Is economics ideological by nature?

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It’s easy to rag on economics as not being a “real” science, and I try not to do things that are too easy. But in recent weeks I’ve really started to wonder. It is fascinating, and frightening, to me that smart economists can disagree about whether what the economy needs right now is more government spending or less. The debate isn’t about how much stimulus, or how much austerity, or the way such stimulus/austerity should be applied, but rather about which one is called for in the first place. How is this possible? It’s like a group of doctors not being able to agree whether a patient’s blood should be thinned or coagulated. What am I supposed to make of that?

Roger Backhouse, a historian and philosopher of economics at the U.K.’s University of Birmingham, helps me out in his new book, The Puzzle of Modern Economics: Science or Ideology? I’ve been reading it over the past few weeks and at first I thought Backhouse was going to confirm my worst fear: that it is so difficult to employ scientific methods in understanding super-complex large-scale economic phenomena (like the U.S. economy) that ideology is pretty much necessary if you want to come to any useful conclusions about what’s going on or what should be done. Most scientific disciplines don’t have esteemed members regularly going after one another in the op-ed pages. Economics, in an important way, feels different.

But the more I read Backhouse’s book, the more I understood that it’s important to distinguish economics from economics as it is typically practiced. Backhouse shows how the current mathematics-heavy top-down approach to economics is not the only one. He traces the origin of the approach–which necessarily assumes that people are rational agents trying to optimize their resources–to the 1930s, but points out that it took some 30 years to really catch on. Before that, the field was rooted in empirical work. Theories tended to be tentative and not all-encompassing. Economists would gather data, and insight from other fields about how people behave (like psychology), in an attempt to come up with explanations about how the world works.

The current fashion, of course, is to come up with theories about how the world is supposed to work. The obvious problem: people aren’t always rational. They are, in fact, influenced by things like advertising and a sense of fairness. As a result, math-heavy top-down models can prove disastrously wrong. Backhouse notes that crises of economics are common. Before the recent financial crisis, it was the crisis of the 1970s and a struggle to account for oil price shocks, waning productivity and stagflation.

None of that means economics is fundamentally flawed. Just that we expect too much of it. Backhouse also runs through a few examples of economics working just beautifully. One example: the program in the U.S. in the 1990s to control acid-rain-causing emissions. Setting up a marketplace and letting companies trade permits was a smash success. Companies innovated and emissions came down. Backhouse explains that part of the reason this worked so well was that the economics profession created the environment its equations were meant to describe. And that environment–the marketplace–was relatively simple. The endeavor was worlds away from trying to use economics to capture the entire system of U.S. finance, or an even more complicated system like the economy itself.

And when you think about it, it is a little odd that we think economics would be able to do these things. After all, the economy is as much a product of sociology and policy as it is pure-form economics. Yet we’d not expect a sociologist or a political scientist to be able to write a computer model to accurately capture system-wide decision-making. The conclusion I’ve come to: while economists may have an important perspective on whether it’s time for stimulus or austerity, maybe we should stop looking to them as if they are people who are in the ultimate position to know.

More on Time.com:

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