Irrational Economics

by Webstir1 min read17th Jul 20218 comments


World Modeling

Lars P. Syll has great new post up on his blog, accessible below. 

I highly recommend reading before commenting. My question to the forum is not whether or not Lars is right or wrong. I think he produces a pretty air-tight argument. But rather, given the hand in glove relationship between economic predictions and political policy: Is the failure of the economists to gloss over such an important scientific axion a feature, or a bug?

Is the old saw that economists function in a capitalist society more as theologians than scientists, on the balance true? Put another way, is there evidence that the Neo-classical economists understand the problem that rampant deductivism, divorced from practical application to reality, is nonsense -- but persist in the face of said knowledge for financial and political gain?  

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I find his post incredibly uncompelling.  I believe he's arguing against a straw man; economists in the real world doing real work involving real dollars are painfully aware of the issues he brings up.

My guess is that his experience in economics is heavily influenced by his PhD work and that he's arguing against "economics as he experienced it at universities" as opposed to "economics as practiced by professionals in a real economy".

If practioners need to go way beyond and above the theory that does underline how hollow the theory is

"economists in the real world doing real work involving real dollars" are doing micro. And yeah, I don't doubt they agree. And most of them know the limitations which is why they practice micro.

The problem exists at the macro level.

There is a problem of choosing between being empty handed vs doing non-sense. Having axioms that reflect the real world better make sit harder to have any results. Thus the simplifiers might feel warranted with their spherical cows to get atleast something, even if they recommend rolling cows around.

I would be more concerned that the alternatives can't even be concieved of rather than them being known but supressed.

But alternatives do seem to exist. See the debate between @ProfSteveKeen et al and Nordhaus. It's a joke how rationally lopsided the debate is in favor of Keen, but since Nordhaus's arguments keep the lucre rolling, that's what gets the press among VSPs 

I can't manage to locate any theory with these hints.

Somebody that makes for good ethos conviction but has not mathematised their option in a way has not provided an alternative hypothesis. At the level where it is all gears we can be rigth or wrong but where we can't nail down the details it is more about what feels good or promising and what feels like a dead end or unpleasant.

You're going to have to familiarize yourself with Keen's work I'm afraid. Here's a good starting point.

Grab a cup of Joe:

I was somewhat unimpressed.  It's hard to take discussion of "mainstream economics" very seriously - there are a LOT of different parts of economics study, and this author doesn't explain what theory or policy he's concerned about.

To the extent that economics overlaps with politics, it certainly is subject to many of the same failings - oversimplification, pandering, and selective choice of theory as truth.  I blame politics more than economics for those things.