Why are we still treating economics as if it were an empirical science that makes reliable predictions?

Originally published at: https://boingboing.net/2019/11/15/nevertheless-it-moves.html




You’re conflating the entire science of economics with political ideology using economics as a justification.


I’m not entirely sure that’s a distinction with a difference.

Because, as the article points out, so much of economic theory is un-falsifiable, a lot rests on simply moving the goalposts and throwing out any data points that don’t fit the model.


If the ‘science’ of economics is not predictive, then it isn’t a science, is it?


It has often been said that the problem with academia is that the egos are so big and there is so little at stake. This leads to worlds where academics care primarily about their own rightness and argue endlessly solely to prove they are right.

Unfortunately, this is just as true for economics and politics except there is actually a lot at stake. In any field without verifiable, independent tests success is largely dependent on how good of a debater one is not whether the ideas are right. Its not an easy problem to fix either


The performativity of economics accounts for much of whatever predicability does exist in this social science.

Mark Blyth also has some excellent writing and talks on this subject, if you’re interested.


Why are we still treating economics as if it were an empirical science that makes reliable predictions?

The answer is that doing so benefits same neoliberal consensus that brought us the “end of history”. It’s the same reason that the Soviets did it in regard to their “ultimate” formula for success.

I’ll credit my stepfather, an economist in his first career, for helping explain to me at a young age why his social science – despite all the statistics and math and experiments and observations – was less like chemistry or physics and more like anthropology or sociology.

everyone who was in a position to do something about the coming crash refused to adapt their dogma to reflect the facts, and everyone else, who could see the crash coming, was sidelined because they refused to buy into the dogma.

You can only force reality to resemble the model, instead of vice-versa, for so long before things fall apart. The people who insist on doing the former have been in power in the West for too long now.


To the extent that economics can be considered a “science” at all it is a social science like politics or law, not a hard science like chemistry or physics.


An economic “crash” is simply a particularly-intense transfer of wealth upwards. When there are “losses” on the Wall St casino, the money is not disappearing; it’s simply the house collecting on the bets. The corporate elites are fine with crashes, as long as they get theirs, which they always do. And they are short-sighted and sociopathic enough to not worry about a complete collapse.

Traditional economics is propaganda that works backwards, starting with the conclusion that we live in a rational and just society where the wealthy deserve all that they’ve taken.


Graeber on debt and coinage:

[Graeber] argues that credit systems originally developed as means of account long before the advent of coinage, which appeared around 600 BC. Credit can still be seen operating in non-monetary economies. Barter, on the other hand, seems primarily to have been used for limited exchanges between different societies that had infrequent contact and often were in a context of ritualized warfare.

Graeber suggests that economic life originally related to social currencies. These were closely related to routine non-market interactions within a community. This created an “everyday communism” based on mutual expectations and responsibilities among individuals. This type of economy is contrasted with exchange based on formal equality and reciprocity (but not necessarily leading to market relations) and hierarchy. The hierarchies in turn tended to institutionalize inequalities in customs and castes.

The great Axial Age civilizations (800–200 BC) began to use coins to quantify the economic values of portions of what Graeber calls “human economies”. Graeber says these civilizations held a radically different conception of debt and social relations. These were based on the radical incalculability of human life and the constant creation and recreation of social bonds through gifts, marriages, and general sociability. The author postulates the growth of a “military–coinage–slave complex” around this time. These were enforced by mercenary armies that looted cities and cut human beings from their social context to work as slaves in Greece, Rome, and elsewhere. The extreme violence of the period marked by the rise of great empires in China, India, and the Mediterranean was, in this way, connected with the advent of large-scale slavery and the use of coins to pay soldiers. This was combined with obligations to pay taxes in currency: The obligation to pay taxes with money required people to engage in monetary transactions, often with very disadvantageous terms of trade. This typically increased debt and slavery.

This shit rocks my world.


Economics wishes it was empirical as anthropology. It’s pure philosophy, which is basically journaling about the philosopher’s feelings. We’ve built a whole society out of Adam Smith’s neuroses and trust issues.


I’m pretty sure that doesn’t describe neo-Keynesianism, for example. Economics is not just frothy Chicago school handwaving to excuse laissez-faire capitalism, you know.


It’s a science if we distinguish true ideas from false ideas on the basis of empirical observations. It’s not a science if all we get are ideas that can never be disproved by observation.

However, there are plenty of disprovable predictions being made. See the list of people who predicted hyperinflation in 2008. It never arrived. The problem is that the conservative economists who made those false predictions are still taken seriously.


Imagine if I went to university and studied math, got sent on continuing education courses in math, and attended seminars by mathematicians with impressive resumes working for business and government, and everyone I interacted with assured me that if I had two apples in one hand and two apples in the other then I had five apples.

Then I go online and say math is bullshit, and someone says, “You shouldn’t characterize all math as being the 2+2=5 school. There are other schools of mathematics out there as well.”

Somehow I feel like I’d still think math was bullshit.


Economics is hard. Pricing is hard. You can’t know everything and yet you can’t let it run on it’s own. Just to get a grasp of how this global economy works you would have to read a room full of dry books. This knowledge is very focused is known by very few. There may only be 100 people in NYC that understand how a particular market works.

You might want to start here:

Possibly because of this, which I have posted before:

The next question is: Can a misinformative vast literature be used intentionally as a tactic to win political debates? It seems to me that in principle it could. Suppose you and your friends wanted to push a weak argument for political purposes. You could all write a bunch of papers about it, with abstracts and numbered sections and bibliographies and everything. You could cite each other’s papers. If you wanted to, you could even create a journal, and have a peer review system where you give positive reviews to each other’s B.S. papers. Voila - a peer-reviewed literature chock full of misinformation.

And as always, application of this analysis to fields other than economics is left as an exercise for the reader.


Why are we still treating economics as if it were an empirical science that makes reliable predictions?

I didnt; said for the longest time, economics isnt “science” but purely esoteric bs.

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You’re not taking into account the market efficiencies that are present by having those apples in your hands, which, if modeled using the Fama–French three-factor model will accurately predict that you actually have five apples.

Jeez, this isn’t rocket science.