If You're So Smart: The Narrative of Economic Expertise.

• Author: Sandler, Ralph

As in his earlier book, The Rhetoric of Economics |1~, Donald McCloskey again applies the devices of literary criticism to the literature of economics. He proposes to his colleagues that they think of economics as a form of rhetoric, but he does not use the term pejoratively. Rhetoric is the study of how people persuade.

Those familiar with McCloskey's work will find this book to be an engaging and literate continuation of the themes explored in The Rhetoric of Economics. Economists cannot avoid communicating rhetorically, a style of argument which consists of facts, logic, metaphors and story. Persuasion requires that all of these be used. While scholars must be factual and logical, they must also devise good metaphors and construct compelling stories.

McCloskey is a superb storyteller who is comfortable using a broad spectrum of material including literature, history, ethics, linguistics and poetry. This book is rich with examples of how metaphors and stories have been used to shape one's opinion about economic research. Stories such as Great Britain's so-called economic "failure" after 1870 and Robert Fogel's remarkable counterfactual study on the American railroad industry are used to illustrate how they support economic arguments. But how do we know whether the stories being told by scholars are good or bad ones? The answer is that they must be tested against other parts of the rhetorical tetrad--facts, logic and metaphor.

The author also examines the limits of economic expertise. The claim that prediction is the defining feature of a "real" science and economics possesses that feature has been challenged before by McCloskey |1~. Economics is seen as an historical and philosophical rather than a predictive science. When economists pretend otherwise they risk the scorn of non-economists who ask the American question: If you're so smart why ain't you rich? The book's title is a literary device used by McCloskey to demonstrate the practical limitations of economic expertise. Perhaps the market test of riches explicit in the American question is a reasonable one if the expertise claims actual riches (or for that matter glory or power) from being able to predict the future. But rational expectations leads people to react to economic predictions in ways that dampen or magnify those predictions. The inability of economists to provide consistent and accurate forecasts of the stock market, interest rates, or the price of corn, for example...