Attacks from the left and the right on economics

One thing I have noticed in my time is that people on the political left and right both attack “mainstream economics” with abandon.  This is good, as a discipline has to be able to explain itself widely and be willing to face criticism.

However, it is one of the elements of these attacks that interests me here.  Namely, how each side of the political spectrum attacks the “focus” of economics, or the framing – specifically in terms of the market and government.  Here is my oversimplified understanding of this element:

  • Left:  Economists are focused on markets.  They start from a place where markets are perfect, and markets provide the best outcomes and work from there – therefore they have a pro-market bias.
  • Right:  Economists focus on markets and resource allocation.  The focus on markets makes them dwell on policies that solve “market failures” rather than paying attention to the possibility of government failures!  As a result they have a bias to push policies that are anti-market.  Furthermore, by discussing the allocation of resources they drive the feeling that the economy can be controlled – which also leads to a bias towards government involvement.

I find both of these attacks suffer from the same problem, they avoid trying to understand why economists use the counter-factual they do, and the way economic analysis stems from it.

In itself, economics is not about giving policy prescriptions, it is about “trying” to “objectively” describe and explain an economic situation.  We find the elements of a market (which is the voluntary trade relevant to the issue at hand), and try to model them.  When then describe a “perfect counterfactual” and look at how these elements cause outcomes to differ.  We then do nothing.

In this case, the purpose of our counterfactual is to give some idea about how a more “realistic” outcome compares to an “ideal” outcome.  We do not say that the ideal outcome is possible, we do not say that any policies could move us towards the ideal outcome, and as strict economists we do not place hefty welfare judgments on the relative outcomes.  The counterfactual is solely there to allow us to describe, in some sense, how the elements in the model impact on the outcome – it helps us to describe.

The next stage is more “subjective” (I am putting commas around objective and subjective as even the “objective” analysis involves a number of subjective assumptions – but I digress), and it is not in the realm of economics per see.  Economists often move on to the policy analysis stage, but it is an additional element, that requires different skills than those that are central to economics.

The biases the left and right discuss tend from their view of the value judgments made by analysts at this stage of analysis – they are not relevant in a discussion about economists.  As a result, although the left and right often like to tarnish all economists with the same brush this is just not the case – economics is not the issues they disagree with here, but the value judgments made in the application of economic models.  The critique is of analysts they do not agree with, not the discipline as a whole.

Of course, I do not expect individuals with a political mind to ever properly accept or represent this significant difference – as there is too much satisfaction and political capital associated with attacking all economists 😀

5 replies
  1. Bill Bennett
    Bill Bennett says:

    Political attacks on economics are like, but not exactly the same as, political attacks on the laws of Physics.

    It doesn’t matter what ideologies say, the Earth still revolves around the Sun, Newton’s laws of motion are a good approximation and E still equals MC squared.

    The problem with economics is that many assumptions and a lot of the data are more subjective than the speed of celestial spheres.

  2. Kimble
    Kimble says:

    Bill is right. Economics is just like physics. I think Matt would agree with me on this.

  3. Go Air
    Go Air says:

    When I was in college. I was very week in Economics and also in Physics.
    Bill is right, I think their is some similarity with both Eco and Physics.

  4. steve
    steve says:

    I think its more like the religious attacks on evolution. Even though all the facts and theories point one direction. people cannot accept a shift from their idealogy.

  5. Matt Nolan
    Matt Nolan says:

    @Bill Bennett


    @Go Air

    I think the comparison to physics is one we have to be careful with – economics and physics are actually surprisingly “inexact sciences”. However, the method – trying to separate “objective” and “subjective” elements – is definitely shared.


    Very true. I imagine this is true for everyone in some sense, even economists. Which is why I think that discussing methodology is just as important for us (if not more) then it is for people who are not economists.

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