On signs you’re reading bad criticism of economics

Constructive criticismA couple of weeks ago Chris Auld’s blog carried a post entitled 18 signs you’re reading bad criticism of economics. Auld is seeking to help the reader differentiate bad criticism from ‘solid’ criticism. The post generated plenty of debate below the line and was retweeted into my timeline several times.

I’ve been thinking about the post for a few days. There are a whole bunch of issues tangled up in Auld’s 18 signs. Some of them are relatively technical points. Some of them are rather more far-reaching.

I have a suspicion that underlying Auld’s distinction between good and bad criticism there is the division between internal and external critique. That is, good criticism is internal criticism – it is generated from within a particular academic community by people working from within broadly the same intellectual paradigm. External criticism originates, surprisingly enough, from outside that paradigm. We generally find that economists – like most people – are rather more tolerant of and amenable to internal than external critique.

Auld dismissed bad criticism as crankery, which is a label that mainstream economists have a tendency to apply rather indiscriminately to perspectives that differ too much from their own. One person’s crankery is another person’s foundational critique. But if proponent and critic operate from profoundly different social ontologies then most likely all that will result is mutual incomprehension. That doesn’t necessarily make criticism from a non-mainstream economic perspective wrong. Except from the perspective of the mainstream economist, of course.

I won’t run through Auld’s points in detail, but I wanted touch on all of them.

I’ll start by observing that Auld uses the term ‘economists’ as many critics do – in a rather undifferentiated manner. He is therefore right that critics who claim that ‘economists’ claim that people are always rational (Sign 8) are engaging in bad criticism. Not all economists claim this to be the case. Which isn’t the same as saying no economist does.

Auld identifies several jargon terms that bad critics misconstrue: not only ‘rational’ (Sign 12) but also ‘efficiency’ (Sign 13) and ‘externality’ (Sign 14). It would be fair to say that it isn’t unknown for economists to fail to keep the informational and allocative definitions of efficiency clearly separate. However, whether criticism is invalidated by terminological inexactitude rather depends on how badly wrong you are in the use of the term and what, precisely, the criticism is.

Some of Auld’s signs of bad criticism are empirical. He is surely right that if a critic were to claim that economics is not empirical that would be bad criticism (Sign 10). But there is surely some good criticism in asking precisely what sort of empirical endeavour economics might be and what it has or can achieve. He sees the claim that the financial crisis has disproved mainstream economics (Sign 9) as bad criticism. But it strikes me this is rather more debatable. Of course it depends on how broadly one wants to define ‘mainstream’, but I think that credible criticism is possible on issues like the empirical performance of the efficient markets hypothesis or the empirical adequacy – or even relevance – of DSGE models. That some of the most high profile proponents of this type of mainstream macro have declared it to have emerged from the crisis unscathed does not ipso facto demonstrate that it is fit for purpose.

Auld considers criticism that treats all of economics as if it were battles between schools of macroeconomics (Sign 11) to be bad criticism. That is an interesting point, because it depends on what is intended. On the one hand, it is clearly true because such criticism leaves out all of microeconomics and much else besides. On the other, the criticism that much of the debate between “schools” of macroeconomics is about the implications of rather modest variations in detailed assumptions might constitute rather good criticism. Those with radically different views of how the macroeconomy operates aren’t even invited to join in the party.

We know that mainstream economics is generally intolerant of heterodox approaches. So it is perhaps not a great surprise that Auld sees any criticism of economics that cites Debunking Economics as crankery (Sign 18). Whether you agree with Steve Keen or not, he has asked some important ontological and epistemological questions of dominant approaches to economic analysis. That the mainstream economics community has dismissed him rather than engaged with his arguments – which in many ways simply echo the more pluralist debates within the economics community that existed prior to the 1980s – reflects rather worse on the economics community than it does on him.

The claim that all economists care about is money (Sign 15) and that economists ignore the environment (Sign 16) are common complaints, and they are not unrelated. Stated in these bald terms then they clearly are bad criticism. Again, however, they can be reframed into slightly softer terms – for example, that converting everything into the common metric of money both requires unacceptable compromises and loses something important in translation – and they could then constitute perfectly respectable criticism.

Auld highlights the indiscriminate use of the term ‘neoclassical’ (Sign 3) and the reference to “the” neoclassical model of Walras (Sign 4) as problematic. I would agree that it certainly could be problematic. However, the term ‘Walrasian’ is often used by critics in a rather allusive way to signal the prioritising of mathematical elegance over real world relevance – even if the mythical auctioneer is not explicitly invoked. Does that make it bad criticism? Quite possibly, but it depends what the point is.

The elision of the distinction between ‘neoclassical’ and ‘mainstream’ economics (Sign 5) is certainly common. We can accept that the neoclassical school no longer represents the entirety of the mainstream in the way it once did. But the distinction between the two is elusive and by no means unproblematic.

The last few signs of bad criticism Auld identifies operate in a rather different register and get us into rather deeper water.

Treating macroeconomic forecasting as the major goal of economic analysis (Sign 1) is clearly wrong, if only because much economic analysis has nothing to do with the macroeconomy let alone forecasting. We might all agree that forecasting is not a major goal of respectable economic analysis. We might also agree that anything close to a point estimate of a future economic magnitude is almost certainly wrong. The best you might aspire to is qualitative predictions about the broad range of values within which an outcome might fall. But we can’t deny that there is quite lot of forecasting going on. Or that most of it is wrong. Clearly, this point might be a reference to all the criticism after 2008 that economists singularly failed to see the crash coming. But I’m not sure that was a failure of forecasting so much as a rather more fundamental analytical failure.

Auld identifies a bunch of bad criticisms that move us into more sociological territory. He cautions against criticism that frames the issue in terms of politics and claims that economists are market fundamentalists (Sign 2). Criticisms that refer to “corporate masters” or imply economists are shills for the wealthy or corporations (Sign 7) and any criticism that uses the term “neoliberal” (Sign 6) are considered bad criticism.

There is plenty going on in these statements and I’m not going to unpack it all here. The first point is usually addressed by reference to the profile of academic economists’ own political beliefs, which, at least in the US, tend to be less right wing than non-economists would imagine. But we then have to explore which “economists” we are talking about. In particular, we might inquire into the political profile of the economists who have genuine leverage over policy. We might ask what sort of economic analysis spews from the think tank industry telling simple stories about the market and marketization are the solution to most policy woes. When critics look at the effects of economics on the world that is more likely what they are thinking about. Similarly, claims that all economists are shills for corporate interests are clearly false. But the claim that some high profile economists are compromised by conflicts of interest, which in any other walk of life would be seen as deeply problematic, can hardly be disputed.

As for neoliberalism, it is often used as a general pejorative applied to those whose policy proposals one happens to disagree with. That is bad criticism. But we cannot conclude from this that neoliberalism is not a phenomenon of considerable contemporary significance. And while I don’t think “economics” as a body of thought can meaningfully be labelled as neoliberal, I don’t think we can dismiss the possibility that certain types of economic analysis allied with particular political interests are implicated in the neoliberalisation of society. But that is a topic for another day.

Finally, Auld see any criticism that goes out of its way to point out that the Economics Nobel is not a real Nobel is bad criticism. I disagree. Economics has done its darnedest to claim some of the reflected glory of the Nobel committee without any great justification. Critics tend to see this as saying much about economists’ pretensions to being scientists like natural scientists rather than scientists like social scientists. Pointing out to economists that it is more correctly called the Sveriges Riksbank Prize in Economic Sciences is just tweaking their noses.

I like to think that is me showing my usual tolerance. But it may be, of course, that I’m a crank too.

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7 replies »

  1. Hi Alex,

    Thanks for your thoughtful remarks. A few comments:

    Many of your points take the form, “Auld says X is wrong, but X may apply to some subset of economists.” Sure, but my complaint is that these points are commonly used as bludgeons against the community of economists as a whole. For example, as you say, some financial economists have behaved badly, but the bad behavior of a minority of people in finance does not impugn the entire discipline. Similarly, some medical researchers have taken money from pharmaceutical firms under dubious circumstances, but that does not mean it’s reasonable for anti-vaccine nuts to suggest that all medical research is therefore suspect.

    I did not imply that all criticism from a non-mainstream perspective is, therefore, wrong. What is wrong is erecting a strawman, intentionally or otherwise, and then screaming at it, which is the sort of unproductive and often offensive criticism of economists which has become all too common, and the theme of the 18 signs.

    For example, no economist claims people are always rational. Consider the difference between:

    1. Economists claim people are always rational.

    2. Economists claim it is often very useful to assume rationality in models.

    Statement 1 is wrong, but commonly asserted. Statement 2 is true. The critics I reserve the most ire for are those (like Dan Ariely) who are well aware of the difference, but insist on the first phrasing. Rationality is a technical assumption in mathematical models. Similarly, epidemiologists often assume that there exists an uncountable infinity of people, and biologists often assume people are arrayed on a lattice and interact only with their diagonal neighbours. None of us believe that these assumptions are literally true, of course,

    The complaint about “the” neoclassical (Walrasian) model somewhat redundantly refers in part to the tendency of critics to allege that economists think markets are perfect, implicitly or explicitly referencing what we now know as the First Welfare Theorem. The First Welfare Theorem gives a list of restrictive conditions which would have to be true for markets to be “perfect” in the limited sense of efficiency, and even in such a hypothetical world there is still room for redistribution. Reducing all of economic thought—the countless questions across numerous fields, the many approaches and modeling strategies, the mountains of empirical evidence—to one 19th century model, and often to one implication of that model, is bad criticism.

    I certainly stand my ground on Debunking Economics. You’ve equated my criticism of that book with sweeping dismissal of heterodox approaches, which is the only place you are being quite unfair. I’m not dismissing heterodox economics, but I am unequivocally dismissing that economically illiterate book. Of all eighteen, approvingly citing DE is the surest sign of bad criticism.

    As a rule, approvingly referencing any sweeping denouncement of any discipline is a sign of bad criticism of that discipline, as sweeping denouncements are rarely credible. If, say, “Debunking Biology” or “Debunking Climatology” or “Debunking Policy Studies” are ever published, I’ll go ahead and do what I implied credible economists do not do: I’ll forecast that they’ll be rubbish.

    Thanks again for your thoughts.

  2. Hello Chris

    Thanks for your very full response. You touch on a lot of issues that deserve proper consideration.

    I broadly agree with your main point – that constructing straw men and issuing sweeping condemnations are not good methods of constructive engagement. I certainly agree that there are people who should know better than to do it. But I would qualify my agreement by saying that it may depend on context – there could be situations in which a broad characterisation (ie simplification) of the situation, as a first approximation, can be useful. Economists shouldn’t have a problem with that idea.

    There are plenty of points in your comment that I’d like to pick up on. But I’ll have to leave that until this evening, as I’ve got the day job to get on with in the meantime.

  3. @Chris
    I have been too preoccupied with other things today to do full justice in response to your comment. So I’ll just make a couple of further comments:

    – You are right that my post rather elides the distinction between the general point (mainstream economics is generally intolerant of heterodox approaches) with the specific point that you dismiss Debunking Economics as crankery. I can see that is a bit loosely expressed and could be read as suggesting you were rejecting all heterodox views. That wasn’t my intention. I should have expressed the point more precisely.
    – While I agree that on the ethical point it is primarily a small number of financial economists who have been identified as being subject to a substantial conflict of interest, I think we might also reflect upon the economic community’s response to that being pointed out. We might, for example, consider the fate of George DeMartino’s campaign to introduce a clearer code of ethics to economics – something that most other disciplines that involve research impacting upon humans/society have had for years. The fact that many economists don’t even recognise that their work may have ethical implications would seem bizarre to researchers in other disciplines – precisely because the ethical implications of some economic ideas are so obvious to them.
    – You raise the fundamental theorems of welfare economics. That is something I have touched on before on this blog. While undifferentiated criticisms of “Walrasian” economics may well be wide of the mark there is something I find troubling about this part of the literature. We know that the welfare theorems are still used (in some of the welfare/public economics textbooks at least) to demonstrate that a complete market economy delivers a pareto optimal allocation of resources. But we also know, as you point out, that the conditions under which this holds are highly restrictive – some might say utterly implausible. It is maybe less common to link these concerns to things like the SMD theorem and point out that whole general equilibrium edifice is rather suspect as a guide to the real world. Indeed, in some cases rather more straightforward arguments like the theory of second best are overlooked. So students may simply pick up the first point – that economists have ‘proved’ that the market economy maximises welfare – without an appreciation that that is primarily a formal result with limited bearing on a market economy with the characteristics of the real world, and that even in its own terms its coherence was subsequently thrown into question. So the students wander off into the world with the belief that markets can sort it out; therefore impediments to the price mechanism are definitionally “a bad thing”. Such a simplistic reading of the argument in the hands of ‘economists’ in positions to influence the content of policy can, in my view, do some serious mischief.

  4. Economists have failed to police their profession. Instead of starting to do so, they are more interested in attacking “offensive” outsider critics. Strangely, there are economic theories about the fate of professions who behave in this manner – but economists aren’t minded to pay attention to them…

    It’s amusing to me that Auld works in health economics, an area well known for the vast majority of belief in rabid marketisation amongst it’s members. It’s all very well Auld protesting that he isn’t doctrinaire, but he needs to accept the reality that there’s good evidence that the majority of his colleagues are.

    Worth noting in passing, since we’re talking about claims to “expertise” that economists have no expertise in assessing bias, groupthink or the influence of culture and ideology. As such they are fundamentally as ignorant of many of the critiques as they claim their criticisers to be.