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Weekend read – More quotes against economics

From Asad Zaman A previous post Quotes Critical of Economics collected assorted quotes which are useful in writing up different kinds of critiques of economics. In addition, I collected quotes from Romer’s Trouble With Macro which are sharply critical of economics. In terms of the “Loyalty, Voice, Exit” paradigm, I look for “Exit” quotes, which suggest that we need to throw out the entire discipline and rebuild on new foundations; for a proposed alternative, see “Uloom-ul-Umran: An Islamic alternative to Western Social Science“. I try to avoid “Voice” critiques which suggest that we can rescue economics by making modifications, minor or major. I have been collecting more quotes along these lines for two years. I was hoping to sort them into categories, and organize them via some

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from Asad Zaman

A previous post Quotes Critical of Economics collected assorted quotes which are useful in writing up different kinds of critiques of economics. In addition, I collected quotes from Romer’s Trouble With Macro which are sharply critical of economics. In terms of the “Loyalty, Voice, Exit” paradigm, I look for “Exit” quotes, which suggest that we need to throw out the entire discipline and rebuild on new foundations; for a proposed alternative, see “Uloom-ul-Umran: An Islamic alternative to Western Social Science“. I try to avoid “Voice” critiques which suggest that we can rescue economics by making modifications, minor or major. I have been collecting more quotes along these lines for two years. I was hoping to sort them into categories, and organize them via some commentary, but have not found the time to do so. So instead of waiting longer, I am just publishing them as a random and disorganized collection – given below.

For Marx, ‘pure’ economic theory, that is economic theory which abstracts from a specific social structure, is impossible. It would be similar to ‘pure’ anatomy, abstracted from the specific species which is to be examined. (Ernest Mandel’s Introduction to Fowkes translation of Das Kapital).

Chicago economist Ronald Coase attributed a satirical description of it to the English economist Ely Devons: ‘If economists wished to study the horse, they wouldn’t go and look at horses. They’d sit in their studies and say to themselves, “What would I do if I were a horse?”’  From Radical Uncertainty by Kay and King. 

In 2003, Robert Lucas of the University of Chicago, in his presidential address to the American Economic Association, declared that the “central problem of depressionprevention has been solved, for all practical purposes, and has in fact been solved for many decades.”

 Lucas (2004) asserts that “Of… … that “Of the tendencies that are harmful to sound economics, the most seductive, and in my opinion the most poisonous, is to focus on questions of distribution. The potential for improving the lives of poor people by finding different ways of distributing current production is nothing compared to the apparently limitless potential of increasing production.” In this paper we evaluate this claim using an extended version of Lucas’ (1987) welfare-evaluation framework. Surprisingly, we find that the welfare costs of inequality outweigh the benefits of growth in most cases. These calculations support the case for a research agenda that treats not only growth but also inequality as a priority. From: Cordoba & Verdier: Lucas vs Lucas: On Inequality and Growth

“Nothing is more dreadful than the despicable murder of a beautiful theory by abominable facts.” Quantum Philosophy Omnes.

Few things are as dangerous as economists with physics envy – John Rapley

Mirowski; More Heat Than Light

The further one digs, the greater the realization that those neoclassicals did not imitate physics in a desultory or superficial manner; no, they copied their models mostly term for term and symbol for symbol, and said so.
It may not show in the subsequent chapters of this volume, but at the time I was staggered by the enormity of it. What did it mean to say that the economic theory used in the West to discuss all manner of events and issues was essentially a simulacrum of the physics of the mid-nineteenth century?

Here is how the economist Herbert Gintis describes it in an article titled “Hayek’s Contribution to a Reconstruction of Economic Theory9”:

By contrast to Hayek, modern economic theory in general, and game theory in particular, hold to a much stricter and I believe indefensible form of methodological individualism in which all social phenomena above the level of the individual must be explained as Nash equilibria in a game played by self-regarding, amoral, rational actors. So ingrained in economic theory is this principle that it is not usually even explicitly articulated. Rather, it is simply embraced as “tacit knowledge” (p111).

Steve Denning (Jul 22, 2013) How Modern Economics Is Built On ‘The World’s Dumbest Idea‘, Forbes

We’re all drunks looking under the lamppost.”
—Aviv Nevo, professor of economics, University of Pennsylvania, speaking at the European Central Bank’s annual gathering of leading economists in Sintra, Portugal.

Leading Economists At A Loss

Yet the world’s leading economists aren’t much help in understanding, let alone solving, the problem of stagnant wages:

  • It’s “the economy’s biggest mystery,” writes CNBC’s Jeff Cox.
  • “This is one of the big economic questions of our time,” said Ángel Talavera, lead eurozone economist at Oxford Economics in London.
  • “The lack of wage growth at the aggregate level despite the declines in the unemployment rate and strong job gains remains a mystery,” Joseph Song, U.S. economist at Bank of America Merrill Lynch, wrote in a note to clients.
  • “Economists are stumped,” writes Noah Smith in Bloomberg.

Federal Reserve Chairman Jerome Powell also admits to being troubled. “I wouldn’t say it’s a mystery,” he said cautiously. “But it is a bit of a puzzle.”

The combination of strong growth and stagnating wages flies in the face of basic economic principle that falling unemployment should lead to higher wages. Employers compete harder for workers. Paychecks rise across the board. Inflation goes up. Ergo, wages increase, as businesses pass on the higher cost of labor to customers.

Uskali Maki: Econ Epistemology: Hopes and HorrorsA recent Presidential Address to the Econometric Society suggests that a prominent game theorist may have been influenced by these findings: “I am a micro economics teacher. I am part of a big ‘machine’ which I suspect not only influence the world but even is brainwashing students to think in a way which I do not particularly like.” (Rubinstein 2004, 16) He shares his doubts about whether economic “toy models” are able to inform us about the world but believes that nevertheless “models can have an enormous influence on the real world, not by providing advice or by predicting the future, but rather by influencing culture, that is, the collection of ideas and conventions which people believe in and which influence the way they reason and act”

Why Economists were Blind to the Crisis?: The Subcommittee on Investigations and Oversight will hold a hearing on July 20, 2010, to examine the promise and limits of modern macroeconomic theory in light of the current economic crisis. The Subcommittee has previously looked at how the global financial meltdown of 2008 may have been caused or abetted by financial risk models, many of which are rooted in the same assumptions upon which today’s mainstream macroeconomic models are based.1 But the insights of economics, a field that aspires to be a science and for which the National Science Foundation (NSF) is the major funding resource in the Federal Government, shape far more than what takes place on Wall Street. Economic analysis is used to inform virtually every aspect of domestic policy. If the generally accepted economic models inclined the Nation’s policy makers to dismiss the notion that a crisis was possible, and then led them toward measures that may have been less than optimal in addressing it, it seems appropriate to ask why the economics profession cannot provide better policy guidance. Further, in an effort to improve the quality of economic science, should the Federal Government consider supporting new avenues of research through the NSF?

Nobel laureate Edmund Phelps

Q: So how did adaptive expectations morph into rational expectations?

A: The “scientists” from Chicago and MIT came along … They said, let’s be scientific. In their mind, the scientific way is to suppose price and wage setters form their expectations with every bit as much understanding of markets as the expert economist seeking to model, or predict, their behavior …

Q: And what’s the consequence of this putsch?

A: Craziness for one thing … What led to rational expectations was a fear of the uncertainty and, worse, the lack of understanding of how modern economies work. The rational expectationists wanted to bottle all that up and replace it with deterministic models of prices, wages, even share prices, so that the math looked like the math in rocket science … The problem is that we don’t have a “right” model that could be certified as such by the National Academy of Sciences. And as long as we operate in a modern economy, there can never be such a model.

John Kay sums it up pretty well:

An important scientific advance yields conclusions that differ from those derived from other theories, and establishes that these divergent conclusions are supported by observation. Yet as Prof Sargent disarmingly observed, “such empirical tests were rejecting too many good models” in the programme he had established with fellow Nobel laureates Bob Lucas and Ed Prescott. In their world, the validity of a theory is demonstrated if, after the event, and often with torturing of data and ad hoc adjustments that are usually called “imperfections”, it can be reconciled with already known facts – “calibrated”. Since almost everything can be “explained” in this way, the theory is indeed universal; no other approach is necessary, or even admissible

Evolutionary Biologist: David Sloan Wilson

The more I learned about economics, the more I discovered a landscape that is surpassingly strange. Like the land of Mordor depicted by J.R.R. Tolkien and portrayed so vividly in Peter Jackson’s Lord of the Rings films, it is dominated by a single theoretical edifice that arose like a volcano early in the twentieth century and still dominates the landscape. The edifice is based on a conception of human nature that is profoundly false, defying the dictates of common sense, before we even get to the more refined dictates of psychology and evolutionary theory. Yet efforts to move the theory in the direction of common sense are stubbornly resisted.

… Neoclassical economics provides an outstanding example of the you can’t get there from here principle in academic cultural evolution. It will never move if we try to change it incrementally. It must be replaced wholesale with a more realistic conception of human nature.

From Introduction of “Political Economy: Making Sense of the Post-2008 WOrld

Yanis VarouFakis:

Some time in the 1990s, Joseph and I converged on a difficult belief: that in economics, error is not just what happens until one gets it right. It is all one can expect! Serious, Inherent Error is the only thing that can come out of even the most sophisticated economics. The only scientific truth economics can lead its honest practitioners to is that the study of capitalism is guaranteed to lead to superstition if predicated upon a determination to extract truth from the theoretical models and their empirical applications.

Our conclusion that all theoretical certainties, upon close inspection, turn into dust was not easy on our minds or hearts. It did not come naturally to us. Yet we embraced it, and even shouted it from the rooftops, once we became convinced of the basic truth therein: namely that a scientific economics is an illusion leading one closer to astrology than to astronomy and more akin to a mathematised religion than to mathematical physics.

Joseph Halevi

In this context, I should mention also the themes put forward by Michat Kalecki, who significantly influenced the above authors as he was the first economic thinker to have developed the theory of effective demand, which later became trivialised into Keynesian economics. In Kalecki, thanks to his Marxist-Luxemburg background, the problem of effective demand is not resolved by clever financial and policy tricks. Instead the question of profitable market outlets becomes the central internal and systemic contradiction in the advanced stage of capitalism. Wasn’t he right all along?

Nicholas J. Theocarakis

The disillusion with the scientific pretensions of economic theory was even greater in my case. The largest part of my working life was spent outside academia, with only a foothold in it as an adjunct lecturer, and only for the last five years am l a full-time academic. Having left industry to ‘serve’ science, it was harder for me to accept that the greener grass was a wasteland. I had been trained as a labour economist in the ‘80s in Cambridge and this was then a discipline where relevance and subtlety were still practised. My later retreat in the safe haven of the history of economic thought, where my main research interests now lie and where true scholarship is still evident, made me more reluctant to acknowledge the poverty of theory, although more equipped to see how it came about.

.I found it deeply offensive to see how quasi-rigorous mental gymnastics are increasingly being used to dress up reactionary political positions and end up in justifying policy measures that result in the misery of millions and being hailed as “harsh but necessary” by “embedded economists” – a phrase borrowed from my friend and colleague Thanassis Maniatis – singing in chorus with embedded journalists serving specific class interests. Living in besieged Greece in the last two years made this point even more painful.

Listening to Yanis’ recollection of the fall of the Soviet Empire, I must confess that I never felt obliged to justify the indefensible or felt sorry for its demise. I think I saw it then for what it was. But I was taken aback by the viciousness with which the 1 free-market system’ was used by turn-coat kleptocrats to enrich themselves and turn their vengeance on the people of the ‘liberated’ states. And I admit that I also failed to see to what extent the countries that purported to be exemplars of ‘really existing socialism’ served as a countervailing power for the assault on the social rights of the working classes in the West that has been unleashed in the last three decades.

Mainstream economic theory has played a sinister role as an ideological prop for this assault. The practice of presenting political positions as scientific necessities, while paying lip-service to a wert-frei, but truly wertlos, science, was one of the first reasons that convinced me to reconsider my views on economic theory. The failure of the Left, and concerned economists, to articulate a consistent, cogent and fruitful discourse convinced me that the problem had to do more with the nature of our science than with the choice of the appropriate paradigm. Equally annoying I found the self-proclaimed heterodoxy of alternative schools of thought, where heterodoxy (with the appropriate flavour) was worn as a badge rather than as an intention to do true political economy. Marx, Keynes and Veblen were my intellectual heroes, but I always had a disdain for hero-worshippers.

Another aspect of our science that always worried me was that it pretended that you can ostracise the political element from it. Siding with Protagoras instead of Plato, I believe that you can never argue that politics, and economics, is a science that can be left safely in to the hands of the experts. Scientific pontification in economics is often an attempt to win a political argument with false pretences.


A description of “mental model” is provided by Robert Aumann: “In my view, scientific theories are not to be considered ‘true’ or ‘false.’ In constructing such a theory, we are not trying to get at the truth, or even to approximate to it: rather, we are trying to organize our thoughts and observations in a useful manner.

Quote from Chapter 3 of Hilary Putnam: Collapse of the Fact/Value Dichotomy

Often economists defend the strategy of assuming that economic actors are “rational” as what Sen calls an “intermediary” strategy: actual behavior is identified with rational behavior, on the ground (or methodological hope) that actual behavior is close enough to rational for this “simplifying” assumption to work, and then rational behavior is assumed to be identical with self-interested behavior. Sen’s uncharacteristically savage comment is as follows:

The complex procedure of equating self-interest with rationality and then identifying actual behavior with rational behavior seems to be thoroughly counterproductive if the ultimate intention is to provide a reasonable case for the assumption of self-interest maximization in the specification of actual behavior in economic theory To try to use the demands of rationality in going to battle on behalf of the standard behavioral assumption of economic theory (to wit, actual self-interest maximization) is like leading a cavalry charge on a lame donkey“

Economics: The Discipline That Refuses to Change:




Overview: Dismissive and hostile criticism by Solow led Lucas and supporters to obstinacy, causing them to stick to models even though the models flew in the face of empirical realities. Solution – If mainstream Keynesian orthodoxy had been less hostile, Solow Lucas would be been more amenable to modifying the model towards including Keynesian ideas of rigidities, search models, and others. So it was psychology of leaders of the profession.

Notes about Trouble with Macro:

  1. A paper that ridicules post-real macroeconomics and hurt’s some feelings
  2. A persistent equilibrium in which many economists are afraid to publish things that they believe to be true

Paul Romer: What Went Wrong: Fraud Economists who incorporated the wrong values into their models, are to blame.


There were disagreements about the relative importance of the different factors that contributed to a century of remarkable progress in the United States, but everyone agreed that progress would continue.

No one then would have predicted that by 2020, life expectancy in the US would be falling.

When I agreed to write a review for Foreign Affairs of Lemann’s book and a complementary book by Binyamin Appelbaum – The Economists’ Hour – I knew that both would ask “what went wrong?” I expected both authors to criticize economists for failing to anticipate the possibility that the US might stop making progress. I anticipated that both would charge that even after the fact, economists have failed to diagnose the cause of the slide from progress to regress.

What I did not anticipate was the claim that economists were the cause.

Paul Romer on Mathiness: https://paulromer.net/mathiness/

The point of the paper is that if we want economics to be a science, we have to recognize that it is not ok for macroeconomists to hole up in separate camps, one that supports its version of the geocentric model of the solar system and another that supports the heliocentric model. As scientists, we have to hold ourselves to a standard that requires us to reach a consensus about which model is right, and then to move on to other questions.

Polanyi (1946) notes, “Previously to our time, no society has ever existed that, even in principle, was controlled by markets.”

Mark Twain popularized the phrase: “there are three kinds of lies: lies, damned lies and statistics”, and attributed it to Benjamin Disraeli. It refers to the power of numbers to deceive.

In fact, the summum bonum of this ethic, the earning of more and more money, combined with the strict avoidance of all spontaneous enjoyment of life, is above all completely devoid of any eudaemonistic, not to say hedonistic, admixture. It is thought of so purely as an end in itself, that from the point of view of the happiness of, or utility to, the single individual, it appears entirely transcendental and absolutely irrational. Man is dominated by the making of money, by acquisition as the ultimate purpose of his life. Economic acquisition is no longer subordinated to man as the means for the satisfaction of his material needs. Weber (1955, Chapter 2).

“The advance of capitalist production develops a working class which by education, tradition and habit looks upon the requirements of that mode of production as self-evident natural laws.” (Marx 1977: 899-900)

Malthus wrote in his, Essays on the Principle of Population (1826):

“.. we should facilitate, instead of foolishly and vainly endeavouring to impede, the operations of nature in producing this mortality; and if we dread too infrequent visitation of the horrid form of famine, we should sedulously encourage the other forms of destruction, which we compel nature to use.

Instead of recommending cleanliness to the poor, we should encourage contrary habits. In our towns, we should make the street narrower, crowd more people into the houses, and court the return of the plague…

But above all, we should reprobate specific remedies for ravaging diseases; and those benevolent, but much mistaken men, who have thought they were doing a service to mankind by projecting schemes for the total extirpation of particular disorders”

market economies encourage the pursuit of wealth “to the point of being absolutely irrational,” according to Max Weber.

Lord Keynes stated that:

‘ … we have exalted some of the most distasteful of human qualities into the position of the highest virtues. The love of money as a possession [… is …] a somewhat disgusting morbidity … For at least another hundred years we must pretend to ourselves and to everyone that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight’(Keynes, 1930 cited in Skidelsky, 2001).

Quotes from The Great Economists by Phil Thornton

Daniel Kahneman – economic psychologist

‘Economists think about what people ought to do. Psychologists watch what they actually do.’

Daniel Kahneman, Interview with CNN Money, 23 August 2007

Alfred Marshall – microeconomics arrives

‘(1) Use mathematics as shorthand language, rather than as an engine of inquiry. (2) Keep to them till you have done. (3) Translate into English. (4) Then illustrate by examples that are important in real life. (5) Burn the mathematics. (6) If you can’t succeed in 4, burn 3. This I do often.’

Letter from Alfred Marshall to statistician Arthur Bowley, 1906

John Maynard Keynes – the rise, fall, rise … and fall

‘This ‘long run’ is a misleading guide to current affairs. In the long run we are all dead.’

John Maynard Keynes, A Tract on Monetary Reform, 1923

Friedrich Hayek – the archetypal libertarian

‘The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.’

F.A. Hayek, The Fatal Conceit, 1988

Asad Zaman
Physician executive. All opinions are my personal. It is okay for me to be confused as I’m learning every day. Judge me and be confused as well.

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