The world is increasingly realizing the importance of the study of economics and the true value of understanding complex market structures and interactions. Since the time of Adam Smith and the birth of the United States, economics has begun to transform into a scientific study, with overwhelming influences in political and economic policy. However, scientific classification disputes are still widespread. Is the study of economics a natural, social, or ethical science? How does its nature as a science predetermine its inability to cease evolving? The evolution of the field of economics is not synonymous with the idea of progress. By being misconstrued as such, economic science can be misleading.
The development of a study, such as economics, consists of a pure sequence of events as well as the global context in which these historical events occurred. To suggest the word progress, one interprets a sort of change for the “better,” especially in a science that has social and ethical implications. This is a normative suggestion, which breaks from the mainstream economic assumption of objectivity and therefore discredits validity. According to modern philosophical theories, in order to deem any sort of judgment regarding progress, one must account for the nature of science and its compatibility with the study of economics. In The Structure of Scientific Revolution, Thomas Kuhn defines the study of a science in the form of a paradigm, or an “accepted model or pattern” (Kuhn, p.23). To Ward, the paradigm can be described as an “invisible college” or social network. One trait of the paradigm is that historical economic developments have a cumulative effect, which involves two main elements: the revolution and the “mop-up” work (Kuhn, p, 23-25). Caldwell asks the question “[is] progress possible in science?” and agrees with Kuhn that a new definition of progress may be required when referring to the sciences (natural or social) (Caldwell, p. 74). This new definition defines progress as the “evolution of the state of knowledge” (Caldwell, p.74), which Ward believes is always occurring. He asks that “[despite] all those signs of Kuhnian normality, can it be that economics is in a state of permanent revolution, in which the tensions of unsolved problems continually percolate on the fringes of a discipline that studiously ignores them while continuing the development of its problems of detail?” (Caldwell, p.74). Caldwell theorizes that the nature of science leads to the recognition of anomalies, therefore paradigm change, and that scientists never “reject an old paradigm without coming up with a replacement” (Caldwell, p.72). Mitchell’s proposal then that economists can only “point out the shortcomings of individual behavior, [and] not change the behavior,” becomes very interesting (Mitchell, p. 3). In Caldwell’s aforementioned framework, one can interpret Mitchell as saying that economists are not scientists who can invent or discover new paradigms because they can never control and change human behavior. Therefore, they can never totally form a new paradigm as a replacement.
To continue with the idea that evolution does not equate with progress even today, the adoption of modern political economic theory and economic rationalism has not brought economists any closer to providing answers to some of the most prevalent economic problems, such as the difference between rich and poor countries. Easterlin, in his book Growth Triumphant, proposes the happiness-income paradox as a timeless and unsolvable mystery (Easterlin, 131-144). Since the birth of economics the income differential among societies has been an issue and was a focus for Marxism. Historically, discontent over large income gaps has caused political and economic revolts. As long as economies develop and change, certain human behaviors will prevent true global progression from happening. Karl Marx once stated that “[a] house may be large or small; as long as the surrounding houses are equally small it satisfies all social demands for a dwelling. But if a palace rises beside the little house, the little house shrinks into a hut” (Easterlin, p. 140). Essentially this can be interpreted on a larger scale; that as economies develop into what modern political economic theory calls “developed,” human preferences will simultaneously continue to evolve. Thus, true human satisfaction, an optimal pareto-efficient outcome, is never truly attainable. This can be through the mechanism of association or by default due to the definition of economics (the study of how humans make choices with limited resources and unlimited wants, [Miller, p.2]). Mitchell repeatedly insists that this very misconception of economics as a natural science prevents the academic realm from realizing the involvement of the “very unpredictable variable:” human behavior. Hence, when human nature and the nature of economic science advance together, one cannot assume that the evolutional changes imply progress in the social network.
Generally large shifts in patterns of thinking are associated with large steps of progress. Paradigm shifts, which “reveal the nature of things (Kuhn, p.25),” could be viewed as such, while mop-up work “is dependent […] upon a paradigm” (Kuhn, p.25). One can view the shift from a Ptolemaic (geocentric) model to a heliocentric model of the universe as a step of evolution in astronomy as well as progress because it brought scientists closer to what is now regarded as accepted truth and is the basis for many prevailing theories. However, science is not necessarily based upon truth, but is highly dependent upon the paradigm framework that surrounds it, and thus is not objective. Perhaps this is why it was Copernicus and not Aristarchus who received credit for the heliocentric model. If one regards the paradigm of natural sciences, which are highly dependent upon concrete mathematical and scientific experiments, and one assesses the variable of human volatility, it is evident that economics does not fit into one accepted paradigm. Can a science fit into more than one paradigm? If so, how then can a shift from one or several paradigms mark progress? Easterlin proposes technology causes shifts in the paradigm of economics and that revolution and evolution are distinctively different (Easterlin, p. 15-29). However, technology does not inherently affect the state of economics, rather the methodology. Ward argues “methodological sophistication may often substitute for solution in the eyes of the most respected practitioners” (Ward, p.32). Mankiw gives many examples of the multiple views of economics, many of which are from rivaling paradigms within the field. He also raises the point that the inability to find one paradigm in which all economists can agree has caused economic science to come to a “truce” rather than a universal and “synthesized” paradigm. Mankiw uses examples of conflicting views on monetary policy (and its applications), imperfect competition, and the nature of business cycles (Mankiw, p. 38-43). In each of these specialized topics, when economists cannot explain a piece of economic phenomena or cannot wholly prove their own theory, Mankiw argues that there is not “so much a synthesis as a truce between intellectual combatants, followed by a face-saving retreat on both sides” (Mankiw, p.39). Disregarding conflicting theories within each subtopic, one can still see the blatant existence of several paradigms within the field. As Ward points out, micro and macro “remain two distinct theories, and from the propositions of one are not derivable from the propositions of the other” (Ward, p.38). Perhaps this trait more than any other determines economics to be a field always in a state of evolution and never in a state of progression. Until the day when science allows economists to successfully understand all needed variables (such as human nature), the science of economics will remain highly imperfect, working towards some final, synthesized paradigm.
The persistence of certain timeless issues, such as disease and the unequal global income distribution, presents the marked difference between progress and evolution. While progress marks movement towards something “superior,” evolution marks change, but allows for the connotation of pure change without regard to quality. Progress is upscale while evolution is unending and can be in any direction (such as horizontal or reversed). Economics as a science can be frustrating because there is so much movement that is not forward progress. Caldwell reiterates that by the nature of science, “normal science leads its practitioners to awareness of anomalies,” and thus, according to Kuhn and Ward, new paradigms are formed (Caldwell, p. 72). However, Caldwell goes farther in stating that “a new paradigm rarely emerges in a fully articulated form,” and that they usually emerge due to more precise quantitative methodology or to provides a more aesthetic interpretation (Caldwell, p.73). He even indicates that to choose between equally “objective methodological standards” is an act of faith. Mankiw provides a concrete example of horizontal movement within the paradigm of macroeconomics such as in the theories of price stickiness and efficiency wages. Paul Krugman, the winner of the Nobel Prize in Economics in 2008, claims that new neoclassic theory may help Keynesian economists to explain and understand “how price stickiness could happen” (Krugman, p.33-42). It does not provide a better, nor a more accepted, theory of macroeconomic phenomena. Mankiw continues with the application of economics (from the scientist to the engineer) and asks, “Have the developments in business cycle theory over the past several decades improved the making of economic policy?” (Mankiw, p.40). This touches the heart of the issue of progress in economics. He claims that constant institutional change and the differences in the concept of “study verses application” in economics do not transcend into the scientific theory of economics nor are they always accounted for in its paradigm. The application of economics in policy to initiate societal progress does not automatically take place. “The real world of macroeconomic policymaking can be disheartening for those of us who have spent most of our careers in academia. The sad truth is that the macroeconomic research of the past three decades has had only minor impacts on the practical analysis of monetary or fiscal policy” (Mankiw, p.42). If theories of a science are not applied, is progress possible? Or is there always a lag between the academic acceptance of theories and their entry into mainstream thinking? Would the research of the past three decades even be applicable to modern times when aggregate human behavior has changed once again? Mitchell points out that this is often seen as a “failure on the part of economics; that economics cannot always generate answers, but sometimes just more questions” (Mitchell, p.4). Perhaps these questions can highlight why economics is constantly in a state of evolution and why it is difficult to perceive economics as progressive. While methodology and quantification techniques may continue to qualitatively improve, if the data or objects being observed continuously change as well as the paradigm in which they exist (such as political institutions), one will never succeed in understanding completely.
The idea that economics is not progressive may seem rather pessimistic or even insulting. Why do we continue to study it if this is the case? By suggesting that economics is simply evolutionary and not necessarily progressive, one does not diminish its importance in the modern world. Mitchell states that this may seemingly create failure “when failure is not the case” and that it is not the failure of a social science to only generate more questions, but that it is the nature of a social science. In a world that continues to look to mathematics, science, and technology for the future, it is imperative to understand the constraints of certain sciences, especially those that emphasize both mathematics as well as human behavior. It may be more difficult to understand the complexity of economics and the social sciences than to create, say, a “perpetual-motion machine” (Ward, p.3).
Works Cited
Caldwell, Bruce. Beyond Positivism: Economic Methodology in the Twentieth Century. 1982. 70-79. Print.
Easterlin, Richard A. Growth Triumphant. Ann Arbor: The University of Michigan, 1996. Print.
Gordon, Robert A. "Rigor and Relevance in a Changing Institutional Setting." American Economic Review 66.No. 1 (1976): 1-14. Print.
Hodgson, Bernard. Economics as Moral Science. Berlin: Springer, 2001. Print.
Krugman, Paul. "How Complicated does the Model have to be?" Oxford Review of
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Kuhn, Thomas. "Chapters 3,4,5,7,8,9." The Structure of Scientific Revolutions. 1962. Print.
Mankiw, N. George. "The Macroeconomist as Scientist and Engineer." Journal of Economic Perspective (2006): 29-46. Print.
Miller, Roger L. Economics Today. 15th ed. University Park: The Pennsylvania State University, 2009. Print.
Mitchell, Matt. What's Actually Wrong with Economics: Misconceptions and Unreasonable Expectations of a Social Science. Diss. The Pennsylvania State University, 2009. 1991. Print.
Ward, Ben. "Part I." What's Wrong with Economics? 1972. Print.
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