Sunday, January 3, 2010

The disciplines of economics

Economics is sometimes presented as the most "scientific" of the social science disciplines.  It is mathematical, it involves sophisticated models, it makes use of enormous data sets, and it is invoked in the formulation of social and economic policies in much the way that the science of mechanics is invoked in the building of bridges.  So one might imagine that the foundations, objectivity, and empirical credibility of modern economics are now beyond question.

Each of these assumptions is debatable, however.  Daniel Hausman, a sympathetic critic and the leading authority in the philosophy of economics, casts doubt on the claims for precision and comprehensiveness of economic theory in The Inexact and Separate Science of Economics.  Essays in my volume, On the Reliability of Economic Models: Essays in the Philosophy of Economics, cast doubt on the validity and reliability of some of the computational models that are used in current economics, including especially the computable general equilibrium models (CGE).  And economists like Bruce Pietrykowski have pointed out that there are multiple traditions bundled into the history of contemporary economics, some of which have been overlooked to the detriment of the science of economics (The Political Economy of Consumer Behaviour: Contesting Consumption).  (See an earlier post on Pietrykowski's work).

We need to have a better history and sociology of the formation of the disciplines of economics in order to have a better understanding of the scope and limits of current theory.  There is, of course, a major literature on the history of economic thought, including such beacons as Joseph Schumpeter's History of Economic Analysis, Mark Blaug's Economic Theory in Retrospect, and I. I. Rubin's History of Economic Thought.  (Rubin saw the muzzle-end of economic history, by being executed by Stalin in 1937 for crimes against the state.)  But traditional approaches to the history of economic thought almost always look for synthesis and logical progression; so the account that we often get represents the development of economics as a fairly linear evolution from the physiocrats to the classical political economists to the marginalist revolution to Keynes and general equilibrium theory.  The differences, contingencies, and choices that occurred along the way tend to disappear.

What the sociology of science can add to the history of science is a detailed, empirical examination of the institutions, processes, networks, and knowledge systems of a discipline.  Sociologists like Robert Merton (link) and Andrew Abbott (Chaos of Disciplines) attempt to provide a micro-level account of the development and workings of a scientific discipline, using the empirical and theoretical tools of sociology.  And this approach sheds a great deal of light on the way the particular field of science works, as well as providing greater granularity to the status of scientific claims within various disciplines.  (It should be said that the current generation of historians of science also sometimes take this kind of micro-level view -- for example, Peter Galison's treatment of Einstein and PoincarĂ© in Einstein's Clocks, Poincare's Maps: Empires of Time.  But to date this hasn't been true of historians of the social sciences.)

Marion Fourcade's profoundly innovative book, Economists and Societies: Discipline and Profession in the United States, Britain, and France, 1890s to 1990s, takes a sociologist's toolkit to work on the disciplines of economics.  Here is a good statement of her fundamental thesis:
Economics arose everywhere.  But everywhere it was distinctive.  If we look back just a few decades, we see that the institutionalization of economics expertise in science, policy, or business took different routes across nations.  Scientific and practical knowledge about the economy was conceptualized and institutionalized in different ways in different places, and for identifiable reasons. (3)
What is some of the evidence for thinking that "economics" is different in different national settings?  Here is a good example of an empirical approach a sociologist can take to this question.  Fourcade cites opinion surveys that have been conducted of "professional economists" in seven European and North American countries, on topics relevant to economic theory and policy.  For most of these questions there are significant differences between U.S., French, U.K., and Canada economists -- documenting the idea that there are meaningful differences in the theoretical presuppositions of economists in those national cultures.  Here are a couple of questions from table 0-2 (p. 6):
Tariffs and quotas reduce welfare
Agree          U.S. 95%  France 70%   U.K. 84%
Disagree      U.S.   3%  France 27%   U.K. 15%

Reducing the influence of regulatory authorities (e.g., in air traffic) would improve the efficiency of the economy
Agree          U.S. 75%  France 37%   Canada 56%
Disagree      U.S. 21%  France 56%   Canada 43%
On these two questions (only a subset of eight in the table), economists in the U.S. and France demonstrate very significant differences of judgment on very basic economic policy issues, with U.K. and Canada falling between them.  The regulatory question is particularly revealing.  So survey research -- a very basic tool of sociological research -- turns out to have useful and surprising results when directed at the profession of economics.

Another tool that Fourcade uses to good advantage is something that Merton emphasized as well: examination of scientific biographies and interviews with current practitioners.  How did specific influential individuals develop into professional economists?  And what can the sociologist learn about the profession from these detailed intellectual itineraries?

Fourcade is careful and reflective in formulating the methodology she pursues in the book.  She makes use of the comparative framework employed by comparative historical sociologists in other fields as well; she singles out the U.S., U.K., and France as specific national cases within which she attempts to reconstruct the specific values, attitudes, and institutions that defined "economics" as a profession.  (This is methodologically similar to Frank Dobbin's study of "policy cultures" in these same three countries; Forging Industrial Policy: The United States, Britain, and France in the Railway Age.)  She calls her approach "critical organized comparison" (13).

This approach defines the bulk of the book; Fourcade provides chapters on the economic cultures of professional economics in the U.S., U.K., and France, in which she examines in detail the academic institutions, policy environments, and epistemic assumptions that went into the creation of economics as a discipline of knowledge and expertise in each country.  She argues that each national setting represents a "constellation of practices" that distinguishes it from the others; so that the profession of economics is defined differently in the three settings.  Here are the components of the French constellation as she sorts it out: limited private jurisdiction, segmentation of economics training, legitimacy of technocratic generalist discourse, state jurisdiction dominant, and late and piecemeal institutionalization (16).

A key insight in the book is Fourcade's insistence that economic knowledge, economic policies, economic expertise, and the profession of economics are jointly specified within a specific national culture.  They are socially constructed in ways that she makes perfectly understandable.  These social products are interrelated, and they are differently understood in the separate cultures studied.  "In short, we want to examine the historical conditions that helped crystallize the very idea of what economics is, and attend closely to changing local classifications and representations of this idea over time" (13).

She also pays close attention to the institutions through which economists are trained and validated -- another key sociological insight:
The structure of the academic system and the place of economics education and research within it are particularly relevant to understanding the nature of economic knowledge production in each country.  As an academically organized form of knowledge, and a training ground for a vast array of business and administrative professions, economics is shaped by broader research and higher education ecologies. (22-23)
Here is a nice statement of how she sees her work hanging together:
This book has been particularly concerned with one specific type of affinity, that which ties knowledge to its social setting.  Instead of focusing--in Foucault's manner-- on what makes particular sorts of knowledge possible at a given historical moement, I have thus tried to analyze interactions between forms of political organization and forms of knowledge making within specific social contexts. (239)
Economists and Societies is a very appealing piece of sociology, and it is a highly insightful contribution to a very fundamental question: what is the status of economic knowledge?

(Related work on the significant differences that can be discerned across national traditions of a social science discipline is being done for the discipline of sociology as well; see this post on national differences in the discipline of sociology, highlighting work by Gabriel Abend.)


Dan said...

Nice summary of Fourcade! But it might be worth including here a mention of the recent "Performativity of Economics" tradition coming out of science studies (starting with Callon's 1998 "Laws of the Markets"). This approach, most associated with MacKenzie (e.g. "Do Economists Make Markets?", "An Engine, Not a Camera"), draws on Austin to argue that economics is important because it *does* things - it remakes the world by teaching actors how to calculate, and what to calculate. For example, MacKenzie shows how "implied volatility" came to be a key feature of options trading due to its importance in the Black-Scholes-Merton model that is widely used in the pricing of options. Etc. MacKenzie goes further and argues that sometimes (such as with the option pricing model), economics actually helps remake the world to look more like its models, by getting actors to behave according to its rules and by convincing regulators to allow more and more the model assumptions to be true/legal (e.g. trading on margins, short-selling, whatnot), among other ways.

This tradition has been extremely fruitful in the past 10 years (and very helpful for me in my work), and asks and answers very different questions that could still fall under the heading of "sociology of economics".

gaddeswarup said...

These seem to contrast with the views in "The Construction of a Global Profession:The Transnationalization of Economics" by Marion Fourcade.
This article relies on an analysis of the institutionalization of economics worldwide during the 20th century to argue that the logic of professional development in this particular field has come to be increasingly defined in global terms. Connections to (mainly) U.S.-based standards of work and professional practice are routinely used in the local competition whereby different professional segments and groups seek to assert their authority on particular jurisdictions (scientific, corporate, or political). In this process of professional construction (or reconstruction), economies are being transformed through complex transnational mechanisms which, ultimately, feed back into the identity and jurisdictional claims of the economics profession itself, both in the “core” and in the “periphery.”

Dan Little said...

G: You're right -- the position described in the abstract does seem inconsistent with the argument in the book. I wonder how Marion might respond.