Sounds Familiar

From a recent blog posting by economist Brad DeLong, entitled The State of Economics in the 2000s Analogized…:

But I think there also has to be an explanation in terms of the sociology of academic disciplines. And in that light, it seems to me that if I were a journalist, I’d consider writing a piece comparing freshwater economics to the other major recent case in which an academic discipline went completely off the rails, namely English departments’ swing into postmodernism in the ’80s and early ’90s. Offhand, there seem to be some real similarities, e.g.:

  1. In both cases, the people involved maintained, credibly, that you couldn’t really assess the work in question without putting a lot of effort into understanding it.
  2. In both cases, that required mastering difficult stuff. (In econ, all the math and models; in pomo lit stuff, mastering the literally incomprehensible language in which a lot of that stuff was written.)
  3. In both cases, that deterred a lot of people on the outside who were generally puzzled and skeptical, but didn’t want to spend years getting into a position in which they could credibly say: yes, this is, in fact, nuts.
  4. So in both cases practitioners were largely insulated from criticism they had to take seriously.

Relatedly, in both cases it took shocks from the outside to expose the problems in this (in the case of English, things like the Sokal hoax; in the case of econ, the near-collapse of the global economy.)

Both cases involved a lot of arrogance, and a generally dismissive attitude towards other approaches. Since, in both cases, practitioners were able to seize significant amounts of control over a discipline before their approach crashed and burned, this did real damage to the disciplines in question (leading to, e.g., large chunks of previous disciplinary history being forgotten.)

In the last sentence DeLong identifies clearly what is most sad and disturbing about this kind of story.

Update: As a commenter points out, the text quoted is from DeLong’s blog, but is not his own words, he’s quoting someone else.

This entry was posted in Uncategorized. Bookmark the permalink.

12 Responses to Sounds Familiar

  1. Marcus says:

    That quote from Brad DeLong is beautifully lucid. Joe Polchinski could have it tattooed on his bottom, for string aspirants to read.

  2. Pingback: A semana nos arXivs… « Ars Physica

  3. hackenkaus says:

    Oh great, now that people are finally making the connection between freshwater economic theory and string theory, it can’t help but draw Lubos into the debate, which will of course be very productive.

  4. spammophobia says:

    The effects of the global crisis on economic thinking and modeling are still to be seen, but what was the net effect of the Sokal affaire on postmodern literature? I guess nothing much has changed actually, but a more, and better, informed opinion would be interesting.

  5. Chris W. says:

    It should be pointed out that the text was quoted by Brad DeLong, from an email sent to him by one ‘chunkyreesewitherspoonlookalike@gmail.com’. His post makes this clear.

  6. Carl Futia says:

    I’d be careful about accepting DeLong’s (second hand) views as gospel.

    To suggest that economists, especially macro-economists, have taken a collective wrong-turn sometime during the past 30 years is silly.

    As a group, economists are just as smart as physicists. They are just as dedicated to testing their theories against evidence – even though this is much harder to do in economics because controlled experiments are next to impossible to conduct.

    DeLong would have you believe that the current economic crisis proves that economics as currently practiced is bunkum. Does it make sense to imagine that DeLong knows the truth and that everyone who disagrees with him is an idiot?

    Why should economists be able to prevent economic crises? Do they have magical powers? Can they give marching orders to the US government and to you and me?

    The physics of hurricanes is reasonably well understood. Can physicists prevent hurricanes?

  7. Chuckles says:

    (…in the case of English, things like the Sokal hoax; in the case of econ, the near-collapse of the global economy..)

    And in the case of physics, what exactly?
    The disapperance of Madagascar?
    I am not a strings fan, but to compare the nonsense that is pomo with the voodoo that is much of macroecon to strings is absurd. At least string theorists arent going around telling us how to think, trying to change society b causing us to experience joussiance (whatever the hell that is) or giving so called economic advice to governments around the world that ends up damning the lives of millions.

  8. Bob Levine says:

    And I’d be VERY careful of accepting Carl Futia’s views, firsthand or not, as gospel. I think I’m a bit more persuaded by the arguments of Paul Krugman—who does know a thing or two about Nobel Prize level economics—given at

    http://www.nytimes.com/2009/09/06/magazine/06Economic-t.html?_r=1&pagewanted=all

    that indeed, macroecons of the freshwater persuasion got it spectacularly wrong during the past 30 years. Krugman gives specific instances where Chicago-school economists ignored evidence, actual occurences in the real world, to a degree that even the most devoted string theorist would be unlikely to indulge in if contraindications of comparable strength were to emerge from the LHC.

    One of Krugman’s highly relevant points is that many economists were attached to extremely unrealistic models of economic behavior because the simplifying assumptions associated with ‘perfect market’ models of the economy allowed them to create wonderfully ramified mathematical models that were too beautiful to be false. Sound familiar?

  9. Armozel says:

    Well I’m glad that someone else is starting to chime in a fundamental crisis that has existed probably since Marshall (and Walras). The attempt to model human behavior in the form of catallactics (interpersonal exchange) by assuming static equilibrium and other physics concepts into the attempt has made more errors than it has solved.

    Lets take the idea of the price system as an example. Most theories revolving it simply assume prices exist with *no* concrete explanation (I say most, because at least the Austrians have taken a stab at it, going far back as Carl Menger’s own work on the issue), but the theories some how make many conclusions about the nature of how prices move, how capital is influenced (and vice versa), and so on. How can any of these theories survive if they can’t start with the basics (how the price itself gets started? how money started and so on?).

    Then there’s the problem of the implied separation of micro and macro sphere phenomena. Not even in biology (in particular, evolutionary biology) is there such a division, but economists get away with it with little or no criticism. And any criticism that’s leveled on this issue is either ignored or attacked in a derisive manner. It’s issues like these that makes economics less of a science and more of political ideology meets perennial RTS game sort of situation (where those with the most “street cred” and the loudest voice gets to set the tone of the discourse, and the rest get drowned out like the Austrians and even some Post-Keynesians).

  10. srp says:

    Anyone who accepts the critiques of Krugman and DeLong at face value is making a mistake. The freshwater models certainly have many limitations, but it’s not as though the alternative neo-Keynesian models predicted the current crisis any better or explain it any better after the fact. Krugman isn’t much of a macro expert in the first place and, for example, was actually cheerleading for the creation of a housing bubble a few years ago.

    The truth is that the Keynesian and freshwater types have converged a lot in the last couple of decades in the formal properties of their models. None of these models does a very good job of dealing with financial shocks.

  11. Bob Levine says:

    @srp:

    “The freshwater models certainly have many limitations, but it’s not as though the alternative neo-Keynesian models predicted the current crisis any better or explain it any better after the fact…
    The truth is that the Keynesian and freshwater types have converged a lot in the last couple of decades in the formal properties of their models. None of these models does a very good job of dealing with financial shocks.”

    I’m not sure that predictive success is really at issue (and I don’t think Krugman is really arguing that Keynsian economics predicts financial shock better than any other kind of economics). I think the issue is rather that the freshwater world-view assumes that the largely unregulated market is going to work, that any problems the rest of us face are simply normal corrections, and so on. The insulation of this
    best-of-all-possible-worlds picture of reality—the kinds of denial that Krugman documents—from events in the actual world, the picture of the Infallible Market that it promotes, is really the problem. And it’s just that extreme insulation for empirical challenge that makes de Long’s and Krugman’s observations relevant to the issue of string theory’s overall stance.

  12. Jack Lothian says:

    As someone who has studied and worked in both Physics and Economics, I do believe that economics has gone off the rails. First, it is a pseudo-science – there are no provable theories and no repeatable experiments. Second, most of the basic assumptions (especially at the micro-level) are at best approximations and these assumptions clearly break down at times. It is obvious that people, even in large groups, are not rational & that irrational feed-back loops exists that swamp classical economic optimality cobstraints.

    Up until recently, most economists, especially macro-economists, understood these point but starting somewhere around Friedman, economics found religion and this polarized and distorted the field. Capitalism and free-markets are the magic economic hand of god. Today the talk about competition, deregulation, efficient markets & the “magic hand” has become a dogma that is not to be questioned and it need not bother explaining difficult events such as the various “economic bubbles” that keep happening. After all, these events are a result of man’s imperfections & we just need to try harder to be pure and everything will turn out perfect.

    As an aside, the physicists and mathematicians who recently moved into the field are sophisticated modelers, use to modeling large multi-body problems of various types. In truth, their methods and temporary success say nothing about the underlying economic theories and they brought no real science to economics.