by Physics envy — a sure way to make economics useless
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Lars Pålsson Syll considers the following as important: Economics
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Physics envy — a sure way to make economics useless
In the 1930s, Lionel Robbins laid down the basic commandments of the discipline when he said that the premises on which economics was founded followed from ‘deduction from simple assumptions reflecting very elementary facts of general experience’, and as such were ‘as universal as the laws of mathematics or mechanics, and as little capable of “suspension”.
Ah yes, general experience. What did Albert Einstein allegedly say about common sense? A funny thing happened on its way to becoming a science: economics seldom tested its premises empirically. Only in recent years has there been serious investigation of its core assumptions and, all too often, they’ve been found wanting.
Unlike in physics, there are no universal and immutable laws of economics. You can’t will gravity out of existence. But as the recurrence of speculative bubbles shows, you can unleash ‘animal spirits’ so that human behaviour and prices themselves defy economic gravity …
Given this willful blindness, the current reaction against economists is understandable. In response, a ‘data revolution’ has prompted many economists to do more grunt work with their data, while engaging in public debates about the practicality of their work. Less science, more social. That is a recipe for an economics that might yet redeem the experts.
Physics envy still lingers on among many mainstream economists. It is also one of the prime reasons behind the pseudo-scientific character of modern mainstream economics. The use of mathematics in mainstream economics — in contradistinction to physics — has not given us much in terms of accurate explanations and successful predictions of real-world phenomena.
Turning economics into a ‘pseudo-natural science’ is — as Keynes made very clear in a letter to Roy Harrod in 1938 — something that must be firmly ‘repelled.’