Blog-Reference and Blog-Reference adapted to context and Blog-Reference on May 17
Economics fits perfectly Feynman’s description of a cargo cult science: “They’re doing everything right. The form is perfect. ... But it doesn’t work. ... So I call these things cargo cult science, because they follow all the apparent precepts and forms of scientific investigation, but they’re missing something essential.”
Economics have realized that science consists of the two components theory and evidence: “Research is in fact a continuous discussion of the consistency of theories: formal consistency insofar as the discussion relates to the logical cohesion of what is asserted in joint theories; material consistency insofar as the agreement of observations with theories is concerned.” (Klant)
But, for some reason, economists do not get the two components properly together.#1 With regard to the criteria of material and formal consistency, economics is a failed science.
Currently, economists are in the mode of thorough self-critique. Yes, we have done too much math, yes, there has been too much abstract model building and too little empirics, etc. But then, all this was what ‘thinking like an economist’ was meant to be: “It is a touchstone of accepted economics that all explanations must run in terms of the actions and reactions of individuals.” (Arrow)
Economists readily admit obvious blunders. But then these are declared the faults of the old guard and now the smart young economists are on the right track. Fact is, though, that the new guard, just like the old, does not really understand what science is all about.
Science is about general and invariant features of reality. In marked contrast, history is about unique event configurations on the surface which never repeat themselves. Science abstracts from all spatio-temporal details, which are so dear to the commonsenser and realist, because NO way leads from the history of falling apples to the universal Law of Falling Bodies. Nozick defines invariance in general terms: “An objective fact is one that is invariant under all admissible transformations.”
Non-scientists and historians are glued to the ever-changing surface, so they produce stories while scientists try to get hold of the underlying structure and produce laws = invariances. Economists are dimly aware of this: “That’s a good reason to want a good structural model.” (Noah Smith)
The lethal defect of economics is that it is microfounded, i.e. based on behavioral axioms.#2 Now it holds that (i) there is NO such thing as an invariant of human behavior, and (ii), NO way leads from the explanation of Human Nature/motives/behavior/action to the explanation of how the economic system works.
Economics is NOT AT ALL about human behavior, this is the subject matter of psychology, sociology, anthropology, biology, political science, etc., but about the behavior of the economic system. By consequence, economics has to be macrofounded.#3
Economics has to step down as fake Queen of the so-called social sciences in order to eventually become an honorable member of the system sciences. This paradigm shift, clearly, is beyond the means of Noah Smith’s ‘smart young empirically-minded economists’.
#1 See ‘What is so great about cargo cult science? or, How economists learned to stop worrying about failure’
#2 See also ‘The happy end of the social science delusion’
#3 See ‘True macrofoundations: the reset of economics’
Related 'What is REALLY wrong with macro' and 'Does Asad Zaman fly with POL or SCI Airlines?' and 'Macro imbeciles' and 'From the pluralism of false models to the true economic theory'
You say: “I’d recommend closely reading and translating Blanchard’s ”
That is not such a good idea. Blanchard, too, is in deep methodological confusion. For details see:
From the pluralism of false models to the true economic theory
Eclecticism, anything goes, and the pluralism of false theories
Getting out of IS-LM = Getting out of despair