The pursuit of scientific knowledge is as personal an act as lifting a paintbrush or writing a poem, and they are both profoundly human. If the human condition is defined by limitedness, then this is a glorious fact because it is a moral limitedness rooted in a faith in the power of the imagination, our sense of responsibility and our acceptance of our fallibility. We always have to acknowledge that we might be mistaken. When we forget that, then we forget ourselves and the worst can happen.
At least in economics, we now have a situation where intellectual minds are more and more gleichgeschaltet (forced into line). A friend of mine is in a PhD programme in Asia, doing mostly mathematics in order to understand, modify and then innovate so-called (dynamic stochastic general equilibrium) DSGE models. Another friend applied for a PhD position in Central Europe. What do they do? DSGE. It certainly is the only game in town if one wants to get a PhD in economics with a focus on macroeconomics. Why is this so? How can they be sure that these models and only these models describe reality (best)? Whose fault is it when because of the monoculture the next crisis will push us above the brink and the global financial system collapses? DSGE models did not predict the last crisis, can’t explain it except by some ex-post ad hoc assumptions. Shocks in these models are always exogenous, but in reality with hindsight you can see that the shock was having endogenous roots. Many people made big profits in the real estate bubbles, and the people who lost a lot of many where not identical with the ones profiteering.
We need to open up the faculties of economics to new economic thinking or the discipline will wither away into meaninglessness. In no other science the assumption that we are not fallible is ingrained to such a strong extent. People are rational, have perfect information, with any costs, etc., and if not: it’s the problem of the people. This philosophy, although simple and completely naive, seems to have been propelled by large parts of the economics profession over the last 30 years, thus implying that ‘greed is good’ and stupidity should be punished by the market. These foundations are shameful for the discipline and should be abandoned. As it stands, the science of economics – with proper exceptions – is not a tribute to what we can know although we are fallible. It is the opposite.
The quote used for the title of this post comes from video starring Bronowski: