As the owl of Minerva spreads its wings over the future of the euro, I am reminded of what Joseph Stiglitz had to say about the scientificity of economics, as reported recently in this text by his Columbia colleague Akeel Bilgrami:
Among disciplines, economics… is perhaps the worst offender in inuring itself against alternative frameworks of thought and analysis. In fact, I will frankly say that I have never come across a discipline that combines as much extraordinary sophistication and high-powered intellect and intelligence with as much demonstrable falsehood. So, for instance, some of the most brilliant intellectuals I have known to this day make claims about the trickle down of wealth in capitalist economies and present them with the most sophisticated quantitative methods, despite the plain fact that wealth has not trickled down (at least not to the places where it needs to trickle down) anywhere in the world in the entire history of capitalist political economy. If a physicist were to make some of the claims that economists have made and that have been falsified as repeatedly as they have, he would not only have his career terminated, he would properly be the laughingstock of his profession. Now there is no direct political influence that forces this sort of refusal to question, let alone give up, one’s assumptions in a discipline such as economics.… It is largely unconscious self-censorship—often done with career advancement in mind—that threatens academic freedom in such a discipline.
On the very evening after I wrote those words, I was over at a dinner at my economist colleague Joe Stiglitz’s apartment, and I impertinently told him that I was going to raise this point in a lecture…at a conference on academic freedom at the New School the next day. His response was memorable. “Akeel, I agree with you about economists, but I don’t understand why you are so puzzled. One would only be puzzled if one were making the wrong assumption about economics. What you should be assuming is that—as it is done by most economists—economics is really a religion. And so why should you be puzzled by the fact that they cling to and never give up their views despite their frequent falsification?”
(from Akeel Bilgrami, Truth, Balance and Freedom, in Akeel Bilgrami and Jonathan R. Cole, eds., Who’s Afraid of Academic Freedom? Columbia University Press (2015), pp. 20-21)
With all due respect to Stiglitz, I would like to propose a less spiritually freighted explanation for the disdain so many academic economists display for empirical verification. The following is an excerpt from Chapter 4 of MWA.
The topic is finance but it applies to economics more generally, especially where economics encounters public policy. TINA is Margaret Thatcher’s There Is No Alternative, which is what the IMF and the EU, confident in their uncorroborated (not to say demonstrably false) theoretical framework, has kept repeating to the Greek government, which remains obstinately attached to empirical verification. Chapter 4 continues:
Like pure mathematicians, (macro)economists privilege internal consistency and intellectual satisfaction over correspondence to externally-defined circumstances in what the uninitiated persist in regarding as reality. Should economists perhaps be seen as a subspecies of pure mathematicians, who differ from the rest of us in their extraordinary effectiveness in salary negotiations?