So, what can we now say about models? Well, those that make the best economists and the most fertile theorists — that is, those that are best able to spot novelty which is essential for any good working economist and any progressive theorist — should adhere as best they can to Keynes’ kaleido-static approach. Or, if they so feel, they should engage in a form of kaleido-dynamics if they can manage it. This requires a great deal of irony on the theorist’s part and a distinct ability to recognise that Truth is a slippery concept and that all we can do is try to weigh up rather general arguments and see which is, ordinally, the most likely. (Yes, readers of Keynes’ Treatise on Probability will see something of his underlying philosophy of knowledge here…).
Those who are better at writing textbooks and engaging in instruction should try to build the best ‘business-cycle machines’ that they can. In my opinion, the Godley approach — which is an outgrowth of Kaldor’s and Kalecki’s work — is the most promising field of inquiry. Such theorists should be very careful not to stray too far from the real world. I think, for example, that Samuelson and Hicks committed this particular sin (Hicks largely recognised this, Samuelson was blind as a bat). But with some discipline I think that there is little problem if economists build business-cycle machines and use these for didactic purposes. (But don’t try to test these thought-experiments against the data, please!).Fixing the Economists
Finally, those who are inclined to the ‘hermetically-sealed myopia machines’ should pack up and move on. There are other disciplines where the skills involved in constructing complex, rigidly deterministic systems are required. Engineering is the most obvious example. People inclined toward this sort of theorising would be better placed in these disciplines. They pay quite well and if you fall into this skill-set you will probably find some satisfaction there, but you will not make a good economist. Indeed, as I said, I don’t think that what you will be doing can adequately be called ‘economics’ and you will likely just spoil the discipline for the rest of us and annoy potential students.
Two Different Approaches to Economics and One Approach to Pseudo-Economics
Philip Pilkington
1 comment:
To be fair, the economists that take the surveys and design measurements, do the basic heavy lifting of econ, need to be less theoretic/philosophical and more engineering minded. We sort of take their work for granted with the massive amounts of data we have available at our finger tips but reporting inflation, demand, sales and things of this nature requires sophisticated tools. Econometrics is an important part of economics and requires accounting, math, statistics, probability, econ and more. It isn't all about irrelevant modelling. Some of these people really do impeccable work but too few in econ appreciate or understand how important the work they do is. The way measurements are taken, why they are measured the way that they are, how they are summarized and analyzed, what they indicate and what they do not is poorly reported in text books, popular media and blogs. Much of the econometric academic literature is good but gets too deep and heavy for end users of data. It is boring and less sexy to ponder than something like MMT but probably equally as important to understanding the world.
Post a Comment