Hatchet job on modern economics

Mark Blaug has written a hatchet job on Ugly Currents in Modern Economics. One particular development that draws his ire is the increasing mathematization of the field. The article does a good job of summarizing the major trends in the field while explaining why most of them are wrong.

3 thoughts on “Hatchet job on modern economics

  1. Arrow and Debreu were heavily influenced by Nicholas Bourbaki, and tried to replicate NB’s style in economics. This would be fine, IMO, if economics were a branch of mathematics and not a social science. As a result, we’ve ended up with a useless, glass-bead-game of a discipline, as Blaug argues.

    Interestingly, perhaps to atone for Bourbaki, French economic students have recently attacked formalist approaches in economics, describing them as “autistic”, and created the post-autistic economics movement (www.paecon.net). The economic profession’s reaction to these attacks was vicious, and highly indicative of what was at stake in defining the scope and methods of the discipline.

    Although I liked the article, Blaug’s desire to have economists focus on predictive ability as a measure of a theory’s worth ignores the fact that the subjects of the domain of economics are intelligent entities (human beings). Thus, economists are not modeling or predicting in a vacuum. Economic theory can and does influence the behaviour of economic actors, to such an extent that economics IMO is what linguists call a performative activity — it is able to bring about the reality it purports to describe. The Black-Scholes model in finance is an example: Economists (Black, Scholes, Merton) assumed certain behaviours from financial traders when they developed their model for valuation of stocks. The model is now applied in financial markets, which has led traders to adopt the behaviours assumed for them by the economists. Prediction in such a context of self-fulfilling and self-denying prophecies is not necessarily easy, or even sensible. It certainly bears a great deal of thinking about.

  2. Are you an economist? As an outsider, it’s hard for me to judge the accuracy of claims such as Blaug’s. There is nothing intrinsically wrong with addressing abstract questions such as the existence of general equilibria — if general equilibrium in pure exchange economies did not exist, that would be an important fact. The question is if there is too much emphasis on mathematical results, and not enough on empirical results, but as an outsider it’s impossible for me to judge one way or the other.

  3. I’m not an economist, but was a pure mathematician who also studied math. econ. Mathematicians usually dismiss math.econ as not very interesting math. I think it is OK math (after all, even Steven Smale has contributed to it), but is not very interesting econ. The so-called “economies” studied in math.econ are abstractions from real economies, so abstract as to be not even a distant approximation of anything in the real world. What is annoying is that math. economists have forgotten this, and talk about their subject as if they think they are talking about the real world. They have mistaken the map for the territory.

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