- 9 The Poverty of Economic Modernism
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9 THE POVERTY OF ECONOMIC MODERNISM The Mathematization of Economics Was a Good Idea The economic conversation has heard much eloquent talk, but its most eloquent passages have been mathematical. Especially since the 1940s economists of all schools have become enchanted by the new and scientific way of talking. Most journals of economics nowadays look like journals of applied mathematics or theoretical statistics. The American Economic Review ofthe early 1930s,by contrast, contained hardly an equation; assumptions were not formalized; the graphs were plots of series, and not common; the fitting of a line to a scatter of points was rare. The consequence of the primitive machinery for conversation was an inability to speak clearly. Economists could not keep clear, for instance , the difference between the movement of an entire curve and movement along a curve. Being mathematically innocent, they were unable to talk in curvy metaphors. They might think of the Labor Problem, as Harry A. Millis did in his presidential address to the American Economic Association in December 1934, as having something to do with marginal productivity (pp. 4-5). After reading J. R. Hicks's book of 1932, The Theory of Wages, as Millis had without much mathematical understanding , they might recognize that marginal productivity did affect wages. But the economists before the reception of mathematics fell headlong, as Millis did, into confusions that a little mathematics would have cleared up: confusions about working conditions (which they did not see as merely another item with income in the utility function) or about bargaining strength (which they did not see as determined by aggregated marginal productivities and supply curves of labor). Mathematical metaphors were not then available to most economists. Now they are available in bulk, especially to the bourgeois, Englishspeaking economists who dominate the profession, and ofwhom Iam an example. Ofthe 159full-length papers published in the American Economic Review during 1981, 1982, and 1983, only 6 used words alone and only 4 139 140 The Poverty of Economic Modernism added to their words tabular statistics alone, the one formal device common in 1931-1933. The techniques of mathematics, statistics, diagrams, and explicit simulation, which economists viewed once as useless and arcane, had become routine. Fully two-thirds of the papers used mathematics explicitly, and most of the others were speaking in a mathematicssaturated environment in which the words "production function" and "demand curve" would call up the mathematics anyway. Nearly half of the papers used diagrams in the fashion economists have come to use them, puzzling other students of society by talking definitely about curves that do not have definite shapes. Nearly a third of the papers used regression analysis, often in quite elaborate ways. Over a tenth used explicit simulation that only academic engineers and physicists could have followed in 1934. Mathematical analysis illustrated by diagrams (and without facts, in keeping with the abstract character of economic conversation) was used in 60 of the 159. Anyone of these techniques would have dazzled and dismayed an audience of economists in 1934. But a Philosophy Got Mixed Up in the Mathematics Yet this gain, like most gains, was achieved at a cost. Books on technical economics are no longer even superficially accessible to lay people and young economists overvalue a narrow and often silly ingenuity of technique. The main cost, though, is harder to spot. It is that along with their new mathematical way of talking the economists adopted a crusading faith, a set of philosophical doctrines, that makes them prone now to fanaticism and intolerance. The faith consists of scientism , behaviorism, operationalism, positive economics, and other quantifying enthusiasms of the 1930s. In the way of crusading faiths the doctrines have hardened into ceremony, and now support many monks, bishops, and cathedrals. The connection between the mathematics and the philosophy was only psychological. A science can be mathematical without becoming positivist, behaviorist, or operationalist. But psychologically a faith of some sort was needed during the struggle for Jerusalem. No young economist in 1950 would have risked his professional life for the values merely of tolerance and methodological balance. Many of the mathematically unskilled in economics around 1950 were ignorantly obdurate : they would have none of that, and often had the institutional means to prevent it. The times warranted citadel storming. But now, so long after the victory, you might ask whether the faith 141 The Poverty of Economic Modernism that supported it still serves a social function. You might ask whether the strident talk of Science in...

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