Cracks in the “Science” of Economics
by: Nichola Torbett on July 11th, 2009 | 4 Comments »
Free market economics has never made sense to me, and now I’m wondering whether it is because I don’t have faith in the basic tenets of the religion. Yes, I said “religion.”
In his latest column for the Guardian, which is titled “Praying for an Economic Revolution,” Andrew Sullivan suggests that neoliberal economics is not a science but a religion based on faith.
This seems to me to open up all kinds of other ways of organizing economies, including Biblical economies. I am particularly taken with this essay by Biblical scholar Walter Brueggeman, who neatly sidesteps arguments between capitalists and socialists, insisting that “[t]he Bible does not linger over such labels, but insists that every available instrument of well-being – government, charity, private sector – must be mobilized in order to mediate the resources of the community for the sake of the common good.” He goes on to suggest an economic transformation from “autonomy to covenantal existence, from anxiety to divine abundance, and from acquisitive greed to neighborly generosity.”
You can read the whole article here.
Interesting, Nichola. I do not understand, shall I say, the scripturalism of economics? Too much emphasis is placed on scripture as writing when it is, instead, a written transcription of voice. Karel Van Der Toorn has a remarkable perspective on the matter in “Scribal Culture”.
Have you ever considered the Mishna? It has some fascinating wisdom and speaks the “biblical economy” you mention.
Economics had become too theoretical even in its hay day. Keynes was critical of the state of affairs in economics as being too speculative and with insufficient data. This was part of his critique of his teacher Alfred Marshall’s work on classical economics. One might make the same case against Keynes and his acolytes. Although Keynes and Dexter White hashed out the scaffolding for the Brenton Woods system they both served rival interest – the former the U.S. and the latter Great Britain. Economists serve specific agendas putting their own speculative bias before facts using numbers to conceal their world view biases. Hence economics, in its mathematical form, obscures the prejudices of the economist in the manner of a pseudo-empiricism or a pseudo-positivism. The underlying assumption of the Marshallian scissors taught as part of the introduction to this field and the more refined models of Neoclassical Economic thought are derived from the Lockean concept of enlightened self-interest that is portrayed within the proverbial black box as being in perfect symmetry and as the tit for tat exchange of value, supply equaling demand. Markets do not behave that way. For starters one can look at the work on monopolistic competition as developed by Joan Robinson where profit (that is, economic quasi-rent) is central to her modeling of the economy. Better yet, one can look at today’s malaise – a vivid but tragic demonstration, in real time, of market failure. What can save economics from losing any more ground as a social science? Perhaps the answer lies in an interdisciplinary approach combining its mathematical modeling with a sociological understanding of how monetary institutions and behaviors evolving around the exchange of value develop over time within an historical context. But such coordination of the three disciplines of Economics, Sociology, and History must entail a continued critique of the potential for biases where the numbers and concepts abstracted for the purpose of model construction may obscure the economist’s Weltanschauung.
What was inadvertently omitted in the above response is the importance that hard science plays for economics. Nicholas Georgescu-Roegan critiqued economic thought as working within the proverbial black box, that is, as a closed system ignoring physical reality. Georgescu-Roegan integrated the second law of thermodynamics (the law of entropy) into his economic modeling. One cannot ignore the physical environment in which markets operate. Alas, too many contributors to the field of Economics have ignored both the physical and social-historical setting within which economies develop. To avoid this tendency toward ideology that ascribes an almost religious aura upon this social science, economists must attune their observations and thought to reality such as it is.
What alternative would NOT be based on faith?
We all seem to agree that a good system improves everyone’s standard of living, minimizes suffering and waste, and so on. The questions are all the kind that can only be answered through experimentation — we need to look more at the kinds of experimentation that are being done in neuroeconomics, computer simulation, and local experiments being done in every part of the world. Ideology won’t fix things. Anti-ideologies won’t either. Only experimentation on the local level, gradually extending outward, will have any real impact. So what’s being done now that’s working?