Economists often get criticised for trying to emulate physicists by arriving at a set of equations that describe human behaviour. There have been innumerable critiques of that approach and the predictive power of economic models is notoriously poor. This article was written in 1986 but feels as if it could have been written yesterday.
…economics, in view of what it is rather than what it claims to be, is a proper subset of history. …[Economists] are trying to do the same thing as historians, namely, to tell plausible stories about the past. …When done well it has the air of good history written by someone who has taken Differential Equations 152.
Which isn’t to say that we can’t learn from the past. In fact, when you read Matt’s posts about the role of economic forecasters he characterises them as story-tellers rather than oracles. The numbers are inevitably wrong but that is not the economist’s forte and shouldn’t be seen as the useful output of the profession. It is to the detriment of all economists that some members of the profession promulgate the view that we are fortune tellers. As McCloskey says, “if economists go on indulging the misapprehensions of their customers, issuing predictions about next month’s exchange rate of next spring’s interest rate, the loss of reputation when the customers catch on will be large, and richly deserved.”