Thursday, February 26, 2015

The Insecurity of the Orthodox Economist

-- Posted by Neil H. Buchanan

My new Verdict column, "Education Is Everything, but It’s Not the Only Thing," was published today.  In it, I discuss the different ways in which education matters to economic outcomes, and the ways in which it does not.  I close the article by reminding readers that economic outcomes are hardly the be-all and end-all of education.  I might pick up on that latter topic in a future column or a Dorf on Law post, but for now, I will let today's column stand on its own.  I encourage everyone to read it.

Here, I will pick up on the theme of my Dorf on Law post from earlier this week.  There, I commented (yet again) on the closed-mindedness of the modern economics profession and, in particular, its failure to live up to anything close to the standards of a science (much less a field devoted to free academic inquiry).  The basic problem is that current economists are not open to differing modes of analysis, because they are sure that stylized rational-actor modeling is the only correct way to "do economics."

Longtime readers of this blog might recall that I wrote extensively about this state of affairs in a series of posts last Spring.  In one of those posts, "Which Jerks Would You Rather Hang Out With? (Economics Edition)," I described the difference between "orthodox" and "heterodox" economists, the latter having been effectively pushed out of all of the top economics departments during the 1970's and 1980's, with the purge continuing into the lesser departments in the 1990's, to the point where there are now only a tiny number of outposts for heterodoxy in the world of economic academia.

Generally speaking, the intellectual purge happened on purpose, but not based on any coherent plan (at least, so far as we know).  That is, the people who began to try to drive out the heterodox were generally politically conservative, so they viewed it all as an ideological purge that they could mask by calling it a matter of "science."  Meanwhile, the orthodox economists who might have been ideologically sympathetic to the heterodox simply sat on their hands, in part because even liberal orthodox economists truly believe that it is they who are doing real economics, and that the heterodox were losing because heterodoxy is unworthy.

The process was essentially a matter of orthodox economists taking control, slowly but steadily, of all of the levers of power.  Editorships of top journals were given to people who rejected out of hand any heterodox work.  The editors are quite open about it, too, telling authors that their work must fall within the orthodox framework in order even to be considered for publication.  Once publication outlets had been nailed down, the hiring of heterodox economists became a losing cause, which meant that graduate students would be told (reasonably) that they would be committing career suicide if they were to write heterodox work.

At that point, economics departments became closed societies in which everyone could honestly say that they do not know any economist who is not doing orthodox work, which must mean that everyone who is doing heterodox work is not a "real economist."  As many people have noted, the ultimate insult from an economist is to describe someone's work as sociological.

In the face of that onslaught, it is actually amazing that any heterodox economists exist at all.  Indeed, most of them are plying their trade outside of economics departments: public policy schools, law schools, some business schools (strangely enough), think tanks, labor unions, and so on.  Still, there have been some hardy bands of heterodox economists who have tried to defend redoubts within economics departments.  Inevitably, however, it seems that every fortification will ultimately fall.

In my post last May, I noted the rather infamous case of the University of Notre Dame (the football school in Indiana), which had long housed a vibrant economics department that was home to both orthodox and heterodox economists.  As the 1990's ended, the orthodox economists enlisted the university's administration in a concerted effort to drive out the heterodox.  This first resulted in a formal split of the department into two separate departments in 2003, a Department of Economics and Econometrics that was for the orthodox, and a Department of Economics and Policy Studies that was for the heterodox.  By 2009, the university had announced that it would close the heterodox department entirely.

An earlier example of this pattern happened at the University of Sydney in Australia two decades earlier, a split that was especially acrimonious.  In general, however, such open hostilities are rare.  The external norms change, and in rather short order, the orthodox drive out the heterodox.

Even so, new examples occasionally arise.  A reader of Tuesday's post directed me to a report on some recent ugliness in the University of Manitoba's economics department, where a long-term happy detente (with a department that was 2/3 orthodox and 1/3 heterodox) was tossed aside by an aggressive new orthodox department chair (backed by the university's president).

That report, written by a special committee of the Canadian Association of University Teachers, is a depressing read.  Essentially, it documents what happens when orthodox economists decide to start flexing their muscles.  The intellectual insecurity of the orthodox economists there came out in verbal bullying, sneering comments about the heterodox, threats to people who do not vote "the right way" on departmental matters, intimidation of graduate students, and so on.  The report describes these incidents with care, but for anyone who has seen this kind of thing in person, the report's understated tone still evokes a chilling recognition of how academic bullies work.

And like all bullies, these guys are afraid.  They are afraid because their answers to heterodox critiques are circular.  They are afraid because real scientists laugh at their pretensions.  They are afraid because at least some of them know that philosophers of science long ago exposed the unscientific nature of the discipline.  (Many do not know this, of course, because their professors would never consider it worthwhile to have their students read such things.)  And they are afraid because, as I noted in my post on Tuesday, they know that many of the most revered members of their discipline have terrible track records in explaining the world, and especially in providing ideas about how to make the economy work better for everyone.  What better way to deal with one's fears than to lash out at those who see the bullies for what they really are?


djg273 said...

Could you clarify whether this week's criticism of economists, and the scientific rigor of economics as compared to other fields of study covers the entire field of economics or is limited to macroeconomics.

I think some of your criticisms of economics are particularly unfair if applied to innovative fields merging economics and theoretical computer science. Studies in this area often seek to examine "irrational" behavior and how best to design systems to account for this behavior.

In my personal experience (admittedly as an attorney rather than an economist) I have found that many subfields of economics (with the notable exception of macroeconomics) are significantly more scientific than other social sciences such as sociology and social psychology.

Unknown said...

I am a member of one of the few surviving heterodox departments. I agree with the prior commentator than the rational actor model is recognized as failed, not simply flawed, by a wide range of orthodox economists.

Neoclassical economists asked to be judged by its predictive ability. It has failed catastrophically under its own suggested test in a broad range of fields. If embracing the scientific method means discarding falsified theories and policies that have proven disastrous, then neoclassical economists and economics has failed the test of being a scientific discipline.
And, yes, their hate for heterodox economist with far better predictive records does betray their insecurity.
William K. Black
Associate Professor of Economics and Law, University of Missouri-Kansas City. I am also a white-collar criminologist and a former financial regulator. I am currently at IAEN for four months (in Quito).

Neil H. Buchanan said...

I'm very glad that Bill Black found this post, and I appreciate his comments. He knows about this stuff better than I do, because he's living it every day.

Re djg273's query, it is mostly a macro phenomenon, but definitely not entirely about macro. Even when non-macro people use non-neoclassical methods (e.g., behavioral economics), the default norm is to look for Pareto-efficiency, which is both meaningless (because it lacks a scientific baseline) and easily manipulated (because it lacks a scientific baseline).

So, although I am pleased when I see some of the methodological pluralism that has emerged in the last generation or so in non-macro fields, I still see too much inherent bias in the hidden assumptions. On the other hand, there is some very good empirical and experimental work that need not be squeezed into standard neoclassical micro modeling norms, and that work can be exciting and informative.

The bottom line is that social science is not really science, but that's OK. Good social science inquiry requires careful empiricism and honest modeling, which some economists do, and some non-economists do, too.

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