economics as self-reflexive and unfalsifiable because economists won’t commit to factual prediction of the economic weather.

Whatever troubles the field, his criticism can’t be it.

Empirical observation is a constant chastisement for *all* the sciences, not just economics, but physics or neuroscience or any empirical science. Self-referentiality is no bar to a science: above all logic but also math, neuroscience, linguistics, cognitive science, and many others, refer to their own subject matter. Reflexive hypotheses can be predictive, and their predictions can be tested.

One mustn’t confuse reflective *science* with a reflective regression in *implementation*. Moreover, a regressive theory becomes a reductio of itself if practiced — you can’t implement an infinite regression, so it can play no role among the phenomena.

Implementing theories does complicate the science — but it is not a flaw in economic science. It’s just that the science must attempt to model the consequences of acting on economic hypotheses. But this is also a traditional part of science called trial and error.

It may be an embarrassment to the dignity of human intelligence that many of our scientific advances have been driven by accidents within trial an error, but it is surely not a *failure* of science. It’s an embarrassing success (and usually viewed not as embarrassing but perhaps unjustifiably as brilliance).

In any case, analogizing economists treating a crisis as a surprise meteor undermines Yanis’ own argument. Is cosmology a non science because not every meteor’s location or arrival can be predicted??

Physics doesn’t purport to tell the shape of the next snowflake or when it will begin to rain today. It does tell me why we generally stand on the earth and not float through the air. The problem with economics may be that we expect too much. Just because we ourselves are the agents of our own economy shouldn’t lead us to expect us to predict it any better than any other science. And yet that’s exactly what economists try to do. I think it’s because there is a moral call in the field that is tough to ignore for those who hear it.

The challenge for economics has always been not its lack of predictive ability, of which it has about as much as any natural science, but the moral dimension: Adam Smith long ago pointed out that labor gets shafted in the balance of wealth.

What’s dismal about economics is that the economy often works most efficiently and exuberantly at the price of a human sacrifice. The big question is whether the failures of those who wish to resolve that moral quandary are greater than the occasional crises of the economy. This is also a matter of trial and error.

That undergrads are more cooperative than those who chose to become economists may say more about why students choose economics. The experiment didn’t track those undergrads who went into econ and those who didn’t and what happened to their cooperativeness afterward. So it may say little or nothing about what is taught in economics. In any case, to assume that the personal attitudes of the scientists affect the science is to assume what was to be concluded: that it is a non science. If it is a true science, then the personal biases of the scientists won’t matter (well, that’s an idealization: even physicists take sides on theoretical issues, defend them, promote them and make their reputations on them and get their funding to promote them). Determining whether a discipline is science should depend on its predictive success — its testability — and its simplicity within itself and in relation to other sciences. But bear in mind that the Popper model is also an idealization that doesn’t correspond accurately to the actual practice of even the hardest sciences, even in logic, for example.


One Response to “dismal complaint”

  1. achilleas Says:

    very well said!

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