Economics needs a divorce from itself — one half from the other — Mencius Moldbug argues:
Most people believe that there is something called “economics.” But this is just not so.When we use the word “economics,” we are conflating two completely distinct disciplines. Worse, at most one of these disciplines is right — each despises and condemns the other. It’s as if English had one word stellatry, which meant both astronomy and astrology.
Our first discipline is literary economics. Literary economics is what the word economics meant in English until the 1870s or so. It is Carlyle’s dismal science. It was also practiced in the 20th century, under the name Austrian economics, by figures such as Mises, Rothbard and Hazlitt. Our second is quantitative economics. Quantitative economics was invented in the late 19th century and early 20th century, by figures such as Walras, Marshall, Fisher, Keynes and Friedman. It is also practiced today, under the name economics.
Observe, for a moment, the suspicious evolution of this terminology. Astrology and astronomy have a similar temporal relationship — as do alchemy and chemistry. Ie: astronomy replaced astrology, and made it clear that its predecessor was nonsense. Chemistry replaced alchemy, and made it clear that its predecessor was nonsense.
But when Robert Boyle replaced alchemy with chemistry, he chose a new name to make it clear that he was separating the sheep from the goats and classifying himself among the former. Astronomy is separate from astrology for much the same reason, and in much the same way.
Whereas in economics it’s the other way around. The new name has replaced the old one in situ, forcing its predecessor to decamp to a label which, like all labels, was originally pejorative. It’s as if chemistry had decided that it was the only true alchemy, and forced the original alchemists to rebrand their field as, I don’t know, Swedish alchemy.
Of course, this doesn’t prove anything at all. But isn’t it slightly weird? You’d think that if you discover that Field A, which has been taught in all the best schools and universities since Jesus was a little boy, was so misguided in its methodology that it is useless to continue its work, and instead people should study the far superior Field B, you’d call your glorious new B a B, rather than insisting that you had discovered the one true A.
I’d say this anomaly is, if nothing else, a reason to investigate the obvious alternative that this question suggests. Which is that it’s actually the new field, Field B, which is a crock. And which has chosen to hitch a ride on the good name of Field A, devouring it in classic parasitic style. In other words, it is actually the Swedish alchemists who are the real chemists, and whose field has been invaded and annexed by a horde of canting, zodiac-wielding transmutationists. Oops.
You may or may not agree with this proposition. But it is surely prudent to consider it fairly. And the only way to do so is to hold the disputed marital property, economics, in escrow, leaving the respondents with their own separate and equal names. Ideally, the noun would be estopped from both parties, giving us not literary economics but something like econography, and not quantitative economics but something like economodeling. (Or perhaps, if you want to be nasty, econogy — practitioners, econogers.) However, some may be too conservative for these bold linguistic innovations.
Let’s briefly establish the distinction between these fields. It should be obvious that whatever their respective merits, they are different things and should not be conflated under one name. To indulge in a little Procrustean generalization:
The method of quantitative economics — including both econometrics and neoclassical macroeconomics — is to construct mathematical models of economic systems, ie, systems of independent, utility-maximizing agents. The purpose of quantitative economics is to predict the behavior of these systems, so that central planners can manage them intelligently.
The method of literary economics is to reason clearly and deductively in English about the behavior of economic agents. The purpose of literary economics is to construct and convey an intuitive understanding of causal relationships in economic systems.
Clearly, these fields have nothing in common, either in methodology or purpose. It is true that some quantitative models can be explained in literary terms. However, they cannot be justified in literary terms. And if they can, no quantitative methods are necessary. Indeed, successful quantitative methods often hold up quite poorly when judged by literary standards. Two good examples of this phenomenon are Henry Hazlitt’s Failure of the New Economics — a line-by-line response to Keynes’ General Theory — or Murray Rothbard’s abusive treatment of Irving Fisher’s equation of exchange.
And by the standards of quantitative economics, which considers itself a predictive, falsifiable, inductive science, literary economics is simply a nothing. At best, a popularization. It makes no testable predictions. Why anyone would study it in the 21st century is a mystery.
Ergo: there is no possibility of reconciliation. Papers should issue. Custody of that little brat, economics, should be delayed for further consideration.