“It might be more appropriate if the Sveriges Riksbank would end the Economics Nobel Prize as a failure: strictly, it isn’t a true Nobel at all; it was not part of Alfred Nobel’s legacy, but a much later add-on to pander to the economics profession’s vain pretensions of scientific respectability. If we judge a science by the hallmark of predictability, then the predictions of economists are no better than those of ancient Roman augurs or modern taxi drivers; alternatively, we can judge by its contribution to “scientific” knowledge, in which case the contribution that modern financial economics has made makes us wonder if the agricultural alchemist Lysenko shouldn’t have got a Nobel himself; or we can judge it by contribution to the welfare of society at large, in which case the undermining of the capitalist system, the repeated disasters of the past 20 years, the immiseration of millions of innocent workers and savers, and the trillion dollar losses of recent years surely speak for themselves.”
– Alchemists of Loss – How Modern Finance and Government Intervention Crashed the Financial System, by Kevin Dowd and Martin Hutchison. First published in 2010. Page 86.
Now having read it, I cannot recommend this book too strongly. Some of the discussion about modern financial theory – and its baleful consequences – is quite complex, but the authors write with a verve and eye for drama that makes this a very readable book. In my view, it is the best study of what has happened, and more importantly, spells out in practical, thoughtful ways as to what should be done.
One general rule of thumb for dividing science from non-science, or perhaps more generally knowledge from belief, is whether or not different “schools” exist within it. So, we know for instance that psychology isn’t actually a science due to the existence of parallel but mutually incompatible schools “Freudian etc”. Likewise, economics.
The interesting thing for me, regarding the knowledge realm, is that you can actually prove that Keynes was wrong so long as everyone is prepared to agree that the rules of arithmetic and mathematics are correct. It only takes school-level math to show that the infamous Multiplier[1] is simply wrong[2]. But since most of the field refuse to do this, we can be entirely confident that economics, as a field, right now, is neither a science nor, more generally, a “truth/knowledge seeking endeavour”.
[1] For instance Hazlitt does so in his famous book “The Failure Of The New Economics”.
[2] This doesn’t prove that another school e.g. Austrian is correct, but it considerably narrows the field.
This is also true of psychiatry. Econtalk had a podcast with Menand that was based on this article of his. I haven’t read it, but the podcast was interesting.
http://www.newyorker.com/arts/critics/atlarge/2010/03/01/100301crat_atlarge_menand
I also recommend ‘Alchemists…’
Ian-
By that logic, meteorology isn’t a science either because of the existence of warmists.
And physics isn’t a science either because there’s no one overriding consensus about some astronomical quirks. And God help the evolutionary biologists who are still fighting over punctuated equilibrium, or the definition of what constitutes a “species,” or quasi-Lamarckian inherited changes in gene expression.
That could be said about most academic “disciplines”, come to think of it. Ian has the troof of the matter, especially where Psychology, Sociology and Social Anthropology are concerned.
Economics is a pseudo-science; just because mathematics and statistics are involved does not make that discipline a science.
How’d I get smited? I didn’t mention r4c3!
Ian B. – agreed.
J.P. – yes the “Nobel” has become a farce (Nobel Krugman, Nobel Stickinsect, and so on), sometimes it is awarded to interesting people – but it does more harm than good.
Therefore it should end.
I agree strongly with Sunfish.
Think about it this way. If economics isn’t a science then what argument is there for any sort of liberty? The short answer is there is none at all.
Sunfish:
I think that would be climatology, not meteorology.
Sunfish – clearly it is a matter of degree. It is actually possible to get tractable results in economics as well – in microeconomics – but it is largely a failure as a science. Physics for example has a much higher ‘hit rate’.
Current – free market economics is all about demonstrating how economics cannot be used as a science!
Economics has a better record than most social sciences. Yeah, it’s got all the mess one associates with the soft sciences, and getting an actual hard answer is next to impossible, but it still has merits even if you only get two significant digits and not 15.
And re Krugman, the actual work he won the Nobel for was pretty reasonable stuff, even if he is a blithering asshole in his newspaper column.
Alfred Nobel also instituted prizes for literature and “international fraternity” (“peace”).
Economics is, while not a science, a lot closer to one than either of those, and I doubt that Mr. Nobel would be ashamed to have it recognized under his name.
Also, I think it’s being rather too hard on “economics” by conflating “economics” with “government policy claiming to be economics”.
Even “modern finance” (since they acknowledge the “government intervention” part as not being “economics”) isn’t the same as theoretical or even practical “economics”.
> free market economics is all about demonstrating
> how economics cannot be used as a science!
I assume you’re referring to the Austrian School. They don’t claim that economics isn’t a science, they claim that it can’t be used predicatively for interventionist policy.
They do claim though that it can be used predicatively in certain circumstances, that’s why some of them predicted the downfall of the USSR.
Some call this “pattern prediction”.
Current, if your only argument for liberty is based on economics then you will lose. And you will deserve to.
My argument for liberty is based on Hume. In fact, I am considering starting a liberty movement called The Humean League. And we will spread liberty via infectious electro-pop stylings.
Laird, what would you suggest?
Laird,
Is an “argument for liberty” required? Only if one makes the presumption of slavery, which necessarily implies a right to liberty for the slave-masters, so I suppose liberty is fundamental (though if you need dialectics to “prove” it then you don’t get it).
Mr. Pearce,
Thanks for the book recommendation. I keep seeing it recommended but I’ve now ordered it. However… is there a Samizdata reading list for those who want to plough through the “classics”? I’ve made a start and have read Hayek and Kuhn recently, for instance, but (if it doesn’t sound like an odd question) what’s been going on in the last 30 years that’s essential reading for the budding samizdatista? Comments from all would be appreciated…
Ok Ian. Let’s say Brad claims that he should rule the world. How are we supposed to argue against him?
Current,
In the absence of context for this “Brad” (are you intending to develop the argument by saying he was elected by some group, for instance?), I can only suggest that it would hardly be necessary to pay any attention to him in the first place.
The short answer is, you ask Brad to prove his claim.
Then you send out for pizza. It’s going to be a long wait.
Why does he have to prove his claim? Why don’t you have to prove yours?
Apart from anything else it’s foolish to assume that people will have a bias towards liberty. What if the vast majority of people have an opposite bias?
If Liberty needed any intellectual underpinnings, we should link it to physics. Action should be matched by an equal reaction. Traded goods should be equal in value. Justice should only exist to enforce equal treatment. It wouldn’t be hard- Homo Sapiens should be renamed Homo Transactor, since trade seems natural to us, but not other species.
The situation isn’t symmetric. Brad is asserting a claim over you, whereas you are not asserting a claim over him. He is the one who has to prove his position.
Anyway, why do you think economic theory is going to help you fend off Brad’s advances?
^^^Above answer is to Currant.
> He is the one who has to prove his position.
Why?
Why are you presuming a moral code in which people have a duty to prove their position?
> Anyway, why do you think economic theory is going to
> help you fend off Brad’s advances?
Because, if it is correct and others can be persuaded of that then it supplies and argument to others about why they should oppose him.
I hope folks here know that “natural law” is “nonsense on stilts”.
> Action should be matched by an equal reaction. Traded
> goods should be equal in value.
But traded goods are not equal in value in any meaningful way. Read about marginalism. This guy called Richard Whately had a good saying about it: “It is not that pearls fetch a high price because men have dived for them; but on the contrary, men dive for them because they fetch a high price.”
> It wouldn’t be hard- Homo Sapiens should be renamed Homo Transactor,
> since trade seems natural to us, but not other species.
People have suggested that, including by coincidence Richard Whately.
Not at all, I’m presuming an ethical debate, as per your specified parameters. You asked what to argue against somebody who “claims that he should rule the world”. I replied that he can’t prove that “should” thing there.
We know he can’t. A “should” is another word for an “ought” and we know as a fact of the universe that an ought cannot be proved from what is.
So, so long as Brad sticks to philosophy, you winz.
Why? How do you get liberty from economics? Via utilitarian reasoning? How?
Brad might be a lunatic, so why should I listen to him? If all it takes is the claim, without proof, then i assert my claim that I should be a dictator, and all people should obey me, and my first order of business is- no-one else will claim to be a dictator, ever!!
And I agree that people make subjective value judgements about how much things are worth (shiny, pretty, want it!!!), but if they sign a contract, with both sides agreeing to the exchange, then that could be called a fair and equal trade.
Nuke, there is no reason a trade need be fair and equal. All that matters is that each should value what they receive more than what they part with. The very essence of a “bargain” is that one feels there has been an unequal exchange in ones own favour.
By which I mean that “equal” is not a requirement and “fair” is a word that has many, many, many problems.
Richard, so long as no-one lied, and no force was used, I would call that fair and equal!
Paul: I presume for stickinsect read Stiglitz. Well, I’d rather not read him. However, I’d like to know what you think of him. As you may know, I live in a godforsaken banana republic whose current president thinks Stiglitz is the cat’s left bollock. Out of curiosity, I checked him out on Wikipedia. It appears he got a Nobel for saying that the free market sometimes gets stuff wrong, on account of not possessing the desirable attribute of omniscience, although I suppose you have to use learned terms like externalities and information deficit to get the right Nobelly feel. Anyway. He then goes on to say that because this is so, that the market makes mistakes about allocating stuff (which is obvious to me, since it hasn’t allocated me a French chateau, and it’s had plenty of time to), then Governments need to step in to correct those mistakes. This to me is a bit like saying that because not all Chinese restaurants can do a decent Wan Tan, the whole business of Chinese cuisine should be taken over by an alcoholic Turkish deafmute found sleeping in Trafalgar Square on Dec 24th. I mean, there seems to be a logical gap in there you could sail an aircraft carrier through. But then I think “no, he’s a Nobel prize winner. There has to be some abstruse mathematical logic that makes some sense of this.” Is there?
Endivio, the part you’ve missed out of the Stiglitz Method is the part where the government does what it is told to do by people like Stiglitz. That’s the special sauce that’s supposed to make the recipe work.
It’s a remarkably similar theory to that proposed by John Maynard Keynes in his famous book, “The General Theory Of Why John Maynard Keynes Should Be Appointed To Run The Economy”.
Ethics aside, it is important to make the economic case for the free market society. Making and winning this argument is the most effective way of promoting feedom. Why? Because we know it is right, in a scientific sense (my previous comments notwithstanding), with oceans of evidence to back it up (failure of communism, Hong Kong growth rates, bla bla) and is the most effective way of promoting the general welfare of the people. This is an argument that can actually be won if we express our views clearly and in a compelling enough fashion. The same cannot be said of ethics as at the end of the day some people simply won’t agree. Plenty of disagreement on this site and ostensibly we are on the same side.
> Not at all, I’m presuming an ethical debate, as per
> your specified parameters. You asked what to argue
> against somebody who “claims that he should rule the
> world”. I replied that he can’t prove that “should” thing
> there.
Yes, and my point remains that in the minds of others and his own they may consider it that he doesn’t have to prove it. I don’t think you can make a completely negative case for liberty, because all it boils down to is that you oppose the views of others. It’s a purely defensive point of view, and one that in my view will inevitably end in defeat for one arguing for it.
How can you defend property for example? If Brad takes your cup of tea from you then by what basis can you ask for it back?
> Why? How do you get liberty from economics? Via
> utilitarian reasoning? How?
Yes, through economics.
To be honest I think that other arguments in favour of liberty are very poor.
I’d go further and say that I think in many cases it’s not realised how dishonest they are. To someone who truly believes in natural rights it shouldn’t matter at all what consequences there are in following natural law. There is no reason to ever claim that following natural law should result in a better world?
Or, are the claims here about that, such as the recent quote from Ridley, simply a form of propaganda? Do you not care either way if they’re true? Are you just using them to attempt to persuade normal people though you don’t believe them yourself?
Why is natural law or natural rights nonsense on stilts? I mankind out side the province of scientific reasoning? Are there not laws of human behavior?
To begin with it’s nonsense because Natural Rights advocates always add utilitarianism by a back-door.
Take land for example. A true natural rights advocate would say that land should be given back to who originally homesteaded it. So, the US should be given back to the remaining native americans. But that’s not what actual natural rights advocates say, they say that we can make a compromise and leave property rights where they are even if the route to current property rights was unjust. How can they make such a case without being utilitarian?
What I’m trying to do here is to get people to stop being wishy-washy. I’m prepared not to be wishy-washy about utilitarianism, I’ll say this… I’d support Stalinism if I thought it would make people happier. As Roger Koppl says “If a law requiring us all to wear silly hats would improve the lives of regular folks, I would lobby tirelessly for the silly hats law.”
But, what I ask in return is a similar amount of clarity from natural rights advocates. If they really believe in natural rights then surely there is no significance whatsoever to the happiness of other people, a rigourous natural rights advocate must be a sociopath. Logically it shouldn’t matter to a natural rights advocate if the world would end immediately if natural rights laws are implemented. Logically, arguments that their preferred policies promote a better world are just propaganda to promote them they shouldn’t have any real interest in those issues.
Well put, Current.
Economics is a science in the old sense of a “body of knowledge” (in a different sense history is also a “science” – someone who says there is no such thing as truth in history has stabbed history in the heart).
Economics is not a science in the ense of “the scientific method” as in physics of data gathering and so on.
If people really want to know more about what the science of economics actually is (and some of you know what is comming next) then you have to go and read the works of the Austrian School.
Carl Menger’s starting work would be a good place to start (it really would – even after 130 years).
However, you can read Ludwig Von Mises’ “Human Action” (it is NOT that difficult to read – Hazlitt helped with the style) or Hazlitt’s “Economics in One Lesson”.
And, yes, you should read the works of Rothbard and co – as long as you remember they sometimes put in lots of political and historical positions that are not part of economics as a subject (and which Mises did NOT agree with anyway).
“If economcs is wrong is there an argument for liberty?”.
I take this to mean that if it was possible for the state to equal the long term material living standard of most people (equal what “capitalism” would result in – of course Karl Marx and co claimed that the ending of private property in the means of production would mean vastly HIGHER living standards) would there be no argument for liberty.
There would still be an arugment – in fact two.
A political one – that putting that much power in the hand of the state (or “the people” or “the collective”) is incredibly dangerious (downright bonkers in fact).
And a philosophical one – i.e. that it is just WRONG to steal property and order people about (with the threats of violence) even if there is no reduction in overall material living standards.
However, without the economic argument I believe the political and moral arguments would be ineffective in practice.
Think of North Korea and South Korea – South Korea is in deadly danger from the Norts, IN SPITE OF BEING TEN TIMES MORE ECONOMICALLY EFFICIENT.
Now think of a world (a universe) where statism was just as productive (economically) as freedom.
Where North Korea was just as productive economically as South Korea.
Freedom would be crushed at once – utterly crushed.
The one “freedom” collectivism has is freedom from the “moral chains of right and wrong” – their lack of any moral restraint (their EVIL) would mean they would take over everything and exterminate (or enslave) all their foes.
The one thing that stops them is that their collectivism is economically unproductive – especially in the long term.
It is their key weakness – the fact that their ideas do not work economically.
> A political one – that putting that much power in the
> hand of the state (or “the people” or “the collective”)
> is incredibly dangerious (downright bonkers in fact).
I agree with you about that, but as you say it’s not sufficient to rely on that argument.
Also, note this is a political science argument. I don’t think it will satisfy those who don’t think that economics is a science to say that political science is a science.
> And a philosophical one – i.e. that it is just WRONG to
> steal property and order people about (with the
> threats of violence) even if there is no reduction in
> overall material living standards.
Utilitarianism isn’t just about “material living standards”, the suffering caused by threats of violence, for example, are a real issue to any utilitarian.
“higher and lower pleasures” I take it Current.
And “push (whatever game Bentham cited) is NOT as good as poetry.
The J.S. Mill line.
A lot of that seems to be smuggleing in German philosophy and calling it utilitarianism.
But you could counter that concern with the greatest happiness of the greatest number was NOT invented by J.B. (and you would be right). After all Hutch invented the saying – not JB.
The crude idea of untilitarianism does seem to be J.B. – it was not so crude before him, or after him.
Of course I would say that thing is a mistake (on a grand and noble scale – but still a mistake).
The mistake of confusing pleasure with rightness (yes, I confess, I am a Harold Prichard fan).
For example if a women is gang rapped one should not calculate the pleasure of the rapists against the pain of the women (both at the time and in memory) to decide whether it was good or bad event.
The pleasure of the rapeists (or the pleasure of people reading about the story – or seeing a film of it made by the rapists) is NOT RELEVANT – for pleasure is naught to do with right and wrong, good and evil.
This may have been what J.S. Mill after J.B. (and Hutch and others before him) were (almost) saying.
Some pleasure is BASE, VILE.
I don’t particularly like the idea of higher and lower pleasures. I think it’s a way to denigrate the pleasures of the masses. (See Thomas Sowell’s comments on Mill).
> Some pleasure is BASE, VILE.
Why couldn’t it be argued that loving freedom is base and vile. I’ve heard something similar argued before. How can you oppose that?
Good points Current.
These are part of the reason I think that J.S. Mill effort to save utilitarianism fails.
I would go back to the Prichard point that it confuses good (as in moral) and good (as in pleasurable) and that this is just a MISTAKE.
Whether an action is good or evil, right or wrong (I am not going to get into differences between the “right and the good” here) is NOT determined, by the pleasure element.
This leads us to two moral positions.
Aristotelianism (in its various forms).
Or the “Common Sense” intuitivism of philosphers from the Englishman Ralph Cudwoth – through the Scottish Common Sense School (Thomas Reid to James McCosh), to the 20th century British philosophers such as Harold Prichard and Sir William David Ross.
Both the Aristotelian School (or Schools) and the “Common Sense” School (or Schools) share a lot of common positions. Although, of course, there are differences.