Skip to main content

Is economics a science?

We're used to science types and sceptics taking on a certain kind of idea as 'woo'. Anything from astrology to crystal healing comes under this banner. Broadly there are two kinds of things that get categorized as woo. Some claim to be magic, pure and simple. But others pretend to be science. They hide behind lots of scientific terms (often the language of quantum theory, as the proponents of woo delight in the apparent fuzziness of quantum mechanics). But underneath it's still made up. They might use the terms of science. Sometimes they even use the tools of science from impressive graphs to impenetrable formulae. But they don't use the method of science. It's all a made up fantasy, dressed up as the real thing.

I've just read the stunning Economyths by David Orrell which points out something startling. Classical/neo-classical economics presents itself as a science - but actually it's woo. (Orrell doesn't say this literally, it's my interpretation.) Economics is a pretend science. Just like those who grab hold of the terms of quantum physics without understanding them, the founders of economics took the tools of science, but ignored scientific method. They wanted their ideology to be scientific, and assumed that by taking on the look of classical physics - laws, equilibria and such - that it was enough to make them scientific. But it wasn't.

It's worried me a long time that you can have such totally opposing views as Friedman and Keynes type approaches in what is supposedly a science. But now, thanks to Orrell's book, I can see this is simply because woo doesn't have to have a logical structure.

In the end, the scientific method is quite clear. Having formulated your hypothesis, you test it against experiment and/or observation. If the data contradicts the hypothesis, you have to either modify the hypothesis or discard it. Yet time after time, economics has failed to match reality. Still today economics students are taught about supply and demand curves. About a market that is stable, rational and efficient. It bears no relation to the real world.

I'm not saying you can't simplify. Most models are simplified compared to reality. But they still have to match observation. Instead, traditional economics has buried its head in the sand and pretended bubbles and spikes don't exist. They've pretended (sob) that traders always act rationally, rather than as an emotional herd of sheep. Most economic models don't even accept the existence of banks. It's pathetic.

Of course there are plenty of economists that go against the grain, who argue for taking a dynamic systems approach and for including an understanding of human behaviour in economics. But the fact remains that economics students are still taught the same baloney. It's as if we taught first year physics students the elemental theory of earth, air, fire and water. And that traditional economics approach is still very strong in banks and politics. Even after all that has happened. It's time for a change, and I really would recommend that every banker and politician be forced to read David Orrell's book.


  1. Hi Brian

    I definitely agree with the message of this book, and will have to read it. I’m glad these points are being made.

    Another book which covers similar ground in parts is Robert Skidelsky’s Keynes: The Return of the Master, published last year. It explains how undergraduates these days spend so much time learning the complicated maths that go with the models of classical economics, that they have no time left to question whether what they’re learning is actually useful/the best approach.

    It also shows how the number of worldwide recessions has massively increased since the ‘Efficient Market Hypothesis’ and neoliberalism, based on these classical models, started to dominate in the 1980s. Between 1945 and the 1970s, we just didn’t have the same problems.


  2. A science is just something which is studied.

    There is good science in "economics" - the real issue is "applied economic theory".

    For example, Adam Smith talks about "an invisible hand", that made it possible for British industrialists to sell manufactured goods to American colonialists at the lowest possible price. But the "invisible hand" that drove the "engine of trade" was the one that held the whip over the Jamaican slave's back.

    Historically, trade not based on slavery was usually limited to luxury goods - Greek honey for Israelite pitch for Phoenician purple dye. But Fascist Rome was fed on imported Egyptian wheat, and Imperial Britain was clothed in imported American cotton. Unsustainable in the long term - that is why Britain outlawed slavery BEFORE the US did.

    Adam Smith's basic theory of "supply and demand" is sound. It is the "application" of that theory that is so "Emperor's New Clothes".

  3. I think I would take issue with the subject that 'a science is just something which is studied.'

    There is no doubt that the original scientia just meant knowledge (which is arguably rather different from something that is studied), but in modern usage, you would presumably term English literature (for example) a science, which I'm not sure many in an English faculty would agree with (unless they want to avoid a cut in funding).


Post a Comment

Popular posts from this blog

Is 5x3 the same as 3x5?

The Internet has gone mildly bonkers over a child in America who was marked down in a test because when asked to work out 5x3 by repeated addition he/she used 5+5+5 instead of 3+3+3+3+3. Those who support the teacher say that 5x3 means 'five lots of 3' where the complainants say that 'times' is commutative (reversible) so the distinction is meaningless as 5x3 and 3x5 are indistinguishable. It's certainly true that not all mathematical operations are commutative. I think we are all comfortable that 5-3 is not the same as 3-5.  However. This not true of multiplication (of numbers). And so if there is to be any distinction, it has to be in the use of English to interpret the 'x' sign. Unfortunately, even here there is no logical way of coming up with a definitive answer. I suspect most primary school teachers would expands 'times' as 'lots of' as mentioned above. So we get 5 x 3 as '5 lots of 3'. Unfortunately that only wor

Why I hate opera

If I'm honest, the title of this post is an exaggeration to make a point. I don't really hate opera. There are a couple of operas - notably Monteverdi's Incoranazione di Poppea and Purcell's Dido & Aeneas - that I quite like. But what I do find truly sickening is the reverence with which opera is treated, as if it were some particularly great art form. Nowhere was this more obvious than in ITV's recent gut-wrenchingly awful series Pop Star to Opera Star , where the likes of Alan Tichmarsh treated the real opera singers as if they were fragile pieces on Antiques Roadshow, and the music as if it were a gift of the gods. In my opinion - and I know not everyone agrees - opera is: Mediocre music Melodramatic plots Amateurishly hammy acting A forced and unpleasant singing style Ridiculously over-supported by public funds I won't even bother to go into any detail on the plots and the acting - this is just self-evident. But the other aspects need some ex

Which idiot came up with percentage-based gradient signs

Rant warning: the contents of this post could sound like something produced by UKIP. I wish to make it clear that I do not in any way support or endorse that political party. In fact it gives me the creeps. Once upon a time, the signs for a steep hill on British roads displayed the gradient in a simple, easy-to-understand form. If the hill went up, say, one yard for every three yards forward it said '1 in 3'. Then some bureaucrat came along and decided that it would be a good idea to state the slope as a percentage. So now the sign for (say) a 1 in 10 slope says 10% (I think). That 'I think' is because the percentage-based slope is so unnatural. There are two ways we conventionally measure slopes. Either on X/Y coordiates (as in 1 in 4) or using degrees - say at a 15° angle. We don't measure them in percentages. It's easy to visualize a 1 in 3 slope, or a 30 degree angle. Much less obvious what a 33.333 recurring percent slope is. And what's a 100% slope