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Because neoclassical economics always presents itself as a value-neutral description of the world, its ideological commitments can be adopted by those who learn it without any recognition that they are ideological. This is the source of some very spirited debate within the field itself. A growing global movement of “heterodox” economists has criticized the ideological confines and blindspots of the neoclassical approach. As Nobel Laureate Joseph Stiglitz put it, the dominance of the neoclassical model is a “triumph of ideology over science.”

In the popular press, however, such dissent is almost entirely absent.... For Thomas Friedman (and, indeed, Allen Sanderson), people can’t “disagree” with neoclassical economics. They can only fail to understand it. ...

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In the popular press, however, such dissent is almost entirely absent.... For Thomas Friedman (and, indeed, Allen Sanderson), people can’t “disagree” with neoclassical economics. They can only fail to understand it. ...

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I'm interested because many of the same points I have frequently brought up with Stephen Gordon are addressed
e.g.

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Economics, on the other hand, is a social science, a soft science, and one in which Milton Friedman was still quoted right before his death at a very ripe old age. - Shall I tell you what we economists really want? We want you to find our simple models far too difficult mathematically to follow, so difficult, indeed, that you must just accept them without understanding them at all. And we want you to confuse reality with our models or perhaps even prefer our models to reality. A few temples to us would be nice, too.

I sound angry here, and I am, a little, because model envy or physics envy or whatever you want to call it takes a tool and makes it into the thing itself. It's reality we are trying to explain, after all, not some sterile and often stationary world with no uncertainty or informational asymmetries and with assumptions never fulfilled in many real world markets.

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and

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“The economist may attempt to ignore psychology, but it is sheer impossibility for him to ignore human nature,” Clark wrote in a 1918 Journal of Political Economy. “If the economist borrows his conception of man from the psychologist, his constructive work may have some chance of remaining purely economic in character. But if he does not, he will not thereby avoid psychology. Rather, he will force himself to make his own, and it will be bad psychology.”

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Scientific knowledge is based on controlled experiments, which can be repeated by any other scientist. This is obviously not possible in economics.

Furthermore, it doesn't matter very much if physics is based on abstractions, which exclude chemistry. But since there is no homo economicus but only full human beings, leaving aside the other social "sciences" renders conclusions rather dubious.

Then there are the many unrealisitc assumptions that make it possible to have a model, which doesn't correspond to the world we live in, i.e. perfect competiton, the only one where there are conclusive results as to price and output. There are no perfectly competetive markets.(I recently took out a text book from the library to see if anything substantial has changed in the more than three decades since I studied the discipline. It claims that organic apples are an example of identical products where no producer has any influence over price. It doesn't mention that buyers are large firms that have.)

Monopolistic competition and oligopoly - the 2 sectors that really count in the real world - have no determinate outcome as to prices and quantities in spite of the many ludicrous assumptions.

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The problem is that people argue we should make policy based on Econ 101. No one is arguing that we should run the space program based on Physics 101.

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Originally posted by N.R.KISSED:
[“The economist may attempt to ignore psychology, but it is sheer impossibility for him to ignore human nature,” Clark wrote in a 1918 Journal of Political Economy. “If the economist borrows his conception of man from the psychologist, his constructive work may have some chance of remaining purely economic in character. But if he does not, he will not thereby avoid psychology. Rather, he will force himself to make his own, and it will be bad psychology.”]

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Interestingly, if you fed the problem of describing an economy to a psychologist, the first thing they'd probably do would be to throw out the assumptions and come up with much less rigid ones.

[ 11 December 2006: Message edited by: quart o' homomilk ]

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Interestingly, if you fed the problem of describing an economy to a psychologist, the first thing they'd probably do would be to throw out the assumptions and come up with much less rigid ones.

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Firstly the quote is not mine , it is from the link that Jeff posted. The quote actually dates back to 1905 prior to much work that discredits economics assumptions concerning human behaviour.

I'm usure what you mean but to begin with a psychologist would look at observable human behaviours, they would look at the behaviour of someone producing goods, from extraction of raw materials to factory floor, they would look at the behaviour of management and the boardroom, they would look at the consumers interaction with sales staff in a store or other medium of commerce. What the psychologist would not do is look at abstractions, sales figures price indices and call that human behaviour. Any assumptions based on such abstractions ignore the complexity and intervening variables that define the human activity.

Also the psychology of economics is reductionist to the absurdity. It does not even approximate human motivation, cognitive processing, or social interactions, and there is a great deal of credible empirical evidence to support this.

[ 11 December 2006: Message edited by: N.R.KISSED ]

But it also clearly does involve making value judgments. There's no way around it. The fact that it involves measuring, interpreting and managing resource allocation in the context of complex relationships between people, and between people and their environment, means it has to recognize and interpret values and value judgments.

If you read the vast majority of economists throughout history, you will find that all of them are either expounding or observing various methods and systems in meeting the public good, or finding ways to justify and legitimize methods and systems (and their institutions) that sacrifice the public good to accommodate special elite interests first and foremost.

I find that those who try to push economics as "value-neutral" are most often those in the latter category--those like the corporate capitalist mantra pushers, especially those like the Fraser Institute, Tri-lateral Commission, Big Banks, Chicago Business School, IMF, WTO etc.

By trying to hide behind the "value-neutral" label, they push destructive and oppressive policies that undermine democracy, public interest and human need and the ecology in order to preserve and advance the exploitative interests of various dictatorial power cliques.