Chapter dzǵ: Tacit Preachments are the Worst Kind ȁȂȂŠŔőřőş ঠŝšōşŕ-Šōŏ੠ŜŞőōŏŔŕŚœ: ŞŕœśŞ
One broad message of Ļomas Mayer’s book ofȀȈȈȂis that academic eco-
nomics is driven not only by economic reality but also by features of the
game itself. Economists attuned to the academic game “frequently act as
though the strength of their whole argument is equal to the strength of its
strongest link” (ȀȈȈȂ, p. x). (Ļis strongest-link analogy recurs repeatedly
and appropriately, as on pp.ȄȆ–ȅȂ,ȇǿ,ȀȁȆ–ȀȂǿ. I myself have long used it,
for it is an obvious one.) One form of the bias toward excessive formaliza-
tion “is to lavish tender loving care on those steps of the argument that
are rigorous, while paying little attention to the other steps” (p.ȅȅ). A
related strand of tacit methodology is reductionism—the insistence that
all macroeconomics be reduced to microeconomics (pp.Ȉǿ–ȈȆ; compare
the insistence that psychology be reduced to chemistry and ultimately to
physics).
“Rigor” is often taken as self-evidently crucial to respectable econom-
ics. At a department meeting years ago, discussion of a proposed course
in portfolio management did not concern what of substance the stu-
dents might learn, or how its subject matter might relate to the body of
innovation—ways to show that you are smart by putting old wine in new bottles, usually
with fancier mathematical labels” (KrugmanȀȈȈȃ, p.ȇ).
“[T]he technicality and difficulty of Lucas’s [business-cycle] theory ... was, in the world
of academic economics, an asset rather than a liability. It is cynical but true to say that
in the academic world the theories that are most likely to attract a devoted following
are those that best allow a clever but not very original young man to demonstrate his
cleverness. Ļis has been true of deconstructionist literary theory; it has equally been true
of equilibrium business cycle theory. It turned out that Lucas’s initial theory naturally led
to the application of a whole new set of mathematical and statistical techniques. A first
set of Lucas disciples made academic reputations developing these techniques; later waves
of students invested large amounts of time and effort learning them, and were loath to
consider the possibility that the view of the economy to which their specialized training
was appropriate might be wrong. Indeed, Lucas himself has in the end seemed more
interested in his techniques than in what he does with them” (KrugmanȀȈȈȃ, p.Ȅȁ).
In Krugman’s view, political bias also helped make rational-expectations macroeconom-
ics attractive (ȀȈȈȃ, pp.Ȅȁ–ȄȂ).
Mayer also testifies to tacit methodology at work: “New classicals explain business
cycles as mostly due to supply shocks because a demand-side explanation is inconsistent
with their chosen Walrasian market clearing paradigm” (ȀȈȈȂ, p.ȀȀȅ).
Mirowski (ȀȈȈȁ, pp.ȁȃȀ–ȁȃȆ) and McCloskey (ȀȈȈȁ, p.ȁȅȅ) tell the story of the sup-
pression of an invited conference paper by Lawrence Summers (an eminent economist,
certainly, associated with New Keynesianism) because of frankness about methodology
similar to that of Krugman and Mayer. Summers had entitled his paper “Ļe Scientific
Illusion in Macroeconomics” (published elsewhere inȀȈȈȀ).