the very lowest common denominator

excessive division of intellectual labour

One of the reasons why arguing with “mainstream” economists is frustrating is that “mainstream” economics is so absolutely huge an intellectual endeavour that there is basically nothing you can say about it that’s going to be unqualifiedly true.  So, you might think that “mainstream economics” ignores this or underestimates that or has logically inconsistent assumptions about t’other … and immediately, you find yourself liberally showered with links to working papers demonstrating that “mainstream economics” has been thinking about and modelling this very phenomenon for decades.

This is a great strength of economics as a subject, and in my view it will, in the end, be the salvation of it as a social science, after the massive intellectual reckoning comes with all its problems and fallacies.  It’s just so big and so general that there is always, somewhere out there, an economist’s way of looking at almost any question.  It really is a much more impressive and useful way of thinking about the world than the stereotypical “Economics 101” beloved of internet bores.

But you shouldn’t let yourself be intimidated by it.  Because although it has a certain degree of truth to it, the statement that “mainstream economics has enough variety in its thinking and analysis to meet almost any challenge of the real world” has a lot more important falsity to it.  Basically, as a claim about how economics really works as a social phenomenon, it’s such a massive motte-and-bailey that it ought to have a gift shop selling Historic Wales tea towels.

The thing is that economics gains this variety by having a lot more headcount than competing social sciences, and by being very specialised.  And that means that while “economics” as a subject can be so much more sophisticated and realistic, if you randomly select an economist and randomly select an economics topic, your most likely outcome is that you’ll be dealing with a level of expertise and sophistication that is exactly, identically equal to a half-remembered undergraduate textbook answer.

A necessary consequence of the division of intellectual labour is that outside their particular area of specialisation, economists’ understanding often falls away very sharply indeed.  In my experience, a solid majority of microeconomists believe something like the loanable funds theory of the interest rate.  Anyone who isn’t specialised in labour economics is very likely indeed to model employment as if it was the supply and demand for a good; it’s quite unusual for a non-specialist to understand that the cost of housing is rent rather than house prices.  And so on. 

This isn’t by any means a problem restricted to academia.  About ten years ago, we were all assured that central banks and economic forecasters were all hard at work on models which included the banking sector.  And they were, for a while, but data is hard to get, revising a forecasting model is a big task, and people have careers to get on with.  So for practical purposes, the people responsible for setting monetary policy still don’t really know much more about financial markets than they did in 2005.

Obviously, there are exceptions to even this rule, please don’t send me angry letters, etc.  But it does seem to me that although the peaks of intellectual achievement in economics are high, the base line of knowledge is often surprisingly low, and this isn’t recognised in practice. 

I’d put it this way; if you asked an oncologist to treat high blood pressure, they would most likely have enough general knowledge to make a sensible decision.  If you asked a marine engineer to design a road tunnel, they would say they weren’t qualified to do so.  If you ask a lawyer to give an opinion on a politically controversial subject that’s way outside their area of expertise, then … ok, bad example, economists are not the only ones I agree.

But in economics, you all too often come across people who don’t have a sufficient baseline of knowledge outside their specialty, but who either aren’t aware of this or don’t see it as a reason not to give advice.  Ironically, I think that at the root of this problem is a lack of respect for economics; they know that their own speciality is complicated, fragile and beset by special cases, but their perception of all the rest of economics is that it’s pretty easy stuff which can be figured out from first principles in a coffee break with a few simple axioms.

Which means that in my view, there’s a kind of hierarchy.  If you can find one, a professional economist with direct research experience, or past personal involvement with a policy issue is likely to understand it pretty well.  If one of these isn’t available (and you need to be pretty strict with your definition of the specific issue you’re interested in; lots of things seem more relevant than they are), then in my experience you’re much better off listening to a generalist or newspaper commentator who will at least hopefully have glanced at the facts rather than trying to do it all on the back of an envelope.