The economists have no clothes

Over at The Atlantic, Gregory Clark admits, rather refreshingly, that academic economists have no clothes.

The current recession has revealed the weaknesses in the structures of modern capitalism. But it also revealed as useless the mathematical contortions of academic economics. There is no totemic power.

As a discipline, economics proposes models, which are by definition incomplete. That is, they exclude some details and highlight others. To think that economic theories actually describe reality--as opposed to offer an image of reality that is useful for some purposes--is to mistake the map for the world.

Ceci n'est pas le monde.

Further, the dismal science has all too often provided models whose validity is impossible to ascertain, since it has often built its theories on the basis of premises that are false prima facie. The point here is that, logically speaking, false premises do not yield false conclusions; rather, false premises render the truth values of an argument's conclusions indeterminate. It isn't that economic models are false, but rather that the falseness of their premises means that can know nothing with certainty about their conclusions. We can't say whether economic models are true, false, or some determinate mix of the two. Logically speaking, they're mere speculation, with the same logical status as wishful thinking.

You mean we came all this way and we don't even know if we're wrong?

For example, the theories of classical economics generally accept as axioms (i.e., they accept as true without argument) the following:

1. All economic actors are rational.
2. All economic actors have perfect information about the markets in which they act.
3. All resources are scarce.

These are bad axioms, since they're obviously not true. As in, there's no doubt at all that these are false. Of course, not all branches of modern economics still accept these premises without qualification, but historically speaking these assumptions lie at the foundation of all economic thought. This is precisely the main reason I never studied economics in college. Who can take seriously a discipline that, wherever it ends up, begins with nonsense? While there's no doubt that the phenomena we think of as economic are intrinsically interesting, I remain skeptical that the formal discipline of economics has a great deal to offer beyond the obvious. As Clark notes:

The debate about the bank bailout, and the stimulus package, has all revolved around issues that are entirely at the level of Econ 1. What is the multiplier from government spending? Does government spending crowd out private spending? How quickly can you increase government spending? If you got a A in college in Econ 1 you are an expert in this debate: fully an equal of Summers and Geithner.

Common sense cloaked in jargon and equations. Even the economists' invisible clothes look rather shabby these days.

Knowing what you know

When I found Langdon Morris's book on innovation which boasts an epigram from Aristotle's Nicomachean Ethics, I was understandably excited. "Which passage from Aristotle did he choose?" you ask. Well, he chose:

Excellence is an art won by training and habituation. We are what we repeatedly do. Excellence, then, is not an act but a habit.

Which is an awesome quote, except that it doesn't belong to Aristotle. As a one-time teacher of the Nicomachean Ethics, I can vouch that this quote accurately sums up Aristotle's position on excellence. But when I went looking for the precise provenance of the quote, I discovered that (according to Wikiquote, at least) while the meaning does indeed belong to Aristotle, the specific words flowed from another's pen. Apparently, the above quote is Will Durant's summation of Aristotle's position in Book I of the Nicomachean Ethics. Since the quote remains a clear, concise, accurate summation--in fact, it's probably better than anything Aristotle wrote himself--we'll keep it.

I expect that Mr. Langdon's ethically sensitive parsing of the innovation process will yield a number of worthwhile insights, but for now I just want to cover one. His definition of knowledge and its implied definition of learning. Definitions appeal to my inner philosopher, and smart definitions are what make the world make sense. Too, the subject is, I think, central to the whole constellation of fields covered by this blog; loyal readers will recall that this blog was launched with a post on knowledge and learning.

Langdon's subtle and sophisticated definition of knowledge (found on p. 61 of the .pdf), boils down to the following:

Knowledge is concerned with "how," with the capacity to do useful things. Such capacity, in turn, comes about as a result of the integration of three other elements, information, theory, and experience. Information is the "what," the basic description [the "facts" or "data"]; theory is the conceptual framework that explains how the world functions [the "context"], and experience is the immersive and multidimensional process of doing and having done [the "practice"].

The subtle shift in emphasis from knowledge-as-what to knowledge-as-how turns our entire educational system on its head. Knowledge isn't something that you have--it's something that you exercise. It isn't an amalgam of friable and discrete facts--it's a layered, nested, and embodied concatenation of practices. It isn't a two-dimensional map of bounded domains--it's a multi-dimensional narrative.

Academic education as internal phrenology.

On Langdon's definition of knowledge learning becomes the subjective fusion of information, theory, and experience. The student generates knowledge for himself by bringing information, theory, and experience into relation with one another. It isn't enough simply to have data; nor is it enough to see contextual possibilities; nor is it enough simply to have one or several experiences. All three must fuse within a single self-awareness, and the resulting knowledge possesses the breadth and depth only of the most limited of the three factors.

And perhaps most importantly for me, as an educator, on Langdon's definition of knowledge teaching becomes a creative attempt to stimulate and/or guide the student to meld the three ingredients of knowledge into practicable know-how. Successful teaching doesn't mean providing students with more or better information; it has to do with process only tangentially. Successful teaching means that students are, after being taught, measurably more effective in doing things. They get more done of what they want to do. It's hard to imagine students wanting anything else from their teachers--which may in itself be the strongest single argument for Langdon's definition.