FT.com / Comment / Opinion - How to rebuild a shamed subject.
Lord Skidelsky says in the FT:
The reconstruction of economics needs to start with the universities. First, degrees in the subject should be broadly based. They should take as their motto Keynes’s dictum that “economics is a moral and not a natural science”. They should contain not just the standard courses in elementary microeconomics and macroeconomics but economic and political history, the history of economic thought, moral and political philosophy, and sociology. Though some specialisation would be allowed in the final year, the mathematical component in the weighting of the degree should be sharply reduced. This is a return to the tradition of the Oxford Politics, Philosophy and Economics (PPE) degree and Cambridge Moral Sciences.
Beyond this, the postgraduate study of macroeconomics might with advantage be separated from that of microeconomics. Courses in microeconomics should concern themselves, as at present, with the building and testing of models based on a narrow set of assumptions. Their field of applicability lies in those areas where we have reliable views of the future. Macroeconomics, though, is an essential part of the art of government, and should always be taught in conjunction with subjects bearing on this.
The obvious aim of such a reconstruction is to protect macroeconomics from the encroachment of the methods and habits of the mathematician. Only through some such broadening can we hope to provide a proper education for those whose usefulness to society will lie as much in their philosophical and political literacy as in their mathematical efficiency.
Let us hope someone listens, for he is right.
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“This is a return to the tradition of the Oxford Politics, Philosophy and Economics (PPE) degree”
Err, twenty years ago maybe.
Not anymore.
Economics at Oxford, and in the PPE course especially, is totally dominated by mathematics. And it’s getting worse. Mine was the last year that people without A-Level maths were allowed onto the PPE course. Which means that if i’d been born a year later, the entire degree would have been closed to me.
I ended up dropping economics after the first year because despite one tutor taking a wonderfully maths-free Keynesian approach (including actually reading the General Theory) the University course was maths, maths and more maths. I couldn’t do the maths, and anyway none of it seemed relevant to the world I was interested in.
Which is something I regret. Lack of a good grounding in economics is hampering me post-graduation. Considerably.
so I wonder why the universities don’t do that then?
“Beyond this, the postgraduate study of macroeconomics might with advantage be separated from that of microeconomics.”
Idiocy. What we actually need is a macro that has micro foundations…..
Tim
It’s idiots (your word) like you who think that who have got us into the mess we’re in
I’ll say it again: a country is not a company
But you haven’t quite got that, have you?
Until you do your economics will be a recipe for disaster
As has been economics since the forces Skidelsky opposes got the upper hand
Which, rather fortunately for me, was after I graduated
Richard
The study of the subject could do with practical input. As it is, any street busker knows about things that have been ignored for decades in academia. Which is strange because fundamental things like Ricardo’s Law of Rent, which codify such practical observations, seem to have got written out of the theory or are regarded as interesting historical curiosities.
The subject also needs to be reconstructed, beginning with rigorous definitions of entitities such as wealth, capital, land, labour etc.
Imagine trying to study physics without agreed definitions of things like Mass, Force, Velocity, etc. The absence of agreed definitions in economics is a guarantee that the subject is chronically handicapped.
Tim & Richard, You aren’t so far apart on this, if the two of you could resist bickering for a bit. Tim is arguing that macro-economics should be built on micro-economics, which is (perhaps not surprisingly) remarkably consistent with the Austrian view. And Richard is supporting an argument for a reduction in the role of mathematics in economics and a renewed emphasis on the philosophical, moral and general human aspects, which is remarkably consistent with… the Austrian view (as is the distinction between company and country).
The successors of Jevons, Walras, Marshall, Keynes, Friedman & co have contributed a lot more to the mathematicization of economics than the successors of Menger. If your objective is to provide tools for governments to calculate the effects of their measures to “improve” on the natural outcome of free markets, it is not surprising that mathematics increasingly dominates.
Bruno
Not so fast….
Tim wants a model of the economy that puts him at its epicentre because he thinks the individual is all that matters
I believe in society and that it is bigger than the sum of its parts, meaning aggregation of micro economics produces the wrong outcome
It’s a pretty big difference – and more than a formula or two apart
Richard
Bruno is right – your spat with Tim is about politics
All economics is politics
The two are completely inseparable
Richard, that is where you are very wrong
Alastair
To make that comment you have to be wilfully stupid
Sorry: that’s an objective statement of fact
Richard
That politicians mix it up does not make it right 🙄
If you fall for the trap that does not make me stupid, but it does explain perhaps why you don’t like economics.
Alastair
I know what you’re saying, that economics is objective
That assumes that either it exists in a perfect vacuum separated from society or the people who do economics do so whilst having turned off all their personal critical faculties that have been formed by the world around them
Neither is possible
In which to claim economics is objective and free of politics is a) a blatant lie or b) an act of a deluded person
Which are you?
And for the record I love economics: I hate economists who claim it is something it is not. That’s most of them right now
Richard
actually no – I am perhaps distinguishing between positive (what is) and normative (what you would like it to be) economics. The first significant text I read was an introduction to positive economics by Richard Lipsey. Do you recall it?
Yes, I do
It’s complete crap for all the reason noted in my previous comment
There is no such thing as positive economics
That is not what is – it is what those promoting an idea would like you to think something is
Are you not aware from physics that the concept of the neutral observer disappeared from science some considerable time ago? Only economists cling to it
I’ve always thought that the separation of neoclassical (i.e. mainstream) economics into “positive” and “normative” components – where the positive component was meant to be in some sense value-free – was a total fraud. In fact, neoclassical welfare economics is shot through with implicit value judgements – most of which are very right-wing in character.
It would be nice to have valid microfoundations for macroeconomics but at the moment all we have in the mainstream is a set of mostly very right wing assertions about the way humans behave (or should behave) dressed up as some kind of scientific theory – a fraud which isn’t doing anyone any good. A fraudulent theory is in many ways worse than no theory at all! Fortunately a lot of progress is being made in economics and related disciplines by those who refuse to sign up to the orthodoxy. The Post-Autistic Economics Network site at http://www.paecon.net features a good overview.
I would imagine you are referring to Albert E and his general and special theories of relativity? Not something that has permeated economic thought too much – but then at the relevant scales there is not much trade to speak of.
The study of the development of economic thought is interesting – mostly because it demonstrates continual evolution – unlike the static, statist world you seem to live in.
BTW the most amusing strand to your blog is your desire to see the world in left right terms, where left is equivalent to good.
to suggest there is no such thing as positive economics is absurd. Just because you don’t believe in it does not mean it does not exist.
Alistair
I’m a Christian
And I’d say studying theology does not prove God exists
Any more than studying fairies prove they exist either
But in the second case you’re considered well, at least a little odd if you think they exist much after 10
Same with positive economics really
Some say so of religion
You can keep believing
I’m on this a profound atheist
Richard
Faith is an interesting phenomenon but I don’t see the relevance. The concepts embodied by the words normative and positive are relatively simple, and underpin a study of undergraduate economics – you don’t need faith to believe in them; just a good supply of caffein.
Alastair
You’re so wrong
These are models: abstracts from reality
You need faith to believe in them
I don’t believe in positive economics
you do
It doesn’t make you right
Just deluded, in my opinion
Richard
You might equally refer to ghosts. I tend to suspect they don’t exist, but there is a chap in Derby who makes a very good living walking groups round the older parts of the city at night – on what he calls ghost hunts! But my disbelief proves nothing either way.
On a similar vein, if you were to study quantum mechanics you would learn that very small particles of light behave in a manner that is totally at odds with what most people would describe as rational – in as much that you can prove that something can be in two places at once, or in no places at once.
I guess the world is a strange and odd place.
Richard, its your blog, and your choice as to what comments you allow, but your tendancy to block makes your blog look one sided. In my experience denying ideas that challenge your workd view is a bad thing.
hmmm, most of physical science is based on a modelled view of the world. Ask a physisist to describe a cow and he will describe a sphere. If you don’t believe me then read Feynman.
Not without reason is it known as the dismal science.
Alastair
“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.”
George Bernard Shaw, Man and Superman (1903) “Maxims for Revolutionists”
I am unreasonable and never aspire to be anything else
You can choose otherwise
Richard
Talking about unreasonable men, I was reading a blog by Michael Krigsman about project failure. He was writing about reasons to fire consultants, and a particular line struck me:
“don’t mistake “being difficult” with being honest”.
On a related theme, Matthew Parris was mocking Alan Sugar in the Times under the headline “stuff reason: hurl those insults, spit and mock”.
The point that these unrelated quotes illustrate is that unreasonableness has boundaries. And in context say no more or less that GBS.
Mankind got to the moon by being unreasonable, but not by denying the truth.
I think you are mistaken – you don’t need faith to believe in them at all. What you have to do is to understand that they are models produced to a specific purpose. Science advances by developing new models when the old ones fail, but rarely do they throw out the baby with the bathwater. After all Newton was shown to be wrong by Einstein, but Newtons models still have a lot to offer the world.
Richard,
If it’s not based on micro-economics and it’s relying less on mathematics, on what will the principles of this new macro-economics be based, and how will we test its veracity?
I thought that the point of economics was to provide insight into economic processes. Bearing in mind that they are a consequence of human decisions, predictability is not a certain as in the physical sciences, but with good theory it is possible to say that policy A is likely to, produce effects X, Y and Z – eg a tax on windows will produce bricked-up windows and a tax on booze will produce less drinking but a bit of smuggling.
Of course it gets silly when too much energy is directed to expressing these predictions in numerical terms.
Bruno
When I get the time again that is what I am trying to explore at http://enougheconomics.wordpress.com/
Richard
Richard,
I’ve had a quick browse. Can I suggest that this is sufficiently different to what most people would understand as economics that it would be better to give it another name. Economics is already afflicted by too many different “schools”. That isn’t to say anything about its merits, positive or negative. It’s just a suggestion to avoid further semantic and taxonomic confusion.
But if this is the basis of a new macroeconomics, it seems to be built on the individual and his choices (see http://enougheconomics.wordpress.com/2009/06/20/living-constrained-lives/). I thought you wanted to construct a macro- that wasn’t based on micro-economics and individual wants, because society is more than the sum of its parts?
I am not clear what your metric will be. It seems that money will no longer be sufficient (presumably belonging mainly in the M quadrant). But as you are talking about adding and subtracting, comparing “wealth” in one quadrant with poverty in another, and allowing for the inevitable trade-offs, you imply these four needs are commensurable and that a metric can be provided that allows us to compare poverty or wealth in one quadrant with another. Without it, it’s going to be hard to come up with an economics (or indeed any science or logic) based on this graphical representation of human satisfaction. That graphical representation itself is reasonable in an abstract way, but I can’t see how this will stack up to a new economics.
Bruno
Comments appreciated
I admit the model has a long way to go yet
I don’t dispute the link between macro and micro: I’ll in fact show they are related but that the constraints of macro impose on micro
But at the current rate of progress that will take a while – I have hit a wall of work
Richard