The bogus science

Brad DeLong is among the economists reflecting on the failures of his profession in the wake of the financial crisis. But I don't think he goes far enough. The problem in economics is not just a failure to re-read Walter Bagehot. It's a failure to connect to reality, on any level, methodologically or even epistemologically.

I have long watched with a little bit of amusement and a lot of annoyance as economists have claimed to be the most scientific and rigorous of the social scientists, if not the only "real" scientists of society. That's supposedly why they make higher salaries than professors in other disciplines and give each other a phony Nobel prize every year so they can pose next to the physicists and biomedical researchers.

In fact, economics is more akin to theology than it is to science. I had to pass qualifying exams in economics for my Ph.D., so I have actually taken quite a lot economics courses. Here's how economists work -- for real, this is not a cartoon.

First, they present a number of assumptions, every one of which is false. They then spin an elaborate theory, complete with calculus, from these assumptions. Along the way they forget that the assumptions are false and start to believe their theory is describing reality. When they run up against an undeniable instance in which the theory conflicts with reality, they label that an exceptional "market failure" and, like Ptolemaic astronomers, add an epicycle to their theory account for the supposed "exception" while preserving the central theory. But in fact, the theory fails in every single instance, all the time, without exception. "Market failures" are pervasive and inevitable, because the theory is completely wrong. Therefore they must ignore most of reality and only allow occasional bits and pieces of it to intrude.

Why the success of this peculiar cult? Because the theory provides a justification for wealth and privilege. It is indispensable as a foundation of libertarianism and economic conservatism. It comforts the comfortable. That is the only reason.

Economics is a vast edifice of bullshit erected on a foundation of sand.