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Wednesday 23 Aug 2017 | 10:27 | SYDNEY
Wednesday 23 Aug 2017 | 10:27 | SYDNEY

Economists as historians, or politicians?



7 September 2010 17:30

Gideon Rachman has a piece in the FT discussing the relative merits of economists and historians, in which he argues that, post-GFC, economics' previous pretensions to be a hard science have been rather discredited. For Rachman, a big problem with economics is 'physics envy' and the fruitless search for 'predictive “laws”'.

I do have some sympathy with Rachman's point, although I tend to think that the 'hard science' thing is a bit overdone. Also, in the accompanying video discussion with Martin Wolf, I reckon the latter actually does a pretty good job of setting out both the strengths and weaknesses of economics while still successfully making the case for sticking with the kind of formal theoretical framework that economists like to use and which so many non-economists appear to dislike so much.

More generally, however, for me the one of the big economic lessons to be drawn from the GFC and its aftermath is not so much the one about spurious claims to scientific accuracy (after all, we already knew quite a bit about the shortcomings of economic forecasts) but rather the one about spurious claims to disinterested or apolitical analysis. 

As I've noted before, it's pretty clear that quite a bit of (macro) economic analysis is reflective to some extent of the underlying political views of the particular economist who is delivering it. I suspect that many of the big debates about the role of fiscal stimulus or government regulation or the causes and consequences of inequality, for example, are at least as much about the participants' prior beliefs as they are about the underlying data or models. 

I reckon it's the presence of this political influence, as much as anything else, which undermines some of the discipline's grander claims to being an impartial purveyor of technocratic advice.

Photo by Flickr user Steve Rhodes, used under a Creative Commons license.