by Is economics already pluralist? Some argue that economics as a science is already pluralist and that the critique of pluralists addresses a strawman. Newly emerged research areas such as behavioral economics are often presented as examples. Yet, to assess the argument that ‘economics is already pluralist’, one has to be explicit about the dimension and degree of plurality that is being considered … Considering the topical dimension of economics, for instance, the claim is most likely true: there is indeed a large plurality of topics – here understood as phenomena deemed worth investigating – within the current economic mainstream … For the case of the methodological dimension, the assessment might be different, however. In this context, Akerlof (2020)
Topics:
Lars Pålsson Syll considers the following as important: Economics
This could be interesting, too:
Lars Pålsson Syll writes Andreas Cervenka och den svenska bostadsbubblan
Lars Pålsson Syll writes Debunking the balanced budget superstition
Lars Pålsson Syll writes How inequality causes financial crises
Lars Pålsson Syll writes Income inequality and the saving glut of the rich
Is economics already pluralist?
Some argue that economics as a science is already pluralist and that the critique of pluralists addresses a strawman. Newly emerged research areas such as behavioral economics are often presented as examples. Yet, to assess the argument that ‘economics is already pluralist’, one has to be explicit about the dimension and degree of plurality that is being considered …
Considering the topical dimension of economics, for instance, the claim is most likely true: there is indeed a large plurality of topics – here understood as phenomena deemed worth investigating – within the current economic mainstream … For the case of the methodological dimension, the assessment might be different, however. In this context, Akerlof (2020) points out that the Webster’s dictionary gives two distinct definitions of ‘economics’: economics as the social science concerned with analysing the economy; or economics as a specific methodology, namely a specific style of mathematical modeling and statistical analysis (a definition also advocated in, e.g. Rodrik, 2015). If one follows the second definition, economics is not pluralistic in the methodological dimension per definition. In this case, a debate about the proper definition of ‘economics’ would be necessary. If one follows the first definition, the debate becomes more nuanced since in principle this definition would allow for a broader consideration of methods in economics. In practice, however, the set of accepted methods is constrained by the dominant core methodology of economics …
While methods such as RCTs and experiments did extend the methodical toolbox of economics, they did not broaden the status of the discipline’s plurality on the methodological dimension … Excluding non-modeling approaches, as well as excluding formal models that do not adhere to the twin concepts of optimization and equilibrium, is incompatible with pluralism in the methodological (and epistemological) dimension. Thus, if pluralism refers to the plurality of methodologies, then the current economic discipline cannot be considered pluralist.
In Dani Rodrik’s Economics Rules (2015, W.W. Norton & Company) the proliferation of economic models during the last twenty-thirty years is presented as a sign of great diversity and abundance of new ideas.
But — as argued by Gräbner and Strunk — it’s not that simple.
Like many other mainstream economists, Rodrik wants to purvey the view that mainstream economics is an open and pluralistic ‘let a thousand flowers bloom’ science. But in reality, it is rather ‘plus ça change, plus c’est la même chose.’
Why? Because almost all the change and diversity that Rodrik applauds only takes place within the analytic-formalistic modelling strategy that makes up the core of mainstream economics. All the flowers that do not live up to the precepts of the mainstream methodological canon are pruned. You’re free to take your analytical formalist models and apply them to whatever you want – as long as you do it with a modelling methodology acceptable to the mainstream. If you do not follow this particular mathematical-deductive analytical formalism you’re not even considered doing economics. If it isn’t modelled, it isn’t economics. This isn’t pluralism. It’s a methodological reductionist straightjacket.
So, even though we have seen a proliferation of models, it has almost exclusively taken place as a kind of axiomatic variation — where the core assumptions are usually untouched — within the standard model. Seen from the perspective presented here, that is actually just another variant of theory immunization.
In Rodrik’s world (p. 71) “newer generations of models do not render the older generations wrong or less relevant,” but “simply expand the range of the discipline’s insights.” I don’t want to sound derisory or patronizing, but although it’s easy to say what Rodrik says, we cannot have our cake and eat it. Analytical formalism doesn’t save us from either specifying the intended areas of application of the models or having to accept them as rival models facing the risk of being put to the test and found falsified.
The insistence on using analytical formalism and mathematical methods comes at a high cost — it often makes the analysis irrelevant from an empirical-realist point of view.
Applying closed analytical-formalist-mathematical-deductivist-axiomatic models, built on atomistic-reductionist assumptions to a world assumed to consist of atomistic-isolated entities, is a sure recipe for failure when the real world is known to be an open system where complex and relational structures and agents interact. Validly deducing things in models of that kind doesn’t help us understand or explain what is taking place in the real world we happen to live in. Validly deducing things from patently unreal assumptions — that we all know are purely fictional — makes most of the modelling exercises pursued by mainstream economists rather pointless. It’s simply not the stuff that real understanding and explanation in science is made of. Had Rodrik not been so in love with his smorgasbord of models, he would have perceived this too. Just telling us that the plethora of models that make up modern economics “expand the range of the discipline’s insights” is nothing short of hand waving.
No matter how many thousands of models mainstream economists come up with, as long as they are just axiomatic variations of the same old mathematical-deductive ilk, they will not take us one single inch closer to giving us relevant and usable means to further our understanding and explanation of real economies.