Methodological Suspicions Bleeding Into Ideological Suspicions

|Peter Boettke|

As anyone who has a pulse and is interested in the public/popular discourse about economics as a science knows, Paul Romer has caused quite a stir with his "mathiness" charge against leading figures in the modern economic theory of growth.

Unlike in the past, however, this debate/discussion has not been restricted to the scientific journals, but has resulted in a dialogue in the blogosphere.  This is the nature of things these days, where discussions which were at one time limited to the journals and books among the learned few, now are discussed in public and often with a bit more vitriol than one has been accustomed to since the 19th century (when in books major thinkers often took a gloves off intellectual fighting style).

The discussion has made some reference to past thinkers, but not in any serious way I'd argue.  A fuller discussion of these issues would need to take into account the earlier criticisms of "mathiness" raised by such Nobel Prize winners as Hayek, Buchanan, Coase and North, as well as the even earlier warnings by Frank Knight and Ludwig von Mises.  I'd also like to see acknowledged the warnings about excessive formalism by the 2nd John Bates Clark medal winner -- Kenneth Boulding -- who in his review essay of Samuelson's Foundations published in the JPE in 1949 raised the potential for this problem as the by-product of the Samuelsonian project.  I think the discussion would also be enhanced by an acknowledgement of the arguments made in Alan Coodington's "Creaking Semaphore and Beyond: A Consideration of Shackle's 'Epistemics and Economics', British Journal of Philosophy of Science, and especially the point that Coordington raises about syntactic clarity and semantic clarity in relationship to formalism.

It is my sincere hope that the raising of the problems associated with "mathiness" by such an accomplished theorist such as Paul Romer, would lead to a more open and productive dialogue on methodology.  The reality is that since the 1980s, economists don't really talk about methodology and philosophy of science anymore.  It sort of stopped after McCloskey's The Rhetoric of Economics.  They talk about advances in method, but economic methodology as a subject has been relegated to philosophers, intellectual historians, and heterodox economists. The elite economists don't discuss methodology, they just do what economists do --- a sort of methodological conventionalism.  And that conventionalism is model and measure.  Mary Morgan's excellent The World in the Model is perhaps the best discussion of how economists think.  But you don't really have economists of the stature of Paul Samuelson and Milton Friedman in the contemporary era doing what those two did -- making methodological arguments for formalism and instrumentalism.  And you also don't have economists of the stature of Buchanan indicting the profession as he did in "What Should Economists Do?"

As a result, challengers to the existing status quo of research in contemporary economists have had to deal with the claim that they were methodological suspect, analytically suspect, and ideologically suspect.  Opponents suspicious on any one of these had good reasons to discount the arguments being made, but if you are assumed to be guilty of all three, then you are justifiably ignored.  Certainly this presumptions can be justified in many cases of critics of contemporary practice in economics, but not in all cases.  Romer's criticisms might open up the intellectual space for an improved discussion of methodology and analytics, and hopefully from that a transparent and productive discussion of the broader social philosophic implications of some economic arguments and debates.  But, unfortunately, it is unclear this is how it will go because even Romer has a hard time not sliding from the healthy culture of criticism in a science to the unhealthy and unproductive culture of skepticism.  Consider his treatment of Friedman and Stigler:

Milton Friedman’s famous essay, “The Methodology of Positive Economics,” was a restatement of an attack that Stigler had already launched Chamberlin’s model of monopolistic competition. Stripped to its essentials, it was a syllogism:

Major Premise: Better theories have more unrealistic assumptions.
Minor Premise: Perfect competition has assumptions that are more unrealistic than monopolistic competition.
Conclusion: Perfect competition is the better theory.

For the history of the Stigler-Friedman attack on monopolistic competition, including a review of the Stigler-Friedman correspondence on this methodological line of attack, see for example Craig Freedman’s book, Chicago Fundamentalism. Or go back and read Stigler’s papers, starting with the lectures that he gave at LSE in 1948 that are collected in Monopolistic Competition in Retrospect.

Publishing a book in 1949, with a title that suggests a post-mortem, is pure Stigler. Of course, the tide of history shows that he was wrong, because monopolistic competition has all corners of the profession that the University of Chicago does not control. But Stigler has the last laugh, because for him it was not about economic theory. It was about saving the free world and I think his judgment was that this attack served the political purposes he intended it to have; and that what economic theorist think today hardly matters at all.

See Freedman’s book for more on the history of campaign that Stigler and Friedman undertook because they honestly believed that the future of individual freedom was threatened by the call for a more active government that followed in the wake of the Great Depression. In this campaign, they singled out Keynesian and Chamberlinian theory as the two types of theory that had to be destroyed, so that Marshallian theory could be restored to its dominant position in economics.

With this motivation in mind, it is worth re-reading Friedman’s chapter on methodology to see that it was designed specifically as an attack on Chamberlin and an insistence on a return to the style of economic theory of Alfred Marshall.

In this sort of narrative, the scientific merits of a position are not what drives the advancement of one position over another, but shrewd manipulation of science for political purposes.  This is, of course, popular now-a-days with the work on "agnotology" and in the social sciences claims about a neoliberal conspiracy emerging from Chicago, UVA, UCLA, Rochester, etc., with origins in Vienna and LSE and well funded by mid-western businessmen in dark suits.  Of course, we could also be talking about men in suits walking the halls of power in be they local, state or federal government and finding the right intellectual handmaidens to give them the intellectual fire-power or legitimating cover for the expansion their will to power -- but lets not go there for now.

It is unclear that truth and the science will be advanced if we retreat into such exercises in name-calling and demands for expulsion from the scientific community.  Rather, it does seem clear that we have severe disagreements among the ranks of economists --- not just among the elite practitioners but all the way down throughout the profession.  Perhaps this gives us an opportunity to promote a more pluralistic economics discourse.  And, as I have said before, this doesn't mean that each individual scientist must be a pluralist.  No, in fact, science advances when individuals are willing to make bold conjectures. What matters is that the institutions of the profession encourage constant contestation of ideas and challenges to the existing status quo and the challenges being offered to it.

Critical to cultivating a constructive discourse in contemporary economics is a cultural of criticism, not a culture of skepticism.  I hope Romer's challenging of "mathiness" will lead to such a culture of criticism, but I fear it will reinforce a certain culture of skepticism which will continue to erode the intellectual vibrancy of economics and political economy.

 

Comments

[Jim Johnson]

Pete,

Thoughtful post:

(1) The characterization of Stigler in the passage you cite is not far from the way McCloskey characterizes him. As I recall she refers to him as an "ideologue."

(2) Talking about methodology being "relegated" to philosophers is slightly patronizing. The problem with much of what economists (mainstream, at least) write about methodology is that it is necrophilic, expressing love for views that are philosophically and scientifically long dead. Philosophers like Dan Hausmann & Nancy Cartwright regularly embarrass economists on this score. Exceptions? Bob Sugden and Kevin Hoover come to mind. Methodological interventions from economists provide some added value only if they have read work other than e.g., Friedman. Most have not.

[Brian Albrecht]

This whole conversation about mathiness went from exciting to disappointing. Your points are exactly why.

I started out excited about the possibility of an open discussion about the proper role of math in economics. It was great to see a big name with a chance of being heard starting the conversation. He was attempting to bring the math back to real concepts. His point about calling some mathematical property "location" was important.

However, it quickly devolved into petty name calling and attempts to shun people. It looks like Romer is doing the exact "political" move that he disliked from Stigler and Friedman.

For now, I wait to see if the conversation take a productive turn. The references you list would be a good start. As usual, attributing bad motives to people is not going to productive. Instead, we need a discussion where points are debated on their own ground.

[Dallas Wood]

I wonder what leads Romer to think that Stigler's position on Monopolistic Competition was motivated by politics instead of theory.

Nothing I've read suggests that Stigler was on some kind of political mission. In fact, Milton Friedman said Stigler was largely uninterested in political advocacy:
http://www.jstor.org/stable/2138591

This fits with what Stigler said in Economics or Ethics where he argued that the main job of the economist was to explain the world and that the attempts of economists to preach specific policy proposals were generally unsuccessful (or at least only successful to the extent the public already agreed with them):
http://www.akira.ruc.dk/~fkt/filosofi/Artikler%20m.m/Stigler%20-%20Economics%20or%20Ethics.pdf

Really, Stigler seemed to believe that politics would generally take care of itself as he argued that every social institution had to be efficient or it wouldn't survive in the long-term.
http://www.jstor.org/stable/725548

I'll have to read some of the links Romer posted, because nothing I've read about Stigler suggests to me he was on a political mission of any kind.

[John]

Shouldn't the major premise be that better theories have more realistic assumptions?

[Rafe Champion]

Pete, I don't know the agnotology book but this looks like a horse from the stable you mentioned in that context. http://www.amazon.com/review/R9SQVC5YQCKA6/ref=cm_cr_rdp_perm

[Jeff]

Scientific skepticism is exactly what Romer is calling for. Without a skepticistic bent, you're not doing science.

[Peter Boettke]

Jeff,

Skepticism isn't science, criticism is. This is a major confusion.