Matias Vernengo — Economic Regularities and "Laws" and the Riksbank Prize too

I've been reading The Nobel Factor: The Prize in Economics, Social Democracy, and the Market Turn by Avner Offer, Gabriel Söderberg, an interesting critique of the use of the Nobel Prize to undermine the Welfare State, essentially by conservative groups in Sweden, that were influential within the Central Bank (Riksbank), that disliked the Social Democratic policies in place in the 1960s.…

My comment on section of the post on laws. Economists need lose the term "law." There are no "laws of economics," or any other social science, that are comparable the laws of nature discovered in the natural science, owing to the differences in subject matter. There are no "laws of history," and economics is historical — regardless of how much formalists would like to believe otherwise.

There may be regularities that observable in economics, but they do not rise to the level of universality that is characteristic of laws of nature. Economists should stop implying they they do. It is dishonest, and it is bringing considerable criticism down on the profession for apparent failures.

These failures appear because of the way economist approach their discipline. They set narrow scope conditions that are instead advertised as law-based. Then they they have to resort to "exogenous factors" when things go wrong. This is not doing science. It is either confused, or else ideological persuasion based on rhetoric rather than reasoning and evidence.

My advice is to declare your scope conditions and then don't give the impression that you are able to provide answers for anything beyond the scope of the modeling assumptions. Of course, this limits what economists can claim because restrictive assumptions narrow the scope of the model.

Those who like to pontificate about "laws" don't like that. Now they are on the receiving end of not only criticism but also derision because of the exaggerated expectations about prediction and certainty they cultured in their audience that imploded in the GFC, for instance, and their prescription afterward have shown that they don't know how to fix thing they were involved in breaking.

So when you hear "economic laws," think BS.
 
Naked Keynesianism
Economic Regularities and "Laws" and the Riksbank Prize too
Matias Vernengo | Associate Professor of Economics, Bucknell University

Lars P. Syll — The non-existence of economic laws

In mainstream economics there’s — still — a lot of talk about ‘economic laws.’ The crux of these laws — and regularities — that allegedly do exist in economics, is that they only hold ceteris paribus. That fundamentally means that these laws/regularites only hold when the right conditions are at hand for giving rise to them. Unfortunately, from an empirical point of view, those conditions are only at hand in artificially closed nomological models purposely designed to give rise to the kind of regular associations that economists want to explain. But, really, since these laws/regularities do not exist outside these ‘socio-economic machines,’ what’s the point in constructing thought experimental models showing these non-existent laws/regularities? When the almost endless list of narrow and specific assumptions necessary to allow the ‘rigorous’ deductions are known to be at odds with reality, what good do these models do?

Deducing laws in theoretical models is of no avail if you cannot show that the models — and the assumptions they build on — are realistic representations of what goes on in real-life.…

Lars P. Syll’s Blog
The non-existence of economic laws
Lars P. Syll | Professor, Malmo University