Really Reorienting Modern Economics

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Modern economics can benefit significantly both from a radical reorientation at the level of method, as well as from a greater input from appropriate branches of philosophy.

This is the two part (albeit highly interrelated) thesis I want briefly to defend in this short paper.

The economic crisis has drawn increased attention to the explanatory failures of modern economics; and a good number of commentators are now questioning how the discipline can do better. I have long argued that many of the various problems of the modern discipline derive from the heavy emphasis on formalistic modelling. Though there are other economists taking a similar view, it is noticeable that most of the ongoing response from the economics academy takes the form of proposals either for revised mathematical deductive ‘models’, or for revised approaches to mathematical deductive ‘modelling’. Such reactions are doubtless of value. However, if this is the only sort of redress fostered by the recently formed Institute for New Economic Thinking then I fear its name will be found to be somewhat premature. In any case, I intend to argue that a rather more radical reorientation of the discipline is required.

It is often supposed that any oppositional orientation to the modern emphasis on mathematical method in economics is based on personal preference (distaste) or (limited) analytical competence. It is rarely recognised (or acknowledged) that such an opposition may be an informed choice; that there may actually be good reason to doubt the generalised appropriateness to economic analysis of the sorts of mathematical methods mostly employed by economists, given the nature of social phenomena.

This though is the contention I intend to advance explicitly here. The sorts of mathematical methods economists use are forms of tools. Like all tools they are appropriate to some uses and conditions and not to others. Though a hammer has various uses it is not particularly relevant to cutting the grass. I want to suggest that mathematical methods of the sort economists typically employ may not be particularly, or very often, well-suited for the illumination of social material, given the nature of the latter. The reasonable way forward, I thus argue, is explicitly to design explanatory approaches to be appropriate to the sorts of contexts and materials with which economists must actually deal, even if this means relinquishing the current formalistic emphasis. A philosophical input can help in this latter endeavour.