McCloskey critique

TheMcCloskey critiquerefers to a critique of post-1940s "official modernist" methodology ineconomics,inherited fromlogical positivismin philosophy. The critique maintains that the methodology neglects how economics can be done, is done, and should be done to advance the subject. Its recommendations include use of good rhetorical devices for "disciplined conversation."

Substance

Deirdre McCloskey's 1985 bookThe Rhetoric of Economicsargues that "The Mathematization of Economics Was a Good Idea", but that "economic modernism" took equilibriummodel-building andeconometrics(especially "existence-theorem"mathematics, andstatistical significance) "absurdly" far. Roughly speaking McCloskey wants economics to make interesting, new, and true statements about the real world, and argues that proving the hypothetical possibility of an effect within an analytical framework is not a constructive way of doing this. Although the conventional way of connecting the economic model with the world is through econometric analysis, shecitesmany examples in which professors of econometrics were able to use the same data to both prove and disprove the applicability of a model's conclusions. She argues that the vast efforts expended by economists onanalyticalequations is essentially wasted effort.

In "Ask What the Boys in the Sandbox Will Have", McCloskey identified the economists whom she accuses of leadingeconomicsastray in the 1940s:

1. Paul Samuelson:In her view, Samuelson wanted economics to resemble more closely the hard sciences (especiallyphysics), and elevated the "vice" of "blackboard proofs" and other mathematical (but not necessarily scientific) values to accomplish this.
2. Lawrence Kleinwas theeconometricianshe says is responsible for the modern "mistake" of confusing statistical significance with scientific significance.
3. Jan Tinbergenshe considers responsible for the third vice ofsocial engineering,which is based on the other two. McCloskey says that this presumes to know more than it can, and raised the prestige of the mathematical "modernist methodology" above other ways of performing economics.

Her complaint against the modern profession, and against theBank of Sweden Prize in Economic Sciences in Memory of Alfred Nobelwinners above, has provoked a strong defense from the economic mainstream. It has led to debates with such figures asKenneth Arrow,who vigorously support the "Samuelson" approach, and argue that the quantity of analyticalmathematical modelsin modern economics is a critical requirement for progress. However, McCloskey acknowledges the virtues as being born from each man's "genius", and rather blames the vices as being created not by these three Nobel economists, but by their students and their students' students, including herself.

The diagnosis and solution

McCloskey says that most economists when they write are "tendentious",assuming that they know already, and concentrating on a high standard ofmathematical proofrather than a "scholarly" accumulation of relevant, documented facts about the real world. The advice she offers colleagues here is to spend more time in the archives, and write more heavily researched papers from specific observations in the real world (she argues that this is the norm in the natural sciences on which economics believes it is modelling itself, but that most economics practitioners actually base their methodology more closely on puremathematics).

Since she says: "No one really believes a scientific assertion in economics based on statistical significance" the solution she proposes to establishing cause and effect in economics is "calibratedsimulation".Calibrated simulation relies on measurement and numerical techniques (such asMonte Carlo methods) to test the robustness of its predictions, without requiring a closed-form solution proving that the postulated relationship will always hold (or will be reached in "equilibrium",or beimpossible). As an illustration, she contrasts theBabylonianandGreek"rhetoric"used to back up the claim that the square on thelong sideof every right angle triangle has the same area as the sum of squares on the other two sides: While Greekgeometryfounda 'universal proof', the Babylonian engineers simply measured the sides of a thousandright triangularstones, and applied theheuristicthat since all of these obeyed the relationshipso would the rest.McCloskey believes that the Babylonian approach is more applicable to economics, and thatMoore's Lawand advances in modelingsoftwarewill soon make it easier to use and understand than the Greek approach.

InCalibrated Simulation is Storytellingshe writes that one way to describe scientific theories is how mechanically mathematical they are: at the one end lie such hypotheses asNewtoniancelestial mechanicswhich can be reduced entirely to equations - at the other are important works such asThe Origin of Specieswhich are "entirely historical and devoid of mathematical models". McCloskey says that economics would benefit from recalibrating its output within that spectrum to the more historical, "narrative" analysis.

See also

• Epistemological anarchism,Paul Feyerabend's criticism of fixed methodology in thenatural sciences,is often compared with McCloskey's
• Economic history

References

• 1983. McCloskey, D.N. "The Rhetoric of Economics,"Journal of Economic Literature21(2), pp. 481–517.PDF enlargeable by pressing+button.Also viaJSTOR.
• 1986 McCloskey, D.N.The Rhetoric of Economics,University of Wisconsin Press; 2nd ed. (1998)ISBN0-299-15814-4(First ed. written asDonald McCloskey,leading to occasional confusion in pronouns.)2nd ed. preview.
• 1995 Mäki, U.Diagnosing McCloskey,and McCloskey, D.N.Modern Epistemology Against Analytic Philosophy: A Reply to Mäki,Journal of Economic Literature,XXXIII(3) September (1300-1323)
• 1995 McCloskey, D.N.Calibrated Simulation is StorytellingScientific American(reprinted asSimulate, Simulate; Calibrate, CalibrateinHow to be Human*)
• 1996 McCloskey, D.N.Ask what the boys in the Sandbox Will Have,Times Higher Education Supplement(London), reprinted in the introduction toThe Vices of Economists-The Virtues of the Bourgeoisie
• 2000 McCloskey, D.N.How to be Human*: *Though an Economist,University of Michigan Press,ISBN0-472-06744-3(essays for the economic layman on many subjects from Eastern Economic Journal, and her analysis of the profession's treatment of her critique.)