What Should Economists Do?

• Author: Higgs, Robert

Like most graduate students in economics during the last 40 years, I spent many painful hours plowing through Paul Samuelson's Foundations of Economic Analysis (Harvard University Press, 1947). From that sacred text we novices learned how to prove many specific theorems. Far more important, we learned how neoclassical economics--"modern economic science"--was supposed to be done.

We built mathematically specified "models," sets of equations describing the relations of selected economic variables. Model in hand, we proved that it had a stable equilibrium, then characterized the relations of the variables in that blessed state. Altering the "data" or the "parameters" of the model, we ascertained how a new equilibrium differed from an initial one. In its advanced form this protocol rendered most older economists instantly obsolete, but for young math wizards like Samuelson it opened up the prospect of "new realms of aesthetic delight." Eventually most economists entered those realms. Playing increasingly clever mathematical tricks with the models constituted "scientific progress."

Samuelson fashioned his models, which set the standard, after 19th-century physics. Functions were assumed to be smooth and continuous. Economics was reduced to various types of the same calculus problem: finding a constrained extremum. The economist's job was to state the objective function and the constraints, then grind out the solutions. This required considerable mathematical ability and stomach for tedium but little imagination and no familiarity with economic reality.

By the 1960s, if not earlier, academic economists who quarreled with this way of doing the job were, as Roy Weintraub put it, "regarded by mainstream neoclassical economists as defenders of lost causes or as kooks, misguided critics, and anti-scientific oddballs." By...