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Published by EH.NET (February 2003) 
 
David Colander, _The Lost Art of Economics: Essays on Economics and the 
Economics Profession_. Cheltenham, UK and Northampton, MA: Edward Elgar, 
2001. x + 203 pp. $80 (hardcover), ISBN: 1-84064-694-2. 
 
Reviewed for EH.NET by Lall B. Ramrattan, Department of Economics, 
University of California - Davis. <[log in to unmask]> 
 
 
Although the author of this book expresses an artistic partiality for 
economics, his message is to call a spade a spade, namely "not to present 
scientific economic arguments for more than what they are" (p. 11). The 
methodology of the book is presented in almost syllogistic form on page 10, 
built on a functional foundation, and mapped onto the domain of "how 
economists actually go about their work, and where they get their 
directions from." 
 
Art is defined as "using one's intuition to gain insight, and imagination 
in expressing the insights one has gained through the best means possible. 
Purposeful people are naturally artists" (p. 10). As economizing behavior 
is purposeful, science will have a limiting role. Within the author's 
framework, science is limited to the role of gaining and storing insights. 
Standard science stores insights in efficient mathematical form, and 
conveys insights to others. It fails in some areas that do not lend 
themselves easily to empirical verifications; particularly, in the areas of 
complex systems such as economics and the social sciences. 
 
As a first examination of the author's theses, we may note, from an 
ontological point of view, that economists are not all artistically 
inclined. Economists are inclined to take a position anywhere between 
belief and science. The Austrian school, for instance, are "Human Action" 
or "praxeologically" inclined, a methodology Friedman set about to attack 
with his brand of positive economics. A second problem from a common sense 
or pragmatic position is that knowledge may be a limiting case of belief: 
what we believe in we can come to know. However, superiority over our 
ancestors in science and culture does not guarantee us being more artistic. 
A third problem is that from a research or epistemological point of view, 
science may create art. For example, a recent CBS 60 minutes report showed 
that the invention of the mirror is largely responsible for the enhancement 
of art. A fourth problem from a mystical point of view is that art might be 
an experience good for the economist, with no guarantee that the intuition 
necessary for better economic policies will develop. Because the author's 
position is not clear from the definition he offers of art, we shall try to 
further understand it from a more logical viewpoint. 
 
A distinguishing feature of Colander's methodological position is his 
implicit insistence that normative and positive are contrary rather than 
contradictory terms. According to P. F. Strawson, when one can add an 
inconsistent statement (art) to two statements that are inconsistent with 
each other (normative and positive), then the statements are contrary 
(Strawson, 1952, 16). Colander's system is analogous to the analysis of day 
and night but not without twilight, and appears to be the way its framer, 
J.N. Keynes, laid out its initial architecture for Political Economy. He is 
clear about the position of art as "establishing a buffer between positive 
economics and normative judgments" (p. 60). 
 
Colander argues for keeping the three-part system of Keynes, but for 
adjusting it towards a more realistic balance favoring art. Metaphorically 
speaking, if the three party system can be laid out on the three corners of 
the Jacob Marschak preference triangle as modified by Machina (1987), then 
the way modern economists have unfolded their methodological preferences 
has resulted in the collapse of the side that represents art. However, it 
is not clear whether such a situation represents a degeneration of the 
Keynesian methodology, which the author seeks to make more progressive. One 
must not forget that the father of positivism, Auguste Comte, thought of 
progress in a positive sense as a movement from childhood to manhood, from 
religion through metaphysics to science, and that Friedman might just be 
following that hunch. In terms of the metaphor, the three vertices can 
degenerate, and the suppression of the third vertex, representing art, can 
attempt to make the Keynesian program progressive. 
 
Another approach to understanding Colander's methodology is to contrast it 
with others. The author makes important contrasts with the methodology of 
Thomas Mayer (pp. 51-53). We are told that Mayer emphasizes, "empirical 
science economics," while the author emphasizes "applied policy economics." 
Mayer laments "the notion of an intellectual hierarchy with formal theory 
on top" (Mayer, p. ix), while the author "sees such abstract work as 
necessary to refine theoretical insights" (p. 52). Mayer's approach is akin 
to "fingertip economics," embedded in a "single semi-formal methodology" in 
which the art and positive economics are intertwined, whereas Colander's 
methodology drives a wedge, creating a separating plane between art and 
positive economics. But like practitioners of the same paradigm, the two 
views are dominated with more agreements over disagreement. 
 
It is tempting to contrast the text with the paradigmatic and research 
program methodologies of Kuhn and Lakatos, respectively. Briefly, art as 
used by the author in the tripartite system has often been taken as 
equivalent to the words "practical," "precepts," or "instrumental" 
(Machlup, pp. 489, 506). If those words can be used interchangeably, then 
it would be incorrect to state that the use of instrumentalism is absent in 
modern policy economics. Policy models, such as advocated by Tinbergen and 
others will embody the tripartite distinction with significant weight given 
to each. This point can be further elucidated with a few ninth-grade 
algebraic terminologies. Consider these two system equations: 
 
        Target = d I + eE +f S          (1) 
        Trend = a I + bE + c S          (2) 
 
where I, E, and S are instruments to achieve a target return, and some 
trend. Given appropriate values for the parameters, we can state that 
national trends should be arrested by about x-percent to attain over the 
long-term a target y-percent growth. From the art point of view, the two 
equations with three instruments (I, E, and S) are overdetermined. For 
joint policy effects, we can take one variable as given. But that still 
would not help. Assuming we take the effects of S as fixed, then another 
problem surfaces, viz., db - ea = 0, since the coefficients for I and E in 
the two policy equations are collinear, using the coefficients from our 
model. Similar problems arise if I or E, instead of S, is fixed. Therefore, 
no simultaneous policy effects in line with the two equations are allowed. 
 
The use of the term "instrumental" instead of "art" may not warrant the 
severe charges the author has leveled against Friedman. Friedman would 
legislate rules to act as instruments in the case of regulating the money 
supply, an area in which he is more influential than scientific. In other 
cases, he would use trivial instrumental examples such as the dumping of 
money in a community by a helicopter (Friedman, 1969, p. 4). Colander 
should take into account that Friedman was standing on the shoulder of 
giants such as David Hume. In a recent good text on methodology, Kevin 
Hoover reminded us of such a foundation set by the many Humean statements 
such as "Were all the gold in ENGLAND annihilated at once," or if "every 
man in GREAT BRITAIN should have five pounds slipt into his pocket in one 
night," or suppose that "four-fifths of all the money in GREAT BRITAIN to 
be annihilated in one night"(Hume, 1974, pp. 296-311 cited in Hoover 2001, 
p. 5). In the hard sciences, such experiments were maintained and 
popularized in science by Albert Einstein himself under the name 
_Gedankenexperiment_. We should also state that Friedman is very abstract 
and scientific as can be his work on the permanent income hypothesis. 
Therefore, it is difficult to appreciate Colander's point of view that 
"Friedman's methodology involves ... a lack of interest in doing abstract 
theory" (p. 34). 
 
The five axioms Colander offers are in a budding state. They are not 
parallel to the axioms of Savage or Von Neumann. In the author's own words, 
they are "methodological rules" not intended to be "binding constraints." 
It is up to the methodologists whether to nip these rules in the bud, or 
nurture them for a while. J.M. Keynes gave us a tri-part system that is 
still alive and well today. Colander's restatement of them is likely to 
contribute to their progressive lives. This book is a must reading for 
serious students of economic thought. 
 
References: 
 
Hume, David, _Essays: Moral, Political, and Literary_, edited by Eugene F. 
Miller (Indianapolis: Liberty Classics, 1954, edited 1985). 
 
Friedman, Milton, _The Optimum Quantity of Money and Other Essays_ 
(Chicago: Aldine Publishing Company, 1969). 
 
Hoover, Kevin D., _Causality in Macroeconomics_ (New York: Cambridge 
University Press, 2001) 
 
Machina, Mark, J., "Choice under Uncertainty: Problems Solved and 
Unsolved," _Journal of Economic Perspectives_, Vol. 1, No. 1, Summer 1987, 
121-154. 
 
Machlup, Fritz, _Methodology of Economics and Other Social Sciences_ (New 
York: Academic Press, 1978) 
 
Mayer, Thomas, _Truth versus Precision in Economics_ (Northampton, MA: 
Edward Elgar, 1993) 
 
Strawson, P. F., _Introduction to Logical Theory_ (London: Methuen, & Co., 
1952). 
 
 
Lall Ramrattan is the co-author of "The European Monetary Union vs. U.S.A., 
Cooperation and Competition: An Examination of Welfare Benefits," (with 
Michael Szenberg and Cathyann Tully) in J. Jay Choi and Jeff Wrase, 
editors, _European Monetary Union and Capital Markets_, Volume 2 of the 
_International Finance Review_ (Holland: Elsevier: JAI Press, 2001). He has 
published in many fields of economics in a variety of journals. He is a 
lecturer at the Department of Economics at UC-Davis. 
 
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