Changing Aims in Economics.

• Author: Wilber, Charles K.

This book is an expansion of the 1990 Hennipman Lectures that Professor Hutchison delivered in Amsterdam. The text is only 103 pages and they are small pages with large type at that. But there are 65 pages of notes, using smaller type, which are far more interesting than the text. The book is not a scholarly treatise but rather the wise ruminations of a leading scholar in economic methodology. I found the book delightful reading even when I disagreed with his judgments and despite the convoluted sentence structure.

His thesis is simple and straight-forward: the aim of economics since at least Sir William Petty has been ". . . to contribute usefully to less unsuccessful policy-making . . .". To do this ". . . economists need to be able to produce . . . predictions which, on the average, are slightly but significantly less inaccurate and unreliable than would be forthcoming without their input of systematic, more or less disciplined economic knowledge".

Hutchison's first target is "hyper-abstract" theory building which he attributes to the growing dominance of American academic economists since 1945. He claims they have turned away from the traditional aim of economics for the fools gold of a formal theory based on propositions that are not even in principle empirically testable. One reason for this is their reliance on the fundamental theorem of perfect rationality (with perfect information and no uncertainty) on which to erect an edifice of pure theory that has no relevance for economic policy.

The charge is too sweeping. Certainly pure theorists have become the stars amongst academic economists but policy oriented work has continued apace both in and out of the academy. Also he ignores the work done by theorists of the imperfect information school such as George Akerloff, Edmund Phelps, and Joseph Stiglitz.

Hutchison claims that the dominance of the hyper-abstraction theorists paved the way for the rise of his second target--the post-modernist movement composed of permissive pluralists, Marxists, and conversationalists. Their rejection of any methodological roles or standards leads to "anything goes." To quote Hutchison:

If the main aim of academic economics is to be the carrying on of an amusing, but essentially aimless conversation; or the propagation of some kind of mathematical aestheticism, or nebulous "understanding"; or, alternatively, uncontrained individual self-promotion, either in financial terms or in terms of "high status"...