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Tyler Cowen should not be taken seriously. He provides no evidence for his claims and is increasingly posting commentary to "get a reaction" from readers or to “make headlines.” The economics profession has been heading down an unfortunate path since the eventual misapplication of Alfred Marshall's seminal work. Ever since the so-called "marginalist revolution" the economics profession has preoccupied itself with mathematical modelling (the emphasis here is on *modelling*). This new focus began in theory and then spilled over into empirical work. Sorry to say it but post-marginalist economics has achieved a critical mass of support and practice--it is now the mainstream approach at universities, and in textbooks and scholarly journals. Many special interests have developed along the way and public choice teaches us that they are not going to back down easily. I'm pessimistic for these reasons and others that Austrian approaches to economics (rational and institutional analysis) will not gain traction. The other reasons relate to the critical limitations of the Austrian approach. In particular, a priori deductive reasoning is unlikely to be widely accepted. Empirical refutation of theoretical conjectures in my mind is the strongest method for changing and influencing opposing views--indeed, the theory must be falsifiable. And the Austrian approach does not lend itself well to falsification. In fact, it rejects the notion. Austrian economics has also not made any real meaningful progress since the biblical work of Von Mises in Human Action. Sure, Hayek made contributions but his most important ones on economics--those related to the economics of knowledge--are generally not exclusive to the Austrian approach. Austrian economics needs to realize its limitations and take steps to overcome them. The way I see it: Austrian economics is not really about economics. It's more about social science. But good social science, economics included, must be evidence based. While contributors to this blog will claim that modern Austrians are delving into the empirical end of the pool, I don't think they go far enough. Consider the most notable Austrian practitioners, many of whom are bloggers here. Their scholarly work is sparsely empirically driven. I am aware of the exceptions but good social science--good being a science that truly explains the behaviour of people--should follow an evidence-based rule. Von Mises philosophical approach to economics is seductive, but it’s not evidence-based. Perhaps it’s high time Austrians rethink their foundations…

Hey PJ,

Have you looked at any of the books on the right hand column of this blog spot, let alone the journal articles that can be found on the respective websites of the primary posters here. I think the relationship between theoretical frameworks and historical/empirical analysis is different in our minds than what you think. I'd be interested in your critique of those works that you claim are not empirical more than just saying it isn't enough. What does it mean to be "evidence-based" in your mind, compared to being historical/empirical?

On PJB's question. I think the future of good economics is in the B-School. Even here there are lots of pressures to math-up, but I think that they are tied directly to a demand for output that can inform the real world. Maybe Economics as a social science has to be restated in terms of who the audience is intended to be. If we believe in the market we should speak to market participants we would have to leave the economics that informs policy to those wrong-headed thinkers. I am not sure economic skepticism will ever show up on their radar.

I think PJ's model of TC is a bad one. Although I often impute intentions from outcomes; I don't think this one works. We should have a couple of different models to predict TC's behavior and I will reject the ones that impose nefarious motives. I just don't think this own passes the Ockham's razor test.

BTW, I think it is wrong to dismiss Tyler's observations. You can argue against them, but it is not appropriate to dismiss them. He is too smart and his track record on observation too good to do that so confidently I would argue. In other words, we have good reasons and good evidence to suggest we should be a bit more reticent in dismissal.

Having been involved in attempting to higher faculty for a small private school I must agree with Tyler. Far two many candidates we interview are unable to explain basic economic ideas to students with out relying on mathematical models.
Graduate training needs to be modified to insure those going into academia can express themselves using language and mathematical models.

Tyler's long term trends are properly identified. They represent a major challenge for pro-market thinkers of the next generation, but it does not mean the inevitable doom of economics departments as places where good work is done. I think it is probable that a small number of departments will specialize in hiring those who do "good economics" as Pete describes - these departments will continue to put out good work - hopefully good enough to change the tide of opinion in future generations and eventually we will see a shift. Being a minority view does not necessarily mean an idea is destined for extinction. Today I can still see free-market economists doing good work, getting tenure track jobs, addressing lay people with credibility and authority using mass media, and standing in front of white boards in economics classrooms.

As a free-market advocate it is somewhat easy to look at the state (and direction) of public and academic opinion and resign yourself to surrender. I think this is the wrong approach - we should consider conceding the profession of economics simply because we have become the minority. One might say eventually good economists won't be able to get a job at any economics department, their views being so maligned. To this I say: they also might come and burn us at the stake, but until that day comes, why not keep fighting the good fight, so to speak?

Trolls seem to be out in full force today. I find that strange because I thought they turned to stone in daylight. I won't feed PJ, but I will say he grossly mischaracterizes both TC (totally baseless) and the current work being done in Austrian economics. This is coming from someone who has rather serious objections to Austrian tenets that are considered foundational. I did find it entertaining to see "marginalist revolution" in quotes and a reference to "post-marginalist" economics, as if marginal utility as a determination of price was the primary problem with economics today.

I agree with Pete's comment that no one should give Tyler the back of his hand. Indeed, it's weird to even have to say that. I guess that's just the blogosphere for you.

I think Tyler's point 1 is suggestive. He says native-born American economists will continue to shrink as a percent of the population, which sure seems right and every bit as "unstoppable" as he says. The trend, he says, "encourages mathematics," which also seems right. But that fact seems consistent with continued movements away from Bourbaki economics and toward more inductive methods, as his point 2 might suggest. Experimental economics will continue to gain ground, as will neuroeconomics. I view these methods as conducive to good economics because they keep us rooted in human nature instead of U-Max. If computability issues should ever really take hold within the profession, then mathematical economics may become a force tending to reinforce the link to human nature rather than U-Max. Thus, I don't necessarily view the encouragement to math as a bad thing or a threat to Austrian thinking in the profession.

Tyler's point 1 also suggests that the scarcity value of literary skill will rise over time, which is probably also good for Austrian economics.

I wonder whether Tyler's trends might also spell opportunity for niche economics programs to increase their rankings and their placement success. If your program included heavy "literary" demands alongside the "technical" work, and if you hire enough high-status economists who have tired of U-Max, then you might be able to attract good students and place them well. Gee, I wonder where something like could happen . . .

Zac's comment is striking. I'm not sure in which direction pro-market thought in economics has been trending in the last five or ten years. But we should remember that the overall post-war trend has been strongly pro-market. It used to be that a strongly pro-market economists was an embarrassment to his university. People should remember what happened at the University of Virginia. Thanks to those very people and to the great Milton Friedman and others associated with Chicago, the profession is infinitely more market friendly today. We should try to keep things in perspective.

I would wager that the climate is definitely worse for a pro-market economist right now than 5 years ago, in the court of public opinion and in academic output. Cowen rightly notes that a demographic shift towards fewer American economists is likely to mean departments will become decidedly less pro-market in the foreseeable future.

Koppl's comment to keep things in perspective is well taken. It seems unlikely to me that any shift away from market-oriented economics will make things worse than they were in the 30s, and there is no reason to give up hope that another messianic figure like Friedman might lead free market ideas back to the promised land (i.e. prominent positions at top universities). Taking the long view really does diminish the defeatist idea that the future of economics is somehow outside of economics departments.

Well, David Colander and Richard Holt and I have a book coming out in January from Elgar on European Economics at the Crossroads. Now, economists out of India and China are more likely to be formally mathematical, but the math in Europe is often of a more innovative sort, computatable for example, and the experimental-behavioral tradition there is very strong.

Also, everybody is doing everything in English. The foreign language traditions are just about dead, although still sputtering in a few corners. But they will be soon (another theme of our book).

PJ is straddling both sides of the fence when he denounces mathematical economics and upholds empirical economics, for they are both sides of the same coin.

If there is no mathematics, as he says, it is because there is no empirical data; and, if there is empirical data, as he says, math must follow.

I would submit, furthermore, that the salvation of economics lies not with one school of it or another but with No School Economics, the independent, academically unauthorized, Intellectually Incorrect, non-union intellectual labor that created the science in the first place, and, so far as I know, brought about every real advancement of it, since then.

To be sure, there have been great contributions, if not exactly advancements, from professional economists, and right here, I'm happy to say.

But they are much more the exception than the rule, and to be appreciated all the more for it.


What's your take on the current role of computable economics and its likely future, in Europe and in North America? It is that big in Europe?

Bigger than here, which also goes for more general agent-based modeling and other more alternative math approaches.

I may add the question: which mathematical literature introduces me best to Eurpean-style complex analysis (yet, with keeping structure unlike agent-based modeling)?

To all of you empirical and mathematical economists:

How could you observe the Invisible Hand, and, if you couldn't observe it, measure, count, or calculate it?

Computable economics?

Show me. And not indirectly, through links, references, symbolic representations, nor allusions to "counting without numbers."

Show me "counting" with numbers, in economics, and right here.

My prediction, as always, and as always, borne out:

We'll never see it.

You all want to shut me up, don't you.

It's simple.

Just me the goddammned example already!

Not allusions to it, not in code, not in some other field, some other location, safely out of sight, but right here, before our very eyes, in economics, and in the only real raw material of mathematics, cardinal numbers.

And then you're rid of me.

I will remove myself permanently, and you won't have Lesvic to kick you around any more.


Your mantra "There is only good economics" has its purposes (like keeping obvious junk out of economics). But I do not think economics is a science in the sense that there are narrow and unambiguous criteria of "goodness" except as arbitrarily imposed by know-it-all "top brass" who seek to preserve their own status within the profession. This is not to say that there are no criteria of "goodness" that make sense but they are *broad* and will admit quite a number of different approaches.

In the Economics of Time and Ignorance we said that what divides schools is often not different answers to the same questions but the asking of different questions -- or, more exactly, expecting a different kind of understanding.

It’s hard to see what makes Prof Rizzo a member of the Austrian School of Mises rather than the Chicago School of Friedman.

The Austrian School of Mises is a school of thought, and, the Chicago School of Friedman, of classrooms and credentials, inimical to thought.

Clear definitions and distinctions are essential to clear thought, and, Prof Rizzo's apparent opposition to them, to clear thought itself.

Dear professor Rossser,

Could you point me to some journal/universities/books etc that show the lively emmergence of a European program in complexity or behavioural economics? I am still rather poorly informed, but my impression is that all over Europe, economic research is mostly back-traking US research in the discipline.

As to the influx of non-American in US economcs (as in other fileds, it seems to me), I believe that in general they are not representative of their countries cultural roots, bright - it's true - but usually very eager to absorbe and adopt what at first sight seems to be the most enlightened ideas, methods and policies that lead to the West's prosperity. I see little self reflection, compared for instance of earlier generations of intellectual from less developed nations that went to study in prestigious Western universities.

Hello Bogdan, maybe this is reading too much into your comment, but are ambitious non-Americans thinking that general equilibrium theory, Keynesianism, mathematizing economics and big government led to the prosperity of the West?

I am not convinced about the self reflection of earlier generations of third world intellectuals, they mostly learned about socialism and interventionism. And worse (Pol Pot). Possibly the more prestigious the university they attended, the more damage they did when they went home (more research required).

Yes Rafe, you're reading too much into my comment and totally wrong. My comment was about the fact that, as an "outsider", you first have to master what already seems to be standard, go into that direction and this leaves little room for sel-f reflection. Don't boil it down about free markets economics versus non-freemarket economics and history started before 1950. I have one question: the fall of communism (and central planning) was one of the defining events of the last century. How many east-European have you read producing immortal works about this event so far, hm? Compare that to what happened after teh French Revolution in the 19th century. As a great historian said, the fall of communism produced no new idea...

Rafe Champion,

Great rejoinder!

Prof Rizzo refers to narrow and unambiguous criteria of "goodness" arbitrarily imposed by know-it-all "top brass" who seek to preserve their own status within the profession.

It is true that economics, as defined by Mises, is a narrow field, with but a few great thinkers at the top, while, in the Chicago School, everyone is a researcher, discovering new data and truths, and eligible for the Nobel Prize.

But the fact remains, whether the lowest common denominator of the profession likes it or not, that, without the economic reasoning of the Austrian School, the economic data of the Chicago School is a meaningless jumble, and that there is economics without the jumble but not without the reasoning, without the Chicago School altogether but not without the Austrian School, the Austrian School of Mises, that is.

It's obviously too early to tell, but I've put my hat in with economic sociology. One of the best things about being in a "fractured" discipline is that its easier to make a niche for yourself. We'll see what happens...

PS: Economics is still the best chance we have at this point though. All the econ-haters really don't know what they're talking about.

The Austrian School of Mises, that is, and of the few great thinkers, the "top brass" at the top.


I’ve seen this too with Romanians that left and became quite socialists while living in the West. You can notice this mimetic attitude in many deliberations. For example when discussing flat tax rate most Romanians dismiss it with the argument that the rest of Europe doesn’t have it, but they are doing very well, while Romania isn’t, so this tax must be bad.

Another interesting case is the minimum wage in Romania. There are basically three minimum wages: one for graduates (the biggest), one for the rest from the private sector, one for state employees (the smallest). The funny thing is that the first one is supported by someone from the Bucharest Academia of Economic Studies. There is no way that something of value could come out of this institution or from any of them.


A hot new one is the Journal of Economic Interaction and Coordination. Of its three editors, one is an American (Robert Axtell of George Mason), but none of its advisory editors are, although one is a Japanese at UCLA (and one is a Brit mistakenly listed as being at Princeton, but actually at GREQAM in France). Of its actual editors, only five out of 26 are located at US universities or institutes, with two of those being foreigners.


Janos Kornai.

That last part on the JEIC should have read "associate editors," not "actual editors." Many on the board, including one of three main editors, are Asian (he is Japanese), but the majority are European, and I think a majority of the papers in the journal are by Europeans.

There is only good economics and it belongs in economic departments and perhaps all the social scien.. OMG! :)

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