Economics as the Third Culture?

Is economics a “third culture” the way Noah Smith suggests it is?

Is it sufficiently different that it deserves its own category apart from the humanities and the sciences?

Who cares?

Well, clearly Smith does. His article is interesting, though, more for what it shows us about the viewpoint of those who are trying to defend it against external claims of failure and/or irrelevance.

He notes that economists can be distinguished from scientists and engineers by the narratives they construct. They are story tellers. Albeit story tellers armed with prodigious amounts of obscure mathematics. Yet story tellers nonetheless. They are dedicated to constructing persuasive accounts of why their particular assumptions about the world can assist society in both understanding and controlling the transactional aspect of everyday intercourse. They seek to explain exchange and all the phenomena that influence it. Some of these phenomena are revered as “forces” or “laws”, thus imbuing them with a quasi-scientific and naturalistic status. Such forces play an exalted role in the stories economists weave. They are the economic equivalent of the ancient gods of Olympus. They punish those who dare defy them and they reward those who bow down in supplication.

It would be difficult to imagine an engineer telling stories. Why would they need to?

When bridges fall down it is either because of wear and tear, or it is because of human fallibility: an engineer can point to an error in the plans.

When markets fail it is because the economic gods work in inscrutable ways and with such deftness that the causes of failure lie hidden deep within the complexity of the economy. It is never because of human fallibility. There are no errors in the plans because the plans are just stories, and like all stories they are a sampling of the depths of human experience. The error must be sourced somewhere in the murkiness of the un-sampled part, in a story yet to be told.

Economists are never wrong because the stories they tell are never complete. They are models. They are simplifications. Of course there is another chapter that covers crises. It’s just that the current story has no crises in it. The plot can’t accommodate a crisis, so it cannot exist.

So economics is a kind of fiction. Mathematical fiction.

I suppose that’s a third culture of sorts.

What caught my eye in particular is this statement half way through Smith’s article:

“The main insight, in my opinion, is that most things in the world have some randomness in them …”

Really?

This is an insight of economics? Randomness?

I must misunderstand somewhat. I thought economics, in its mainstream incarnation at least, treated randomness like a plague. Randomness surely would imply more than a smidgeon of uncertainty, and uncertainty is to be found nowhere in orthodoxy. Indeed mainstream economists go to enormous lengths to constrain their parallel world within various kinds of perfection: rationality, equilibrium, foresight, information and so on. Randomness sits well outside their narrative. At least as I understand it. Then again there are some kinds of fiction I don’t find appealing, so I tend to ignore points that aficionados trumpet loudly.

And even if it were a character in the mainstream story, the claim that it is somehow a unique insight of economists is suspect to say the least. I imagine others might stake a claim. Many a better claim.

He goes on:

“Dealing with randomness has made econ stringer in some ways than traditional sciences …”

So he really believes that economics has dealt with randomness. Presumably by ignoring it. I am missing something. This must be one of those stories with multiple meanings only revealed at the very end. And I haven’t reached the end.

But this I cannot misunderstand:

“Literature describes human behavior, while natural science ignores it. But economists want to control human behavior, and that means the object of their study is as smart and free-willed as the economists themselves”

Gulp. I hope this is a joke.

Whatever it is, the implications are astonishing.

Economists want to “control human behavior”? Maybe that’s because their model of behavior is so laughably naive that none of their narrative makes sense without bending reality to fit it rather than the other way round.

And humans are as “smart and free-willed” as economists? Smart? Let’s not go there. But free-willed? Where, exactly, is the free will in abiding by the laws of the economic gods? The precise determinism of mainstream economics holds its model humans in a vice like grip. They have no choice but to obey the rules. Else they are tossed outside the story. Vagaries are not allowed. Preferences are rigidly enforced, unchanging and eternal they weigh upon the model humans eliminating any vestiges of humanity. Why? Because it makes the math easier and allows the economists to make sure their narratives are as self-consistent and precise as possible.

Self-consistent and precise.

Fiction.

A third culture. Neither humanity nor science.

Perhaps not good enough for either?