http://chronicle.com/weekly/v49/i20/20a01201.htm
From the issue dated
Taking On 'Rational Man'
Dissident economists fight for a niche in the
discipline
By PETER MONAGHAN
How do you start a fire under a huge wet blanket? A faction
of disgruntled
economists says that is their predicament.
Their efforts to open the field to diverse views are
smothered, they say,
by an orthodoxy -- neoclassical economics and its
derivatives -- that is
indulgently theoretical and mathematical in its aspiration
to be more
"scientific" than any other social science.
Although it is inadequate to explain human behavior, they
say, that brand
of economics dominates the discipline. Its practitioners
decide what work
deserves notice by controlling what is published in the
field's
prestigious journals. And with strongholds at leading
research
universities and a Nobel awarded in the field, most
mainstream economists
are too proud of their profession to even notice these puny
insurgents.
Many say that the rebels are challenging a straw man -- that
neoclassical
economics, which is based on such concepts as rational
choice, the market,
and economies' tendency to move toward equilibrium, is much
roomier than
portrayed. But others have a more belligerent response: Like
us or leave
us for other departments and disciplines, such as political
science,
history, or sociology.
This month, for example, the University of Notre Dame's
economics
department, long renowned as unusually diverse, is likely to
split in two.
A new department of economics, with a graduate program and
several new
hires, would focus on orthodox approaches.
Dissident economists would be consigned to a department
focusing on
economic thought, social justice, and public policy. But
with no graduate
program, that would amount to exile and slow death, say the Marxist,
labor, and development economists and historians of economic
thought who
make up a large minority of the 21-member department.
The "tensions" that are forcing the split, says a
report by a committee of
Notre Dame administrators and professors from other
departments, "are not
the fault of the current faculty" members. They were
hired years ago,
under "a clear mandate from the administration,"
to help build an
alternative to the neoclassical bastions:
Harvard, MIT,
It is not that Notre Dame wants to abandon the subjects that
its heterodox
researchers study, ones "appropriate to a Catholic
institution," such as
poverty and inequality, says Mark W. Roche, dean of the
and Letters. It is just, he says, that Notre Dame wants
attention from the
mainstream and realizes that that requires satisfying the
field's
"evaluative norms."
Moreover, says the committee's report, "We regard the
differences between
the heterodox and orthodox economists to be so great that
reconciliation
within a single cohesive department is wholly
unrealistic."
Notre Dame, says David F. Ruccio, an associate professor who
specializes
in Latin American economies and exploring intersections of
the humanities
and economics, is "accepting and imposing a certain
definition of the
discipline." The partition would be a logical next
step, he says.
Heterodox practitioners have already been told not to expect
promotions,
and that their books, even if placed with prestigious
publishers, will
count no more toward advancement than articles in minor
journals, he adds.
Administrators are not quite so categorical. Richard Jensen,
the
department's chairman, says "industry standards"
dictate that publication
in leading journals is the key to promotion and tenure.
The split, says Mr. Ruccio, a prominent Marxist economist,
is a matter of
raw power: "If the peasants won't deliver the goods,
collectivize them" in
a low-profile department.
Pros and Cons
Despite the power of the orthodoxy, the naysayers are
numerous. While the
American Economic Association has some 22,000 members, the
30-odd groups
under the umbrella of the International Confederation of
Associations for
Pluralism in Economics have American memberships totaling
more than 5,000.
The confederation's pained statement of purpose laments that
most of its
members' interests, such as exploitation and inequitable
income
distribution, have been "defined out" of
economics. The field has gotten
away with that, observers say, because it is not as
inescapably concerned
as, say, political science, sociology, and anthropology with
concepts like
power, influence, deference, and social practice.
"It's hard to avoid Marx, and a whole bunch of other
theorists, in those
discussions," says Michael A. Bernstein, an economist
and historian at the
University of California at San Diego and the author of a
recent history
of 20th-century American economics.
Not all the rebels are Marxists, although most do charge
that neoclassical
economists refuse to admit that their approach is
"sycophantic to
capitalism," as Steve Keen puts it. Mr. Keen, an
economist at Australia's
University of Western Sydney, says he objects to
neoclassical economics
because "it makes capitalism a worse system than it
would otherwise be,
and makes it function less well as a generator of wealth and
innovation."
Neoclassical theory holds that individuals, households, and
companies
rationally serve their best interests and that competition
sorts out
prices, wages, and the markets for goods and labor in
economies' movement
toward equilibrium.
In other words, the market economy and those who take care
of themselves
take care of one another.
That theory is rooted in the late-18th-century work of Adam
Smith,
although he defined economics more broadly as the study of
the nature and
causes of the wealth of nations.
His emphasis on self-interest, together with the theory of
utilitarianism
that Jeremy Bentham developed at about the same time, came
to resound
loudly in economics by the turn of the 20th century.
Influential thinkers
then increasingly emphasized the allocation of scarce
resources among
competing ends: Economics became a science of
"rationality."
In the United States, World War II solidified the trend,
says Mr.
Bernstein. At the time, the government "embraced the
work of these
cutting-edge economists, saying, This work can help us wage
war." New
ideas about the application of mathematical models and
modern statistics
were used to meet government goals, so economics, like the
nuclear arm of
physics, benefited from enormous infusions of funds.
Academic economics
responded accordingly.
As a result, "every year, 1.4 million undergraduates in
the U.S. take an
introductory economics course that teaches that only
selfishness is
rational," objects Neva R. Goodwin, co-director of the
Global Development
and Environment Institute at Tufts University, who is
helping to prepare a
textbook with alternative views.
The orthodoxy also distorts economic reality, say its
critics.
"Superficially, it seems like a coherent model of the
world," says Mr.
Keen, the author of Debunking Economics: The Naked Emperor
of the Social
Sciences. But don't be fooled, he says, by the mainstream's
fancy
mathematics and claims that it is a predictive science, not
just a
descriptive social science.
"I'd put its maturity at the same level as physics
before Newton," he
scoffs. "And possibly before Galileo."
Many approaches to economics fall under the heterodox
umbrella. Besides
Marxist economics, they include so-called Austrian
economics, which
disputes the neoclassical truism that economies tend toward
equilibrium;
post-Keynesian economics, which highlights the role of
uncertainty in
economies; complexity theory, which uses such concepts as
chaos theory to
model economies; the intersections of economics and such
realms as
feminism, environmentalism, and the law; and evolutionary
theory, which
views economies as akin to evolving biological systems. The
neglect of the
last particularly appalls Mr. Bernstein, who calls one of
its founders,
Thorstein Veblen, "probably the most truly original
thinker that the U.S.
has produced."
Global Ripple
The dissidents take heart from events in France. In 2000, an
online
graduate-student petition proclaimed that neoclassical
economics, or at
least its unbridled application in teaching and research,
dwelt in
unreality to the point of being "autistic."
The students dubbed their movement "Post-Autistic
Economics" and quickly
provoked a national debate of the French variety. Some
leading
publications and high-profile economists hailed the
protesters, who, in
petitions-cum-manifestoes, denounced economics as a morass
of "imaginary
worlds" that was mired in "pathological,"
pseudoscientific mathematics;
that was aggressively excluding pluralism; and that was,
even so, barely
able to explain "l'économie de Robinson Crusoé."
The French minister of education appointed a senior
establishment
economist, Jean-Paul Fitoussi, to lead a commission to study
the claims.
Last September, the panel issued a call for some reform of
economics
education.
"Some mistakes have taken place" in formal
modeling, amid "very little
concern for its empirical relevance," he conceded.
Teach the debates about
neoclassicism, he declared.
The forces of post-autism wanted more. In a petition of
their own, some
200 French economists charged that the orthodoxy's
rationalist "fiction"
excluded the whimsy, variety, and "often
altruistic" behavior of Homo
economicus, and was a front for cultural power structures
that other
social sciences had deconstructed long before.
That sentiment rippled over to the Universities of Cambridge
and Oxford,
where graduate students began well-subscribed petitions, and
then, with
help from the Internet, on to several other countries. Most
active has
been the Post-Autistic Economics Review
(<http://www.paecon.net/>http://www.paecon.net),
edited by an American
doctoral student at Cambridge.
In the United States, some Ivy League graduate students
started a petition
drive. Then, in June 2001, 75 reformers from 22 countries
met in Kansas
City, Mo., and produced a Kansas City Proposal, which
decried economics'
neglect of its own cultural, social, political, moral, and
historical
dimensions.
'A Con Game'
The reformers include prominent scholars who made their
names as top-notch
neoclassical economists. One is the iconoclastic and
polymathic Deirdre N.
McCloskey, a distinguished professor of the liberal arts and
sciences at
the University of Illinois at Chicago who also has
appointments there and
at Erasmus University of Rotterdam in art, cultural studies,
economics,
English, history, and philosophy.
In 1983, she (then he, but that's another story) sparked an
uproar with
"The Rhet-oric of Economics," an article in the
prestigious Journal of
Economic Literature. In it, she convinced many heterodox
economists that
the discipline's claims to truth, while couched in terms of
scientific
proof, were shored up by many forms of reasoning and
persuasion.
Much of economics, she has reiterated with rhetorical flair,
is "a con
game of a very odd sort," one marked by three primary
"vices."
First, economists incessantly misuse tests of statistical
significance. In
a 1996 paper, "The Standard Errors of Regression,"
again in the Journal of
Economic Literature, she and Stephen T. Ziliak, now an
assistant professor
of economics at the Georgia Institute of Technology, argued
that about 70
percent of papers in a leading journal shirked accepted
standards for
determining statistical significance, while a similar
proportion mistook
statistical significance for economic importance -- by
failing to use
good, human judgment.
The second vice is "blackboard economics":
"endless thinking about
imaginary economies that don't ever have anything to do with
the world."
In her view, "that's not science; that's just chess
problems." A genuine
science like physics, she says, would observe and describe a
phenomenon
long before even venturing to model it.
The third vice: "the arrogance of social
engineering."
Ms. McCloskey, a self-proclaimed free-market libertarian,
expounds on
those "sins" in such publications as The Vices of
Economists, the Virtues
of the Bourgeoisie. The latter, she argues, include not just
prudence but
also courage, temperance, and love -- elements that Adam
Smith, too,
wanted in economics' domain.
"Probably three-quarters of the scholarly activity in
economics is
useless, will result in no understanding of the world,"
she sums up.
"Maybe higher. It's tragic."
Some more-mainstream American economists won't sign
petitions but agree
there is fire under the smoke. One is Edward E. Leamer, an
econometrician
at the University of California at Los Angeles. He says that
in the 1930s,
economics "was done in verbal, written language."
But "the era of
Samuelson," he says, referring to the Nobel laureate
Paul A. Samuelson,
"was so successful in introducing mathematics into the
conversation that
it's now required that you speak math."
Mr. Leamer calls that unfortunate "because most of our
Ph.D. students can
never really master that language, and they struggle so hard
with the
grammar and syntax that they end up not being able to say
anything."
He and many other professors report that newly minted
Ph.D.'s often cannot
comprehend classic prose texts of the discipline, either.
They have not
read Adam Smith, David Ricardo, and John Maynard Keynes,
titans of the
18th, 19th, and 20th centuries. As a result, those would-be
academics
learn the "neo" without the "classical,"
and so have no way of embracing
the pioneers' varied legacies.
Do the Math
Most critics say mathematics is not the issue. "There
are plenty of
anti-neoclassical economists who use math, and Marxist
economists," notes
Mr. Bernstein of San Diego.
In the online pages of the Post-Autistic Economics Review
and other
publications, fellow reformers have pounded away at a
central point. As a
University of Cambridge historian of economic thought, Geoff
Harcourt,
puts it, always "pose the economics of an issue first,
then see whether
some form of mathematics may be of use in solving the
problems thrown up."
Mr. Leamer agrees. "The great economists got involved
in this discipline
because they were interested in these social problems, and
they thought of
economics as a tool for addressing and solving them,"
he says. "But the
discipline has become more and more model-driven."
"A mathematician is uninterested in the problem,"
he adds. "He's
interested in the degree of difficulty of the proof, or the
surprise
nature of the theorem. Those value systems are fine in
mathematics, but
they're very destructive in economics."
The issue may not be how much mathematics to use, and when,
but what kind.
Does neoclassical economics, with its emphasis on
equilibrium, look for
"closed form," "all other things being
equal" solutions that simply don't
suit the dynamic nature of economies? Yes, say critics like
Western
Sydney's Mr. Keen, who would prefer the kind of modeling,
done in physics,
biology, and other fields, that takes account of rates of
change over
time. "The physicists are saying, You guys might be
using sophisticated
mathematics from the 19th century, but you don't know crap
about modeling
today."
The Teflon Orthodoxy
Earlier attacks have left the American economics mainstream
unscathed. The
American Economic Association's Committee on Graduate
Education in
Economics, formed in 1988 and packed with big names, found
similar faults
with the discipline. One finding, says Mr. Leamer, a
panelist: "Students
could solve complex math problems, but they couldn't solve
simple
economics problems that would have been central in the
1960s." The
committee's report appeared in 1991 in the flagship American
Economic
Review "and was then ignored," he recalls.
Similarly, in 1998, the group's Committee on Journals,
headed by Thomas
Schelling, a past president of the association, charged in a
report that
leading publications had too much theory and math, and too
little
empiricism, policy, and history.
Manuscripts in a "literary" mode,
multidisciplinary manuscripts,
policy-oriented manuscripts? Apparently unwelcome, said the
committee's
report, which by general agreement has languished.
Reform-minded
economists have not had even the limited success of a
similar
"perestroika" movement in political science, which
has won a promise from
leading journals that they will be more hospitable to
nonmathematical
articles.
Neoclassical practitioners say that's because the reformers'
complaints
are inaccurate. In the initial French debates, Robert M.
Solow of the
Massachusetts Institute of Technology -- a Nobel laureate
whose growth
model is a fixture of the undergraduate curriculum --
objected that the
protesters were not sufficiently allowing for neoclassical
economists'
self-critiques and evolution, for example their work on
incomplete
markets, imperfect competition, asymmetric information, and
the like.
Kenneth J. Arrow, who shared the 1972 Nobel in economics,
echoes that
point. Neoclassical economics is "a pretty baggy
framework, and a lot that
goes on in it might not be quite what used to be thought of
as
neoclassical economics," says the Stanford University
scholar, who is
regarded as an architect of the mathematization of modern
economics. So,
while concepts like rational choice, profit maximization,
and satisfaction
may underlie most of the framework, what one means by them
"has become
more and more subtle."
Similarly, orthodox economists have broadened how they study
such notions
as rational choice. "The big thing there has been the
development of game
theory, recognizing that if you're trying to outguess
somebody else,
they're trying to outguess you," says Mr. Arrow. Game
theory has been
applied to many areas of economics, and that marks a major
change since,
say, the 1950s.
"Behavioral economics" -- the study of how people
do not make rational
choices -- also has recently "caught fire," he
says. It is being applied
to such realms as securities prices, consumer purchasing,
contracts, and
labor bargaining. The psychologist Daniel Kahneman of
Princeton University
shared the 2002 Nobel for work in the area that he had done
with the late
Amos Tversky. "Any good department has got to have a
behavioral economist
on board, and that's one of the signs of the way things
develop," says Mr.
Arrow.
"Now," he asks, "do you call that
neoclassical or post-neoclassical? It is
a continuation of the neoclassical tradition, but it's
getting away from
the traditional assumptions."
Mr. Keen is unimpressed. He says mainstream economists often
tell
reformers that they are attacking a straw man. But economics
curriculums
are still chockablock with the neoclassical. "So I
simply respond," he
says, "'If what I demolish is a straw man, why do you
teach him?'"
Still, it's tough for an economics department to defy the
dominant
paradigm. "Everyone is trying to be a little MIT or a
little Harvard, and
look exactly the same because that's the way you get
scientific prestige,"
says Bruce J. Caldwell, a historian of economic thought at
the University
of North Carolina at Greensboro. That approach, he points
out, ignores
basic economic theory about the benefits of diversification,
specialization, and niche marketing.
Notre Dame, says Mr. Roche, the dean of arts and letters, is
seeking a
niche. Actually, two: one in economic thought and policy and
another in
which it can use mainstream tools. He is not surprised,
however, that the
plan makes his faculty members "unsettled."
Orthodoxy, they know, has
already begun to make inroads into some of the few other
centers of
heterodox practice: New School University and the
Universities of
Massachusetts at Amherst and California at Riverside.
'Parallel Conversations'
In June, in Kansas City, Mo., the International Confederation
of
Associations for Pluralism in Economics will hold a World
Conference
on the Future of Heterodox Economics, offering thousands of
marginalized economists a rare opportunity to gather en
masse. There,
they will plan their battles and commiserate about how long
they must
wait for change. And, says Georgia Tech's Mr. Ziliak, they
will share
war stories about how "the market wants you to pretend
that you're an
objective economist, who is going to reveal something about
the world
through neoclassical lenses, using standards of neoclassical
theory,
and some latest fashion of econometrics."
But even though people are "still hiding their embrace
of pluralism, or of
postmodern economics because they want that job," he
says, they are "still
doing research, in their preferred areas, although with
little
institutional support." That trend and the June
meeting, he says, make him
optimistic: "The idea is to create solidarities across
different heterodox
approaches -- libertarian, Afrocentric, feminist, etc. I
know I feel
energized by it."
Mr. Ziliak has another prediction. "Maybe we heterodox
economists will
just say that we don't care about the pecking order anymore,
and we'll
just produce parallel conversations in economics," he
says. "That may mean
having less-prestigious job offers and lower incomes, but I
think you'll
see more and more people doing that anyway -- obviously for
both supply
and demand reasons."
"That's right," says the forthright Mr. Keen.
"You've got to agree to be
marginalized, and then fight like hell."
HOW ECONOMICS BECAME WHAT IT IS
Several books on the history of the discipline of economics
and the
history of economic thought have appeared in recent years.
More are
forthcoming. Among them:
The Crisis in Economics, edited by Edward Fullbrook
(Routledge,
forthcoming in June)
Debunking Economics: The Naked Emperor of the Social
Sciences, by Steve
Keen (Pluto Press/Zed Books, 2001)
Economics and Reality, by Tony Lawson (Routledge, 1997)
Economics as Religion: From Samuelson to Chicago and Beyond,
by Robert H.
Nelson and Max L. Stackhouse (Penn State University Press,
2001)
How Economics Became a Mathematical Science, by E. Roy
Weintraub (Duke
University Press, 2002)
How Economics Forgot History, by Geoffrey Martin Hodgson
(Routledge, 2001)
Intersubjectivity in Economics: Agents and Structures,
edited by Edward
Fullbrook (Routledge, 2001)
Machine Dreams: Economics Becomes a Cyborg Science, by
Philip Mirowski
(Cambridge University Press, 2002)
Microeconomics in Context, by Neva R. Goodwin, Julie Nelson,
Frank
Ackerman, and Thomas Weisskopf (Houghton Mifflin,
forthcoming in 2004)
A Perilous Progress: Economists and Public Purpose in
Twentieth-Century America, by Michael A. Bernstein
(Princeton
University Press, 2001)
Post-Modernism, Economics and Knowledge, edited by Stephen
Cullenberg, Jack Amariglio, and David F. Ruccio (Routledge,
2001)
The Rhetoric of Economics, by Deirdre N. McCloskey
(University of
Wisconsin Press, second edition, 1998)
The Vices of Economists, the Virtues of the Bourgeoisie, by
Deirdre
N. McCloskey (Amsterdam University Press, 1996)
Section: Research & Publishing
Volume 49, Issue 20, Page A12
==========
** NOTICE: In accordance with Title 17 U.S.C. Section
107, this material
is distributed without profit to those who have expressed a
prior interest
in receiving the included information for research and
educational
purposes. **