Sunday, January 18, 2009

US Economics: A Pseudo-science in the Making

By Thomas Riggins

True science, a dispassionate search for the truth, can only thrive in environments conducive to free inquiry and intellectual honesty. When the search for the truth can cost you your life or freedom, as in the Middle Ages or at the time of Galileo – or anywhere where religion or superstition has state-sanctioned authority, it is unlikely to be vigorously sought. Today in the U.S. the pursuit of truth may not be life threatening (yet), but it is definitely income threatening. When a person's income and job are on the line and jeopardized, if telling the truth conflicts with powerful vested interests, you can be sure that the majority of people will conform to what is expected of them rather than ruin their careers or chances for future employment by standing up for an honest accounting of the facts.

An example of this can be seen in the state of the "science" of (bourgeois) economics as it is taught today in every major university in the country. I refer to an article in The New York Times of 1-27-06: "Students Are Leaving the Politics Out of Economics: Shunning Advocacy to Focus on Science" by Louis Uchitelle. What this article really shows is that what the students (and their professors) are leaving out is not "politics" but science itself.

Let’s see what Uchitelle has to report: Referring to the new book by Steven D. Levitt, "Freakonomics," we are told that graduate students in economics are following Levitt's model of "focusing on small insights about the economy" and abandoning "broad theories" about how the economic system we live under (capitalism) actually works. They are, Uchitelle says withdrawing in effect from political debate." The "freakonomists" think this makes them more scientific, when in reality they are trying to avoid asking how the economic system actually works, because they are afraid of the answer.

Uchitelle reports that the present generation (in the main) of young economists prefers to "shun prescriptions that seek to cure the economy's ills." What they claim to do is "to cast economics as a scientific inquiry" by using mathematical models, "without becoming advocates for one solution or another." Imagine a medical scientist who shunned any interest in curing sick people but was only interested in finding out what caused them to become sick, and with no desire to advocate a solution.

Here is another example of how the type of "science" utilized in freakonomics could be misused: Global warming is causing all sorts of environmental, social and health problems. The scientists tell us that greenhouse gases are responsible, so we ask them "How do we get rid of these gases? What is the best solution to this problem?" If a scientist replied that he or she had no interest in that sort of question and that our question was unscientific because science doesn't put forth solutions to problems or make judgments about them, we would rightly think that the person we were talking to had little understanding of either the function or the history of science. Was Einstein being unscientific when he advocated the banning of nuclear weapons as the solution to the threat of atomic war?

The article points out that mathematical modeling is today predominant in graduate economic training. Models based on "assumptions" about such things as unemployment, inflation, etc., are programmed into a computer and then the computer spits out its responses. This is of course a matter of garbage in, garbage out, since the assumptions most frequently used are contained in the dominant capitalist model in the first place. The graduate students, however, are seeking a more "empirical" approach, such as that found in Levitt's "Freakonomics"-- i.e., an approach "which relies on statistical evidence." Many graduate students, as well as their professors, may consider such an approach "scientific," but it has all the markings of bourgeois mystification, resorted to in order to avoid the damaging (for capitalism) results of a genuine scientific approach. Thus, pseudoscience is preferred because there are few university and no corporate jobs for those who call into doubt the rationality of the capitalist system.

Here is an example of Levitt's scientific approach. He says he "finds a strong correlation between legalized abortion and the decline in crime." Now that Roe v. Wade has been around for three decades crime has gone down because the number of "unwanted, crime-prone young Americans " has declined. Thus, these potentially evil fetuses have had their future criminal careers aborted. Therefore, our reporter wants to know if Levitt is pro-choice or anti-choice. The "scientific" answer is this, in Levitt's own words: "As an economist, I am better than the typical person at figuring out whether abortion reduces crime, but I am no better than anyone else at figuring out whether abortion is murder or whether a woman has an intrinsic right to control over her body."

There are several problems with Levitt’s answer, especially coming from someone supposedly educated in science and logic (assuming bourgeois economics to be a science and logical). First "murder" is defined by the criminal law of the state-- it is not something an individual decides for him or herself. Under the laws of the United States abortion, presently at any rate, is not only not murder, but is a constitutionally protected right. Second, in our system all citizens have equal rights and protections under the law (in theory) so that if any persons (men for example) have intrinsic rights to their bodies, then all persons have. It is up to anyone who denies such rights to women to come up with a scientific or logical reason for their position-- i.e., they bear the burden of proof.

It is legitimate to ask if Levitt actually is better then the "typical person" at telling whether abortion reduces crime. The claim is based on a "statistical correlation," and Levitt seems to assume that this is the same as a "causal relation" (he says abortions "reduce" the crime rate)-- a very unscientific position! Let me give a concrete example of such pseudo-causality. The February 6, 2006 issue of Time magazine contains the following statistical correlation: "The NFL title game's outcome typically forecasts stock-market performance for the rest of the year. Eighty percent of the time, a win by an old-NFL team [but not an old AFL team --TR] has meant a bullish market." It would be a freak economist indeed who set out to understand the workings of the stock market by studying football statistics.

Uchitelle also reports that undergraduate students are taught economics completely differently than graduate students (who presumably will become professional economists working in a capitalist framework). He quotes Harvard economist N. Gregory Mankiw: "My undergraduate students are tremendously interested in public policy, and I teach it to them in Principles of Economics." The "principles" he teaches extol the benefits of "free trade" and he does this because "I am teaching the next generation of voters. In graduate school, however, we are training the students to use the tools of economic research."

Mankiw, Uchitelle reminds us, was formerly chairman of President Bush's Council of Economic Advisors and will be remembered (if at all) for maintaining that it was good for the US to outsource jobs overseas. Good for the big multinational corporations, of course, but not for small businesses and not for working people.

Students in graduate school, we are informed, are "rarely offered courses in the history of economic thought." It also seems that the number of future economic professionals now in graduate school who have read the "works of the giants in their field" is less than it was 20 years ago. Uchitelle lists these "giants"-- they are Adam Smith, David Ricardo, Alfred Marshall, and John Maynard Keynes. Needless to say, Karl Marx doesn't make the cut. He seems to be read only in places such as Cuba, Venezuela, Vietnam, China (for nostalgic reasons), and now perhaps Bolivia.

So a new generation of economic charlatans is being born that under the guise of "science" will peddle their bourgeois nostrums to corporate power in the hope of getting good jobs and big bucks. However, they will help us understand nothing of the real economic forces that are driving the world as we know it ineluctably towards destruction.

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