Introduction, and Why Economists Should Be More Like Philosophers

This blog is not, like many other blogs, a commentary on current affairs, as they are in the world, or in the author’s mind. In its content, it is a kind of fantasy economics textbook, that is, a textbook for the discipline of economics, as I wish it was. Textbooks must do something that academic journals don’t: start from the beginning; build from the ground up. That’s what I’m trying to do here. But I think the content of a typical undergraduate economics textbooks mixes much that is true and sound with much that is muddle-headed or misleading, while leaving out some things that are comparatively easy and essential, and belong at the beginning. Therefore, I will teach basic economics in my own distinctive fashion, a fashion much too unconventional to be allowed in a real textbook. It will therefore, as far as I know, be rather original, but that is accidental and unimportant. I don't care about originality but about truth.

Inasmuch as I write a good deal that is original, I will be competing with the academic journals, which are widely recognized as a kind of gatekeepers for any new truth in economics. By an unfortunate custom, the academic journals are supposed to play the double function of certifying new truths, and of getting people jobs, and so job applications are trying to pass themselves off as original science, that is, as writings that contribute something new, true, and important to the large edifice of sound knowledge that academic economics it is taken to be. But the large edifice of what economists think they know, or act as if they think they know, is not, in fact, sound. To cite the single most important, but far from the only, problem, economic theory has gotten stuck in a cul-de-sac called “general equilibrium” for several decades. Empirical economics, without vigorous, creative, reasonably realistic theories to guide it, becomes a crazy, tangled hubbub or random facts without organization. If academic economics were a sound edifice of knowledge, it would be quite difficult to find new, true, important things to add to that edifice, and the number of people who could do that would be a lot less than the number of professors needed to get a decent student-teacher ratio in all the colleges that the world needs in order to equip a modern workforce. As it is, one faces the added hurdle of not offending peer reviewers who are probably wedded to many aspects, and one doesn't know which aspects, of the flawed reigning paradigm. And yet it's not that hard to get published somewhere, because there are so many academic journals if one includes all the second- and third-tier journals that no one reads, but which stay in business because... wait for it... authors pay to get published. Which is fine if you think of the academic journals as complex distributed-network-style employment agency. And there would be nothing wrong with a fee-for-service head-hunting agency, if only it wasn't trying to pass itself of as science. But the point is that readers may wonder why I'm not publishing, or at least trying to publish, all these ideas in academic journals. And so, to justify myself, a few more words on the complex malady of academic economics are needed.

It arises, of course, from the publish-or-perish culture in academia, which creates an oversupply of research, and excessive deference to the established pillars of the discipline. The ratio of writing to reading is too high, because the former, not the latter, gets you tenure. Of course, the ratio of writing to reading in the blogosphere, in which I place my hopes for a renewal of a fruitful scholarly discourse that can advance towards truth, also tends to be high. But bloggers have a style adapted to that ratio. Blog posts, with their comments, have at their best the manner of a conversation of Socrates with his friends, casual and accessible, freestyle and far-ranging yet capable of zooming in on an interesting question with laser-like rigor at need, subtle and serious without trying to be crudely authoritative. Academic journal articles, which must pose as “contributions” to the discipline’s body of knowledge, are written in a stilted, unnatural style, as if they expect their readership to be co-extensive with the discipline, no matter how unrealistic that may be. They must pretend to deserve and expect an audience that they’re unlikely to get. It's unfashionable to try very hard to engage with the reader. Instead, the fashion is to write as if it's the reader's fault if they don't understand, and then to act as if one has read and understood everything that comes up. It's a great, sprawling game of the emperor's new clothes.

A more subtle problem is that the ratio of construction to demolition is too high in the academic journals. There’s not enough criticism of fundamental concepts, because one gets published by flattering one’s peer reviewers, not by challenging their often fragile, touchy egos. And the whole ecology of the academic journals is bad at matching writers and readers and facilitating feedback, partly because it is extremely slow and non-transparent. Young scholars must prove they “know the literature,” and this is possible only in narrow sub-fields, so the academic conversations first becomes too specialized, then, sometimes, ironically, too randomly promiscuous, as scholars in one sub-field start straying into other sub-fields, little knowing how little they know, because the cost of reading enough of one overgrown, over-specialized literature to publish in it is that one has no time to read, or perhaps even to have heard of, closely related literatures. And so a new sub-discipline invents square wheels because it is too busy talking to itself to notice that a venerable old discipline long since invented round ones. And the scholars in the sub-field they’ve invaded probably won’t expose the ignorance and naivete of the invaders, because they’re too busy talking to their cliques to notice the other scholars, and because deep down everyone is bluffing that they know more than they do, and is a little afraid that others are not bluffing, so they're afraid to tick their peers off and motivate them to expose their ignorance.

There is a certain rigor in academic publications, and if I’m researching some narrow, practical topic, I’m glad to find some that peer-reviewed scholarly article about it has been published. The article is likelier than not to be useless, but if not, I’ll usually learn far more from one academic article, and trust it more, than I would from most newspaper or advocacy coverage of the same topic. But the problem with the academic literature is that the whole is much, much less than the sum of the parts. Academic articles are, as I said, mostly job applications trying to pass themselves off as scientific contributions, and sometimes, to be sure, they do that by really being scientific contributions, even good ones. Others fake it. When everyone who wants to teach a principles of economics class in university (which is not that difficult) is told that they must first add something new, true, and important to a large body of knowledge (which is very difficult) most of what is written will fail one or more of the criteria, i.e., be recycled, false, or trivial, yet get published anyway because demand for publication venues evoke a supply response at some price or other, and even pretty hefty submission fees are a small price to pay for a tenured university position. But the problem isn’t just to sort the wheat from the chaff. It’s that even the genuinely good articles don’t cohere into a scientific enterprise capable of systematically advancing towards truth.

An analogy may help. Suppose a wealthy dilettante has an idea for a vast epic novel. He writes a couple of chapters, and a synopsis, and a tentative chapter-by-chapter outline. Then he gets busy with something else, and realizes he’ll never get around to writing the whole novel. But he still wants it to be written. So he hires forty or fifty fiction writers-- they’re plentiful and cheap, after all-- and tells them to start writing whatever bits of the plot most strike their fancy. Not satisfied with the pace of progress, he makes an open offer to other writers to jump in, and soon hundreds and thousands are scribbling away, most of them somewhat cynically. Some self-plagiarize, others try out plot devices or prose styles that they want to use in some novel of their own later. The old dilettante hands out generous spot awards for well-written passages, then authorizes the authors to start handing out spot awards to each other. No one has read the whole book, because it’s far too long, and they’re too busy writing, but they judge one another’s writing on the beauty of the prose and/or by its consistency with the random other bits of the novel they happen to have read, or more likely, written. The system takes on a life of its own, and the novel goes on evolving and expanding, but at some point, it is rather complete, in the sense that every chapter in the outline has had a good deal of writing poured into it.

Would such a book be a novel? Would it have characters and a storyline? Well, sort of, in a weak sense, but it would lack some of the essential virtues of a novel, and wouldn't be worth reading as a novel, though it might be worth cherry-picking the best passages. By the same token, does the current academic literature in economics comprise a science? Does it have a tendency to accumulate and organize facts, and advance men's understanding of the nature of the world? Well, sort of, weakly, but it lacks some of the essential virtues of a scientific enterprise, and it isn't worth engaging with as a scientific enterprise, though it is worth cherry-picking some of the best papers. The tenure motive has eclipsed the truth motive and caused the academic literature to explode into ever-increasing superfluity and incoherence. In saying that, I am not condemning the writers or the articles, but rather the project they are participating in, and the institutions that perpetuate that project.

The upshot is that if we want to pursue truth in economics, it might be worth glancing at and randomly appropriating ideas from the academic literature in economics now and then, but we must be freethinkers, and keep the sword of satire in our hands at every moment to repudiate and ridicule and ruthlessly drive away anyone who dares to mumble that slavish slogan of rent-seeking mediocrities that stalks the halls of academia killing thought: the slogan, “you don’t know the literature.” Fresh reasoning must be preferred to inherited doctrines. If an academic scribbler has had a good idea, very good! Let it be introduced and explained, and if after a brilliant and fully satisfying explanation has been completed, if someone wants to drop a casual citation, that may be reluctantly tolerated, provided that the speaker’s motive in giving the citation is that his humility cannot bear to receive unmerited credit for originality. But since the motive for citation is usually to silence dissenters by appeal to authority, as a substitute for rational argument and persuasion, the practice should be avoided as much as possible. Don’t cite, think!  

By the way, if it sounds implausible that the efforts of so many clever academic economists could be employed as vainly as the above depiction suggests, it shouldn’t. A glance back at intellectual history will quickly reveal that this condition, in which the treadmill activity of crowds of self-seeking scholars aggregates into a sprawling intellectual inertia, is quite a common, even a normal phenomenon.

The West has become accustomed to regarding the Renaissance as a great rebirth of learning after a long dark age of superstition and illiteracy, but in fact, the universities of Europe had been founded centuries before, and were teaching and writing and putting alumni in high places throughout the Renaissance, as they had been doing from the time of Thomas Aquinas and before. We forget this because the towering figures of the Renaissance, the great artists and painters and inventors and writers, saw little or no merit in what the universities of their time were teaching and writing, and posterity has largely agreed. Somewhere, I read a phrase that pithily describes the state into which the late medieval universities had sunk: barren scholasticism. Yes, and it’s a phrase that might be applied more broadly. There seems almost to be a Law of Barren Scholasticism at work in history, whereby civilization respects ideas and therefore gives power to intellectuals, and intellectuals then conspire not to criticize, or not severely enough to overturn, the ideas which distinguish them from the mob and give them their power and economic security, and the ideas harden into stale dogmas, and the search for truth atrophies.

China had its barren scholastics. It was ruled for over a thousand years by the mandarins, a class of Confucian intellectual bureaucrats who attained high rank in government service by succeeding on examinations. Few today are interested in going back to read the thousands and thousands of essays the aspiring mandarins wrote. By the early 20th century, new ideas from the West had exploded across China and swept the old Confucian traditions away.

India had its barren scholastics. The ruling Hindu ideology was long guarded by the Brahmin caste, which made it the basis for their power. They alone knew the Vedas, the sacred literature. They didn't write it down, which would have made it too accessible and threatened their monopoly on the mystique of learning and the caste superiority that came with it.

Islam had, and still has, its barren scholastics: the ulama, scholars of Islamic law, issuing their fatwas, living off the revenues from religious endowments or waqfs, as modern academics live off university endowments, training and certifying each rising generation, important to the legitimation of power in an often politically turbulent world. The Soviets had their Communist Party apparatchiks. Ancient Judaism had its barren scholastics, the Pharisees and Sadducees, against whom Jesus fulminated, and one of these is quoted in the Gospel of John, expressing the timeless creed of the barren scholastics: “this mob that knows nothing of the law is accursed” (John 7:49). You don't know the literature.

But while I can’t resist mentioning this fascinating coincidence between the words of the enemies of Christ and those of the modern academic peer reviewer rejecting an article that he isn't smart enough, or can't be bothered, to understand, or that threatens his status by exposing the flaws in the ideas by which he makes his living, I don’t actually want to demonize the barren scholastics. They are not as searchingly honest as they might be, but they're generally fairly decent as human beings go, and not uncommonly, they are useful as well. Their treadmill scholarship keeps them somewhat intellectually fit, able to recall and to argue for old ideas and principles, and possibly even to apply them to novel situations when others are at a loss what to do. While they make little or nothing of value in the realm of ideas, and generally forget whatever they do happen to make, they often store, generation after generation, much that is of value, delivering it to posterity more or less intact. The thousand years and more in which the mandarins ruled China may be seen, according to preference, as a pitiable stagnation, or a laudable stability, and the medieval period in Europe, when the barren scholastics of the Church had a towering influence over politics and society, could (or so I argue here) teach the modern world much. All in all, I would, though not without ambivalence, be glad to see more young people spending more years of their lives under the tutelage of the barren scholastics of our universities, and more foreigners coming to learn economics under American academics, then going home to shape their own countries with the imperfect but somewhat insightful old ideas they learned in America. I worry, a little, that the West is becoming like the China of the mandarins, a civilization ruled by an intelligentsia, and robbed of its frankness, initiative, and dynamism by the stultifying pieties and conventions of a caste whose smug loquacity masks a timid, paralyzing skepticism. But the ideas that prevail among our intelligentsia are sufficiently non-evil that, depending on the mood I'm in, the prospect of such a twilight stasis doesn't usually seem very horrible. However, I've long felt a vocation to make the world safe for freethinkers, so it seems worth trying to run an experiment to see if freethinking in economics can get a hearing.

The European Enlightenment overturned the lingering barren scholasticism of the Middle Ages, and inculcated the ethos of radical doubt, followed by reinvention and rediscovery, which is the defining characteristic of modern, as of ancient, philosophy. It is this spirit which I wish to emulate on this blog. Philosophy, ancient and modern, is distinctive among fields of study, in that its practitioners have no shared dogmas, only a restless and insatiable spirit of inquiry. Everything is open to critique, re-examination, and rejection. Philosophy never seems to get off the ground, because philosophers are constantly pulling rugs out from under one another and tumbling down. Why would I suggest that economists emulate this comedy of errors? Because philosophers really, really care about truth, whereas economists are too content to go with the flow of complacent fictions. And I am not too afraid of disrupting the “orthodox” unity of concepts and ideas of which economists are proud, because I actually think it can be a good thing for a discipline to be full of warring schools of thought, as it is good for an industry to be full of competing firms.

And this brings me back to the topic of textbooks. Textbooks, as I said before, build from the ground up, and in this respect they resemble philosophers like Socrates and Descartes, who assume nothing and take it as their task to explain and establish everything. At their best, textbooks assume a student with no preconceptions or prior knowledge, and try to persuade that student through reason and evidence to believe in the standard toolkit of economic concepts and laws. But textbooks don’t play fair. They can’t, because it’s their duty to equip a generic economics professor in a generic classroom to inculcate in students a fairly standardized set of knowledge. Textbooks argue for, and may even, in a spirit of pedagogical dialectic, cast momentary doubt on, received doctrines, but ultimately, their agenda must be to make the student believe them, or at least understand them so as to apply them on an exam. Textbooks can’t simply follow the argument where it leads. It must lead to orthodoxy. Textbooks can’t advocate fundamental doubt or dissent. To do so would be incompatible with the (lucrative) niche they’re filling in the educational economy.

This blog will start from the beginning, like a textbook, and will cover some of the same ground that regular classroom economics textbooks do, but it will not rig the game in favor of the received wisdom. The economics that I’ll be building from the ground up is a different economics, a reinvented economics, even if it borrows lots of concepts from mainstream economics, the standard textbooks, and the academic literature. But enough introduction. All should become clearer as I move forward. First stop: SUPPLY AND DEMAND.