Science is miraculously improbable. To work, it must fight against a deep human instinct — our desire to conform.
As social animals, humans are built to do as others do. Why? Presumably because it’s advantageous. In our evolutionary past, conformist groups beat out non-conformist groups. And so here we sit, a conformist species.
But while evolutionarily successful, conformity comes with a big problem: it needn’t respect the scientific truth. Conformity can be successful, yet be based on ideas that are false. Probably the best example of this seeming contradiction is religion. It’s a successful system of conformity whose foundations are manifestly false.
So here’s where science comes in. The role of science, I’ll argue, is to keep conformity in line with the truth. Scientists hold ideas up to evidence, and discard those that don’t withstand scrutiny.
This is a simple process, in principle. But in practice, it can be messy. Sometimes false ideas get entrenched and science goes down the wrong path. To put science back on track, a special type of scientist is needed — a revolutionary scientist.
In this two-part post, I’m going to explore the challenges of doing revolutionary science. The revolutionary scientist has the thankless task of declaring that everyone else is wrong. It’s a job that few people are willing to do. And yet it must be done. So let’s celebrate revolutionary science and think about ways to get more people to do it.
Normal vs. revolutionary science
The philosopher Thomas Kuhn argued that there are two kinds of science: normal and revolutionary. Normal science is about refining the edges of an accepted theory. Revolutionary science, in contrast, is about taking an accepted theory and tearing it to shreds. [1]
Most scientists do normal science. And that’s a good thing. Science is an iterative process that builds on existing knowledge. So if our existing knowledge is secure, doing science means filling in small cracks. We should praise such artisanal work.
But what happens when our existing knowledge is wrong? Then doing normal science isn’t praiseworthy. No, it’s actually an insidious waste of time and resources. When the foundations of our knowledge are wrong, doing normal science amounts to turd polishing.
Unfortunately, scientific turd polishing happens more than we’d like to think. Economics is a case in point. Most economists take the principles of neoclassical economics and refine how they’re applied. With each refinement, economists proclaim that they’ve advanced science.
Sadly, the truth is less sanguine. The foundations of neoclassical economics are, to put it bluntly, bullshit. So each refined neoclassical model isn’t an advancement. It’s a new layer of gloss on the neoclassical turd.
To fix economics, we need to stop polishing the neoclassical turd. We need to throw neoclassical economics in the garbage and replace it with something better. In short, we need to do revolutionary science.
This solution seems simple enough. But it’s easier said than done. For over a century, heterodox economists have tried to take down the neoclassical juggernaut. And yet the beast lumbers on. While it’s tempting to blame heterodox economists for this failure, the truth is that doing revolutionary science is always an uphill battle. Why? Because it cuts against a core human instinct. As social animals, we have a strong instinct to conform.
When we do revolutionary science, then, we’re not just fighting a false scientific theory. We’re fighting a deep human instinct. This makes doing revolutionary science doubly hard. Not only must the revolutionary scientist resist their own conformist instincts, they must convince others to do so as well. That’s a tall order. Faced with new ideas that challenge our core beliefs, most people react swiftly and predictably. We punish the messenger.
So the main challenge of doing revolutionary science isn’t scientific. It’s sociological. The revolutionary scientist must think differently than others. And they must be willing to be punished for it. No wonder revolutionary scientists are rare. No wonder entrenched theories are so difficult to uproot.
Sociality as conformity
To understand why doing revolutionary science is so difficult, let’s look at the human instinct to conform. I’m going to argue that conformity is a fundamental part of sociality.
Skeptical of this idea? To ease your skepticism, let’s play a game. When someone says the word ‘conformity’ to you, what pops into your head? Personally, I think of a North Korean military parade. Have you ever seen one? They’re mesmorizing — thousands of identically-dressed soldiers marching in lockstep. And the march itself is bizarre — a hybrid of a goose step and a jig. Seriously, who came up with this?
OK, what’s the point of this game? It’s not about the outrageous act of conformity that popped into your head. No, it’s about what you didn’t think about. I’ll bet you didn’t think of language as an act of conformity. And yet it is. Without conformity, language would be impossible.
Think about the rules of vocabulary and syntax. They’re nothing but a system of conformity. When we don’t conform to these rules, we can’t communicate with each other. It’s called speaking a different language.
That we don’t consider language an act of conformity is revealing. It suggests that when it comes to language, the instinct to conform is so strong that we’re not aware we’re doing it. Put another way, we don’t have the ability to rebel against language. Learning disabilities aside, children never refuse to learn the language spoken around them. Our instinct to conform is too strong.
Other types of conformity are less instinctive, but still an important part of being human. All state societies enforce conformity to the law. Capitalist societies enforce conformity to the rules of trade. Religions enforce conformity to dogmas. I could go on, but you get the point. Conformity is a fundamental part of our sociality.
The advantages of conformity
Humans are not alone in our conformity. It’s a trait we share (at least to some extent) with all social species. So why do social animals conform? To answer this question we ask: cui bono? Who benefits?
Evolutionary theory gives us three possibilities:
- Conformity benefits no one
- Conformity benefits individuals
- Conformity benefits groups
Possibility 1: Conformity benefits no one
It seems odd to suppose that no one benefits from conformity. But this is possible.
Not all traits are adaptive. Some traits can be what Stephen Jay Gould and Richard Lewontin called ‘evolutionary spandrels’. Spandrels are the byproduct of selection for some other trait. Gould argued that many of our mental properties (like the ability to do math) are actually spandrels:
Natural selection made the human brain big, but most of our mental properties and potentials may be spandrels – that is, nonadaptive side consequences of building a device with such structural complexity.
(Stephen Jay Gould in Evolution: The Pleasures of Pluralism)
Thinking of mental processes as spandrels is interesting. But I’m skeptical that conformity is an evolutionary byproduct. If anything, selection for conformity created spandrels.
Consider the work of Soviet zooligist Dmitry Belyayev. Over many years, Belyayev selectively bred red foxes for tameness. In each generation, he selected the foxes that were most friendly to humans. Although Belyayev selected a behavioral trait, he found that over time the foxes changed physically. The foxes’ ears grew floppy. Their brains grew smaller. Their faces grew ‘cuter’. In short, the foxes acquired all the physical traits that we now call ‘domestication syndrome’.
Interestingly, humans share many of these traits. Compared to other (extinct) hominid species, our heads are smaller and our brow ridges are less pronounced. These features suggest that we domesticated ourselves.
Self domestication seems like something out of the The Twilight Zone. Yet scientists are seriously considering this hypothesis. If true, it means that many of our physical features are spandrels shaped by selection for sociality. In other words, we look like we do because we conform.
This idea remains controversial. But at the very least, it suggests that conformity is adaptive.
Possibility 2: Conformity benefits individuals
Next on our cui bono list are individuals. Is conformity an individual-level adaptation?
The answer is no.
To be an individual-level adaptation, conformity must be the best strategy for individuals. The problem is that this isn’t true. When you’re surrounded by conformists, it’s actually best to be a rebel.
Here’s an example. Imagine a society in which everyone is utterly conformist. We’ll call this ‘Conformist Land’. In Conformist Land, everyone pays their taxes. In fact, people are so conformist that there’s no punishment for not paying taxes. Nobody’s ever done that before!
Enter a Machiavellian named Bob. Upon moving to Conformist Land, Bob stops paying his taxes. When this defiance goes unpunished, Bob gets bolder. He opens an accounting firm. Soon Bob is doing everyone’s taxes. But instead of transferring the tax to the government, Bob keeps the money for himself. He lives like a king and never gets caught.
Clearly, then, conformity isn’t always a good strategy for individuals. When you’re surrounded by conformists, it pays to be a conniving jerk. So conformity can’t be an individual-level adaptation.
Possibility 3: Conformity benefits groups
Last on our cui bono list are groups. It’s here that we see clear benefits to conformity.
To see these benefits, we’ll look at the most social of animals — the cells in your body. Suppose that two people — Alice and Bob — are running from a lion. Alice has normal muscle cells that are highly conformist. When Alice’s brain says run, her muscle cells fire collectively.
Bob, on the other hand, has muscle cells that are non-conformist. When Bob’s brain says run, his muscle cells say: “We’ll fire when we damn-well want to!” So when Bob tries to run, he collapses in a heap.
Who’s better adapted? Obviously Alice. Bob is lion fodder.
So conformity is advantageous for groups of cells (i.e your body). It’s also advantageous for groups of people. This conformist advantage is most poignant in warfare. Armies that attack as a cohesive whole tend to beat armies that don’t. For a book-length exposition of this principle, see Peter Turchin’s book Ultrasociety.
So conformity, it seems, is a group-level adaption. To paraphrase E.O. Wilson and David Sloan Wilson, non-conformists beat conformists within groups. But conformist groups beat non-conformist groups.
The downsides of conformity
Just because conformity has evolved, however, doesn’t mean that it’s always beneficial. We can think of conformity as obeying a set of rules. Conformity is bad when the rules are bad. Here’s three ways it can happen.
- The rules are bad for the group
- The rules benefit a subgroup (not the whole group)
- The rules are scientifically false
Pernicious Conformity Type 1: When the rules are bad for the group
The whole point of conformity is to confer a group advantage. If it doesn’t do this, it’s pernicious.
To understand pernicious conformity, we’ll return to our multicellular friends, Alice and Bob. Imagine again that Alice has normal cells and Bob has abnormal cells. But this time, Bob’s cells aren’t abnormal because they’re non-conformist. They’re abnormal because they conform to a bad rule. Bob’s cells ‘agree’ to get rid of the immune system. “We don’t need it,” they say, “so let’s get rid of it.”
Who’s better adapted? Clearly Alice. She gets a cold and has a runny nose. Bob gets a cold and dies. That’s conformity gone wrong.
Bad rules can undermine human groups in much the same way. The history of medicine, for instance, is littered with practices that killed patients. (Think of the practice of bloodletting.) In even more extreme cases, conformity can lead to group extermination. (Think of the odd practice of mass suicide.)
Although pernicious conformity can be spectacular, it’s often quite subtle. Take fashion. As most males do, I’m currently wearing pants. But a thousand years ago men wore robes or kilts.
Why the switch? Peter Turchin argues that it stems from riding horses (see his two-part post here and here). As mounted warfare spread, pants became the norm. Why? Because riding a horse is uncomfortable with a bare ass. So if your society wages mounted war, the practice of wearing robes and kilts is pernicious (if only for your underside).
Pernicious Conformity Type 2: When the rules benefit a subgroup, not the whole group
Another way that conformity can go wrong is if it benefits a subgroup more than the whole group.
This type of conformity is rampant in human society. Take the ancient practice of endowing kings with divine right. It’s easy to see how this benefited kings. (Think of the opulence of Versailles). But it’s hard to see how divine right benefited the rest of the population. Fortunately (for modern observers), people eventually saw through the ruse and got rid of divine kingship. While the results weren’t always ideal (think of the Reign of Terror), few would deny that we’re better off without kings.
A more comical example of good-for-a-subgroup conformity comes from the film Idiocracy. The film imagines a dystopian future in which US farmers irrigate their crops with a sports drink called ‘Brawndo’. Not surprisingly, nothing much grows.
So why do farmers do something that’s so clearly bad for them? Because Brawndo’s parent corporation owns the regulatory agencies! Brawndo sets the rules. And, not surprisingly, the rules are bad for everyone but Brawndo. It’s good-for-a-subgroup conformity at its most absurd. (Sadly, the Trumpian US seems headed for a similar type of kleptocracy.)
So just because conformity exists doesn’t mean that it’s good for a whole society. Conformity benefits groups, yes. But which group? I’d wager that a lot of conformity helps elites, not the average person.
Pernicious Conformity Type 3: When the rules are scientifically false
The last way conformity can go wrong is if it locks in ideas that are false. Note that this isn’t an evolutionary downside. It’s a scientific one.
Let me explain.
Science and evolution are similar in many ways. Both are iterative processes that build on what’s come before. And both separate what ‘works’ from what doesn’t. Yet science differs from evolution in one key way. Science cares about the truth. Evolution does not.
Often what ‘works’ in evolutionary terms is, in scientific terms, a massive lie. Take color vision. It allows organisms to see features of their environment that would be otherwise invisible. So color vision is obviously beneficial. And yet it’s a lie. Color, as we perceive it, doesn’t exist. It’s a mental fiction — the brain’s interpretation of different wavelengths of light.
So biological evolution can (and does) diverge from the scientific truth. The same is true of cultural evolution. Put simply, ideas can be useful but false. Take religion. It’s littered with falsehoods. (My favorite is Jonah living in a whale.) But despite these falsehoods, religion persists. Why?
Atheists like Richard Dawkins and Daniel Dennett have one idea. They think that religion is a thought virus to which the human mind is (unfortunately) predisposed. But the biologist David Sloan Wilson has a different idea — one that casts religion in a more positive light.
In his book Darwin’s Cathedral, Wilson admits that religions are riddled with falsehoods. But he insists religions are beneficial in one key respect — they make groups cohesive. Religions give us a compelling narrative for why we should conform.
If you think about human psychology, this isn’t surprising. What motivates us to conform isn’t the appeal to evidence. It’s a good story. Spin a good yarn and you’ll have people begging to follow you.
Good military leaders know this intuitively. To rally the troops, they don’t appeal to evidence. If they did it might sound like this:
The Scientific Rallying Cry
Soldiers! We are only distantly related. But evolutionary theory tells us that, despite our differences, it is beneficial to unite. Yes, many of you will die. But if we fight together, the group will survive. And in evolutionary terms, that’s what matters. So charge now to your imminent death, but take comfort knowing that science is on our side.
Faced with imminent death, would you want to hear this speech? I wouldn’t. The scientific truth just doesn’t make a compelling story. It’s not worth dying for.
Good military leaders don’t appeal to evidence. They appeal to emotion. And there’s no better way to evoke emotion than to put God on your side:
The Religious Rallying Cry
Brothers! Our enemies have stolen our land and defiled the Earth with their godless ways. For this, God has willed they must die. So let us do God’s bidding. To battle! May the martyred be reunited in heaven!
I admit that I’m not very good at writing rallying cries (I’m a scientist after all). Still, I think the religious rallying cry is the more potent one. It’s what I’d rather hear if I was on the front line.
And there’s the rub. The ideas that make us conform are often scientific falsehoods. To a scientist like me, this is disturbing. I’d like to think that cultural evolution is synonymous with scientific progress. But it’s not.
Adding the truth as a cultural selection criteria
Cultural evolution is the search for types of conformity that ‘work’. And by ‘work’, I mean beat other types of conformity. It’s a blind process. Only rarely will it respect the scientific truth.
It’s a wonder, then, that we have science at all. But we do, and we should be thankful for it. Science works by adding the truth as a selection criteria for cultural evolution. Science kills ideas that don’t respect evidence. If all works well, cultural evolution equates with scientific progress.
Science, however, isn’t perfect. Sometimes false ideas become entrenched. When they do, a special kind of scientist is needed — someone willing to uproot an entrenched system of conformity. Enter the revolutionary scientist.
We’ll talk more about this person in Part 2. Stay tuned.
Support this blog
Economics from the Top Down is where I share my ideas for how to create a better economics. If you liked this post, consider becoming a patron. You’ll help me continue my research, and continue to share it with readers like you.
Stay updated
Sign up to get email updates from this blog.
This work is licensed under a Creative Commons Attribution 4.0 License. You can use/share it anyway you want, provided you attribute it to me (Blair Fix) and link to Economics from the Top Down.
Notes
Sometimes, though, this conservative approach doesn’t work. If the theory you’re replacing is garbage, then it should be torn to shreds. Copernicus, for instance, didn’t make his heliocentric model of the solar system ‘reduce’ (in some limit) to the geocentric model. No, Copernicus boldly declared that the geocentric model was bullshit.
The same bold action is needed in economics. We need to tear neoclassical economics to shreds and hope future generations forget it existed.
[Cover image: Wikimedia Commons]
Another good post Blair and a subject that I have been pondering a lot lately. Is it correct to think of all knowledge as mental models? So is there ever truth or due to scientific advances just a better fit between the current shared mental model and reality. Language as a shared mental model seems reasonable to me. Work in the fields of psychology and artificial intelligence not doubt the place to go for insights.
Can we can think of mathematics as as a kind of language? People appear to discover new mathematics, which gives an impression of a mathematical reality to be found, but maybe this is illusory, its just a refinement of an unusual kind of language?
A specific area of modelling that interests me is population genetics, its very mathematical, I believe the concepts of the genotype and phenotype arise from this model. The phenotype being the measured expression of the genoype in specific environments. Yet I now wonder if just maybe is like the neo-classical economist modellers that have placed who have placed too much emphasis on mathematics as proof of a reality (model) that in practice isn’t realistic? This is particularly so when you recall that the eugenics movement arose from this model of reality. Perhaps, not so much wrong, as much too much of an over simplification to be useful, and there-in lay a danger much the same as neo-classical economics and its apparent ‘proof’ of free-markets giving optimum outcomes.
Hi Steve,
Thanks for your comment. Lots to think about here. Let’s go through your points.
Philosophers of science have pondered this question for a long time. Here’s what I think. Science has to proceed as though there is an objective truth that can be discovered. But the reality is that we never know if a theory is ‘true’. The best we can say is that it fits the data better than an alternative theory. We also rely on heuristics like simplicity and consilience with other theories. So yes, I think science is aptly described by your statement that scientific advances are a better fit between the current shared mental model and reality.
Mathematics is certainly a language — a very powerful one. I tend to agree with Bertrand Russell, who concluded that mathematics was tautology. This sounds demeaning, but it’s not. Mathematics takes postulates and investigates their consequences. A mathematical proof shows that consequence B must follow from postulate A. In other words, A and B are related by a tautology.
This method is a powerful tool for reasoning, but may or may not say something about reality. Everything rests on the postulates themselves. We may prove, for instance, that the sum of the internal angles in a triangle sum to 180 degrees. But this assumes Euclidean (flat) geometry. But maybe we don’t live in flat space-time. If we don’t, the proof says nothing about reality.
The way I see it, math is important for investigating the consequences of a theory. We use math to take the theory’s assumptions and derive predictions. The predictions themselves are tautologies — they must follow from the theory’s assumptions. But that doesn’t mean the predictions are trivial. In school, I spent literally thousands of hours deriving predictions from Newton’s laws of motion. The predictions were not at all obvious. But they are nonetheless tautologies. The actual science is contained within Newton’s laws themselves, which are assumptions about reality.
I think there are apt parallels between biology and neoclassical economics. David Sloan Wilson talks about a wider trend (during the 1970s and 1980s) in all branches of science towards individualism. In both biology and the social sciences, people assumed that social structure had to follow from the machinations of individuals.
In biology, this manifested as a rejection of group selection, and a neglect of the role of culture. Obviously human behavior has a genetic component. But recent work suggests that phenotype variation caused by culture is far greater than phenotype variation caused by genetics: https://www.nature.com/articles/s41467-020-14416-8
There’s also a problem of causation here. In population genetics, we can reduce everything to simple equations that model the spread of genes. But these equations don’t really tell us why the genes are spreading. Are they spreading because of group advantage? Individual advantage? Some feedback between culture and genes? The equations don’t really tell us.
Eugenics makes similar mistakes. The assumption is that traits that we find desirable for a single individual will aggregate to make a better society. This is a fallacy caused by methodological individualism. It fails to recognize that the characteristics of a society are caused by the interaction of many different traits (both genetic and cultural). The consequence is that we basically have no idea what traits are ‘good’ or ‘bad’ until they interact with one another.
Hi Blair, thanks for such a detailed reply to my questions and thoughts.
Reflecting on individuality I have pondered the following:
If we extend this notion of science as creating a shared mental model of reality to knowledge in general, I have wondered if perhaps there is a good case for saying that individuality is a myth. If our mental model of reality, be it from scientific ‘knowledge’ or cultural ‘beliefs’ is essentially imprinted onto us by the environment in which we have lived our lives (family, media, schooling, reading,…) and our thoughts mysteriously derive from this model, where is the individuality? A somewhat sobering thing to contemplate, but I believe there is good evidence to support it from the observed behaviour of humans (cults, wars, hold of authority figures).
Or, from another more positive angle, by controlling out mental environment are we are essentially creating ourselves?
Hi Steve,
That’s something that I too think about. Given that so much of our thinking is driven by the ideas that we’ve inherited, to what extent can we even think for ourselves? It’s a common trope to say that scientists (especially social scientists) are products of their times. We can see this in hindsight as culture changes. But we can’t see it in the moment. We can’t separate ourselves from our own culture.
I think this is just a truth about social existence. It’s something that has benefits and downsides. Without a cultural inheritance, we’d have to reinvent the wheel every generation. So there could be no scientific progress. The downside is that the ideas we inherit needn’t be true. It’s the Catch-22 of social life.
Blair, I propose the following paragraph as a revolutionary-science approach to economics.
GDP is the measure of a nation’s PRODUCTIVE economy. GDP is the sum of household, business and government spending (and likewise the income of those sectors equals that spending, because ALL spending is someone else’s income). Our economy depends on household spending (2/3 of GDP). That spending is limited by household income (which comes only from those three sectors). Business provides that income to the extent demand (business opportunity) exists, and government provides the rest (by way of bookkeeping entries to household bank accounts). All that’s important to the economy is maintaining this flow, and with a fiat currency (whose value, by definition, depends ONLY on currency-users perception), there are no limits other than that perception.
I don’t believe that there’s any statement in that one-paragraph description that can be logically challenged. The reason I consider it a scientific approach is that all of the NIPA variables that constitute NGDP are well defined and measured (two qualities I believe are essential to “science”). I’ve postulated this description on a wide range of economist blogs (academic and financial, far-right to far-left) without challenge. Yet I see it as exposing many of the flaws (or misunderstandings) in neoclassical economics:
* that government spending does not require taxes or borrowing (as neither its borrowings nor its personal or business income or property taxes are included in GDP), yet GDP includes provision of all of its household’s wants/needs for goods and services.
* that an economy is really a “flow” (ie, an ongoing series of income/expenses) and that the “stock” (or “wealth”) view of an economy (ie, as an accumulation of assets/liabilities) is a fiction (ie, existing only in perception).
* that government can fully provide for all the needs of its citizens (ie, food, shelter, healthcare, education) without a private business sector or it can “encourage” (not “create”) a private sector to fulfill all or part of those needs.
* that much of what we think of as important to an economy (eg, the financial sector) is non-productive, little more than a giant gambling casino of little value to a nation’s populace (and of significant detriment in its encouragement of debt).
Reservation:
* I’ve omitted the import/export sector from the description, yet imports are included in household spending. If the world perceives the nation’s economy as “strong” (eg, NGDP appears stable and growing and/or a wide range of private businesses are actively participating) this should not affect the conclusions. However, it appears clear that what affects such perception and to what extent they can be controlled need to be explored.
Hi Ed,
Many interesting ideas in your comment. Here are my thoughts.
I’m personally hesitant to equate GDP with productivity. I think productivity is a subjective concept, and hence not easy to measure. I’d prefer the following:
This way we can say that unpaid household work is productive (I think it is). But it’s not paid.
This is true for the most part. But there are some exceptions. For instance the national accounts ‘impute’ an income that flows to home owners as a result of owning their house. Yet this income is fictitious — it is neither paid nor received by anyone. For the pitfalls of imputation, see this interesting paper called Imputing Away the Ladder: http://www.economicpolicyresearch.org/econ/2018/NSSR_WP_132018.pdf
Let’s discuss your principles.
I agree that the government spending needn’t require taxes or borrowing. This is a basic principle of Modern Monetary Theory that should be accepted by the economics profession. But we have a long way to go.
Agreed that the economy is a flow of resources. Stocks of ‘wealth’ are fictions in the sense that they have no inherent relation to material flows. But ‘fictions’ can have real consequences. Wealth is just an accounting principle — a symbolic claim on resources. As I see it, wealth is power.
Agreed. But I’m not sure how this follows from nominal GDP. It follows from history, as we know that 100% government employment is possible.
Again, I have reservations about the word ‘productive’. I’m not sure we can distinguish between productive and unproductive activity — at least not objectively. It’s a value decision.
I do think that the choice to include finance as a positive contributor to nominal GDP is dubious. The same goes for military spending.
I think that most of your points stand on their own. So I’m not sure we need to refer to the national accounts to make them, especially since the national accounts themselves are based on subjective accounting principles.
Anyway, I hope you find these thoughts useful.
Hi Ed,
I am not an economist but here are a few thoughts on GDP from my reading:
GDP is widely seen as a crude measure of economic activity as measured by money flow in the economy (or velocity of spending if the amount of currency in circulation is relatively static). Growth in GDP is good and shrinkage is bad, and one or other sector is growing or shrinking, is about all you can say,.
However, when economists talk about economic ‘growth’ they seem to me to talking about something different to the everyday use of the word growth. Growth in GDP is increased money being spent per unit of time. The everyday use of the word usually relates to physical things getting bigger (things grow while measures increase). We can have economic growth without anything real growing if the increase occurs in the services sector. To the extent that economic activity has negative consequences on the environment, this difference in perception is important. Economists say growth it good, many others say growth is bad.
If we want to be more targeted and are interested in the qualities of that growth/increase we need something better than GDP.. People talk of ‘well-being’ measures as a better alternative. New Zealand has introduced a well-being budget (https://www.budget.govt.nz/budget/2019/wellbeing/approach/index.htm) to this end.
@Blair. I’m assuming its ok to respond to another’s post on your blog. If you’d rather we didn’t, please say so.
@Steve. I’m not an economist either, so if I say anything incorrect here, I hope I’ll be corrected. GDP is spending (on finished goods/services) per unit of time (typically the past year). So growth in GDP is simply saying that current GDP is greater than the last GDP reported. Economists tend to equate greater GDP with greater standard-of-living and that’s somewhat true but, as Blair has explained, to try to quantify that in a meaningful and reliable measurement is impossible.
GDP is not as crude a measurement as you may think (and here I’m talking about NGDP (nominal GDP) – not RGDP (“real” GDP, which is what economists use when talking about “growth”). NGDP is compiled from hard data submitted by people and businesses. The IRS collects income data from people and income/expense data from businesses via their tax returns. BLS collects other data (like employment records) that businesses are legally required to file. And Census collects similar data from people via regular surveys and BEA from trade-association records which provide both additional data and some confirmational data.
So there’s plenty of good, hard, auditable data available to see what’s actually happening in the economy. And a methodology (an accounting system) has evolved from the Great Depression of the 1930s to try to give national governments better insights and understanding of their economy via a GDP with multiple sub-accounts. While far from perfect, the NIPA accounts are the best OBJECTIVE measurements we have of our economy. And while many would like a measurement that better conveys “well being”, that requires bringing more subjectivity into the measurement. While I could see some value in that (if it could be impartially administered), I’d prefer it to be a separate measure and not a further distortion of NGDP.
Ed,
Yes, by all means reply to other comments. I welcome the discussion.
Blair,
I’m using productive in the sense of being useful (to people, not necessarily to institutions). And I do see it as a value judgement. However, I see no harm or loss in measuring only a PART of what’s perceived as being useful to people. If unpaid household work was measurable, I’d want it included – but it isn’t and I’m hard-pressed to see what’s lost in not including it. Likewise I see no problem in imputing a rental income to homeowners – NIPA’s double-entry accounting provides (IMO) a sufficient check & balance to their GDP measurement (and mitigates their many other measurement faults).
I see the economy as just a gigantic business (as you appear to also). Like any business, it needs to be managed and accounting provides the ONLY tool by which it can be well-managed. I’ll assume you understand that the comptroller function is VITAL to a business, but if not, I’d like to discuss this further (as I’d like you not to under assess the power of accounting).
In your reference to the inclusion of finance in GDP, I assume you’re referring to the Fed’s FOFA program. I see that not just dubious, but a disaster! The instant we start thinking of “flows” as a difference in “stocks”, I believe we’ll have lost all sense of reality.
I’d like sometime to hear what you find useful (to people) of ANY part of the financial sector.
Blair, I hope you are safe and well in the current crisis.
Blair: “For over a century, heterodox economists have tried to take down the neoclassical juggernaut. And yet the beast lumbers on. While it’s tempting to blame heterodox economists for this failure, the truth is that doing revolutionary science is always an uphill battle”
No, the problem is that heterodox economists are mostly ineffective. If you want to replace neoclassical economics, the general population will applaud you at every turn. However, you need to do it, not just talk about doing it or complain about how hard it is. What you (collectively) are doing is the equivalent of a new electronics manufacturer blaming Apple for the new manufacturer’s own inability to build a working phone. You are being outcompeted. If you were a business, you would go bankrupt. Competition is at the heart of all progress. Economists are supposed to study competition. Why do you (collectively) not realise that it applies to you too?
I don’t see much non-conformity here. You seem to be conforming to many of the stereotypes of heterodox economists.
You see yourself as battling against an all-powerful neoclassical sect. This is wrong. Hardly anyone takes neoclassical academic economists seriously. What they say is either obvious (governments should spend more in a recession) or nonsense (perfect markets) or simple-minded (representative agents and other concepts that view everything as an average). They patronise the rest of the population and pretend that their own political biases represent “science”. You could be pushing at an open door if you stopped seeing the door as an immovable object.
You declare that economics is “science” without defining what you mean by that term or how we would recognise it. Why is studying WWI or WWII “history” but not “science” while studying The Great Depression is “science”? Why are lawyers not scientists when they deal with facts and evidence? I’d say the answer is that lawyer are advocating a course of action by emphasising some facts and ignoring others. However, is that not also what economists do? Best-practice in policymaking is called “evidence-based policymaking” rather than “scientific policy-making” because there is no objectively correct policy. All policies involve value judgements that create winners and losers. Why does that become “science” when economists are involved?
Even if I accept that parts of economics are (or could be) “science”, there are many different types of science with different quality criteria for success. Physics is mostly about mathematical models that predict the future; medicine is about understanding the operation of a system, and its components, and using that knowledge to diagnose, treat and, ideally, prevent problems with the system; geology is mostly about studying very specific aspects of the past. What type of science is economics and what are the quality criteria by which we should judge its success?
You declare that economists are “scientists” but there are other people who know more about specific aspects of the economy e.g. business, banking, stock markets, accounting, psychology, history. Why is it “science” if an economist writes down something that other people already know? Why are economists so isolationist in their behaviours?
One aspect of “science” that economists ignore is that science should be internally consistent. Let’s take an example. Start with the scientific law of the conservation of matter. This is true at any human scope and scale so we could write an accounting identity at the scope and scale of all physical products included in GDP such as:
Raw materials (used up) = Useful products (created) + Waste products (created).
I’d argue that this identity is still science. How do we get from there to economics? We attach a monetary value to the useful products term and assume that we can ignore the costs associated with the other two terms. As useful products are a good thing, we can then pursue policies that maximise the production of useful products. What could possibly go wrong – apart from driving many animal species to the point of extinction, pollution of the oceans with plastic, deforestation and climate change?!?! Why is this garbage regarded as “science”?
The one area where I agree with you is that conformity starts with language. However, consistent language is necessary to make progress in debating any ideas. Many of the problems in economics start from a failure to define terms unambiguously or from defining them inconsistently with their usage by the rest of society. One of the terms that is not defined is “science”.
Hi Jamie,
I define science in an expansive way. It includes anything that puts ideas in contact with evidence. By this definition, history is a science. But it’s not a very exact one. I’m not aware of any theory of history that makes good predictions.
Is the law a science? It certainly deals with facts and evidence. So in that sense, it’s scientific. But in other ways being a lawyer differs from being a scientist. Lawyers care only about convincing a jury or a judge of a persons’s guilt (or lack thereof). But as scientific lawyer would be interested in finding out the truth. Is the person guilty or not?
In your next comment, you take issue with the word ‘truth’ so let’s define it. Science, in an important sense, relies on naive realism. It assumes that there is an objective real world about which we can know facts. These facts constitute the ‘truth’.
Here’s an example. As far as we can tell, the truth is that the Earth revolves around the Sun.
The problem is that we can’t actually tell for certain if a fact is true. All we can do is compare ideas to evidence.
So lawyers don’t really care about the evidence in it’s own right. They care about how they can use the evidence to make a convincing case. I’m not objecting to them doing this … just pointing out that it’s different from science.
About your criticism of heterodox economists. Have you ever spent time in an economics department? You’d see how entrenched neoclassical economics is. Sure, lot’s of people ridicule it. But these people are usually not economists.
You suggest that heterodox economist need to compete in the marketplace of ideas. I accept that. But this misses my main point that the ideas that become popular (win the market competition) needn’t respect the truth.
Here’s an example to make things concrete. When it comes to income, the idea that has won the battle of ideas is this: income is determined largely by productivity.
The problem (which I’ve devoted much time on this blog to showing) is that this is bullshit. There’s no evidence to support it. Instead, the evidence suggests that position within a hierarchy is what’s most important for income.
Will my research win the battle of ideas? Hard to say. There’s so many variables that don’t depend on me. The evidence matters, sure. But it also matters what other people want to believe. If you earn a lot of money, thinking that your income comes from productivity is satisfying. Thinking that your income stems from your position (not your ability) — few people want to hear that.
So my response is that science is not like market competition. I stand by my assertion that science is the search for truth (factual evidence). Sometimes this truth is popular. Sometimes it’s not.
Blair: “Science and evolution are similar in many ways. Both are iterative processes that build on what’s come before. And both separate what ‘works’ from what doesn’t. Yet science differs from evolution in one key way. Science cares about the truth. Evolution does not”
I’m not sure what you mean here. It makes sense to ask whether capitalism (or communism or anyotherism) “works” but what would it mean for it to be “true”? Similarly, an institutional arrangement such as an independent central bank? Or a policy such as a universal basic income? Or the rules of accounting? Or a measurement such as GDP? Or the hierarchical organisation of people into teams? Or the role of women in the economy?
What do you mean by “the truth”? We’re back at language. You haven’t defined your own terms.
Fair point. The key here is that the ‘truth’ concerns the ideas that motivate the system, not the system itself. Capitalism can’t be ‘true’ or ‘false’. That’s nonsense.
But what about the ideas that motivate capitalism? Take the invisible hand — the idea that each person acting in their self interest will maximize social welfare. I think that’s a false idea. Multilevel selection theory tells us precisely why its false. To have benefit at a group level, you have to suppress competition within the group.
Now, I’m using one theoretical claim (multilevel selection) to counter another (the invisible hand). What we really need to do is dive into the evidence. There’s loads of evidence that the invisible hand is wrong. I’m not going to go into it here.
To summarize, our social systems work or they don’t. But they’re not true or false. But our ideas about our social systems can be true or false.
Perhaps the focus on true and false isn’t actually helpful when it comes to complexity?
Here is my take on it: If knowledge is mental models (as previously discussed), these are composed of concepts, ‘thing’ concepts and ‘relationship’ concepts (relationships between things. We can think of a mathematical formula as a relationship). Then truth is an unfalsifiable concept? People hold dearly to truth as without it they couldn’t exist and operate, but when you think about existence, we do exist in reality but via the filter of our mental models of it, what works is important.
Some things are very hard to falsify, such as physical objects, we sense their presence, but we don’t commonly think about our senses (sight, touch, sound, smell, taste) as gathering data, which we then have to mentally process, all the time adding to and refining our mental model of our reality. For example our eye is a lense, if we didn’t process the ‘data’ it gives everything would be upside down and swapped left to right as that is the image that falls on the retina. So, for most people, our personal model is reality.
Here is a problem, whether a particular mental model is falsifiable is of particular interest to scientists but not to people generally. In general people adopt the consensus models without too much question. Firstly they don’t think about knowledge as being of this nature and also, this process of adoption of the consensus is how we learn from the earliest time of our lives, by watching and listening to others. We get indoctrinated by cultural norms.
I think that this contrast between scientists and the general public, comes about because scientists understand that scientific knowledge is hard-won over time. Probability and confidence come with the territory.
Now, when it comes to models of complex systems like the economy and climate, we build them from smaller facts (unfalsifiable concepts) but make assumptions too, in order to make the exercise possible or accept some uncertainty about aspects. Whether a complex model is ‘true’ seems to me the wrong question, its whether its adequate to the task of making useful predictions. If the smaller facts of the model are falsifiable (e.g. homo economicus in the case of economic models) then we are right to be very wary of the models predictions.
I smile when in regard to climate models, people say “its just a model”, when every piece of knowledge is a conceptual model about which we have a high or low level of confidence of its fit with reality.
So to replace one inadequate model with another more truthful, it seems to be necessary to both demonstrate the inadequacy and also, somehow to counter the social momentum (or inertia) that exists around the inadequate one. Calling something “bullshit” is one way to do it, but maybe something more too?
Hi Steve,
Many interesting thoughts here. I’m going to respond to your last point, as I think it’s most important:
This is one of the important lessons from history. It is rarely sufficient to critique an existing theory. People won’t abandon it until you’ve provided a better alternative.
Newton’s law of gravity is the classic example. Astronomers knew for many years that something was wrong. Newton’s theory couldn’t explain the precession of the perihelion of Mercury. But was this just a case of missing mass? Or was the theory actually wrong? For years, astronomers postulated the existence of a planet called Vulcan that tugged on Mercury. But they could never it. It was only when Einstein’s theory explained Mercury’s behavior that astronomers stopped looking for Vulcan and admitted that Newton was wrong.
So in general, people only abandon one theory when a better one comes along.
Now let’s look at economics. Neoclassical theory is the old theory that we want to replace. It’s completely at odds with evidence, which means we should abandon it. The problem is that there is no replacement waiting in the wings — and for good reason. Neoclassical theory purports to offer a complete description of human behavior based on a few simple postulates (stable preferences, utility maximization). The reality is that human behavior is impossible complex, so there is no simple theory that can replace neoclassical economics.
I, for one, think having no theory is better than have a theory that is wrong. The first step of doing science is admitting your ignorance. But clearly this is not what most people want. The human brain wants explanations. So any explanation (regardless of how at odds with evidence it is) is better than no explanation.
That being said, I think we can chip away at the problem. There is no complete theory ready to replace neoclassical economics. But we can piece together small pieces. That’s what I’m trying to do with my own research.
I have probably just restated much of what you said in your original post Blair, that happens, we are comparing mental models.
I am very interested in Cooperatives. If humans are a social and cooperative species (via group selection), why aren’t Cooperatives more common? I believe there is a social hierarchy reason for this, also cultural norms. I think this might be a fertile area for research.
Interesting question, Steve. Here are my thoughts.
On the one hand, I think cooperatives are actually extremely common. The small group (100 people or less) is our default way of organizing. In our ancestral state, basically all groups were cooperatives. We organized in small egalitarian bands.
Obviously, though, things have changed. There’s been an evolution to larger and larger groups, which has entailed a move towards hierarchy. This is most true with formal organizations. Less so with informal organizations. Looking at your own life, you’re probably a member of many informal groups that are organized cooperatively.
The problem with cooperatives, as I see it, is one of scale. We easily organize small groups of people using direct democracy. But how do you do it with hundreds of thousands of people? Maybe it’s possible, but the evidence suggests it’s difficult. Hierarchical control seems to be the go-to answer. Concentrate power and put decision-making control in the hands of a few people.
That being said, I think it’s important to study cooperatives. And there are certainly differences in social norms that affect how we organize. Take the returns to hierarchical rank. In the US they are extreme. CEOs can earn thousands of times the average worker. But in Japan, returns to hierarchical rank are quite modest? Why? Cultural differences, obviously. But to my knowledge, no one has studied these differences in depth. It’s something I’d like to do in the future.
Essentially I agree with you, but I do suspect the story is more complicated. There are kinds of cooperatives (co-ops): consumer, producer and worker. Producer and consumer are producers and consumers of something cooperating for their mutual benefit, these are relatively common (but less common than they used to be, One of Australia’s biggest public companies – Wesfarmers – started out as a farmer consumer co-op in Western Australia).
Considering worker co-ops, which aren’t common, but which are the most interest to me. If you think of all businesses, including worker co-ops, as being composed of managers, workers and capital. The owner of the business, that gets the profits, can be either the manager(s), the workers (worker co-op) or the people/organisation that provide capital (broadly ‘shareholders’). A worker co-op may employ managers to manage day-to-day, but the main decisions are made democratically, one worker one vote. A firm owned by shareholders, also employs managers but gives them a lot of power.
If we generalise and say all business start small and potentially grow big, businesses owned by managers are the most common (small businesses), businesses owned by capital less common but generally bigger in size, and lastly businesses owned by workers are uncommon. A worker co-op can start small too (~5 members), but it seems that the main barriers are at the starting point (forming a cohesive vision, getting enough capital, competitors, employing or delegating an experienced manager). Just maybe, most people expect to be told what to do, they want hierarchy!
It would be good if you could include co-ops in a study in the future!
[…] post, I’ve been reflecting on the challenges of doing revolutionary science. (See Part 1 here.) I’ve argued that revolutionary science — the practice of questioning the core […]
[…] post, I’ve been reflecting on the challenges of doing revolutionary science. (See Part 1 here.) I’ve argued that revolutionary science — the practice of questioning the core […]