Economic Imperialism

Here's what Edward Lazear, presently the Chairman of the Council of Economic Advisers, has to say about economics. It was originally one unbroken paragraph; I have separated the main points, which give a pretty good summary of one form of economic orthodoxy.

Economics is not only a science, it is a genuine science.

Like the physical sciences, economics uses a methodology that produces refutable implications and tests these implications using solid statistical techniques. In particular, economics stresses three factors that distinguish it from other social sciences.

Economists use the construct of rational individuals who engage in maximizing behavior.

Economic models adhere strictly to the importance of equilibrium as part of any theory.

Finally, a focus on efficiency leads economists to ask questions that other social science ignore.

These ingredients have allowed economics to invade intellectual territory that previously was deemed to be outside the discipline's realm.

Based on my reading, at least five of the six points are highly questionable. The whole issue of "What is really a science?" is terribly confused by now, and strong claims like Lazear's can only be thought of as ideological. The empiricism and testability of much of neoclassical marginalism is very doubtful. The hypothesis of "rational individuals" never was at all well-grounded, and it's now under heavy attack. Equilibrium has turned out to be a false, conservative standard (in the physicist's sense of "conservative) which causes economists to ignore and misunderstand historicity (see Mirowski, 1989, and Mirowski, 2004, pp. 229-271). Finally, economics' incursions into new territory have often been ridiculous and disastrous.

It doesn't make any difference, though, because Lazear is the Chairman of the Council of Economic Advisers. People in positions like his are the ones who decide what the default position is, and they don't have to listen to anyone. Here's a review of Mirowski:

The heterodox ideas found here and elsewhere have had no impact on economics as a whole, just as the body of science studies research has had no effect on the natural sciences. Mirowski would attribute this to the "vested interest" of neoclassical economics. An alternative explanation is that research programs such as those found here—which fail to provide either new empirical insights or criticisms of existing practice that are intellectually compelling, let alone constructive ways to proceed—do not have enough substance to warrant a claim on intellectual resources. In my judgment, in this instance the marketplace of ideas is working efficiently.

Steven N. Durlauf, Economics, University of Wisconsin–Madison

If Lazear and Durlauf are right, of course, then they're right. If they're wrong, though, we can conclude that their arrogance comes from their entrenched institutional position. To me they, like many academics today, are comparable to the Sorbonne scholastics so hated by the humanists and the philosophes: brilliant at what they do, institutionally impregnable, and out of touch with the real world.

Addendum:

Tyler Cowen, well-respected and not-too-crazy economist, on Lazear:

Lazear is a superb economist. I do not know him, but I often hear him spoken of with a more general respect, and not just for his intellect.

Bibliography

Colander, David, Holt, Richard, and Barkley Rosser eds., The Changing Face of Economics, Michigan 2004.

Fullbrook, Edward, What's Wrong With Economics, Anthem, 2004.

Keen, Steve, Debunking Economics, Zed Books, 2004.

McCumber, John, Time in the Ditch, Northwestern, 2001.

Mirowski, Philip, Machine Dreams, Cambridge, 2002.

Mirowski, Philip, The Effortless Economy of Science, Duke, 2004.

Mirowski, Philip, More Heat than Light ,Cambridge, 1989.

Redman, Deborah, Economics and the Philosophy of Science, Oxford, 1993.