Philip Mirowski: The Seekers, or How Mainstream Economists Have Defended Their Discipline Since 2008 – Part I

By Philip Mirowski, Carl Koch Professor of Economics and the History and Philosophy of Science University of Notre Dame. Professor Mirowski has written numerous books including More Heat than Light, Machine Dreams and, most recently Science-Mart

Edited and with an introduction by Philip Pilkington, a journalist and writer living in Dublin, Ireland

A bibliography can be found here

During a recent interview with the eminent historian of economic thought, Philip Mirowski, I raised a series of questions relating to how mainstream economists had dealt with the crisis on an intellectual level and what this might mean for the discipline in the coming years. I asked if he thought that they could hope to recover their bearings and, under the tutelage of a figure like Paul Krugman, might re-establish the neoclassical research program by simply tacking on some watered-down Keynesianism, just as Paul Samuelson had done in the post-war era.

Mirowski said that he did not want to answer these questions. “Of course,” he wrote, “I am interested in all of them, but I have been trying to bring the application of history and philosophy of science a bit closer to the earth when it comes to the crisis.” He then sent me an article he had written for a recently published book entitled The Elgar Companion to Recent Economic Methodology.

After reading this 40-odd page article I knew that it was easily the most important statement on how the mainstream of the economics discipline had reacted to the crisis and what this might mean for the neoclassical research program in the future. I also knew that the book in which it was published would likely go unread by a broader audience of non-economists – and possibly even many economists – and so I asked him if we could publish an edited version. He kindly complied and the result is what the reader will see appearing on the Naked Capitalism website in the coming days.

This is a long and complex article and I feel it might be worthwhile if I highlight a few key points that the reader can use as a thread to follow through this series, especially the later few pieces.

• First of all, we should carefully note what Mirowski says in the coming sentences about the debates surrounding the Dynamic Stochastic General Equilibrium Models (DSGE) models. These are the models that are today taught to economics graduates and used in central banks and the like. They are ‘trendy’ and mathematically sophisticated (relatively speaking, of course) – and some point to them as a major advance in economic theory. Of course, like all advances in this most conservative of disciplines they are no such thing. As Steve Keen has pointed out on Naked Capitalism before, they remain essentially static models that assume equilibrium. Thus, they are simply a rehash of the same thing that neoclassicals have been pushing for years: an ideological/metaphysical/theological idea about how capitalist economies work that posits harmony where no such harmony exists. But Mirowski points out that all the naval-gazing going on within the profession right now about the DSGE may be a sideshow – a means to evade the really fundamental questions about neoclassical economics and its foundations. As Mirowski writes in the piece: “The real bone of contention is not the DSGE model per se, but rather the pre-eminence of legitimacy of neoclassical microeconomics. The DSGE model is a herring of the brightest red.”

• This ties into another point that is raised by Mirowski. Those – like Paul Krugman – who attack the DSGE models and seek to return to the old ‘Keynesian’ ISLM models of the post-war era are also engaging in an unconscious, but no less pernicious obfuscation. First of all, Mirowski points out that they are pursuing a hopeless cause. If the post-ISLM economics is thrown out then the discipline has to admit that the vast majority of the work done since 1969 is only so much star-gazing rubbish. Fat chance that is going to happen! Secondly, and more importantly, by returning to the ISLM version of Keynes the neoclassicals in Keynesian garb (like Krugman) are once again avoiding the destabalising of the entire foundations of microeconomics to the point that it becomes self-contradictory and nonsensical that Keynes’ work actually led to (this is what the Sraffians and the post-Keynesians have been pointing out for years – most recently, we can name Steve Keen and his book Debunking Economics for a good summary, and Yves raised similar issues in ECONNED).

• Then there is Mirowski’s critique of Joseph Stiglitz and other attempts by many in the discipline to distance themselves from the now infamous Efficient Markets Hypothesis (EMH). These critiques, as Mirowski shows, are meaningless when looked at from a larger perspective. They are attempts to pick little holes in the edifice of the Great Equilibrator (The Market) and show where tiny little micro-irrationalities creep in. This insulates the economists from recognising that The Market might be inherently destabalising (think Minsky’s: ‘unstable economy’). Indeed, The Market may not even exist as a tangible entity, it may simply be a figment of the economists’ imaginations; a metaphysical/theological positing of equilibrium and harmony – a religious-like belief that somewhere out there is a Godlike Hidden Hand that ensures benevolence; in short: a primitive belief that real science did away with years ago.

Embedded in this critique is a smaller but no less substantial critique of behavioural economics. In this regard Mirowski points to popular exponents of the behavioural tradition like Robert Schiller. As Mirowksi clearly shows, behavioural economics is but another shallow, but superficially appealing defence of orthodoxy. It fundamentally alters nothing because its concepts of ‘rationality’ and ‘irrationality’ are largely ad hoc. This is important because anyone who has ever critiqued economists’ conception of ‘rationality’ is often met with apologists saying that the mainstream has now moved into the behavioural sphere and are thus becoming more scientific. This is nonsense of the highest order. Again, Mirowski puts it eloquently: “Two decades of behavioral research certainly has not resulted in any consensus systematic revisions of microeconomics, much less macroeconomics. Beyond wishful thinking, why should one even think that the appropriate way to approach a macroeconomic crisis was through some arbitrary set of folk psychological mental categories?”

There is much more in what follows and, indeed, these are only the key points that I would pull out of Mirowski’s excellent article. The piece does not drop into these critiques straight away. Instead it provides the reader with an excellent overview of the institutional critiques and counter-critiques of economics within the media. In this, the reader will see the second reason to engage fully with Philip Mirowski’s work (the first being that it is the most pressing and far-reaching critique of neoclassical economics that has ever existed): Mirowski’s work is entertaining. It is ironic, light-hearted and even at times genuinely funny. It engages the reader on a number of different levels – now theoretical, now literary. And in this I believe that Mirowski is one of the most important writers working today – and not only in the field of economics, but also in the fields of philosophy and the history of thought. Anyone interested in any of these areas who has not engaged with Mirowski’s work is far, far behind the times.

– Philip Pilkington


Part I: Them Crazy Seekers

After the financial crisis of 2007-08, the economics profession were in a particularly vulnerable position. No sane person could welcome a worldwide economic contraction; but the economics profession was particularly vulnerable to scorn and derision with its onset, because the orthodox majority had been boasting of unprecedented success in guaranteeing prosperity during the first decade of the millennium, often under the rubric of ‘The Great Moderation’. [1]

Furthermore, the economists had grown so confident in their orthodoxy that they had driven out most rival views and approaches from the richest and most powerful academic settings. This relative homogeneity of their disciplinary convictions helped to set the stage for what has become a rolling come-uppance. Once the contraction proceeded in earnest in 2008, it became commonplace in newspapers, blogs and symposia at various universities to query openly why these economists had apparently been caught unawares. Disparagement grew sharper as time passed, such as in movies like Charles Ferguson’s Inside Job (2010). Individual economists have responded with a bewildering array of diagnoses, qualifications and bald excuses, in ephemeral blogs and interviews, but also in durable print. How can an observer extract signal from noise in order to come to understand the modern predicament of economics? Has it all really been just a flash in the pan? How did economists acquit themselves during the shellacking? As the reader will appreciate, this is eminently a methodological question; but by 2008 the economists were bereft of methodological and philosophical resources to inform their responses.

After a brief flirtation in the 1960s and 1970s, the grandees of the economics profession took it upon themselves to express openly their disdain and revulsion for the types of self-reflection practiced by ‘methodologists’ and historians of economics, and to go out of their way to prevent those so inclined from occupying any tenured foothold in reputable economics departments. [2] It was perhaps no coincidence that history and philosophy were the areas where one found the greatest concentrations of skeptics concerning the shape and substance of the post-war American economic orthodoxy. High-ranking economics journals, such as the American Economic Review, the Quarterly Journal of Economics and the Journal of Political Economy, declared that they would cease publication of any articles whatsoever in the area, after a prior history of acceptance.

Once this policy was put in place, and then algorithmic journal rankings were used to deny hiring and promotion at the commanding heights of economics to those with methodological leanings. Consequently, the grey- beards summarily expelled both philosophy and history from the graduate economics curriculum; and then, they chased it out of the undergraduate curriculum as well. This latter exile was the bitterest, if only because many undergraduates often want to ask why the profession believes what it does, and hear others debate the answers, since their own allegiances are still in the process of being formed. The rationale tendered to repress this demand was that the students needed still more mathematics preparation, more statistics and more tutelage in ‘theory’, which meant in practice a boot camp regimen consisting of endless working of problem sets, problem sets and more problem sets, until the poor tyros were so dizzy they did not have the spunk left to interrogate the masses of journal articles they had struggled to absorb. How this encouraged students to become acquainted with the economy was a bit of a mystery – or perhaps it telegraphed the lesson that you did not need to attend to the specifics of actual economies (Klamer and Colander, 1990). Then, by the 1990s there was no longer any call for offering courses in philosophy or history of doctrine, since there were very few economists with sufficient training (not to mention interest) left in order to staff the courses. [3] Methodology had been effectively defined as ‘not economics’. As one of the original interviewers noted about a follow-up survey of economics graduate students at major departments just before the crisis:

These students furthermore do not show a great deal of ability to reflect on their discipline. They are satisfied with the commonplace, the things that economists conventionally say about their discipline. This cohort appears to be mindless, or at least resourceless, when it comes to reflections on the nature of their science. They have no literature to fall back on. (Klamer in Colander, 2007, p. 231)

Consequently, when the Great Mortification followed in the wake of the demise of the Great Moderation, both those occupying the commanding heights of the profession and those in the trenches were bereft of any sophisticated resources to understand their predicament comprehensively. In a pinch, many fell into a defensive crouch, falling back on the most superficial of personal anecdotes, or else the last refuge of scoundrels, the proposition that ‘we’ already knew how to handle the seemingly anomalous phenomena, but had unaccountably neglected to incorporate these crucial ideas into our pedagogy and cutting-edge research. Streaming video sometimes captured these pageants on the Internet. [4] It takes some thick skin not to cringe at the performance of four famous economists at the January 2010 meetings of the American Economics Association in Atlanta, in a session expressly titled, ‘How Should the Financial Crisis Change How We Teach Economics?’ [5] Three out of the four were not even bothered actually to address the posited question, so concerned were they to foster the impression that they personally had not been caught with their pants down by the crisis. The fourth thought that simply augmenting his existing textbook with another chapter defining collateralized debt obligations and some simple orthodox finance theory would do the trick.

For the ragged remnants of economic methodologists, it was a dreary sight to watch a few older economists rummaging around in the vague recesses of memories of undergraduate courses criticizing Milton Friedman’s little 1953 benediction for believing whatever you pleased as long as it was neoclassical (Maki, 2009), and coming up with nothing better than badly garbled versions of Popper and Kuhn. Of course quite a few had premonitions that something had gone very wrong, but the sad truth was that they were clueless when it came to abstract philosophical argument isolating just where the flaws in professional practice might be traced, and assessing the extent that they were susceptible to methodological remedies. Mired in banality, the best they could prescribe was more of the same. No wonder almost every eminent economist took their philosophical perplexity as a convenient occasion to settle internecine scores within the narrow confines of the orthodox neoclassical profession: MIT v. Chicago, blinkered econometrics v. blinkered axiomatics, New Keynesians v. New Classicals, Pareto suboptima v. rational bubbles . . .

In what follows I shall try not to pay much attention to such local settling of scores, but instead attempt to comprehend these responses as a case study in the social psychological problem of cognitive dissonance.

The father of ‘cognitive dissonance theory’ was the social psychologist Leon Festinger. In his premier work on the subject, he addressed the canonical problem situation which captures the predicament of the contemporary economics profession:

Suppose an individual believes something with his whole heart…suppose that he is then presented with unequivocal and undeniable evidence that his belief is wrong: what will happen? The individual will frequently emerge, not only unshaken, but even more convinced of the truth of his beliefs than ever before. Indeed, he may even show a new fervour about convincing and converting people. (Festinger et al., 1956, p. 3)

This profound insight, that confrontation with contrary evidence may actually augment and sharpen the conviction and enthusiasm of a true believer, was explained as a response to the cognitive dissonance evoked by a disconfirmation of strongly held beliefs. The thesis that humans are more rationalizing than rational has spawned a huge literature (Fischer et al., 2008), one that gets little respect in economics. Cognitive dissonance and the responses it provokes goes well beyond the literature in the philosophy of science that travels under the rubric of ‘Duhem’s thesis’, in that the former plumbs response mechanisms to emotional chagrin, whereas the latter sketches the myriad ways in which auxiliary hypotheses may be evoked in order to blunt the threat of disconfirmation. Philosophy of science reveals the ways in which it may be rational to discount contrary evidence; but the social psychology of cognitive dissonance reveals just how elastic the concept of rationality can be in social life. Festinger and his colleagues illustrated these lessons in his first book (1956) by reporting the vicissitudes of a group of Midwesterners they called ‘The Seekers’ who conceived and developed a belief that they would be rescued by flying saucers on a specific date in 1954, prior to a great flood coming to engulf Lake City (a pseudonym). Festinger documents in great detail the hour-by-hour reactions of the Seekers as the date of their rescue came and passed with no spaceships arriving and no flood welling up to swallow Lake City. At first, the Seekers withdrew from representatives of the press seeking to upbraid them for their failed prophecies, but soon reversed their stance, welcoming all opportunities to expound and elaborate upon their (revised and expanded) faith. A minority of their group did fall away, but Festinger notes that they tended to be lukewarm peripheral members of the group before the crisis. Predominantly, the Seekers never renounced their challenged doctrines. At least in the short run, the ringleaders tended to redouble their proselytizing, so long as they were able to maintain interaction with a coterie of fellow covenanters.

In a manner of speaking, the legacy of renunciation of philosophy and methodology led much of the orthodox economics profession to behave in ways rather similar to the Seekers from 2008 onwards. The parallels between the Seekers and the contemporary economics profession are, of course, not exact. The Seekers were disappointed when their world didn’t come to an end; economists were convinced their Great Moderation and neoliberal triumph would last forever, and were disappointed when it did appear to come to an end. The stipulated turning point never arrived for the Seekers, while the unsuspected turning point got the drop on the economists. The Seekers garnered no external support for their doctrines, indeed, quitting their jobs and contracts prior to their Fated Day; the economists, on the other hand, persist in being richly rewarded by many constituencies for remaining stalwart in their beliefs. The public press was never friendly towards the Seekers; it only turned on the economists with the financial collapse. (There are already signs it may be reverting to its older slavish adoration, however.) But nonetheless, the shape of the reactions to cognitive dissonance was amazingly similar. The crisis, which at first blush might seem to have refuted most everything that the economic orthodoxy believed in, was in the fullness of time more often than not trumpeted from both the Left and the Right as reinforcing their adherence to neoclassical economic theory. Thus was made manifest the ‘spontaneous methodology of the economics profession’.


1. Federal Reserve System (Fed) Chair Ben Bernanke had begun in 2004 in speeches and writings to proclaim the onset of a ‘Great Moderation’ in the US macroeconomy since
1984 (Bernanke, 2004). Briefly, this was an assertion that economists had attained such an advanced understanding of the economy that macroeconomic fluctuations had been tamed relative to previous experience, and thus we had entered into a new era of capitalist stability and prosperity. His repeated citation of this thesis went some distance in explaining why Bernanke’s Fed did essentially nothing to counter the worst financial abuses which led up to the crisis of 2007–08; Bernanke was insisting that the mortgage market was sound right up to the failure of Lehman Brothers. It is difficult to convey in any short space just how much the orthodox economics profession loved this thesis; so much so that it spawned a huge academic literature in its own right, one which has yet to be curtailed by events.

2. Here is not the place to document this trend, but see Paul Samuelson’s setting the tone for the community in the 1970s: ‘Those who can, do science; those who can’t prattle on about its methodology’ (quoted in Holcombe, 1989).

3. This dynamic is described from various vantage points in Weintraub (2002).

4. See, for instance, John Cochrane attacking Paul Krugman: com/watch?v5HO4E1bs4CbE; or Cochrane on the PBS News Hour, 17 February
2010:; or for some more nuanced defences of orthodoxy, see the speakers at the April 2010 meetings of the Institute for New Economic Thinking at: (last accessed 10 July

5. Available at:

Print Friendly, PDF & Email


  1. YankeeFrank

    It would be sadder to see the lame fizzle and sputter that is the demise of neoclassical economics if its proponents weren’t an almost singularly arrogant, pedantic and pompous lot; and, more importantly, if their pathetic efforts at erudition hadn’t been quite so devastating for the vast majority of humanity. These human paraquats in their ivory cells just appear to be so many of the damned endlessly rationalizing their perfidious falsity and misdeeds. They are truly damned in a way that few today in our slick technological and scientific age can really comprehend. We love to pretend that our advanced thinking has moved us beyond such concepts as absolution and damnation and that we are smarter and better than our ancestors. In the final analysis, performed by god-knows-who, the great American intellectual edifice will be shown for what it is: brimming with hubris and self-regard, and fully lacking in wisdom and humility.

    Thank you to both Phillips for helping to knock these charlatans off their posts. Do not be discouraged to be the outsider… in times like these it is the only noble profession.

    1. nonclassical

      ..interesting diaspora on reductivism in Philosopy (study of the history of human thought) and history…I have always
      framed the question of attempted sidetracking of student questioning of status-quo as involving “Classical argument”
      vs. bringing classical argument to bear on present context..

      This is certainly what is found in most university level Philosophy coursework I have encountered..

      I was fortunate to find one particular university level Philosophy Prof who wasn’t so he was marginalized by not being allowed office in Philosophy Dept.

      To say this experience set me off on a lifetime of reading-exploring-learning can only be defined by the realization
      it leads here..

      1. Nathanael

        Philosophy departments seem to be among the most rotten of university departments.

        I attribute this to the fact that every time some group of philosophers gets hold of a really good, really useful set of theories or analytical tools, *they go to another department*, even if they have to found that department. Philosophy departments are therefore left with the dregs.

        Science (“natural philosophy”) left for Departments of Science, and then branched into many other departments (Biology, Physics, Geology, Chemistry, Geography, etc.) Economics left, Psychology left. Math left — and in the 1930s, logic left for the Math departments as well. Basically any subject where students get a Ph.D. is one which was originally in the Philosophy department and decamped for better conditions.

    2. Cassandra

      Noam chomsky got it about right. To paraphrase his analysis of neo-classical orthodoxy: “Class hatred with a few scraps of grotesque methodology bolted on to make it look vaguely respectable…” That just about wraps it up.

      1. jake chase

        Economics is bunk because it posits a “real economy” humming along subject only to governmental sabatoge and occasional financial glitches. Veblen understood over 100 years ago that finance is the dog and the real economy is the happless tail. What capitalism does is enable repeated asset grabs by the capitalists on borrowed money created out of thin air by a financial cartel, while simultaneously imposing usury and wage slavery on more than 90% of the population in “advanced” societies, not to mention abject immiseration of a bottom 20% for whom the “production process” can find no sensible use. Its amoral accounting conventions blithely ingore the fact that ever increasing amounts of what is produced by the gigantic corporations enabled by the financiering operations is environmentally degrading shoddy junk, destructive war material and mindless entertainment. What the economics profession is modeling is a black hole into which we shall all soon be sucked by imploding debt unless the Fed’s helicopters are deployed en masse and without much further delay. I don’t know how any intelligent person can even wade through this propagandistic nonsense for any but careerist reasons.

  2. craazyman

    This isn’t another “Code Name Cain” sort of thing is it? I’m not as gullible as I used to be.

    There is an easy explanation for the failure of the saucers to arrive at Lake City — they went to the wrong planet and the wrong Lake, by mistake. You can’t blame the believers for that. If reality doesn’t cooperate with theory it’s not always theory’s fault. We need decades to probe these mysteries in their full scope and complexity and only simpletons come to quick conclusions. In the meantime, let the consulting fees roll.

  3. Middle Seaman

    The introduction makes statements that are incompatible with the way science works. When two models of the same concept/system exist, there is no scientific debate between the models. Debates exist outside science only.

    “Those – like Paul Krugman – who attack the DSGE models and seek to return to the old ‘Keynesian’ ISLM models of the post-war era are also engaging in an unconscious, but no less pernicious obfuscation. First of all, Mirowski points out that they are pursuing a hopeless cause.” But that is not really the issue. The fight between the DSGE model, that are static because dynamic models are probably unachievable, and ISLM models will not be resolved by public debate. Science practices optimal Darwinism; the wrong model will disappear. Thus Mirowski is climbing a non existing tree here.

    The introduction itself is way more complex and convoluted than Part I, which is rather easy to read. There are even some sentences in the introduction that fail to parse into anything recognizable.

    Part I is talks about economics and decries the abandoning of methodology and philosophy. Wrong models and over-reliance on mathematical wizardries is not unique to economics. Actually, it’s commonplace. The public debate about these models in economics is external and irrelevant to the evolution of the science. The issue here is, and Krugman repeats it frequently, whether economics is a science.

    1. Philip Pilkington

      “When two models of the same concept/system exist, there is no scientific debate between the models.”

      Did I say there was? I don’t think you read that properly…

      “Science practices optimal Darwinism; the wrong model will disappear. Thus Mirowski is climbing a non existing tree here.”

      Then contention here is that these models are not at all useful and that neither are correct. The contention is that ALL of mainstream economics models are bogus (see: Steve Keen, Yanis Varoufakis et al, and many other post-Keynesians and Sraffians).

      “The introduction itself is way more complex and convoluted than Part I…”

      I agree. But the next three parts needed summarising.

      1. Dan Duncan

        “The contention is that ALL of mainstream economics models are bogus…”

        How does an economic model become “legit”? Does it have to explain the world perfectly? If not, then how much leeway do you grant it before deeming it “bogus”?

        And what of models that–while far from perfect–still managed to describe the world better than predecessor models…are these still bogus? Is the efficacy of a legit model static? What of models that initially “work”, but degrade over time? Still bogus?

        By not stepping back and first defining a legitimate model…so that you too can be held to a standard…you’re operating in the philosophical ether, wherein concepts and definitions are equivocated on the fly….

        1. Philip Pilkington

          Minsky was right — Keen’s models seem okay (if a bit superfluous).

          My opinion is that economics — like sociology or psychology — is not particularly conducive to models. But if models must be constructive, Keen’s work is a good start.

          And no. You can criticise something without laying out an alternative. That is perfectly legitimate practice.

          1. nonclassical


            ..but it is also “revolutionary”, in the classical sense..

            as Krugman has pointed out, without alternative, all we have is revolution..destruction of what IS..

        2. JTFaraday

          No, Dan. My contention is that ALL mainstream economics models are bogus, and that economics is politics in another key.

          Anyone who thinks anything else is so far, far behind the times that they’re still living in the seventeenth century, struggling to see in the waning light as the monks file in for vespers.

          1. Piano Racer

            You’ve hit the nail on the head, Prof. Faraday.

            Your first tip-off that this is ideological nonsensical bullshit is that Phil Plinkington is tangentially involved. I use his presence as a very effective counter-indicator for quality.

            MMT zealots are such a joke.

          2. Philip Pilkington

            “Your first tip-off that this is ideological nonsensical bullshit is that Phil Plinkington is tangentially involved. I use his presence as a very effective counter-indicator for quality.”

            The world you inhabit must be a remarkably simple place…

          3. Frank Speaking

            If War is the continuation of policy by other means and an act of force to compel others to do our will; ultimately economics is another means of war—its theories, models and schools of thought are so many fig leafs attempting to cover up this fact.

            Corporations have no national identity, no quaint notions of patriotism or respect for a nation’s Constitution, Bill of Rights or rule of law.

        3. chad

          “How does an economic model become “legit”? Does it have to explain the world perfectly? If not, then how much leeway do you grant it before deeming it “bogus”?”

          A model is legit only until it is shown to be wrong. Or, in other words, only until an observation is made that contradicts the prediction made by the model. That’s pretty much all there is to it.

          1. Ed Seedhouse

            “A model is legit only until it is shown to be wrong. Or, in other words, only until an observation is made that contradicts the prediction made by the model. That’s pretty much all there is to it.”

            Well first, this has already happened for neoclassical economics. 2007/8 was disproof by reality.

            And second you may prove a model wrong in another way, namely by showing that it contains an inescapable contradiction, and that is what Steve Keene has shown.

            Mainstream economics is just astrology in a different disguise.

          2. Kukulkan

            A model is legit only until it is shown to be wrong. Or, in other words, only until an observation is made that contradicts the prediction made by the model. That’s pretty much all there is to it.

            Not quite. Consider the recent reports that neutrinos have been measured as travelling faster than light between CERN in Switzerland and the Gran Sasso Laboratory in Italy. That contradicts the prediction made by the Theory of Relativity, yet Relativity has not bee been overthrown.

            There are various reasons for that:

            i) Relativity is a robust theory with close to a century of accurate predictions and explanations to its credit; something like that is not overthrown easily.

            ii) The initial report was of a single result that may have been due to error, misinterpretation, mismeasurement or some other factor. The results have since been repeated, with some changes made to the experimental procedure to eliminate possible sources of error, considerably strengthening the case for the observed results.

            iii) Even if the observations turn out to be valid, it’s unlikely that Relativity will be overthrown. More likely it will be modified to account for the new phenomenon — though such a modification may transform the theory into something very different to what it is now.

            An analogy would be with Newtonian mechanics. That was spectacularly successful for centuries. However, its predictions for the orbit of Mercury (among a few other things) were not matched by observations. Relativistic mechanics, on the other hand, accounted for Mercury’s orbit very well. However, Newtonian mechanics weren’t invalidated. Instead, as Relativistic mechanics were developed, it became clear that Newtonian mechanics were a special case.

            That is, if various parameters — size, temperature, relative velocity — are taken to be those generally found on and around Earth — which is to say, those which people have direct experience of — Relativistic mechanics produces results pretty much the same as those of Newtonian mechanics. It’s only when one moves into situations outside those parameters that Newtonian mechanics breaks down.

            Thus, Newtonian mechanics were not invalidated or made illegitimate so much as being recognised as limited. For what it’s worth, they’re still used when one knows the parameters are going to be with the range they can handle, because they’re easier to work with that Relativistic mechanics.

            If faster-than-light neutrinos turn out to be valid, Relativity is likely to be expanded into something more comprehensive. That’s how science works. Successful models generally aren’t rendered illegitimate, they’re modified and incorporated into new models.

            One of the signs that economics is not a science is the fact that it has competing models that are (i) mutually exclusive so that ideas from one model are impermissible in other models; (ii) models successively overthrow and replace one another. That’s not science, that’s competing ideologies. Or religions.

            If economics were a science, then ideas and observations by Marx, Keynes, Friedman, etc. would all be incorporated rather than confined to mutually exclusive sets and people would build on those ideas and observations rather than endlessly debate them.

          3. Nathanael

            In fact, the competent economists *are* integrating the insights of Smith, Ricardo, Marx, Veblen, Keynes, and Milton Friedman — the insights which have been borne out by history, rather than the ones which have been shown to be way off-base — with the discoveries of environmental economics, and the basic results of experimental economics.

            It’s just that there aren’t that many competent economists. Brad DeLong — not a Marxist — has been rereading Marx and asking his commenters for help on passages he didn’t understand.

            One he found most confusing was why Marx thought that the elite capitalists would never consent to a progressive tax and general social insurance system to keep the peasants happy. As the commenters pointed out, when Marx wrote, *no capitalist had ever consented to it* since the industrial revolution, and it was only in the 1930s that capitalists tried it. Most of the elite capitalists are back to their old refusal to consent to it now. (It’s going to get their heads chopped off, if history is any guide, but apparently they didn’t learn history.)

      2. Justicia

        Further on this subject, a methodological critique:

        Scientific American

        Why Economic Models Are Always Wrong

        Financial-risk models got us in trouble before the 2008 crash, and they’re almost sure to get us in trouble again

        By David H. Freedman | October 26, 2011

        But what if there were a way to come up with simpler models that perfectly reflected reality? And what if we had perfect financial data to plug into them?

        Incredibly, even under those utterly unrealizable conditions, we’d still get bad predictions from models.

        The reason is that current methods used to “calibrate” models often render them inaccurate.


      3. Nathanael

        “Then contention here is that these models are not at all useful ”

        But as Krugman has pointed out, with datasets to back him, IS-LM *is* useful. It is a very imperfect model, but it’s made more than a few solid predictions.

        Sorry, you lose when you attack models which are making good predictions by claiming that they are “not at all useful”.

        In contrast, DGSE is actually useless.

        1. Justicia

          And a stopped clock is right twice a day. That model outcomes may at times coincide with real events is not proof of either their accuracy or utility.

          1. Fifi

            IS-LM is not a broken clock. It’s crude but it works on short term projections.

            Its two problems
            – It assumes that the underlying structure of the economy is not affected : true over the course of months or a few years but obviously wrong beyond that. Moving the lines around can extend the usefulness of IS-LM but how they actually move is largely voodoo.
            – It doesn’t say much and, contra neoclassical theology, it doesn’t pretend to tell you how to run your economy, simply that if you do this with rates, you’ll get that for your real GDP. Again useful for short term decisions but it won’t dispense you from the hard work of actually running the darn thing.

      1. proximity1

        I think we’d all be better off leaving out comments on Darwin, “Darwinism” and everything related from closely to remotely and all points in between.

        Economists have already made a mess of economics. For God’s sake let them leave Darwin and natural selection the hell alone!

        “Nature” has no objective, no a priori conception of “success” or “failure” or “good” or “bad”. For Nature, one outcome is as “good” as another. For an idea of the practical implications of this, please consider that if, for example, the H.I.V. virus–a living, evolving, organism, were to entirely wipe out the human race, this would count, as far as Nature is concerned, just as much as a “success” or “positive” outcome, as would be the case if, on the contrary, human efforts to combat the virus were so successful as to eliminate it entirely.

        In economics, there are outcomes which can be conceived as (in essence) objectively “better” or “worse”, etc. Not so for biological evolution’s processes. This doesn’t mean that there is no relation at all between the human-created abstractions we call economic behavior since, after all, all human activity ultimately has some relationship to biological mutation and evolutionary processes. It means, rather, that making an appeal to this very hazy and little-understood relationship for purposes of supporting or undermining moral claims or predispositions to one or another moral or economic theoretical construct is a fool’s errand destined to produce something not far from sheer nonsense.

        Economics is a social phenomenon and in no way a “science”, no matter how desperately its high priests would like to have it believed otherwise. It is, instead, a branch of anthropology and the sooner that is recognized and accepted, the better off human-kind in general and the world of academic economics, in particular, shall be.

        BTW, happy birthday to this website and thanks to its creator-administrators for its continued work. There aren’t really very many interesting, worthwhile sites on the World-Wide-Web, most of it being a crashing waste of time. This site, however, is a welcome exception in my opinion.

        1. Ransome

          Anthropology, I like that. I always thought Keynes would have been better if he studied biology. Ratios, volumes, distributions, flows and rates of change are commonly found in biology, and some modeling also. As far as history, to study biology requires extensive use of natural history to potentially understand the significance of an observation. Biologists are not resistant to change their minds because they live in an environment of change. Economics is the study of religion, a set of beliefs that tribes worship and fight wars over. There is a moral quality involved, most early economists were of the cloth and scriptures define who can be cheated, economically speaking. That markets are self-regulating is a belief or a myth as is perpetual motion.

          1. Mansoor H. Khan

            Ransome said:

            “Economists have already made a mess of economics. For God’s sake let them leave Darwin and natural selection the hell alone!”

            One way to think about all this stuff is to look around the globe and see which societies are more stable, have less conflict, have more satisfied, economically secure people and generally more balanced.

            I think countries like Germany, Sweden, Norway (the northern european countries) have elites who are much more aware of their “connectedness” to people around them and even the environment (they have less pollution).

            While our money system needs a radical change because usury is suicide (even for these northern european countries) we should try to emulate the “sharing” culture of these northern european countries.

            Capitalism and markets work much better in these societies. There is less emphasis on power and material accumulation and more emphasis on social stability and sharing.

            mansoor h. khan

    2. Foppe

      Middle Seaman: “Science practices optimal Darwinism; the wrong model will disappear.”

      Sorry, but I have to call out this argument, as it is dangerous. Science is just as prone to capture by socially powerful groups as any other area of life. To pretend that ideological capture is irrelevant to some kind of weird “truth” that science is inherently (ultimately) self-correcting — simply because there will some day be a time at which that group loses its dominance — is to engage in a kind of (callous) Hegelianism/utilitarianism. (Saying that “science” self-corrects is akin to saying that a counter-revolution leading to a better outcome justifies the repression that occurred during the “revolutionary” period, “since it all worked out in the end”.)

      1. nonclassical


        thanks for eloquently blowing up Hegel…philosophers tend
        to devolve in direct relation to how far beyond their own limitations of their own times they intend to prognosticate..

      2. Justicia

        Science proceeds one funeral at a time.

        Or, as Max Planck actually said:

        “A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it.”

        1. Nathanael

          Except that in actual fact, it generally *does* convince some of its opponents.

          Sure, we know that scientists are subject to the same cognitive biases as everyone else. And so many, many scientists do hold out, sticking to their pet theories, long after the evidence has shown otherwise.

          *But many of them do eventually change their minds.* Consider the recent study, funded by the Koch Brothers, about global warming. They hired one of the only reputable climate scientists left who didn’t think it was really happening and human-induced, and gave him enough money to do a really solid study of the evidence. His study said “Global warming is happening, and it is caused by greenhouse gas emissions caused by humans”.

          In economics, I need only point to Brad DeLong as an example of someone who believed vast masses of the neoclassical bullshit, who has “marked his beliefs to market” (as he says), and been convinced by the facts. Check his blog for those entries about stuff he used to think which has been conclusively proven wrong.

          That’s scientific behavior. And scientists really do do that. There’s another easy example, in the history of the theory of evolution; there were a lot of holdouts against Darwin’s theory of evolution, but finally the most famous one (I sadly forget his name) said “Right, I’ve seen enough evidence — Darwin is right about this.”

          1. PL_2

            I’m going out on a limb and calling out the call out.

            Darwinism is hardly fact. Many perfectly reputable scientists repudiate it.

            I didn’t believe this statement I just made, but I checked it out, and it’s true.

            What!? one cries. What! A creationist! Eeek.

            Not at all. There are many many scientific problems with Darwinism. Indeed it has been so modified it’s not really Darwinism at all any more, even in it’s most conservative manifestations.

            I’m going to give you one more angle, and give it to you straight.

            Many many physicists now believe our ordinary conception of Time is false.

            Without our ordinary conception of time, Darwinism ceases to offer anything at all. So if you want to swallow Darwinism hook line and sinker, then you have to say our ordinary conception of time is all there is.

            But that’s it straight. I could tell you ten other things wrong with everyone’s ideas of Darwinism. But maybe another day.

          1. Fifi

            Econ is NOT a science.

            It pretends to be a science, all mathy and things and stuff with lots of smoke and grave, sterns stances but it fails miserably on all three basic criteria of science. It’s not descriptive, it’s certainly not predictive and any notion of falsifiability is an absolute joke in that domain.

            At best, for its most talented (and humble and realistic) practitioners, it’s a proto-science grossly encumbered by loads and loads of theology and astrology and priesthoods and heavenly choirs, and even human sacrifices.

        2. Fifi

          Max Planck was too cynical. He should have said :

          “A new scientific truth does not FULLY triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it.”

          Lots of scientists easily accept to change their views when new facts come to light and a quite few positively relish those “Oh Wow!” moments.

      3. Nathanael

        “Science” self corrects, but science is a *practice*, a *method*, an *attitude*.

        People calling themselves scientists don’t necessarily self-correct. It’s very easy for a science to turn into a non-science due to stupid cultural drift — look what happened to physics departments when string theory came along.

        1. Nathanael

          I’m going to put this another way. Science, empirical science, is defined as the self-correction process: the process of changing your theories based on evidence.

          And because of human confirmation bias (a major cognitive bias) a key feature of science is constantly trying to *disprove* or *break* your current theory.

          If you’re not doing that, you aren’t doing science. Even if you’re a professor in a “science” department at a prestigious university, using a large expensive laboratory, publishing papers which use a lot of mathematics, in very prestigious journals, funded by the National Science Foundation.

          (Incidentally, math is not a science; it’s its own thing.)

    3. Min

      “Debates exist outside science only.”

      May I introduce Messers Bohr and Einstein?

      “Science marches on, funeral by funeral.”

      1. Kukulkan

        “Debates exist outside science only.”

        May I introduce Messers Bohr and Einstein?

        Who won?

        Does modern physics use Einstein’s Theory of Relativity exclusively, rejecting Bohr’s Quantum Mechanics? Or is it the other around? Or are there two rival schools, each rejecting and condemning the other? Does a young physicist in the wrong department get dismissed as a Bohrite or an Einsteinian, with that label sufficient to invalidate all their ideas?

        Or do modern physicists use both the Theory of Relativity and Quantum Mechanics because both work and they all recognise and acknowledge that both work.

        The debate between Einstein and Bohr wasn’t about whose model or approach was true, it was about Einstein not liking the philosophical implications of the probabilistic approach of Quantum Mechanics. But, it turns out that philosophical objections really don’t stand up against evidence — and Einstein was willing to acknowledge the evidence. He may not have liked it, but he admitted it.

        This wasn’t “Fear the Boom and Bust” a Hayek vs. Keynes or Fight of the Century: Keynes vs. Hayek Round Two. The validity and legitimacy of Einstein’s and Bohr’s models was settled by evidence, not rhetoric.

        1. Nathanael

          It goes beyond that. Bohr’s model didn’t work quite right, so the modern quantum mechanics model (with all the probabilities) was designed — Schroedinger’s model and Hilbert’s model, which turned out to be equivalent. These were even *more* objectionable to Einstein philosophically, and indeed to a lot of physicists — the probability computations didn’t seem to have any natural *meaning*. But it WORKED. So they eventually gave in and went along with it.

          Contrast the nonsense about string theory lately, which is a pretty mathematical structure with *no relevance to the real world*. The various versions of string theory keep making wrong predictions; it is useless. Yet there is a large cult of “physicists” who keep on pushing it, saying “just one more epicycle and we’ll have this working”. *That* is much more like what we see in economics these days.

        2. craazyman

          I am embarrased to make yet one more comment tonight . . .

          . . . but Heisenberg said something brilliant, which I do not find remarkable given it was Heisenberg, that quantum theory posed “a serious problem of language.” To bridge mathematical descriptions with verbal descriptions is quite challenging.

          I think it is so challenging it is almost impossible given the intrinsic precisional gulf that separates those two formal descriptive systems. They each approach the asymptote of infinite mythology, perhaps from opposite directions.

          Anyway, those two videos are absolutely awesomely done. I tip my hat. Who needs a PhD from MIT after watching both of them? Save your money, man, and go have fun. You’ve learned all there is to really know about macro economic theory from both of them. haha.

        3. Kukulkan

          Actually I’ve been thinking about this and I’ve realised I owe Min an apology.

          As I noted, the Einstein-Bohr debate wasn’t about which was the better model. It was about personal likes and dislikes, philosophical objections and metaphysical implications. Einstein didn’t like Quantum Mechanics. It’s probabilistic approach irked him. As summed in the quote “God doesn’t play dice with the world.” He just didn’t care for any approach that was not built on solid deterministic laws.

          What only struck me after I posted the comment above, was that made the Einstein-Bohr debate exactly like economical debates. Those aren’t about whether or not a particular model works either. Instead they’re all about personal likes and dislikes, philosophy and metaphysics. They’re not about which theory has the more effective explanatory and predictive powers; they’re decided by entirely by which theory an individual happens to find more agreeable.

          That’s why the Global Financial Crisis had no discernible impact on the practice of economics. A failure of prediction and explanation on that scale would be devastating to a theory in a science such as physics or biology, but in economics, theories aren’t judged by those criteria.

          The likability, philosophical implications and metaphysical meaning of various theories in economics remain unchanged. Supporters of Neoclassical economics still find it more agreeable than any of the alternatives, so why should they give it up or change it? The fact that it doesn’t work is irrelevant.

          So, my apologies Min. I did not realise how apt and entirely appropriate your invoking the Einstein-Bohr debate was. Hence my response.

          In my defence though, I will say that I did get there eventually.

  4. chas

    Maybe they’ll wise up when there’s no groceries at the local grocery store & no gas at the local station.

  5. LAS

    This should be an interesting series.

    Those with the power make the markets and those without the power may temporarily believe the markets are their making/unmaking. There’s never appeared to be an equilibrium. As much inequality as there is among persons, there is even more among business/political entities.

    Without knowing much about economics whatsoever, it seems there ought to be dynamic models involving reproductive numbers. These models ought to include mass over-runs and mass starvations of whole populations as viable possibilities. In some scenarios there may be a recovery via intervention and in others there may not be. Until we see models like this, economics is probably not on the right track.

    1. Philip Pilkington

      “These models ought to include mass over-runs and mass starvations of whole populations as viable possibilities.”

      That’s it. That’s the fundamental criticism. Minsky put it as such: “If your model cannot show depression as one of its states it is wrong.”

      Incredible that economists refuse to recognise that. And ironic that they’re now all fetishising Minsky…

    2. nonclassical

      …when sailing Canadian waters, listening to N.O.A.A. weather radio, it often seems we are hearing yesterday’s
      weather being reported..

    3. Nathanael

      Both the simple ecology models (heard of the boom-bust cycle of predator-prey relations?) and Keynes’s models predict some of these sorts of observed behaviors. Resource utilization models in environmental economics are quite good at predicting this sort of stuff and even describing how to avoid it (if you have power).

      Neoclassical economics doesn’t deal with any of this, demonstrating its worthlessness. But then it was never intended to be a model of the real world; it was intended to be an excuse to implement steal-from-everyone policies which benefited an elite few, who didn’t care what happened after they died.

  6. Nicholas Weaver

    I actually like the weak Efficient Market Hypothesis, with a very minor tweak: The market efficiently reflects the current price as dictated by the information and beliefs of the active market participants.

    The two key additions are “beliefs”: the market includes patent nonsense in determining the price, and “active”, only active traders matter. So my information/belief that the housing market was out of control in 2004 had no effect, but someone levering up to buy did.

    Manias, panics, bubbles, etc, all not only work in the weakened weak EMH, but are expected. Which is a very different conclusion than one gets with the strong EMH.

    1. Philip Pilkington

      First of all, the very seperation of ‘information’ (presumably ‘objective’) and ‘belief’ (presumably ‘subjective’) is essentially impossible. This is what led Keynes to his ‘animal spirits’ and his ‘fundamental uncertainty’.

      Secondly, as Mirowski says, these ‘behavioral’ amendments are remarkably shallow and serve only to obfuscate the inherent disequilibrium of the system and subsequent poverty of ALL neoclassical models.

      1. Anonymous Jones

        I know, I know, I know.

        I should just stop reading your posts and your comments. Alas, I still think you have interesting things to say. It’s just so unfortunate that your confidence level is so incongruent with your actual abilities.

        I kinda agree with your statement, “the very seperation [sic] of ‘information’ (presumably ‘objective’) and ‘belief’ (presumably ‘subjective’) is essentially impossible.” Of course, as with most things, this topic is far more complicated than that. Even though you can’t draw a bright line between information and belief and even if most statements constructed with (the imprecise heuristic we develop as) language contain both information and belief, this does not mean that certain statements aren’t farther one way or another up and down an imaginary continuum between what we conceive of as true information and true belief. The statement “10 dollars is more than 1 dollar” is much more information-like than “God wants me to have 10 dollars”.

        So yeah, you’re not really wrong. But no, you don’t really seem to get it, or at least your statement was so obtuse that it seems to the educated reader that you don’t get the complexity of the world.

        You clearly don’t get that you don’t have all the answers (or most of them).

        As I have said many times (and as Yves intimated again by repeating Twain’s quote in her anniversary post), most people really seem to think they know more than they actually do.

        Phil, it is clear that you really know a lot. But you think you know so much more.

        Long ago, I realized that most of my difficulties with people correlated quite strongly with that negative differential. It’s rarely whether someone was brilliant or slow, experienced or naive. The main problem was always if there existed a negative gulf between what that person believed he was and what that person in fact was.

        1. Philip Pilkington

          That’s funny. I always thought my posts indicated that I believed that people have VERY limited mental abilities vis-a-vis the actual existing world.

          In fact, this is pretty much a constant theme with me. Have a look at what I just said above. I didn’t say “look everybody I know X”, I said “hey everybody, you cannot do Y”. That is — like most of the things I write — a negative statement.

          Was it Socrates that said: “I know one thing: that I know nothing”?

          1. Philip Pilkington

            *Whispers* Also, I was clearly talking about distinguishing between ‘belief’ and ‘information’ in economics models. I’m not setting up a metaphysical statement here. I’m just saying that it’s impossible to distinguish between the two in economic calculations. That’s why Keynes came up with ‘animal spirits’ and ‘fundamental uncertainty’.

            When I said above that you cannot distinguish between ‘information’ and ‘belief’ I was not laying down an Ever True axiom for every sentence generated by Man… Nothing so lofty. Just a simple (Keynesian) economic point.

    2. Philip Pilkington

      Also, when you make these assumptions the very terminology you use begins to lose all meaning. Example:

      “The market efficiently reflects the current price as dictated by the information and beliefs of the active market participants.”

      What on earth does the term ‘efficiently’ mean in that context? It seems to mean something like that the market is effective at being uneffective. Or that it is apt to transfer signals that are, at the very same time, noise.

      The whole thing starts to crumble into illogic and doublespeak very quickly when you move away from certain presuppositions. But a certain degree of neoclassical training allows the student to develop blinkers in this regard — like the Seekers.

      1. Philip Pilkington

        Just to give the reader a firm grounding in the English language so that they’re not swayed by NeoCla doublespeak:

           [ih-fish-uhnt] Show IPA
        performing or functioning in the best possible manner with the least waste of time and effort; having and using requisite knowledge, skill, and industry; competent; capable: a reliable, efficient secretary.
        satisfactory and economical to use: Our new air conditioner is more efficient than our old one.
        producing an effect, as a cause; causative.
        utilizing a particular commodity or product with maximum efficiency (usually used in combination): a fuel-efficient engine.

      2. Rcoutme

        I am not an economist; I am a scientist (chemist by education). It seems to me, however, that including the two caveats does have a practical meaning. If markets are efficient to the beliefs of the players, then making the markets slow down would actually make the markets more efficient (as beliefs would likely turn to knowledge more often). This would have a practical effect on possible policy changes regarding the rules for buying and selling (from regulatory standpoint).

        1. Philip Pilkington

          Well, that’s stretching the English language more than a bit. All you’d really have to say to get this across clearly to people is:

          “Market price generally falls in line with peoples’ beliefs about where the market is going”

          Using terms like “efficient” in that context is, at best, trying and, at worst, doublespeak.

          (Also, if we accept my statement — which is perfectly true — then we stop thinking of thinking of markets as mechanisms that always efficiently channel resources. So, saying it the other way is effectively saying:

          “Markets inefficiently channel resources in an efficient way.”

          That is doublespeak)

    3. nonclassical

      …as Yves points out in “ECONned”, “the market” we indulge
      is not the one indulged by those making decisions-whose market involves “high frequency trading” by computer logarythm, collusion, monopoly, and manipulated data..nor
      does it include insider information available to those outside..

      There simply is no “level field” for all, which completely
      disrupts “market” efficiencies…

  7. Schofield

    Philip Mirowski is a gem exposing the entrails of fanaticism. He did this well with Dieter Plehwe documenting as editors the rise of Neo-Liberalism in their book “The Road from Mont Pelerin: The Making of the Neoliberal Thought Collective” Raymond Plant in his book “The Neo-Liberal State” then augumented this with his book fastidious dismantling Libertarian and Neo-Liberal arguments on the basis of their failure to balance negative with positive rights. An insight he derived from the rational ethics philosopher Alan Gewirth whose two books “Reason and Morality” and “The Community of Rights” are the original source for demolishing Libertarian and Neo-Liberal fanaticism and putting the Invisible Hand into a more workable perspective than Adam Smith managed to achieve.

  8. scraping_by

    The Market may not even exist as a tangible entity, it may simply be a figment of the economists’ imaginations; a metaphysical/theological positing of equilibrium and harmony – a religious-like belief that somewhere out there is a Godlike Hidden Hand that ensures benevolence; in short: a primitive belief that real science did away with years ago.

    Well, sort of.

    The Market can exist not in economics but in anthropology or sociology. That is, an outside look shows a group of people doing a few conventional things concerning money. They behave in ritualized ways and use opaque jargonized language. They depend on relationships over rules, and celebrate ends but obsess on means.

    The Market is more a job category or an industry than an abstract process. Real people are doing real things. And while a lot of the things they do make less sense as time goes on, it’s still can be reduced to simple acts.

    We’re not talking The International Jew or The Gnomes of Zurich here. But this is trying to abstract agency out of antisocial self-aggrandizing actions. Remember the Southern Planters abstracted slavery to the principle of property, and then defended the principle of property, abstracting the daily brutality out of slaveholding. Think of The Market as just-so stories about the actions of a tribe with a narrow social function, who are currently parasites on the rest of us.

    1. Philip Pilkington

      That’s a very different definition to what neoclassical economists have. I think a good place to start is that The Market doesn’t exist. Only markets exist.

      1. proximity1


        ” I think a good place to start is that The Market doesn’t exist. Only markets exist.”

        I agree. And we could add that, as with a multiplicity of sorts of “markets” there are various versions of “capitalisms” some much better or worse than others and none anywhere near being mainly, largely, “good” for everyone all things considered, or all things being “equal”. All things are never considered any more than they are ever “equal”.

        Although I’m not up to judging the mathematics presented in it, I can nonetheless point favorably to Emmanuelle Bénicourt’s and Bernard Guerrien’s text, La théorie économique néoclassique where, in his prefatory remarks, he tells (at least at the time of his book’s appearace) that as unlikely as it seems no text (till then) existed which presented side by side both neoclassical economics in formal theory as well as its presentation in non-formal terms. In other words, books gave one view or the other; either the text was a rigorous presentation of technical theory–in which case it departed seriously from the popularly held and defended claims of dominant economic theory— or, on the other hand, it presented these–in which case it was anything but an accurate presentation of actual technical theory since, in effect, the two were and remain incompatible with each other and cannot be reconciled. The main point of Bénicourt’s and Guerrien’s text is to show just that. ( )

        I can also recommend Pierre-Noël Giraud’s book, Le Commerce des promesses (see:

      2. scraping_by

        Spot on. Once you create an abstract summation and turn it into something apart from the sum of its parts, you’re in la-la land.

        Real people. Pants one leg at a time. Real jobs. Buy and sell. Stay with things you can put a hand on.

  9. Sufferin' Succotash

    I’m wondering if economic history was given the same treatment as methodology in economics departments.
    If that’s the case, then the muddled neoclassicist response to recent events is understandable. If you don’t reflect on your own discipline and you don’t reflect on the past, then you really aren’t doing much by way of thinking. It’s not so much a matter of cognitive dissonance as of non-cognition in the first place.
    Jest sayin’…

  10. Diogenes

    I have long believed that the problem with economics as an intellectual discipline is intrinsic to its fundamental approach to understanding the world. Reading Mirowski’s lucid and intelligent prose reminds me of some observations that my late father, a Harvard educated historian, shared with me some three decades ago regarding the way, as he saw it, that economists and political scientists go about their search for the truth.

    Political scientists have a fundamentally different approach from that of an historian. Political science is Aristotelian and classificatory. A historian is, in the best sense, probably intuitive and he’s inductive. The historian tries to find out what something is from examining it.

    Remember what biology was like before it got smart– when it was Linnaeus? You described things by saying “That’s a worm” or “That’s a fish.” If it’s a fish, it belongs to this order and this species. In the same way, a political scientist will look at some country that’s trying to get its independence and say, “That’s a classic case of irredentism.” It involved Trieste and Fiume. As far as I know, that was the only case of irredentism; that’s where the word was coined– it’s an Italian word. Political scientists think if they name something, if they put a label on it, they’ve done something. Well, all they’ve done is name it. They haven’t explained anything.

    I developed my distrust for economists without ever having to deal with them. I read enough about them and by them to realize that I didn’t trust them. If economics really were a technical science, for any given problem in economics there would be a solution with which a fairly substantial number of economists would agree. In fact, there don’t seem to be any such problems. This makes me feel that it isn’t that economists are stupid as individuals; it’s that their discipline is stupid: that it doesn’t exist.

    The trouble really started in the nineteenth century when political economy was split into political science and economics. Political economy makes a great deal of sense. Political economy realizes that the exercise of power and the production of goods and services are intermeshed. History’s function is to explain how this worked in specific times and places.

    Once you start talking about universal rules of human behavior, it doesn’t really matter what psychology you use, because I don’t think even psychology transfers from one culture to another. Even Freduianism, I think, describes the behavior of somewhat distraught Jewish ladies in nineteenth century Vienna more than anything else. That doesn’t mean Freudianism is totally wrong, but it certainly tells me that Freudianism does not translate wholesale to the Trobriand Islands, or even to Charlestown, Massachusetts. I don’t think it does. I don’t know how many lives have been ruined because practitioners thought that it did. I suspect that it’s a very large number of lives indeed.

    1. Philip Pilkington

      Very good.

      And he was right about Freudianism too. It didn’t translate well at all to the colonies. Freudians in Islamic countries like Morocco found the whole thing very confusing. Of course, Freud recognised this well when he said that the Irish could not be analysed.

      But now, as the Irish have become more Westernised Freudianism has taken off in a big way. It has also got quite big in Japan, of all places. Says a lot really.

      1. JTFaraday

        Oh, come on, Pilkie. Does the following “thesis,” referenced by Pope Mirowski in your post above, really source to “Fischer et al., 2008?”:

        “The thesis that humans are more rationalizing than rational has spawned a huge literature (Fischer et al., 2008)”

        1. Philip Pilkington

          I assume so. This is an academic paper. Here’s the bibliography (Yves’ link above is wrong).

          Fischer, Peter, D. Frey, C. Peus and A. Kastenmüller (2008), ‘The Theory of Cognitive Dissonance: the State of the Science’, in Peter Muesburger, Michael Welker and Edgar Wunder (eds), Clashes of Knowledge, Berlin: Springer, pp. 189–99.

          If you want to pick apart my articles in a childish manner by all means have at it. But be careful when you start saying that the references in a Professor’s academic articles are fake — people might just come to think that you’re a total and complete tool…

          1. JTFaraday

            If you are condemning “Freudianism” without knowing where the term “rationalization” cited here comes from, then you’re a hopeless case.

          2. Philip Pilkington

            I’m not ‘condemning’ Freudianism. I’m making a point that many of the Freudians who I know well accede to. I was even going to quote a certain very prominent Freudian called Jacques Lacan in this regard but I thought my comment stood on its own.

          3. JTFaraday

            You are the one who is always making claims that people are not rational, so I just find it odd that you are so eager to reject–in toto– the Gran Pere of human irrationality.

            Also, I have to assume that when you and Pope Mirowski make the (essentially Freudian) claim that “humans are more rationalizing than rational,” you are not claiming that this statement is particular to only some cultures (or some groups of economists) but not others.

            It’s not as if we’re talking Moses and Monotheism here.

          4. Philip Pilkington

            Wow. I don’t think you even read anything I write anymore. Just attack! Attack! Attack!

            Let’s just be very clear: I think Freud was a genius and one of the great thinkers of the 20th century. But Freudianism ran into big problems in other cultures. That’s not controversial. Most Freudians I know would today accept it.

          5. JTFaraday

            No, actually Philip, I think that you are given to grand sweeping gestures of rejection, preferably with snark, gets right to the heart of why you’re always going back and forth with people on this blog, some of whom are all too happy to snark back at you.

            So where are we now? Evidently *some* Freud does transfer–in your opinion very well– to cultures other than hysterical Jewish ladies in the 19th century. As you’re always saying, the people the Neocla Cult hypothesizes about as if they are rational are actually not. Thus, (among other reasons), it’s junk pseudoscience that doesn’t conform to the reality of the existence of the irrational masses.

            It’s YOUR thesis, unless we want to start slicing and dicing the population into the rational and the irrational because, as we know, “Freud doesn’t really translate” beyond Diogenes’ historically contingent and culturally particular population of hysterical women.

            Personally, I’m not so committed to contentions that “the people are irrational” from technocrats in waiting, but if you are, you may as well be consistent.

          6. Philip Pilkington

            I no longer have any idea what you’re saying…

            “Evidently *some* Freud does transfer–in your opinion very well– to cultures other than hysterical Jewish ladies in the 19th century.”


            “It’s YOUR thesis, unless we want to start slicing and dicing the population into the rational and the irrational because, as we know, “Freud doesn’t really translate” beyond Diogenes’ historically contingent and culturally particular population of hysterical women.”

            It does not follow that we ‘want to start slicing and dicing the population into the rational and the irrational’ because Freud might be historically relative to some degree. The two things have nothing to do with one another — zero.

            That argument looks like the gnomes’ business plan:

            1. Collect Underpants
            2. ?????
            3. Profit

          7. JTFaraday

            Well, it seems to me that that the political implications of contentions like whether or not people are “rational” all depend on how those contentions are deployed.

            Deploying such contentions as weapons in all kinds of ways against other cultures and subgroups within cultures is a much longer and *more toxic* game than that of the rinky dink little Neocla cult you’re so obsessed with, (which you surely know but choose to disregard).

            So it is one place where your certitude that you’ve found the Holy Grail of socially useful critical thought is more than likely entirely erroneous. What seems rhetorically useful today against the Neocla Cult will be turned into a new weapon tomorrow.

            Thus, in my opinion, you really can chill out and cease sniping.

            But, the bottom line here is that if you’re going to set up Pope Mirowski as your Messiah and cultural cure all, then you may as well really wear it.

            The statement “more rationalizing than rational” clearly has Freudian roots, and you clearly think this statement about the inner truth of human nature travels beyond the intimate and domestic travails of hysterical Jewish ladies, contra Diogenes.

            That is all.

  11. Timothy Gawne

    An interesting article, but the reality is simple.

    Most mainstream economists are whores who have been bought by money. That’s it.

    Consider: for any real science, the issue is whether a theory has predictive power. The problem with current mainstream economics is not so much its almost total lack of predictive power, but the almost total lack of concern about it. If an astronomer predicts an eclipse tomorrow, and it doesn’t happen, there will be a reaction. Mainstream economists don’t worry about things like this. Say what you are paid to say, collect big checks, have some Champagne, let the world do whatever it wants.

    Also: modern mainstream economics has no internal logical consistency. For example, we are told that the rich must be allowed the unrestricted ability to ship jobs to low wage countries, because free trade is always good. Then we are told that the rich must be allowed the freedom to restrict trade in legal goods like pharmaceuticals, blue jeans and legal DVDs, because of course without restricting trade profits will dry up and needed investments will not be made.

    ‘The freedom to restrict trade’? What rot.

    Modern mainstream economics is so corrupt that is does not even deserve a careful rebuttal. We should just call corruption corruption and be done with it.

    1. Rcoutme

      “The only function of economic forecasting is to make astrology look respectable.” – John Kenneth Galbraith

      Btw, ouch! lol

  12. Amos Newcombe

    The “hopeless cause” argument is a cheap shot: off topic and wrong. Repudiating past research interests as the old guard dies off is a common way for science — even “science” — to advance. And even if the cause is hopeless, that doesn’t mean that it is incorrect.

    The next sentence is the confusing one, but I think it can make sense if the author’s intent is this:

    “…by returning to the ISLM version of Keynes the neoclassicals in Keynesian garb (like Krugman) are once again avoiding what Keynes’ work actually led to — the destabalising of the entire foundations of microeconomics to the point that it becomes self-contradictory and nonsensical.”

    Am I right about your intent here, Mr. Pilkington? I hope to read a lot more about this here.

    1. Philip Pilkington

      Yes, that is what I meant. I had to run the intro by Mirowski and he made some alterations. Since I was frantically editing the whole piece (from PDF, which is horrible) I didn’t give me Mirowski-edited intro too much time.

    2. Philip Pilkington

      P.S. What the ‘hopeless cause’ comment is referring to is the following:

      The ISLM model is very stripped down and simple. So simple that a smart undergrad could easily grasp it. The DSGE models and their ilk tend to be more complex. If economists returned to the old ISLM framework all the supposed complexity added to the DSGE models would essentially have to be junked. The reason Mirowski says that this is a hopeless cause is because economists have an obsession with mathematics. It confers upon them a feeling of prestige. To go back to the old ISLM would mean that this prestige would be stripped away. I cannot see it happening.

      1. joel3000

        The mathematics is a means for excluding the unwashed from the discourse.

        The fact that the math is ‘true’ does not mean that the economic theory being argued with it is true too. Math itself, given its axioms, is the most unambiguous communication in exists. It is true across all time and space. Every statement is true or false, nothing in between.

        Human behavior, in contrast, is fluid. What might be true for me as an individual can change depending on the context I am in. My behavior in the midst of a mob, or as a corporate employee, may be different than my predilections as an individual. Stochastic modeling is a weak accommodation to that fact, but it can’t go far enough. The fact is that explaining human behavior with math is like trying to paint a rainbow with a calculator.

      2. Nathanael

        A lot of economists don’t seem to understand mathematics, do they.

        Math is a tool. We use it for making models. The math itself is true — but does it describe the real world? I can define a million different mathematical models, but for any given problem most of them will just be wrong. Simpler models are often better. Indeed, making the math *simpler* (while still accurate) is actually a major goal of work in applied mathematics. And math isn’t the only tool, either; some of the best models have no obvious math to speak of in them (look at biology or psychology).

        People in real sciences, including real social sciences, understand all of that. But only a small minority of economists appear to be actual scientists.

      3. Amos Newcombe

        I would only suggest that old habits of thought can change with remarkable speed once they are shown to be rotten, and those closest to the subject can be the last to see the change coming.

        In any case the hopeless cause argument is non-substantive: whether a man’s cause is hopeless is independent of whether his claims are true.

        A lot has been said here about the scientific style of discourse, (ideally) based on evidence and truth, versus the political style, which is all about ideology and tribal membership. I prefer economists who use the scientific style. I like Krugman and deLong for that reason. I’d like to add Mirowski to that list, but with the hopeless cause argument, we are not off to a good start.

        I look forward to Mirowski’s substantive arguments.

  13. Susan the other

    Thank you Philip for this Mirowski series. I’m noting my favorite things. Quick question: Did Minsky (or any economist or other analyst) ever attempt to construe an equation that explained poverty?

  14. Ed

    What I took from that long article was the technique by which economists using the “wrong” (eg more historical minded) methodology were driven from the profession. Essentially academic journals just started refusing to publish any papers written using the unfavored methodology. To get tenure, you need to be published in academic journals. An economist using the wrong methodology couldn’t get an academic job, and since these still dominate the job markets for economists, would therefore find it difficult if not impossible to use his or her training to find paying work. It all sounds very Soviet.

    The obvious question is why did the academic journals stop accepting papers using these methodologies in the first place? I’m inclined to agree with Timothy Gawne at 9:53.

    1. Nathanael

      The way around this is nastily difficult, expensive and work-intensive, yet I know people in other subjects who’ve done it: START YOUR OWN JOURNAL.

      You have to do it while there still are elder figures who do research with competent methodology, and you have to get them onboard.

      At that point, you all publish in that journal. You can get the peer review bootstrapped using the elder people, and if universities start denying tenure to people who publish extensively in the “wrong” journals, then you can start a full-court-press media campaign within the discipline. If your journal is, in fact, better, you can pull it off.

      It’s been done. It may be absolutely necessary for economics to survive as a discipline.

      The alternative is for all the real economists to rename themselves something else and start their own *department*. This has *also* been done; the “natural philosophers” lost the battle to control philosophy departments and ended up starting science departments. Right now, physics departments are going to hell, and the real physicists are in “materials science” departments. Even earlier, the astronomers split off from the astrology departments. This is a longer and slower way to do things.

  15. Foppe

    Thanks for pointing out this work of Mirowski’s.
    I am curious to know, however, whom you hope to reach by including the following bit of rhetorical violence:

    And in this I believe that Mirowski is one of the most important writers working today – and not only in the field of economics, but also in the fields of philosophy and the history of thought. Anyone interested in any of these areas who has not engaged with Mirowski’s work is far, far behind the times.

    Is it readers of this blog? Your (perceived) ideological opponents? People who ignore your suggestions?

    1. Philip Pilkington

      Like I said: people who work in philosophy and the history of thought.

      Michel Foucault — who is the Big Cheese in the history of thought right now — is very popular today in philosophy and sociology departments and yet I think Mirowski effectively shows his work to be wrong-headed in his ‘More Heat than Light’. I’ve pointed this out in detail to some people I know involved in the Foucault fan club, the more open-minded have been very receptive (and see exactly what I mean) — the less open-minded… well, I think they’re behind the times.

      But my main feeling is that Mirowski is involved in a very small sub-discipline and that his work — which has been around for over 20 years — has yet to be engaged with by the philosophy departments (who are well behind the times, in this regard).

      1. JTFaraday

        Long gone are the days on This Side of the pond when the proselytizing masses of the Foucauldian cult, on fire with the zeal of the new convert, would string up the heretics and the homophobes and the recalcitrants and painfully tease out their fungal toenails. The last witch burning was in 1992. The last crucifixion was in 1997.

        With the publication of The Metaphysical Club in 2001, we became pragmatists. With a single blast of Menand’s trumpet, all were converted.

        1. Philip Pilkington

          Even Hubert Dreyfus? Easily the most interesting philosopher alive in the US today (barring Mirowski, of course).

          Also have a look in the sociology departments that I just mentioned.

      2. Foppe

        It was somewhat of a rhetorical question, sorry.
        Anyway, I hate to have to point this out to you, but “philosophy” (and even philosophy of science) is a rather broad discipline, and while I certainly agree that a lot of the work being done in various disciplines right now isn’t all that interesting (especially formal/analytical ethics — ugh), it seems to me that your assertion is a bit difficult to take seriously precisely because you aren’t any more specific.
        Secondly, wrt the history of thought I agree that Foucault’s work gets too much attention, and that it is approached too uncritically. Having said that, are you familiar with the field of science and technology studies? There seem to be quite a few authors working in that field that do interesting work (that I imagine Mirowski would approve of).

        As to your last point: what about Dreyfus do you find so interesting that he must immediately be declared the most interesting American Philosopher? His work on Heidegger/embodiment? I’ve only read his AI essay, but it never struck me as all that shocking.

        Anyway, will have a look at more heat than light — the ToC looks promising.

        1. Philip Pilkington

          Yes, Mirowski is big in science studies — but I think some of his work applies elsewhere.

          I like Dreyfus because he tries to introduce phenomenology and continental philosophy is an academic space that appears to me stifling. American philosophy seems to me to be largely about the pedantic arguing over the meaning of words. Dreyfus brings fascinating questions of perception — real perception, not perception jammed into some pre-existing conceptual apparatus — to the fore.

          Listen to his Heidegger lectures, they’re fantastic:

          (For a more watered down intro try this:

          1. SR6719

            “You have but to fix your attention on the first object to hand; you will see immediately that no-one has ever examined it, and that the most elementary things about it remain to be said … I propose … the opening of trap-doors in [the] inner self [ … ] an invasion of qualities … Thus the best path to take is to consider all things as unknown…and begin again from the beginning.” – Francis Ponge

  16. craazyman

    The Grand Inquisitor himself uses his Demonic Sadistic Godless Equation as if were a parlor card trick, which which he deludes the people from apprehending the truth that is intrinsic to their nature.

    He parades around as if he were a pope and through his clergy he impresses upon the people the necessity of their debased condition.

    But when we develop our plan for liberating them — after we spend a year acquainting ourselves with local wine and women under 150 pounds in the vacinity of La Mancha — we will make them see the truth of their condition and they will cease their miserable fawning and stand up rightly, as men stand when accomplishing great work.

    Perhaps Mr. Mirowski, you will consent to ride with us from town to town, as we perform our liberation. A man of your wisdom can only be an asset to our endeavor. We cannot offer compensation, but we will have a donkey and the prospect of great fortune should we succeed, at which point you would have the choice of the finest horses and leather saddles in Spain, and quite likely any number of women of your choice.

  17. Eric L. Prentis

    December 19, 2011

    Philip Pilkington
    Dublin, Ireland

    Dear Philip Pilkington;

    I enjoy your article on Philip Mirowski’s work published today in “Naked Capitalism.” I have an excellent example of cognitive dissonance in economics.

    Allow me to introduce myself, Eric L. Prentis, Ph.D. I am a financial economist with stock market experience. My research over the past seven years is on the Efficient Market Theory (EMT) and the Rational Expectations Theory (RET), on which the mainstream economic ideology of “free-market fundamentalism” rests. My empirical research paper is published in the “International Journal of Economics and Finance” (2011) and disproves the EMT. Please see

    The irony of the EMT is that mainstream economic researchers over the past 46 years have been studying the data in the wrong way; they cannot see the forest for the trees. Looking at day-to-day stock price movements of individual companies is immaterial to studying markets as a whole. EMT researchers’ vision is myopic because they leave the unsystemic risk in their data. Not surprisingly, mainstream economists conclude market movements look random. Therefore, no one can beat the market over the long term. Consequently, markets are efficient and better than government control. This is the theoretical foundation for “free-market fundamentalism.” I empirically prove this position is INCORRECT, using the rules that EMT theorists say should be followed—-but never are because economists denigrate technical analysis and do not teach the correct methodology. This is the catch 22 in financial economics; the only way to disprove the EMT requires using a technique that economists consider contemptible and know very little about.

    I cannot get my papers published in the best journals. I get comments like, “very interesting” or “don’t give this information away,” but elite editors refuse publication. I believe these editors are protecting the status quo. I sent a copy of my published paper to the father of the EMT—-and called him on the phone; but he refuses to talk with me. Talk about cognitive dissonance and putting your head in the sand.

    I would love to correspond with you discussing further scientific proof on why the EMT and RET are invalid. And consequently, why mainstream economics has no supporting arguments.

    Sincerely yours,

    Eric L. Prentis, Ph.D.

    1. Nathanael

      Thanks for your comment, and I’m glad to see that you’re getting published in journals.

      One of the signs of rot in the economics profession is that the so-called “best journals” are actually pretty crappy. They reject solid, data-based papers and print fantastical bullshit.

      They are “best” only because the heads of some economics departments — specifically, the incompetent or corrupt heads of economics departments — decree that they are best and use them as a metric for rating researchers. The metric of publication in the “best” journals is rather less useful than standardized tests, which are known to predict nothing much other than performance on standardized tests.

      A priority for competent researchers must be to eliminate the mental stranglehold that these so-called “best” journals have on hiring and promotion decisions. I’ve no idea how to do so though.

  18. Hugh

    You know DownSouth who used to comment here before apparently getting into it one too many times with Pilkington made many of these same points.

    What DownSouth was relating was part of the history of philosophy, specifically that capitalism and liberalism had the same roots in the Enlightenment/Rousseauian notion of an idealized rational actor. But in politics as in economics, people are not rational actors. (BTW the Framers were well aware of this distinction between the reality and the ideal, which is why they tried to build so many checks and balances into their system. So while they invoked the ideal they prepared for the worst as it were (especially as it related to their own propertied class))

    One of the manifestations of this bogus rationality is what Hannah Arendt, a great favorite with DownSouth, called scientificality. She is writing in a somewhat different context but you can see some of what she meant here:

    Scientificality of mass propaganda has indeed been so universally employed in modern politics that it has been interpreted as a more general sign of that obsession with science which has characterized the Western world since the rise of mathematics and physics in the sixteenth century; thus totalitarianism appears to be only the last stage in a process during which “science [has become] an idol that will magically cure the evils of existence and transform the nature of man.” And there was, indeed, an early connection between scientificality and the rise of the masses. The “collectivism” of masses was welcomed by those who hoped for the appearance of “natural laws of historical development” which would eliminate the unpredictability of the individual’s actions and behavior.

    Origins of Totalitarianism, p.346.

    Scientificality was for Arendt not about science but its misuse as an instrument of power. Arendt was primarily focused on scientificality’s use to produce natural laws of race (Nazism) and of class (Marxism). But I trust you can see how easily the springs and gears of the neoclassical/neoliberal version of scientificality translated into the “scientific prophesy” of the Great Moderation. Or how they fit into into the prognostications of MMT.

    I think it is a great pity that DownSouth does not comment here anymore. I am more trained in the manipulation and analysis of ideas. DownSouth was, in their history. His contributions are missed.

    At any rate, what Mirowski misses, intentionally or no, is that economics as practised in the last 40 years is not about science but scientificality. That is it is about power and propaganda. If you want to know why economists propounded theories based on easily falsifiable assumptions, such as the rational actor, market efficiency, free markets, perfect information, and economic equilibrium, or ignored the great economic issue of our times, massive wealth inequality. Or why it is after their theories, prophecies, and credibility were blown up in the great meltdown, they continue to maintain them. It is to be found here. Their job was never to understand about how the economy worked but rather how it could be made to work for the elites to which they belonged.

    1. EmilianoZ

      I can’t remember if it was DownSouth who finally got around to reading Carroll Quigley and was mighty pleased to find that in “The evolution of civilizations” Quigley had said that scientificality could be used as an “instrument of irrationality”. “Scientificality” was not the word used by Quigley but what he meant was that seemingly rational mathematics could be utterly unscientific.

      Quigley wasn’t talking about our friends, the neo-classical economists. One of his examples was from ancient Greece. The Pythagoreans were believers in mathematics but were very much against the observation of reality, which could only be, according to them, misleading. They were also supporters of the oligarchy and very much against democratization. Quigley’s explanation of how the Pythagoreans’ unscientific mathematism related to their conservative politics is unclear to me.

      It seems like we’re using the terms rationality and science interchangeably. Quigley, who coined “intrument of irrationality” seems to do that.

      1. Nathanael

        Hee hee hee. The fact is that it is those very same Pythagoreans, a secretive cult of mathematicians, who give us the connotations for “rational” and “irrational”.

        Ratios of natural numbers (2/3) were, in their minds, good. (“Rational”). Numbers which were not ratios, like the square root of 2, were horrifying and evil. (“Irrational”.) I’m simplifying a bit (as I’m sure some expert will tell me), but these same connotations have been passed down for thousands of years to us.

        Utterly unscientific, superstitious nonsense, but it’s the only reason we use the word “rational” for logical thinking and “irrational” for illogical thinking.

        1. Hugh

          Well, as long as we are playing this game, the Greek word for mathematically irrational, i.e. not a quantity that can be expressed as a ratio was άλογος which got translated into Arabic as asamm (deaf) which got translated into medieval Latin as surdus (deaf). This became surd in English although this term is not used much anymore. We do see it still though in the word absurd keeping its irrational connotation.

    2. craazyman

      I don’t know how South let himself get chased off the board. Maybe it was just time to die (metaphorically speaking).

      But his Hannah Arendt rap was getting stale with me. I was more interested in how he survived down there without getting shot or kidnapped in a crazed drug cartel murder ritual, running for his life like Cornell Wilde in Naked Prey.

      Maybe he lived in a gated community with armed guards and his love of the masses was metaphorical, as it often is with philosophical humanists. Often these love affairs don’t survive even the first contact, which shocks like an encounter with aliens. I know from riding the bus that liberty is not always something to idealize.

      He was a man of refinement and sensitivity, which no doubt laid him open to all sorts of preydations should he let his guard down for even a minute. Hopefully he could go in disguise and walk about the city, maybe with a mustache and sombrero and pot belly and some ragged pants, like Henry the 5th before St. Crispin’s Day. I wonder if his love of Mr. Arendt would have survived such an experince. Probably it would have been enobled even, as the subject matter of this post echos in another field of thought, but that is the mark of a true humanist and not an imposter.

      1. Nathanael

        I’m not sure *how* far south he lived. In Mexico the drug wars are mostly near the northern border. By the time you get south as far as Mexico City, it’s quite safe. Even further south is the Zapatista rebellion, but in its own way that area can be quite safe too (as long as you don’t alienate *either* the locals *or* the central government agents).

    3. Yves Smith Post author

      Actually, it was Anonymous Jones that Down South went after. He became convinced that Anonymous was a neoliberal and would attack him reflexively.

  19. Nathanael

    “If the post-ISLM economics is thrown out then the discipline has to admit that the vast majority of the work done since 1969 is only so much star-gazing rubbish. Fat chance that is going to happen!”

    Krugman advocates *exactly that*. And frankly, so does Brad DeLong.

    ““Two decades of behavioral research certainly has not resulted in any consensus systematic revisions of microeconomics, ”
    Well, they’re only just getting started!

    Do you know how many decades of behavioral research it took to get consensus systematic revisions of *psychology*? I believe it was approximately eight!

    I wouldn’t count the experimental economists out, yet; the few small-scale things they’ve found in experiments are very interesting and valuable (the discoveries about cultural fairness standards, derived from the “ultimatum game”, should be required reading for any economist).

    (Of course behaviorists who don’t do experiments are frauds. And there is no sense whatsoever in which experimental behaviorist economics is “mainstream” yet.)

    Pilkington is correct that the fundamentals of micro are rotten, and correct that Keynes points towards a reconception of micro, but I don’t know what Pilkington’s problem is with the behaviorists or Krugman.

    And as others have stated, he seems to miss the primary fact about “mainstream” economics, even though he keeps leaning towards this fact — the “mainstream” economists do not revise their theories when their theories are shown to be wrong, because they are *paid* to not revise their theories. It is hard to make a man understand something when his salary depends on his not understanding it, as the saying goes.

    The secondary factor which he *does* seem to get is the cognitive dissonance one. Even the economists who aren’t directly paid in this way (“playing for Team Republican” is how Krugman puts it) are subject to the “We’ve been doing it since 1969, it can’t all be bunk” psychology. This is the reason people still believe in astrology, demon possession, and other such bunk — “We’ve been doing it so long, it can’t be wrong!” This is wrong, of course, but it’s a very common psychological problem.

    Both of these can also be considered aspects of the problem that most economists are not scientists and do not even try to practice science. They just want to look “sciencey”.

    1. Philip Pilkington

      My problems with behaviorism are the same as Mirowski’s (to read these in detail, stay tuned they’re being published tomorrow).

      Simply put: behaviorism deflects attention away from capitalism’s inherent structural instability (ala Minsky) and leads people to think that the problem is simply human irrationality. But it’s not a question of psychology — it’s a question of systemic instability… which is a whole different kettle-of-fish.

      Also, the behaviorists — as Mirowski will show — reabsorb what they call ‘irrationality’ into what they call ‘rationality’ by using a ‘rationalistic’ theoretical framework. This is done subtly — but it is done completely.

      Looked at from this point-of-view I think behaviorism is simply a soporific that has been engaged with to convince bored PhD students to continue doing economics…

      1. Nathanael

        “Also, the behaviorists — as Mirowski will show — reabsorb what they call ‘irrationality’ into what they call ‘rationality’ by using a ‘rationalistic’ theoretical framework. This is done subtly — but it is done completely.”

        Bleh. That’s not experimental behavioral economics (“How do people behave? Let’s test it! Can we model that?”). That’s a crock. I agree with your criticism if THAT’s what you’re referring to.

        1. Philip Pilkington

          If you’re using a ‘utility’ based framework then it’s already bunk.

          If not, this still stands:

          “Simply put: behaviorism deflects attention away from capitalism’s inherent structural instability (ala Minsky) and leads people to think that the problem is simply human irrationality.”

          Work on the micro as the macro rots… No good. The macro is where the policy is…

  20. skippy

    Classicist (anything) equals assisted suicide. Small doses over a long time… still kill.

    Skippy… Personally, I blame the building of temples. Seems like a repetitive pattern.

  21. Ed

    What Nathanael said in response to my earlier comment is fascinating. I’ll admit I’ve been too infected by credentialism myself to consider this.

    It may be useful to have two working definitions for professions. If you are right about physics departments, for example, by one definition a physicist is someone with a degree from a physics department. If the physics department is hostile to what people several decades ago understood as “physics”, then a physicist is someone who does that, regardless of what degree he or she has or even if he has a degree at all. But I don’t think we are at the stage yet where the second definition will be widely accepted. Right now credentialism is gaining strength.

    1. Nathanael

      Thanks for your thoughtful response. I think you’re right — credentialism is actually *rising* right now. This is arguably one of the underlying problems with our society.

      This is happening even while the cult of ignorance — “I don’t need no book larning” — is still on the rise. An odd and terrible combination, and I suspect the two reinforce each other.

      Both can only collapse due to the deadweight of their *inaccuracies*. There is an actual practical advantage to being right, though it may seem small most of the time.

  22. Justicia

    Many thanks, Philip. I look forward to reading the rest of the series.

    I’ve been a econ-skeptic for years. My work in environmental finance has led me to appreciate the largely ignored critique of neoclassical thinking from ecological economists.

    I do hope Mirowski tackles the fundamental absurdity of mainstream economic thought that derives from Newtonian mechanics. The retarded world view of the neoclassical school, with its fantasy of unlimited growth, ignores 20th Century physics — particularly, the laws of Thermodynamics — and biology. Here’s a short take from Robert Nadeau (author of ‘The Wealth of Nature: How Mainstream Economics has Failed the Environment’) that was published in Scientific American:

    The Economist Has No Clothes

    By Robert Nadeau
    Unscientific assumptions in economic theory are undermining efforts to solve environmental problems

  23. psychohistorian

    This should be an interesting series.

    When do we start talking about inheritance and private ownership of property as core elements of our current socio-economic system and the implications of these as such?

    Currently, all power flows from these social constructs, doesn’t it?

    I didn’t forget faith and their associated fear factor but I see faith as an adjunct to the current power center that has been seriously co-opted from its more benign roots.

    I am glad to hear others shredding the curtains of faith in economic modeling and theory. It is cover for our current fascism.

    1. Nathanael

      “When do we start talking about inheritance and private ownership of property as core elements of our current socio-economic system and the implications of these as such?”

      Marx did. Hell, *Andrew Carnegie* did too (he believed nobody should inherit anything).

      But that was before the demonization of Marx in the West and his deification in the Soviet states. The demonization of Marx for political reasons was quite successful at driving discussion of these phenomena off the table entirely.

  24. Hilary Barnes

    “The market may not even exist as a tangible entity”, writes Philip Pilkington. O, yes, it exists. The problem is that it is never in equilibrium. It is a system in a state of perpetual turbulence, or, in the language of fluid dynamics, “it is a regime characterised by chaotic and stochastic property changes” (Wikipedia, “Turbulence”). Just as some theoretical physicists make a root and branch criticism of the science of climatology for failing to recognise that the climate system is one in perpetual turbulence, where, for example, trying to measure averages (“average global temperature”) becomes meaningless, economists should perhaps abandon the concept of equilibrium as nonsensical and see where this takes them.

  25. Fifi

    The IS-LM model is purely phenomenological, it’s ugly and it’s kludgy but it works on a short timescale, as long the underlying structure of the economy is not radically affected. That’s why people like PK use it to justify short-term measures like fiscal stimulus.

    Where it goes wrong is when you try to use it as a tool for long-term macro planing and you slap crap concepts like NAIRU or the “Phillips curve”, which have been shown and acknowledged over and over (including by people like PK or Delong) that it’s not a curve but at best a trajectory with vaguely curvish local behaviors on a short time scale. There again, short terms tools foolishly extended into long term “planning” cudgels.

    The real sin of mainstream “economists” and their theology is the illusion they provide that economic choices can be left off to purely technical decisions (always to the benefit of whoever happens to be at the top of the totem pole, curiously enough) and that politics are essentially useless. Well, that’s how you run head first in the wall of reality and inevitably politics come back with a vengeance, oftentimes carrying torches and pitchforks.

  26. ReaderOfTeaLeaves

    Much here to ruminate upon.
    I await further revelations regarding DSGE and it’s role in upholding the neoclassical edifice.

  27. Dick Eastman M.S., M.A.

    Liquididty preference or hoarding dollars while engineering deflation? Shortage of aggregate demand or a constant net drain of purchasing power due to the fact the that three domestic sectors households, public goods and private production have only loans for money and that every loan must be paid back principal plus interest — where the interest is not created to be paid back — leading to asset transfer to the creditor class — who own the corporations which are the body parts of the businesses bankrupted by planned deflation. Expound these irrefutables and see how long you hold your academic chair or whether you are ever published again.

Comments are closed.