[OPE] Anatole Kaletsky: economics on the brink of a paradigm shift?

The prevailing academic orthodoxy has to be recognised as a blind alley. Economics will have to revert to a genuine competition between diverse intellectual approaches - such as behavioural psychology, sociology, control engineering and the mathematics of chaos theory. So economics is on the brink of a paradigm shift. We are where astronomy was when Copernicus realised that the Earth revolves around the Sun. http://www.timesonline.co.uk/tol/comment/columnists/anatole_kaletsky/article5663091.ece

I think Kaletsky is far too optimistic because economics is hardly a great source of creativity, it's mainly a source of money.

Firstly, economics does not constitute a coherent science, but an eclectic amalgam or mosaic of all kinds of bits of theory which are not even mutually consistent.

Okay, there is a certain amount of chaos in reality. But in economics, "theoretical chaos" is the norm - there are just a few dogmas that hold it together, such as enriching yourself is good, private property is good, socialism is bad, and market activity solves everything. Actually, in reality, leading economists cannot even agree on what economics is about, what its subjectmatter is, and numerous theories are being taught even although they were proved false fifty, a hundred, or a hundred and fifty years ago.

A "paradigm shift" suggests a rational response to a new, unpredicted situation within a shared theoretical framework. But because economics is such a chaotic mess anyway, you can as economist draw any kind of conclusion out of the new situation and still be called an economist - and, moreover, still be considered to be working within the same economic paradigm. There is such a jumble of mutually inconsistent theorems in economics, that you can always find one to justify your new interpretation, so that you seem consistent with a tradition, "standing on the shoulders of great thinkers".

Secondly, increasingly economics as a science is itself in decline. Why? Because it doesn't solve any problems much - an accountant does accounts, a business manager manages a business, but what can an economist offer? Basically, only an ideology about good and bad effects of economic policies, which, because of many competing interests, can never pretend genuine objectivity. Doing an economics degree these days is often just a way of stating "I am clever at math and I love money" but in other respects it is fairly meaningless.

The "revolutionary" change in thinking, as I have argued before, does not concern primarily economics, but the whole way in which social life (the life of human communities) is organised, in other words, it is about social organisation. The problems have little to do with a lack of material wealth, but what we do with it, in the context of the empirical social behaviour of human collectivities.

Thirdly, economics is intellectually crippled and crippling, because as soon as its theories are proved not to work, it refers to "extra-economic factors" as an ad hoc strategem - but economics itself lacks any analysis of social relations among human beings, because social relations are ruled out of economics.

So, the only thing that we can reliably predict is that new eclectic combinations of economics with other disciplines will occur. But this is not a "Copernican revolution", precisely because in economics you can argue that the earth turns around the sun sometimes and other times the sun turns around the earth, or both turn around something else, over even both happen at the same time. You never get to a real "revolution" because most of the important theorems are not of a kind that can be definitively proved or disproved - they contain moral elements, metaphors, categoricals and conditionals which do not permit definite proof or refutation.

The valid element in Kaletsky's argument is, perhaps, rather that economics is once again revealed to be a proto-science, rather than a true science, because it is hardly capable of making any objective evaluation of economic life without being heavily distorted by the moral biases of what Marx called "the furies of private interest".

Jurriaan

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Received on Thu Feb 5 17:43:50 2009