Excellent quote (ht Economist’s View):
Popper’s critique of historicism, then, can be rephrased as a compelling critique of the model of the natural sciences as a meta-theory for the social and historical sciences. History and society are not law-governed systems for which we might eventually hope to find exact and comprehensive theories. Instead, they are the heterogeneous, plastic, and contingent compound of actions, structures, causal mechanisms, and conjunctures that elude systematization and prediction. And this conclusion brings us back to the centrality of agent-centered explanations of historical outcomes.
Agreed with this 100%. Fundamentally, the usefulness associated with the study of economics comes from its framing and discussion of tendencies – not from the precise value of its predictions.
An understanding of individual actions and incentives allows us to describe what has happen and inform policy – but it does not give us a crystal ball with which to see the future, or figure out exactly what will maximise social happiness.
That is why we economists never seem to agree with each other. But when we do agree, it is probably a good idea to listen, as there must be a rare combination of compelling factors driving such an unlikely event 
Note: To clarify what I think the quote says that I’m agreeing with. I believe it says that we can’t come up with some holistic model of society that will spit out nice predictions – we can only try to understand society through the behaviour of individuals given observed actions. This sounds like methodological individualism to me …
3 comments
1 ping
Heidi says:
August 31, 2009 at 10:48 am (UTC 12 )
“When we do agree, it is probably a good idea to listen”. LOL, I would totally agree with that comment – except when does it happen
Kimble says:
August 31, 2009 at 4:28 pm (UTC 12 )
“…methodological individualism…”
Ssssh! People might get the idea that you’re an Austrian.
rauparaha says:
September 1, 2009 at 5:48 pm (UTC 12 )
Well, Matt does work at the home of Austrian economics in NZ, so I hear
TVHE » Cartoon: Economics says:
September 24, 2009 at 10:24 am (UTC 12 )
[...] complex world around us – so judging the discipline on ex-post outcomes makes little sense (we have discussed the range of issues [...]