While Veblen might answer yes, I would finesse the question. Whether the science of economics can ever develop a blueprint that is useful  is a separate question than the one I addressed, and I am agnostic about it. I think it is reasonable to have a few economists exploring blueprints, but that at least in macro, the blueprints aren't ready for prime time, and won't be for a long time. But scientific knowledge is continually advancing, and as it improves the models scientists develop may be more use in macro policy than they are now.   

What I am questioning is the tendency we have in economics to think of applied economics as applied economic science, and not as applied economics (which includes science, but also includes knowledge gathered in other ways--such as case studies the study of history, sensibility, knowledge of institutions, etc.) I see the many various types of knowledge as helping provide pieces to the puzzle. 

 My argument has been that the modern macro modeling methodology which holds that all policy advice should be filtered through DSGE models (the macro variation of general equilibrium models) since those are the best science we have makes little sense.  Yet, that is the prevailing view, expressed by Chari and Kehoe, Bernanke, and most macro modern economists (Robert Solow excepted).  The acceptance of this methodology has policy consequences. It has led Federal Reserve banks to put significant resources into building such models and, more and more,  they are basing policy on them--albeit after they are highly massaged.  My argument is that while DSGE  models may be the best scientific models we have, they are not yet ready to serve as a single filter for all applied macroeconomics. While one can massage them to "fit" the past events, that means little in terms of using them for dealing with the future.  


David Colander
CAJ Distinguished Professor of Economics
Department of Economics
Middlebury College
Middlebury, Vermont, 05753
(802-443-5302)

-----Original Message-----
From: Societies for the History of Economics [mailto:[log in to unmask]] On Behalf Of Sumitra Shah
Sent: Thursday, July 14, 2011 10:46 AM
To: [log in to unmask]
Subject: Re: [SHOE] GET and gothic cathedrals

David Colander:

"I see the macroeconomic policy problem differently. In my version of this joke, the economist loses.
The reason why is that in the building process, the builders continually adjusted the plans, creating
the gerrymandered system that is our economy. They created a variety of different blueprints,
replacing one set with another, and they never marked down their adjustments on the blueprints.
So the standard economist reading from the blueprints got the wrong answer."




I apologize if this takes one farther from the original query. But in his separation of theory from policy, David Colander's description of the actual building of cathedrals and the role of blueprints reminded me of couple of comments by Warren Samuels in his reflections on Veblen in the Journal of Economic Issues (1995). He writes:

"Veblen was the great demystyfier. He emphasized that human arrangements are in a process of Darwinian evolutionary flux., without ultimate ontological causation, meaning, or normative status."

"The reason why Veblen provided no blueprint for the future, aside from some relatively innocent but informed speculations, is that he believed that the future would have to be worked out, that one could not set it forth once and for all time. Veblen was a true existentialist, pragmatist, instrumentalist, and evolutionist; the world of future would have to be made by those who applied their tests of workability and so on, not by some armchair intellectual."

A far cry from the GET and gothic cathedrals. And if I understand Matías Vernengo's question: "Or are you just saying that no general theory (no blueprint) is ever possible, and we have only case studies?" Veblen answer would be a YES to the first part, no?

Sumitra Shah