Wednesday , January 29 2020
Home / Real-World Economics Review / Economics is still in the pre-scientific age

Economics is still in the pre-scientific age

Summary:
From Michael Joffe If you are interested in “creating greater economic equality, reducing the power of corporations” and so on, you have to understand how economic power works. I am using “power” here not as an ideological category, but in the sense of causation, the degree of one’s ability to bring something about. It is obvious that in the economy, some people and some organisations (e.g. firms) have more influence than others. What they want to happen is more likely to happen. This is causation, and it is power. So it is nothing whatever to do with the mere theological discussions that Ken Zimmerman appears to think this is about. And it is absent from economic theories (not just neoclassical ones). To quote discussions among anthropologists about universal human laws etc is just

Topics:
Editor considers the following as important:

This could be interesting, too:

Editor writes Breaking the national envelope

Editor writes The awakening of an econ student

njhaering writes Anti-Cash-Alliance suffers setback in their home-town New York

Lars Syll writes On causality and econometrics

from Michael Joffe

If you are interested in “creating greater economic equality, reducing the power of corporations” and so on, you have to understand how economic power works. I am using “power” here not as an ideological category, but in the sense of causation, the degree of one’s ability to bring something about. It is obvious that in the economy, some people and some organisations (e.g. firms) have more influence than others. What they want to happen is more likely to happen. This is causation, and it is power. So it is nothing whatever to do with the mere theological discussions that Ken Zimmerman appears to think this is about. And it is absent from economic theories (not just neoclassical ones).

To quote discussions among anthropologists about universal human laws etc is just silly. We have ways of finding out how causation works. In biology and other natural sciences, they have worked extremely well. We have known how the human circulatory system works for 400 years. We know a lot about e.g. the causes of many diseases.

If economists applied a similar methodology (mutatis mutandis) to the economy, we would have much better knowledge about how it works, causally. And it is an elementary error to confuse the workings of the economy with something like predicting human behaviour, which everybody knows is near-impossible. The behaviour of the economy has many regularities – most of which seem to me to be system properties like feedback, not reducible to the vagaries of human nature. These can readily be understood if one goes about it in the right way.

And also, to reiterate, this is about understanding causal processes, not about prediction. One of the big flaws (not the only one!) of conventional economics is that it acts as if research is all about prediction. The basis of the natural sciences such as biology is understanding causation. That can help with prediction. But most of all, it means that interventions have a better chance of success. Compare modern medicine, with a scientific basis, with what was going on in, say, the 1850s. Leeches and all that. Economics is still in the pre-scientific age, it is like 1850s medicine.  read more

Leave a Reply

Your email address will not be published. Required fields are marked *