by Does it — really — “take a model to beat a model”? When we provide such a critique, we often hear another mantra to which many economists subscribe: ‘It takes a model to beat a model.’ On the contrary, we believe that it takes facts and observations to beat a model … If a model fails to answer the problem to which it is addressed, it should be put back in the toolbox … It is not necessary to have an alternative tool available to know that the plumber who arrives armed only with a screwdriver is not the tradesman we need. A critique yours truly sometimes encounters is that as long as one cannot come up with some own alternative to the failing mainstream theory, one shouldn’t expect people to pay attention. This is however to misunderstand the role of
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Lars Pålsson Syll considers the following as important: Economics
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Does it — really — “take a model to beat a model”?
When we provide such a critique, we often hear another mantra to which many economists subscribe: ‘It takes a model to beat a model.’ On the contrary, we believe that it takes facts and observations to beat a model … If a model fails to answer the problem to which it is addressed, it should be put back in the toolbox … It is not necessary to have an alternative tool available to know that the plumber who arrives armed only with a screwdriver is not the tradesman we need.
A critique yours truly sometimes encounters is that as long as one cannot come up with some own alternative to the failing mainstream theory, one shouldn’t expect people to pay attention.
This is however to misunderstand the role of philosophy and methodology of economics!
According to a methodological stereotype to refute a theory it is necessary to present a better one … In the field of physics this claim might be legitimate. In economics and other sciences it is part of a defensive tactic by the supporters of criticized theories which are in a dominant theoretical position.
In multi-paradigmatic sciences, as economics, pure criticism has a very important task, namely throwing light on the epistemological, methodological, logical and empirical weakness of competing theories (or ‘paradigms’) and the inadequate applications of some methods … The criticism without explicit positive alternative also has its justification. Each critique strengthens the competing theories in an automatic way, without permanent mentioning of the advantages of one of the competing theories. Each theory can contribute to our understanding of economic phenomena in one way or another even in refutation.
And as John Locke wrote in An Essay Concerning Human Understanding:
The Commonwealth of Learning is not at this time without Master-Builders, whose mighty Designs, in advancing the Sciences, will leave lasting Monuments to the Admiration of Posterity; But every one must not hope to be a Boyle, or a Sydenham; and in an Age that produces such Masters, as the Great-Huygenius, and the incomparable Mr. Newton, with some other of that Strain; ’tis Ambition enough to be employed as an Under-Labourer in clearing Ground a little, and removing some of the Rubbish, that lies in the way to Knowledge.
That’s what philosophy and methodology can contribute to economics — clear obstacles to science.
Every now and then yours truly also gets some upset comments from people wondering why I’m not always ‘respectful’ of people like Paul Krugman, Eugene Fama, Robert Lucas, Greg Mankiw, and others of the same ilk.
But sometimes it might actually, from a Lockean perspective, be quite appropriate to be disrespectful.
New Classical and ‘New Keynesian’ macroeconomics is rubbish that ‘lies in the way to Knowledge.’
And when New Classical and ‘New Keynesian’economists resurrect fallacious ideas and theories that were proven wrong already in the 1930s, I think a less respectful and more colourful language is called for.
The continuing problems of modern economics do not reduce to this particular mathematical model or that particular model but the whole modelling emphasis. The commonality of all such modelling is the widespread commitment to deductivist forms of reasoning/explanation that, to be relevant, presupposes a social reality composed largely of closed systems of isolated atoms. This is the ontological theory of the modern mainstream whether recognised or not. It is this theory to which we must apply your dictum ‘it takes a theory to beat a theory’. And that, or so I claim and argue, is precisely what critical realism does …
This of course feeds into the reason that Lars, and also myself, are almost always negative in referring to the mainstream. From the perspective we adopt, it is simply a huge error to adopt unthinkingly – and especially to insist that we all do so — methods that carry ontological presuppositions that rarely if ever hold in the social realm. So, a largely critical orientation to the mainstream (as here understood) is surely warranted. But I myself can be and am very positive towards anything more relevant.