October 29, 2024
Which economist hasn’t had to turn the other cheek to the aspersion that “economics is not a science”?
There’s a partial truth in this accusation, if by economics we mean “macroeconomics,” and if by macroeconomics we mean “aggregates acting on aggregates.”
But don’t just take my word for it. Here’s the 1966 words of the 1986 winner of the Nobel Prize in Economics:
“Macro-economic theory may, of course, attain the status of a science, when and if its propositions carry predictive implications. However, when it does so, it will be a wholly new science, not that of economics…It is the divergence of macro-economics from the central propositions that is tending, today, to create serious problems of communication within the confines of the same discipline that is professionally classified as ‘economics.’”
Written during the dark days of Keynesian ascendancy. But in casting a furtive glance at 2024’s representative agent models, can we conclude there’s been an improvement? Maybe there’s justification for simply referring to contemporary, mainstream macroeconomics as “macro.”
And what of those those “propositions” Buchanan references?
“Once he has succeeded in identifying what individuals, on the average, consider to be ‘goods,’ the economist can predict that more of any ‘good’ will be chosen the lower its ‘price’ relative to other ‘goods.’ This is the central predictive proposition of economics, which can be all-encompassing provided only that the terms ‘goods’ and ‘price’ are defined in sufficiently broad and inclusive ways.”
Both quotes from “Economics and its Scientific Neighbors.”