----------------- HES POSTING ----------------- [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. ------------ FOOTER TO HES POSTING ------------ For information, send the message "info HES" to [log in to unmask]