Whats your view and why?
A dangerous / excellent tool, depending on who uses the instrument for what purpose and period of time in which context.
If it was science, economics would have improved the quality of life of all mankind without side effects.
If it was art, economy would only appeal to the feeling, without other side effects such as harm to nature and thus to people.
For the time being, I am opting for an tool/instrument because economics has completely different effects at different levels and in the hands of different (types of) people.
At its best economics is a social science; at its worst it is a pseudo-science masquerading as science behind an obscurantist mathematical hubris that justifies neoliberal ideology that is costing us jobs, social justice, and human lives. (See: http://a.co/0N31uHy)
Picked up a book the other day called “Cents and Sensibility: What Economics Can Learn from the Humanities”
by Gary Saul Morson et al. (http://a.co/g5YqLUW). Reading it now along with Kate’s book. These are exciting times given the revolution going on in economics these days. I like the tool/instrument metaphor as it brings up the vision of a toolbox that can contain tools other than just economics, like ethics, philosophy, etc. as all important part of the toolbox for creatively creating solutions to real-world economic problems.
It cannot be a science if the practitioners cannot be bothered to get the mathematics correct. How much do American consumers lose on the Depreciation of automobiles every year? When has any economist brought up the subject?
We hear about GDP all of the time, what happened to NDP?
Net Domestic Product
But if you look up the equation then you find that ONLY the Depreciation of Capital Goods is subtracted from GDP. Durable Consumer Goods are part of GDP but strangely they do not depreciate. Air conditioners are no different from bananas.
It is very interesting that we do not hear the Capitalists, Communists or Socialists suggesting that 700 year old double-entry accounting be mandatory in ours schools.
Of course from the perspective of Game Theory it may be good that the people who are supposed to be losers should be kept ignorant.
The first science arose from the curiosity of man and the desire to understand everything. This is why Newton wondered about a falling apple to explain gravity. With the economy I see little curiosity or amazement, economy seems to want to maintain itself. In the cartoon of a priest who says to a politician: “You’ll keep them poor, I’ll keep them dum” you can nowadays replace the priest with an economist. The economist who wants to keep the economy as it is, not completely devoid of self-interest in any case.
The economy can grow as a science if it allows more systems: (hurray for the donut!) But even then it is not art but rather a science that wants to control and predict. It is not an exact science because the predictive value of the economic laws seems to me just as great as weather forecasts. But we still need economics as a science to discover the derailments in time together with other ‘sciences’.
It seems to me that until we recognize that macroeconomics and sociology are actually the same subject, we will always be stumbling around trying to understand which is the correct way to think about them.
Macroeconomics is an exact science due to my recent book about its understanding as an engineered reality. The 310 page e-book is titled “Consequential Macroeconomics” and can be obtained for free by writing to email@example.com The book looks at this subject in a new way although it does include past ideas too, but due to its originality it will blow your mind clear of all those dismal, old cobwebs of the older schools of thought on this vital subject for good government.
I’m sorry but I can’t leave your first sentence without reaction. You call Macroeconomics an exact science. Exact science means that the results of your actions are predictable. I’ve never seen any economist predict correctly what’s gonna happen. Any study of economy is a human science.
I don’s see how you can justify your belief that it is inexact until you have read my book and the article(as an introduction) which is below. Write to me for a copy of this e-book and then perhaps you will see what and why I am claiming and its truth. Past performance in forecasting is no criterion for disproof.
Making Macroeconomics an Exact Science
Today macroeconomics is treated as an inexact topic within the humanities, because at a first look it appears to be a very complex and easily confused matter. But this attitude does not give it fair justice–we should be trying to find a better way to approach and examine the subject, in a good way that avoids these problems of complexity and confusion. Suppose we ask ourselves the question: “how many different KINDS of financial transactions occur within our society?” Then the simple answer is that only a limited number of them are possible.
Although our society comprises of many millions of participants, to answer this question properly we should be ready to consider the aggregates of all the various kinds of activities (no matter who performs them), and then idealize these activities so that they fall into a acceptable number of more general terms, for the expression of a relatively small number of different but specific social functions. Here, each activity is found to apply between a particular pair of entities—with each entity being expressed by its having individual properties. Then to cover the whole social system of a country (excluding foreign trade), the author finds that it takes only 19 mutual flows of money for the purchase and payment of goods, services, access rights, taxes, credit, investments, valuable legal documents, etc. Also these flows are between only 6 different representative entities. .
The analysis that led to this unexpected result was performed by the author and it may be found in his working paper (on the internet) as SSRN 2865571 “Einstein’s Criterion Applied to Logical Macroeconomics Modeling”. In this model these 19 double flows of money verses goods, etc., are shown. They are found to pass between only 6 kinds of role-playing entities. Of course, there are a number of different configurations that are possible for this type of simplification, but if one tries to eliminate all the unnecessary complications and sticks to the basic activities, then these particular quantities are the most concise result. They provide the most simple yet fully comprehensive and satisfactory analysis.
Surprisingly, past representation of our social system by this kind of an interpretation model has not been previously properly examined nor presented before. Other partial versions have been previously modeled (using 4 entities, by Professor Hudson), but they are inexact due to either their being over-simplified, or in the case of econometrics, much too complicated.
These are the two reasons for the earlier non-scientific confusion by many economists and their failure to obtain a good understanding about the way the whole system works. The model being described here is unique, in being the first to include, along with some additional aspects, all 3 factors of production, of Adam Smith’s “Wealth of Nations” book of 1776. The three factors of production are Land, Labor and Capital and along with their returns of Ground-Rent, Wages and Interest/Dividends, respectively, which are all included in this presentation diagram.
The diagram of this model is in my paper, and in Wikimedia Commons as Diag.Func.Macro.Syst.pdf, which needs enlargement to see all of the aspects included in the one view. A mention of the related teaching process is also provided in my short working SSRN 2600103 “A Mechanical Model for Teaching Macroeconomics”. With this model in its different forms, the various parts and activities of the Big Picture of our social system can be properly identified and defined. Subsequently by analysis, the way our social system works can then be properly calculated and illustrated.
It is done by the mathematics and logic that was devised by Nobel Laureate Wassiley W. Leontief, when he invented and introduced the important "Input-Output" matrix methodology (that he applied it to the production sector only). This short-hand method of modeling the whole system replaces the above-mentioned block-and-flow diagram. It enables one to really get to grips with what is going-on within our social system. Subsequently it will be found that it is the topology of the matrix which actually provides the key to this. The math is not hard and is suitable for high-school students who have been shown the basic properties of square matrices.
By this technique it is comparatively easy to introduce a change to a pre-set social system that is theoretical in equilibrium (even though we know that this ideal is never actually attained)–it being a convenient way to begin the study. This change will then create an imbalance and we must then introduce a process for regaining equilibrium again. The introduction of sudden changes or policy decisions my thus be simulated and the effects determined, which will point the way to what policy is best. In my book about it (see below), 3 changes associated with taxation are investigated in hand-worked numerical examples and the logical and irrefutable results are a surprise even to this author!.
Developments of these ideas about making our subject more truly scientific (thereby avoiding the past pseudo-science being taught at universities), may be found in my recent book: “Consequential Macroeconomics—Rationalizing About How Our Social System Works”. Please write to me at firstname.lastname@example.org for a free e-copy of this 310 page book and for additional information.
I’ve been reading this article and I can understand your need fot macro-economics to be recognized. But still macro economics can not take into account the psychology (also a science) into account to make it an exact science. Science yes, but no exact science
** IT IS TRUE THAT SOME PEOPLE SEEK TO COMBINE ECONOMICS WITH PSYCHOLOGY BECAUSE THEY LOOK AT THE POPULATION AS BEING HUGELY AFFECTED BY THEIR PERSONAL THOUGHTS, FEELINGS AND MOTIVATES. But this is not the same thing as how this population as a whole responds to the changing situations.
When fuel prices rise, the people will buy less petrol and make fewer journeys and pay more for their consumer items due to greater delivery costs. So I find that any of the psychological aspects that are included within the doughnut to be completely irrelevant–individuals may well decide to change what they consume when prices change due to their feelings, but the population as a whole is not affected by individual decision-making and their aggregate choice is based only on aggregate price changes. Lets leave the psychology to the psychologists and the economics to our experts instead (not as well).
“Past performance in forecasting is no criterion for disproof.” Sorry, but in science it is! A hypothesis or theory that makes poor, untestable or just plain wrong predictions will rightly be disgarded and that holds regardless of wether one agrees with the classical Popperesque view of scientific method or more recent and social/psychological opinions of philosophers of science like Feyerabend. I mean, how long would Newton’s Laws have lasted if 80% of the time apples were observed to fly off in all directions, hover in mid air or spontaneously turn into cider unstead of falling vertically?
I cannot remember the last major economic crisis that was correctly predicted by the majority of established economists. And no sooner does one (Keynes, say) come up with a theory that seems to actually work and solve at least some problems than it’s junked by rivals and others with vested interests in alternatives that enrich them as the expense of the majority…
I’m sure there are others better qualified than me to judge if economics is in any sense an Art, but for my money the best artists enhance our experiences of beauty (or at least creatively challenge our perceptions of what is beautiful, which is why Tracy Emin’s bed or pickled sharks don’t qualify in my book), reveal new ways of looking at the world or at least amuse and entertain.
Simply describing something mathematically doesn’t mean one is doing Science or medics would still be using phrenology. Neither does the fact that musical notation is, in effect, a mathematic representation of sound helpful in deciding which symphony one prefers. (In fact I sometimes wonder if Astrology might have more success in predicting the future of the economy than Economics!)
This is a no links version of my post, II hope you will be able to Google them.
Based, for example, on "Naming is framing, so let’s rename and reframe the future of development,” as Kate Raworth say, in 2014 I wrote the post “Replacing the Science of EcoNoMics with the System Profession of EcoIsOurs,” which now has four updates. The second paragraph of the initial texts says:
In order to describe both EcoNoMics and its replacement EcoIsOurs, I will mostly copy, with minor editing, the abstract, part of the introduction and part of the historical evolution of the text of the Plenary Address of the International System Dynamics Conference “Economic Theory for the New Millennium, given by Dr. Jay W. Forrester, the father of System Dynamics, on July 21, 2003, in the city of New York.
In the meantime, I argued about what’s on this story “Complementing the EcoNoMy’s Science with the EcoIsOurs’ Profession.”
Now I jump to the most recent version of my thought experiments “Peter F. #Drucker’s vision led to the #EcoIsOurs #TheWorldIsFlat4GD model.”
Macroeconomics has recently become a true science. It can be seen as such when you read my recent 310 page on it “Consequential Macroeconomics–Rationalizing About How our Social System Works”. Write to me at email@example.com for a free e-copy, and at last get some sense to replace all the past confusion around!