Exploring the Eclipse of Equality

In the Air: Economics and the Social Sciences

In Intellectual History on March 26, 2010 at 9:11 am

In response to a request by ICAR’s communications guru, Paul Snodgrass, I will say a few words about the David Brooks column today. He must have read Kristof yesterday as well, because he has a really fascinating column on the history of Economics that gets us thinking. I think that Brooks’ call for a great history of economics is wanting right now. Of course, there are many good examples out there. One that bears noting is Joseph Schumpeter’s  History of Economic Analysis. If you read this posthumously published book, you see that there is quite a bit of diversity concealed in Brooks’ first act. His history is a bit truncated. In fact, there are many sciences of economics out there (and I hear at least one colleague quietly condemning me for my last post for overemphasizing fresh water schools). We could spend time with the now forgotten methodenstreit in Germany, which produced Max Weber among other things. We could remember John R. Commons and his Wisconsin institutionalism that helped to give birth to the Social Security Act and much more. This is alive today mainly in Transaction cost economics, which I once quipped did not inherit the lion’s share of Commons estate. There is today a whole new society of mainly European thinkers who specialize in Socio-economics. This is related to the new sub-field of Sociology called Economic Sociology (full disclosure: I took a preliminary exam in this). In short there are dozens of ways to study economics and the current form is like the current form of American capitalism–it is historically specific to the extreme. So get out conflict resolvers and study economics and prove yourself competent.

It is ironic to study Schumpter himself as an example, because although he became a kind of midwife for the current neo-classical economic consensus by advising the dissertation of Paul Samuelson, he had a very different vision of economic development that was not so mathematical and restricted. You already know about this when you speak about creative destruction. What you may not know is that his ideas derive from a radical system of dynamic theory that he developed in his youthful book The Theory of Economic Development. Schumpeter is said to have become embarrassed by his early work because it was not fit with the mathematical zeitgeist of the time and he buried it, while encouraging the pseudo-physics of society that we know today. Moreover, almost everything that is interesting about Michael Porter’s “five forces” is contained in this book, which just proves that social science ideas are like old soldiers–they never die, but just fade away. The one really positive thing about the Great Recession is that there is now an irrefutable case for common sense that economics as we now know it is no social physics. It is what all social sciences are–pragmatic experiments in social progress.

I once had an instructor who was looking for a way to do economic science while avoiding the fractured disciplinary mess we faced in the 1990s. He said we needed to find either a sociologist who could think or an economist who could write. Presumably these deficits are endemic to the two fields, but it is a telling statement. There are few people out there who are as bright as economists. Their challenge is to think productively about something human, which could then be written in a way that people might want to read because it would apply to this world and not a beautiful fantasy land. The problem is not the economists themselves, but economics as a discipline.

So let’s think like economists and write like human beings. The era of the two cultures is well behind us. We just have to catch up with history. A little light reading with Gustav von Schmoller anyone?

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