Roger E. Backhouse

 

On his book The Puzzle of Modern Economics: Science or Ideology

Cover Interview of October 27, 2010

In a nutshell

Is economics the key to everything or do we need to look for completely new ways of explaining what is going on in the world?

By “economics” I mean the discipline of economics—the theories and ideas produced by economists.  And I look at some examples of economics being used to solve problems that everyone knows are important—such as finance, the Russian transition from communism to capitalism, or reducing sulfur dioxide emissions from power stations.

I argue that whilst there have been some big successes, economics hasn’t been nearly as successful when the problems get too big and complicated.

But if economics is all about solving real problems, how is it that so much of economics seems to be abstract mathematics, dealing with abstract, completely rational “economic agents” who don’t seem to bear any relation to people we have ever met—except, perhaps, some economists or traders on Wall Street?

When economists use their abstract math to claim that free markets can solve problems, is this because that is what they want to find, or is it because there are strong economic reasons for the market to achieve better than what government intervention could achieve?

The way I like to approach such big questions is by seeing where something has come from.  I am a historian, so I go back into history. Not a long way back, just to the Second World War—you won’t find Adam Smith or Karl Marx in this book.

The key idea here is that economists have been working hard to make economics scientific.  I look at how they have tried to do this, which sets things up to tackle the problem of ideology head on, and to think about why economists disagree so much.

To go back to the beginning, how is it that there are economists who think economics is doing brilliantly and other economists who think it is a disaster?