Progress in Economics: A Comment

I thought I could use some of my illegitimate blog administrator’s privileges to participate in the discussion on the “progress in economics” post by Floris without being lost in the midst of other users’ comments.

What strikes me both in the video interviews and in the related comments is how it lacks historical and sociological understanding. Of course, it strikes me because we are first and mostly a history of economics blog with a strong interest in the methodology of science studies but I do not think that this lack is solely annoying from an historian’s or a sociologist’s perspective. Rather, I think it is problematic on a much larger level.

For an historical point of view, first, I think it is important to understand that what we call “progress” is something that has changed dramatically over time. While until the early 20th century, what was considered good economic theory was what could be tested and validated by reality, it became in the decades following WWII something that was considered as rigorous mathematically - i.e. a model that is built on a cogent axiom base. That story is well told in Roy Weintraub’s How Economics Became a Mathematical Science(2002). Weintraub shows that, to happen, this evolution in economics had to be preceded by a change in the image of mathematics itself, as mathematics broke away from the objects of science. This evolution of economics is in some way similar to the evolution of many other disciplines that were “mathematized” at approximately the same time. It involves changes in attitudes and in the professionalization of the economics disicpline that are so significant that there is a feeling of “no coming back”. Many of the researchers interviewed, for whom I have the deepest respect, argue that the problem might be that the discipline has become too abstract and too far remote from reality. Yet I doubt that any of them would tell his students that mathematical accuracy is something that can be eschewed for the sake of deeper human sensitivity - or something of that sort. It seems unlikely, therefore, that progress in economics will involve fewer mathematical refinements in the future.

Another thing that historians would point out is that discussions of economics being too abstract and “inhumane” have occurred many times in the past, and before economics became a mathematical science. In the first decades of the 20th century, for instance, economists and social scientists working at the Wharton School, at Columbia or at the University of Wisconsin (e.g. Simon Patten, John Commons, Rexford Tugwell) were claiming that economic theory should not be separate from political and social activism - in particular social work. In their view, progress in economics as a science, therefore, should be accompanied by some kind of social progressivism. This has been well studied by people like Malcolm Rutherford or Tim Leonard - including the dark side of this movement, which is that many researchers of that period held eugenic views. What has happened with the technicization of economics is that this relation between scientific progress and social progress has somewhat loosened. Yet it would be wrong to argue that this has completely disappeared. Though the more recent period is less investigated in this respect, it is likely that people such as Solow or Krugman have, beside their technical works, some idea of what should be done in the larger society and a reflection on how economics can help achieve this. However, they are not naive to the point that they think that changes in economic thinking (or in any thinking at all) will automatically bring social change. Though it is the story that is sometimes taught to high school students, I guess no one seriously believes that the Keynesian revolution is what has got Western countries out of the Great Depression! The relative economic stability of the first decades after WWII was a consequence of the postwar reconstruction, accompanied by a strong political willingness to build an international monetary system and Keynesian economic models were only one among many instantiations of the postwar zeitgeist.

What many of the interviewees in the video define as economic progress is therefore beyond the reach of economists alone. What is rather needed is a willingness to refound the economic system on a global scale, which involves social scientists, politicians ans business leaders. My feeling is that if it is the intent of INET to promote “progress” in both economic and political thinking, its success will be much easier to locate in the latter than in the former, at least in the short run. Progress in economics will reveal itself in retrospect.

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