|Why Economics Will Never Be a Legitimate Science
(December 24, 2013)“If we expect an economic theory to behave like a theory of physics, with non-trivial predictions about the future, we’re never going to get one.”
Back in August I explored Why Isn’t There a Demonstrably Correct Economic Theory?. Many commentators have noted the obvious, that economics is a pseudo-science rather than a real science: beneath the fancy quantification and math, economics is fundamentally the study of human behavior, and that complex mix of dynamics cannot be reduced to a tidy econometric model that spits out accurate predictions.One key element of science is that the results must be reproducible, that is, the same experiment/conditions should yield the same results time and again. I suspect that economic models are not applicable across all times and situations; a model might “work” in one era and in a very specific set of circumstances, but fail in another era or in a similar set of circumstances.
Since human behavior is based in culture as well as in naturally selected (genetically driven) behavior, then cultural milieus and values obviously play critical roles in shaping economic behaviors.
So presenting an economic model as “scientific” and quantifiable is in effect claiming that the bubbling stew of human culture can be reduced to quantifiable models that will yield predictions that are accurate in the real world. This is clearly false, as culture is not a static set of objects, it is a constantly shifting interplay of feedback loops.
This helps explain why human behavior is so unpredictable. Virtually no one successfully predicted World War I in 1909, and no one predicted the collapse of the U.S.S.R. in 1985.
Another reason all economic theories fail as scientifically verifiable models is that economics boils down to a very simple dynamic: those in power issue financial claims on resources as a “shortcut” way of gaining control of the resources without actually having to produce the resources or earn the wealth via labor and innovation.
I think this is the one fundamental dynamic of economics, and it does not lend itself to reductionist models.
Longtime correspondent Chuck D. recently explained why economics will never be predictive (i.e. a real science) like physics:
Thank you, Chuck, for an insightful, thought-provoking commentary.