Ain't Necessarily So...

I haven’t been paying close attention, but there’s been a bit of web-chatter lately about the ideological bases of economics. Ordinarly with this sort of thing, the people who pay most attention will already know most of the moves in the game, but there’s a good quick executive summary here in which Max Sawicky itemizes 10 ways in which economics is not as “scientific” as it thinks it is. Meanwhile Greg Mankiw here says it’s a vicious canard that he doesn’t like vegetables, why he once ate a carrot (not the least interesting aspect of this is that I think he is completely sincere).

At the end of the day I sign on with Sawicky’s commentator who says that economics is sociology that thinks it’s physics. Trouble is, when all is said and done, I’d still rather read economics than sociology. Indeed, one reason economists get away with it is what an economist might call the “How’s your wife? Compared to whom?” problem—the other guys simply do not offer a plausible alternative.

Here’s an example. Economists have been telling us for years to be suspicious of governments and to trust markets. Public employees, they tell us, have the wrong incentives. The sociologists say they have it backwards: it’s the entrepreneurs who have the wrong incentives, and privatization bespeaks a tragic loss.

The point is, of course, that they are both right: lousy incentives abound. What I would like to see is a good comparison-in-depth: what works when? Which sent of bad incentives cost what? Which ones are most amenable to taming and control?

I’ve never seen anything in economics that offers anything really useful or interesting on that question. You might think of it as a problem for sociology. Trouble is, of course, I haven’t seen much there very interesting either.

Fn.: This all brings to mind a wonderful piece I showcased last year about the wholly arbitrary and, well, "political" sources of the capital glut.