T.C.A. Srinivasa-Raghavan just started column titled ‘Empty Sum’ The Business Line Newspaper. He writes in his first piece:
- “Economists will protest, more than somewhat shrilly, that I am making far too many sweeping statements. That is to be expected. But, after spending a lifetime with them, I know that in their heart of hearts they agree that this is exactly true of most of post-war economics.
- Techniques in econometrics have, of course, improved. But useful economic theory has made virtually no progress. Much of microeconomics stays where it was in, say, 1945, except in the matter of its dress. And as we are seeing now, macroeconomics hasn’t gone beyond Keynes, who published his seminal work in 1936.
- My view is that the post-war period can be divided into two clear segments. The first comes roughly up to the mid-1970s when economic theory grew increasingly distant from real life and more-or-less merged into advanced mathematics. The second phase was a sort of reaction, and comprises the empiricist phase where, gradually, the mere presence of a data set has meant that anyone who knows a little regression can become an economist. Thought and thinking have both exited.
- The trouble with empiricists, as opposed to empiricism whose importance can’t be denied, is that they can’t tell the difference between correlation and causality. I once wrote an article showing how every change of party of government in the
after 1945 has been accompanied by a recession. US
- The correlation was easy to establish but causation, in either direction, is another kettle of fish altogether. Even after having been advised early not to fall prey to it, they make the classic post hoc, ergo propter hoc (after this, therefore because of this) mistake.
- The triumph of mindless empiricism has seen the advent of a menace called the policy economist. This tribe is to economics what ‘non-state actors’ are to security: guided missiles but with commercial intent. These economists flourish in think tanks which, if you ask me, are like those camps in
, Muridke, PoK, etc. But more about them in the months to come. Kandahar
- Overall, the swings between the two extremes — of economics posturing as physics so that it can use advanced mathematics, and data-based vacuity which has no roots in politics, custom, institutions, law, etc — have led the discipline into a state of meaningless tarkam and vitarkamwhere scoring petty points is mistaken for scholarship and where debate becomes an end in itself”.