Today Public Discourse publishes the first installment of a two-part review-essay in which Ryan T. Anderson takes up Redeeming Economics, a new book by John D. Mueller. There’s a lot to chew on in this review, but I want to highlight just one of the interesting things Anderson pulls out of the book. To wit, Mueller’s claim that Aquinas was the originator of what he calls an “adequate” economic science. Here’s Anderson:
As Mueller tells the story, Aquinas was the first to put together a complete economic science by combining key insights from both Aristotle (on production, exchange, and political distribution) and Augustine (on personal distribution and consumption based on utility).
Here’s Mueller explaining his theory:
The first revolution in economics had occurred five centuries before [Adam] Smith, when Thomas Aquinas (1225-74) set forth the basic elements of economic theory. Synthesizing the work of Aristotle (384-322 B.C.) and Augustine of Hippo (A.D. 354-430), Aquinas offered a comprehensive view of human economic actions. All such actions fall into four categories: humans produce, exchange, distribute, and consume goods (human and nonhuman). Thus the theory Aquinas outlined—known as “Scholastic” economics—had four key elements: the theory of production, which explains which goods (and how many of them) we produce; the theory of justice in exchange, which accounts for how we are compensated through the sale of goods for our contributing to their production; the theory offinal distribution, which determines who will consume our goods; and finally, the theory of consumption (or utility), which explains which goods people prefer to consume.
Anderson concludes:
Production, exchange, distribution, and consumption: Any adequate economic science will need to account for all four of these aspects of economic choice. And Mueller is insistent that this is true of all economic choices, across time and place, for individuals and families, corporations and nations.
Anderson’s review raises the question of what exactly we mean when we speak of economics as a “science.” I suspect that if we were to follow Mueller’s advice, economics no longer would be recognized as scientific—at least in the narrow sense that the word is commonly understood—by today’s economic practitioners.
Indeed, a great deal of our misunderstanding of economics stems from the misleading metaphor between economics and physics, between the study of Adam and the study of the atom. So, as much as I admire Mueller’s effort, I suspect that we would be less prone to misunderstanding economics if we were able to drop the scientific label altogether and speak of it instead as a “discipline.” Then, perhaps, we could move away from a situation where economists are regularly (and rather unfairly) faulted for their lack of infallibility.
May 4th, 2011 | 11:17 am
“Econometricians, they’re ever so pious. Are they doing real science or confirming their bias?”
May 4th, 2011 | 11:18 am
Of course economics is a science. It’s just that nobody’s good at it.
May 4th, 2011 | 12:12 pm
I don’t know much about economics, but unless I really miss my guess, any economist who talks about Aquinas will probably be laughed out of the profession.
May 4th, 2011 | 12:50 pm
Chuck,
You are correct, you don’t know much about economics. Most histories of economic thought begin not with Aquinas, but with Plato and Aristotle. Plato’s Republic contains references to specialization in labor and production and Aristotle’s Nicomachean Ethics and Politics pretty much laid the foundation for all economic thought that has come since.
May 4th, 2011 | 4:01 pm
Is Economics a Science?
Give Nobel-Prize winning economist Paul Krugman the final and authoritative answer to this question.
May 4th, 2011 | 7:32 pm
It’s not physics but I think it qualifies as a social science.
May 5th, 2011 | 10:19 am
I think it boils down to this: there are aspects of economics that are scientific, but not everything that people call “economics” is scientific. Particularly, policy prescriptions based on one of a set of rival theoretical models are not scientific. Quantifying how people’s economic activities interrelate is, if done properly.
May 5th, 2011 | 11:49 am
IMO economics is the science of reasoning by analogy. Unlike ‘hard sciences’ which do most of their work by observation, economics does a lot of its work by ‘thought experiments’ (which have a place in harder sciences as well). These thought experiments are usually reasoning by analogy and they work to the degree that the anlogies are good and the lessons pulled from them are real and not trivial.
For example, competitive advantage and the gains of trade are often illustrated with the analogy of the world’s greatest lawyer whose also the world’s fastest typist. Should the laywer spend an hour a day doing all his typing or hire an average woman to spend 8 hours a day typing up his papers? Well since the lawyer will almost certainly be able to bill a fantastically large sum of money per hour, that hour a day spent on lawyering rather than typing will more than pay for the slow typist who must spend a full day typing. Hence in one beautiful analogy you see why trade makes sense between nations…even if one nation is ‘bad at everything’. Of course more sophisiticated economics will turn this story into equations and gleam more insights from them but that too is reasoning by analogy.
This becomes clear when you talk to people who aren’t that well versed in economics. They take the same analogies and ruin them. They might say the world’s greatest lawyer should do his own typing because one hour less lawyering in the world is a good thing and not much good will come of an hour of the world’s best lawyer lawyering…. Or they may say the lawyer is just going to stiff the typist on her wages since, being the best lawyer in the world, there’s no way she could win against him in court! That too is reasoning by analogy but its crappy reasoning. The analogy isn’t there to illustrate the usefulness of lawyers or rally support for a typists union…its there to illustrate a principle by looking at a radically extreme version of the relevant variables.
May 5th, 2011 | 12:54 pm
The modern economics derived from Adam Smith is a false science. It is based on the Enlightenment proposition that any science whatever must be a physical science like Newton’s. Many Catholic “experts” on economics and biology agree with that false proposition. The proposition was a derivative of the Enlightenment epistemological axiom that all legitimate thought must be purely “objective,” in the sense of “no contamination by human subjectivity.” Even the rationalist heirs of the Enlightenment have rejected that idea. But it survives in Adam Smith’s brand of economics, which suppresses the human subject in favor of an abstract Newtonian scheme for what is after all a social science. This is the heart of the problem. The Market indeed is the “natural” framework for every economy, but the framework into which Capitalist economics placed is becoming a curse on the human race.
May 5th, 2011 | 2:19 pm
Good examples, Boonton.
May 7th, 2011 | 11:24 pm
Economics is NOT a science; it never has been, and never will be.
Do economists develop hypotheses that they then test in the real world to determine their validity? No, instead they choose to develop a theory they believe should work, given what they believe they know about human nature, which they then try to impose upon all societies, regardless of the appropriateness of such a ‘one-size-fits-all’ approach.
Do economists ever change their minds about their currently-held beliefs, however reluctantly, when confronted with evidence that such beliefs do not work in practice?
No, instead they choose to label those against whom they have tested their model ‘lazy’ and ‘pampered’ (if it’s an individual) or ‘corrupt’ (in the case of foreign, Third-World governments) when their model fails.
Forecasting. When was the last time an economist actually made an accurate prediction, based upon reliable data gathered from the real world (as opposed to their make-believe world of how things should be)? Never. Hypotheses that are in any sense of the word ‘scientific’ are based upon solid, reliable research, not wishful thinking about how the world aught to behave, which is the mentality of economists the world over.
May 7th, 2011 | 11:34 pm
‘It’s not physics but I think it qualifies as a social science.’ – Mike Melendez
‘Social Science’ – an oxymoron if ever there was one.
May 8th, 2011 | 2:01 pm
Peter A.
Do economists develop hypotheses that they then test in the real world to determine their validity?
Actually they do quite often. For example, in the late 70′s the Rand Corporation had a major experiment where it tracked the medical expenditures of people who had several types of health care plans ranging from plants that paid nearly all costs to plans that only paid a fraction of the costs. Most tests are more passive, though. For example, years ago NJ raised its min. wage but PA did not. This set up a perfect experiment in looking at fast food employment. In order to equalise out other random factors, they looked at places near the border of two states. Theory would say that employment would go down with a higher min. wage but actually employment increased slightly. To this day there’s still debate about what exactly happens when there’s modest min. wage increases.
Do economists ever change their minds about their currently-held beliefs, however reluctantly, when confronted with evidence that such beliefs do not work in practice?
That’s a tougher question. I’m going to say no. Most economists tend to stick to the theories they like just as sports fans tend to stick by their favorite teams, even of other teams constantly demonstrate that they are better. Exceptions do exist, one for example is Arnold Kling who favored a modest stimulus package early in Bush’s first term but who then turned around and soured on stimulus when Obama was president, but that may have been less about being confronted with evidence and more about ideology.
Scientists, though, often don’t change their minds very easily. Einstein, for example, refused to believe in quantum mechanics’ randomness and spent most of his post-relativity career trying to find an alternative and didn’t accomplish much. It’s often said that the best tool for advancing science is mortality, the death of the ‘old guard’ clears the resistence to new ideas.
I would say, then, that economics’s biggest success came in the post-Adam Smith period where the general theory of the market and the gains of free trade usurped the theory of mercantilism. But the fact is most evidence in economics simply is not as strong as the evidence you get in physics and chemistry so the ‘changing one’s mind’ simply happens less often. Theories are simply not so easy to squash in economics in most cases.
Forecasting. When was the last time an economist actually made an accurate prediction, based upon reliable data gathered from the real world (as opposed to their make-believe world of how things should be)? Never.
I agree, although I wouldn’t say this should be the only measure of science. A theory that explains observations in a coherent manner but does not allow for anything but broad predictions could still be a scientific theory IMO. Although there you’re veering close to my definition of ‘the science of reasoning by analogy’.
May 9th, 2011 | 2:18 pm
Peter A wrote: Do economists ever change their minds about their currently-held beliefs, however reluctantly, when confronted with evidence that such beliefs do not work in practice?
No, instead they choose to label those against whom they have tested their model ‘lazy’ and ‘pampered’ (if it’s an individual) or ‘corrupt’ (in the case of foreign, Third-World governments) when their model fails.
Sounds pretty typical to me.
BTW if you think economists have never changed their model in response to failure, then you don’t know much about the history of economics. Economics does have some real problems applying hypothesis to the real world (as do all researchers who are for practical or ethical reasons not able to use entire live populations in real-time experiments), but it is simply ignorant to say the field itself does not change in response to input.
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