I am reading Yanis Varoufakis's excellent book, Economic Indeterminancy.
Today I want to share a section from that book, from which I borrowed the title of this post. It rather sadly describes the way I have observed the social aspect of theoretical (and the empirical work with close theoretical ties) economics research these days.
Neoclassicists are exceptionally open-minded people, willing to countenance any proposition, however farfetched, weird or even … leftwing. All they ask in return is that the said proposition is embedded within their three meta-axioms. This ‘openness’ is made all the more significant by the fact that, undoubtedly, any conceivable ‘story’ can be told by tinkering with neoclassicism’s first two meta-axioms (see Dasgupta, 2002). Lured by the prospect of unbounded theoretical possibility, the aspiring young economist delights in tinkering her way into the infinite vistas of potential neoclassical narratives; she even revels in sailing the oceans of indeterminacy stirred up by her tinkering.
At some point, however, the fun must give way to publications, appointments and full induction into the profession. At that point, the lurking gatekeepers (supervisor, referees etc.) present her with a fresh condition: To be allowed into the priesthood, her models must have first achieved ‘closure’ (i.e. a restricted set of equilibria); she must, in effect, submit them to the merciless tightening of the third meta-axiom’s fist, thus tracing the r or b trajectories (see the previous section’s diagram) away from indeterminacy’s cul-de-sac. At that juncture, having already invested great energy and hope in her modelling, it takes a brave and tragic theorist to desist and call it quits.
A tiny minority ‘close’ their models reluctantly, tucking critical comments away in their papers’ footnotes, biding their time and, once tenured, turn into resident critics. Some ‘close’ their models and steer clear of any controversy, but nonetheless manage to retain the memory of how determinacy’s imperatives whipped them back from a complex and rewarding inquiry to a paradigm devised for arid pure-exchange economies in which a sophisticated theory of agency, not to mention a left-of-centre political agenda, is as viable as a fire under a mighty waterfall (see Varoufakis, 2002, for the ‘postmodern’ aspect of this). Meanwhile, the vast majority not only leave no stone unturned to ‘close’ their models, often with moral enthusiasm, but also sweep under the emotional carpet any memory of how their models’ ‘closure’ was bought at the price of returning homo economicus to strict isolation from his brethren, of relinquishing meaningful social norms, and of losing social and historical contingencyThe 'dance of the meta-axioms' is what separates economics from there social sciences. In sociology, and particularly mathematical sociology, the problem of indeterminacy is widely accepted, and the approach to modelling social patterns of behaviour is far more diverse.
In a presentation of my signalling model (links to early presentation and pdf in this post) I was asked the question "In what way is this a model?" It seems that unless unique solutions are forthcoming, economists will back away from the 'wall of indeterminacy' to the happy place where all models have unique, of finite sets of, solutions. Never mind that, as Varoufakis explains, neoclassical models can be generated to support an 'infinite vista' of 'narratives'. That is, you can find any result you want within the meta-axioms if you are happy to tinker with assumptions, but you must follow the methodological conventions.
You can see this process play out across the discipline. I recently discussed how the 'Top young economists' are mostly playing at these games, getting sucked into the neoclassical vortex.
One can only hope that with the current period of naval taxing, and enough smart young economists entering the profession with much broader appreciations of the social phenomena economics attempts to explain, that the profession will gradually admit to these methodological limits and embrace alternatives.