Economics: Puzzles or Problems?
| Peter Klein |
I’ve enjoyed reading Wittgenstein’s Poker: The Story of a Ten-Minute Argument Between Two Great Philosophers, an engaging account of the famous “poker incident” at which Ludwig Wittgenstein may or may not have threatened a visiting Karl Popper with a fireplace poker during a 1946 meeting of Cambridge’s Moral Sciences Club. David Edmonds and John Eidinow perform a forensic reconstruction and conclude that Popper probably exaggerated what happened but that Wittgenstein did act like a boor. More important, Edmonds and Eidinow explore the background and aftermath and use the incident to anchor an elegant survey of twentieth-century philosophy putting Popper’s and Wittgenstein’s contributions in context.
(Incidentally, neither philosopher comes across as the sort of guy you’d want to spend an evening with. Popper appears petty and insecure, almost paranoid. As for Wittgenstein . . . I’m no philosopher, but I know what I like, and Wittgenstein — in his later incarnation, anyway — isn’t it. He’s revealed here as a spoiled brat, petulant and overbearing, and his linguistic approach to philosophy strikes me as little more than clever nonsense. In the spirit of full disclosure, I should mention that I first heard about the poker incident from Popper’s student W. W. Bartley, III, who was far from impartial. See The Fortunes of Liberalism, p. 179, footnote 5.)
At issue between Popper and Wittgenstein that night was the status of philosophy itself. Are there real philosophical problems, as Popper maintained, or merely “puzzles,” as Wittgenstein and his disciples insisted? Contemporary analytic philosophy has tended to gravitate toward the latter view, that philosophy is little more than word-play, a fun and interesting exercise but one with little bearing on the “big questions” of life.
What about economics? Over the last couple of decades economists have paid less attention to the “big questions” of unemployment, inflation, capitalism versus socialism, the quality of life, and so on, focusing instead on finding clever solutions to small, empirical puzzles — call it the “Freakonomics approach.” There are exceptions to this trend — the literature on institutions and economic growth, for example — but on the whole economists seem more interested in puzzles than problems.
Is this a bad thing? On the one hand, it must be admitted that prior attempts to tackle the “big questions” were not entirely successful. (Consider the Keynesian macro models of the 1960s and 1970s — Requiescant In Pace!) On the other hand, as contemporary microeconomic theory has become more flexible and realistic, better able to explain a variety of empirical phenomena, it has arguably become too elastic, and may even be “losing its spine,” as Nicolai has argued. (The Folk Theorem doesn’t quite say that “anything goes,” but it comes awfully close.) Bright young scholars such as Steve Levitt, Austan Goolsbee, Matt Rabin, and Tyler Cowen do a terrific job illuminating various facets of everyday life, but their interests seem far removed from those that occupied earlier generations of economists.
Comments are invited!
Update: I should have referenced a January 2006 NY Times piece by Louis Uchitelle, “Students are Leaving the Politics Out of Economics,” which opens: Taking as a model the research techniques that Steven D. Levitt displays in his best-selling book, ”Freakonomics,” graduate students in economics are focusing on small insights about the economy rather than broad theories that explain how the overall system works.