Dani Rodrik is the Ford Foundation professor of political economy at the John F. Kennedy School. His recent book, “Economics Rules: The Rights and Wrongs of the Dismal Science,” was published by W.W. Norton. I asked him some questions about the book’s argument.
Your book argues that economics is a science — but a science built around a variety of different models rather than a grand effort to create a unified theory of how the economy works. What does that imply for the ways in which economists should conduct debate and think about scientific progress?
Economists have this outdated notion that economics advances through a progression of ever-better theories, with empirical testing serving to reject wrong models and confirm valid ones. In reality, we are really bad at formulating general models as social reality is malleable and contextual. Our theories — such as the theory of value or the theory of comparative advantage — are just scaffoldings, which need a lot of context-specific detail to become usable. Too often economists debate a policy question as if one or the other theory has to be universally correct. Is the Keynesian or the Classical model right? In fact, which model works better depends on setting and context. Only empirical diagnostics can help us know which works better at any given time — and that is more of a craft than a science, certainly when it is done in real time. If we economists understood this, it would make us more humble, less dogmatic, and more syncretic.
Deirdre McCloskey argued a long time ago that because economic models could be constructed to “show” just about anything the modeler wanted. Economics was better thought of as a kind of rhetoric rather than a standard science. What do economists need to do to make sure that their theory is better than simple rhetoric?
There are certainly plenty of rhetorical elements in economic modeling, but models are much more than rhetoric. Models ensure our arguments are coherent, and even more important, they lay bare the critical assumptions on which our conclusions rest. This may seem trivial, but I have dabbled plenty in the rhetoric of other social sciences, and I can assure you that they too could use some of both of that.
Those seem like separate issues to me. Power plays a role in economics, but to say that the discipline is driven by power relations seems extreme to me. As for rational expectations, its success had nothing to do with the “politicization” of the discipline, and everything with the appeal of the idea. It is just a formalization of the notion that “you cannot consistently fool people.”
Read the full piece at The Washington Post.