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[Yuval Yonay published this originally as an editorial on the Economics-Sociology list.
Jonothan Mote is to be thanked for passing the editorial on to HES. -- RBE]
Economic Theory and Reality: A Sociological Perspective on Induction and
Inference in a Deductive Science
I. Introduction
I see myself as a guest writer in this forum. Although I have a
deep-rooted interest in economic sociology and commitment to this field
(I am even a member of the new section), my main interest is not economic
sociology per se, but economic knowledge in general and professional
economists in particular. Yet I guess that my research about economists,
past and present, gives me a unique point of view to observe on economic
sociology and to comment on some of the ongoing debates in this field.
"Sociology of Economists," as I like to christen my field of interest, is
not exactly a new sub-discipline. Although I was happily surprised to
notice a growing interest in this subject, there is no point in further
dividing our rich discipline. "Sociology of economists" is, of course,
part of the sociology of science, the sociology of knowledge, and the
sociology of intellectuals, and theoretically there is no need to develop
special tools to analyze the production and distribution of economic
knowledge beyond those developed in these fields. Due to the centrality
of economic issues in class struggles, in national policy-making, and
even in general culture and human relations, however, this topic has been
discussed mostly in the context of ideological and political debates over
the organization of industrial societies. Thus, while many scholars have
commented on the connection between economic doctrines of various kinds
and economic and political interests, very few have systematically
studied economic discourse in general, and academic economics in particular.
Most glaring, I think, was the lack of any serious sociological study of
the academic arena of economic knowledge production, and this is in spite
of the far-reaching political implications of the economic theories
produced by academic economists. The reason, I think, is that those
interested in studying ideology had little understanding of the obscure,
highly-mathematized economic theories of the postwar period. Marx,
Weber, and many of our other distinguished classical pioneers read the
economic treatises of their days with ease. Their modern
counterparts-whoever they are-could not master the much more complex,
ethereal, and specialized thought of economics of the postwar period.
The critique of economic theory has thus remained on a very superficial
level without detailed studies and understanding of how economists
actually worked.
I was lucky enough to be among a small group of people who started
recently to watch and follow economists more rigorously (e.g., Breslau
1998; Evans 1999; Fourcade-Gourinchas 1999; Gao 1997; Knorr-Cetina and
Bruegger 2000). Having an undergraduate training in economics and an
avid interest in ideology, it was a natural choice to study economics,
and the sociology of science was the likely place to search inspiration
and guidance. Here another comment is due: why had sociologists of
science never studied economics? Was it because economics was not a
science? For some traditional scholars, the answer might be affirmative;
for them economics, as well as all the other misleadingly-named social
sciences, were not perceived as a "real science" due to its apparent
embeddedness in political and ideological debates and lack of
"scientific" aloofness. But for most students of science in recent
years, the reason was exactly the opposite: seeking to challenge the
common notion of science as a detached human practice above the mundane
commotion of politics and commerce, they analyzed the "hard" sciences, to
show how "soft" even the latter were.
In contrast to what many science fundamentalists think, the new sociology
of science of the last twenty years is not aimed at debunking science.
Although challenging previous notions of science as naïve and uncritical,
the current sociologists of science are actually more interested in
understanding the real power of science than in discrediting it (see
Knorr-Cetina 1999; Latour 1999; Pickering 1995). Yes, scientists have
power and they often abuse it to advance either their own selfish
interests or to promote class and national interests. But there is more
than this in science. If it were only an ideological tool, it would have
been redundant in societies soaked with national, ethnocentric,
religious, and consumerist beliefs. Science-and technology; the new
sociology of science cares little for distinguishing between the
two-offers more: it offers machines, tools, and knowledge that can be
used to produce more goods, more deadly weapons, and better control of
public health. Present-day sociology of science tries to understand what
is it about science that allows such achievements. This is an important
task even for those who would prefer these achievements never to have
been accomplished.
And what about economics? Does the most powerful economic knowledge-the
knowledge produced by mainstream economic theorists in the major research
universities in the United States-work as well as physical, chemical,
medical, and biological knowledge? I am not going to commit myself to
any answer here, but I do wish to offer the new sociology of science's
approach to this question. As I said above, sociologists of science seek
to understand what is the key for the power of science, but they do not
come with a key formula, the Scientific Method, which guarantees
science's success. Finding such a key has been the goal of traditional
philosophy of science for centuries, but this pursuit has failed to yield
an agreed upon and widely convincing view (Latour 1999). Instead
sociologists of science have found that scientists use myriad techniques
and methods that consolidate and evolve through continuous struggle and
contestation. If science bears palpable fruits-and whether a specific
field of investigation does or does not yield such fruits is often
debated by conflicting camps within that field-it is because scientific
methods are always challenged and changed. There is never a guarantee
that all theories, methods, and scientifically produced facts are valid.
On the contrary, it has been shown that scientists themselves challenge
the validity of previous knowledge and that of rival colleagues. It is
argued, however, that this process of permanent challenges and
contestation increases our ability to understand and control (Latour 1987).
This conclusion undercuts any pretense of neoclassical mathematical
economists to be better scientists than institutionalist, ethnographic,
historical, and non-mathematical Marxian economists, or to have tools
which are "more scientific" than those used by non-economists (see also
McCloskey 1998). My own book, The Struggle over the Soul of Economics
(Yonay 1998), based on my dissertation at Northwestern, documented how
several actors in the arena of American economics struggled during the
1920s and 1930s over the nature of economic science, invoking different
images of science, having faith in different methods, posing different
goals for their science, suggesting conflicting interpretations of past
economists, and arguing over their potential contribution to the society
at large. None of the actors during the interwar period actually won,
and instead, the field was swept by a new group of contenders-Paul
Samuelson, Kenneth Arrow, and Milton Friedman are the most conspicuous
among them-who offered a completely different conception of economic
science.
Thus, my book, together with a few other recent books (Morgan and
Rutherford 1998; Tabb 1999), shows how much economics changed between the
prewar and the postwar periods. In a nutshell, prewar economics was very
much like what many of us want economic sociology to be. It included a
basic price theory that was used as one tool among many, but economists
also used many more tools including surveys, observation, and historical
documents. The development of new empirical studies was the dominant
trend between the world wars. In terms of theory and policy, economists
ranged between extreme free marketeers and firm supporters of pro-labor
reforms. In contrast to present-day economists, prewar economists of all
stripes did not hide behind scientific objectivity but explicitly
referred to ethical, political, and social values in their arguments.
Ties between economists and neighboring fields-legal studies, sociology,
anthropology, philosophy, and psychology-strengthened and promised new
possibilities for research (Tugwell 1924).
This historical narrative is significant, because it means that
present-day economics is not a natural outgrowth of past tradition, but
rather it is the result of a struggle which was decided according to the
balance of power among those involved, their resources, and their
strategies. Critics of the new sociology of science claim that it
legitimizes any claim to be scientific, thereby threatening the rule of
reason in science. Staunch mathematical economists, faithful Marxists,
and devoted institutionalists are afraid that such "post-modernist" views
would jeopardize the rational pursuit of the Truth, but amazingly enough,
their Truth is not the same. The new sociology of science starts from
these conflicting views of The Truth and from the attempts to stop the
pursuit of truths-in the plural-by arguing that a certain such pursuit
does not conform to one's image of science.
If something should be denounced as unscientific, the sociology of
science implies, it is the attempt to negate the scientific value of
other approaches and forcibly impose premature closure of discussion and
debate. Yet we know that such a practice is quite common in science.
Scientists do try to convince their colleagues to accept their
contributions, and they use their resources to disseminate their ideas by
appointing their students to key positions, by raising funding to produce
new and interesting experimental results, and by controlling publication
spaces. Such a competitive process is inevitable in the attempt to sort
bad ideas from good ones, and we would like to hope that it would lead to
the widespread adoption of a new idea only if there is convincing
evidence in its favor. Sometimes, however, unequal distribution of
resources allows one group of scientists to dominate even if their ideas
are weak, or, more commonly, to bar other ideas that may complement their
own.
Is this what happened with postwar economics? Economists argue over this
question. Mainstreamers suggest that they gained dominance, because
their ideas of how to pursue scientific knowledge of the economy were
more attractive to all "serious" economists (losing sight of the circular
reasoning embodied in such an argument, but this is typical to many
practicing scientists of all sorts), and imply that had other approaches
offered better ways, they would have survived. Here I wish to step down
as a neutral sociologist of economics and re-emerge as an involved
participant. While it is not clear what happened after World War II, one
thing is sure: economists have not made a great discovery, nor have they
become more successful in predicting economic trends. But for reasons
that have yet to be studied, they adopted new tools-mathematical models
and econometric applications of statistics-and believed that in the
future these tools would yield far-reaching achievements (just to dispel
common views, this approach ascended to power despite the objections of
powerful institutionalist and anti-mathematical neoclassical economists
in the United States, and of Keynes' own pupils in Britain). During the
1950s they managed to push aside other ways of doing economics and
cleansed the major departments of institutionalists, Marxian, and
anti-mathematical neoclassicists, and then they used their academic
standing to take control of more sub-fields-law and economics, labor
economics, and so forth-and given the US global dominance, to defeat
other approaches in other parts of the world.
Saying that mathematical economics has not won due to its proved
scientific superiority does not mean that the triumphant mathematical
economists have not had significant achievements in understanding various
aspects of economic life, controlling certain elements of it, or
contributing insights into other social processes. From the point of
view of the new sociology of science it is virtually unimaginable that
hundreds of intelligent people-committed either to the pursuit of
knowledge and/or of their own academic standing-would not find
interesting things to tell us. The question is what has been lost; what
other ways to study the economy have been forfeited and what insights
have therefore never been reached. A related question is whose goals are
being served by the currently hegemonic approach, and whose goals are
not. The fact that economists do not address the issue we think are most
important does not mean that they do not succeed in answering other
people's needs.
The vacuum left by economists in the 1960s and 1970s started to be filled
very guardedly by neighboring disciplines during the 1980s and
increasingly in the 1990s. Psychologists have tested decision making
experimentally; political scientists have examined relationships between
various policies and macroeconomic performance; anthropologists have
examined more rigorously the economic organization of traditional
societies, and organization theorists studied the actual management of
big corporations. Economic sociology is among the more recent tribes to
encroach on the territories formerly deserted by economists and its goals
are more sweeping, running from macroeconomic policies and class
relations to consumer behavior and job search. That is, perhaps, why
economic sociologists are more preoccupied with the ties between their
field and economics. In a sense, economic sociology is seeking to be
what economics was until 1945.
What should economic sociology be like? What methods should be used in
studying the economy, and what issues should be investigated? I don't
believe that philosophers and sociologists of science can answer these
questions. The main lesson of the new sociology of science is that there
are plenty of ways to study the economy, and various ways can yield
different insights. Yes, we should search for what is the most promising
and most important topic to study, and we should search for what are the
best ways to understand that topic, and once we find these, we should
convince others. Thus, the sociology of science tells us that we must
continue to struggle not only with other disciplines but also among us.
This is not a battle cry. On the contrary, this is a call for pluralism,
because the sociology of science also tells us that even when we are
certain of our choices, we should not think that we have found The
Truth. We should therefore keep the door open and listen to others.
This ethical precept applies also to our relations with economics. We
should not shy away from disputes and criticism. They are not more
"scientific" then us, and while they have improved some techniques and
took them to new heights, they have also abandoned a large tract of land,
and, in this sense, have become less rigorous. We should therefore not
try to discredit their approach but instead understand what the
economists try to do (a project Daniel Breslau and I are engaged in at
present; see Breslau and Yonay 1999 for a first fruit from that study)
and then show what is missing in the economists' models. We should also
offer arguments about the practical use of our work versus economists'
work. Applying the law of diminishing returns, we can say that the
marginal productivity of adding more marginalist analyses would be rather
low. Economic sociologists have many things to study, things which
economists know nothing about and which are important to our ability to
understand the economy and use that knowledge to advance social goals;
the marginal productivity of these new fields should be much higher than
that of orthodox economics. We, economic sociologists, should do it
without any feeling of inferiority and without any need to justify the
scientific nature of our pursuits. What to do depends on one's goals and
values. It is not a matter of what is scientific, but a question of what
is more important given one's goals and interests.
But one more comment before I end. Many sociologists perceive economists
as the servants of power, and themselves as critics of power. My study
of the economic profession taught me, however, to be more careful.
Unlike what many sociologists think, mathematical economists did not
simply win because they served big business and conservative government.
At the late 40s and early 50s, institutionalists were very powerful and
well represented in many governmental offices and agencies. Furthermore,
many pioneering mathematical economists believed that their tools could
be used by governments to improve economic conditions and prevent
catastrophes like the Great Depression; their ideas were vehemently
opposed by business groups and by non-mathematical neoclassical
economists. It is only after they had gained hegemony in the American
academy that they entered the circles of power and gradually became less
and less inclined to favor government intervention. The causal
connection between these two processes has not been studied yet, although
it is not hard to suggest ideas of how the two processes reinforced each
other. In any case, economic sociologists should be warned: gaining more
attention from policy makers and from the public in general would change
the internal dynamics of economic sociology, and its relations with the
powers-that-be, as well.
II. Bibliography
Breslau, Daniel. 1998. In Search of the Unequivocal: The Political
Economy of Measurement in U.S. Labor Market Policy. Westport, CT: Praeger.
Breslau, Daniel and Yuval Yonay. 1999. "Beyond Metaphors: Mathematical
Models in Economics as Empirical Research." Science in Context 12(2): 317-32.
Evans, Robert. 1999. Macro-Economic Forecasting: A Sociological
Appraisal. London: Routledge.
Fourcade-Gourinchas, Marion Cécile. 1999. The National Trajectories of
Economic Knowledge: Discipline and Profession in the United States. Ph.D.
dissertation, Harvard University.
Gao, Bai. 1997. Economic Ideology and Japanese Industrial Policy:
Developmentalism from 1931 to 1965. New York: Cambridge University Press.
Knorr-Cetina, Karin D. 1999. Epistemic Cultures: How the Sciences Make
Knowledge. Cambridge: Harvard University Press.
Knorr-Cetina, Karin and Urs Bruegger. 2000. "The Market as an Object of
Attachment: Exploring Postsocial Relations in Financial Markets."
Canadian Journal of Sociology 25(2).
Latour, Bruno. 1987. Science in Action. Cambridge: Harvard University Press.
---. 1999. Pandora's Hope: Essays on the Reality of Science Studies.
Cambridge: Harvard University Press.
McCloskey, Deirdre N. 1998. The Rhetoric of Economics. 2nd ed. Madison:
The University of Wisconsin Press.
Morgan, Mary S. and Malcolm Rutherford (eds.). 1998. From Interwar
Pluralism to Postwar Neoclassicism: Annual Supplement to Volume 30,
History of Political economy. Duke University Press.
Pickering, Andrew. 1995. The Mangle of Practice. Chicago: University of
Chicago Press.
Tabb, William. 1999. Reconstructing Political Economy: The Great Divide
in Economic Thought. London: Routledge.
Tugwell, Rexford G. (ed.). The Trend of Economics. New York: A. A. Knoff.
Yonay, Yuval P. 1998. The Struggle over the Soul of Economics:
Institutionalist and Neoclassical Economists in America between the Wars.
Princeton: Princeton University Press.
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