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. Last Updated: 07/27/2016

In Defense of Economics

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It is often said that people from certain professions have a harder time than others at social gatherings. For example, if a policeman attends a high school reunion, he must listen the whole evening to stories about corruption in law enforcement agencies, while a doctor is subjected to detailed accounts of illnesses suffered by various relatives and friends of those present.

For the last year, economists have been experiencing the same thing. Even when the subject concerns something as innocuous as which economist won this year’s Nobel Prize in economics, the discussion is inevitably accompanied by some negative emotions. For some reason, the global economic crisis has even undermined people’s faith in economics as an academic discipline.

This doesn’t make sense logically. After all, if a patient does not recover from an illness, does that mean the chemistry and biology courses the doctor studied as a student were of no value? If we hear that a building somewhere has collapsed, does it mean the laws of physics have ceased to operate? No, we simply assume that the builders were negligent, that they pocketed part of the money intended for construction or that officials took bribes to overlook safety violations. And even if the properties of some building materials were described incorrectly in the textbook, a few minor corrections to the text would eliminate the problem. Nobody would suggest rewriting physics textbooks from scratch. The same is true of economic science: It provides a solid basis for analyzing crises, and nothing has happened to warrant changing basic economics textbooks in any way.

It is no coincidence that the sharp rise in skepticism toward economics as a science is largely confined to Russia. It is Russia’s misfortune that the economics discipline is in such a sorry state. Economic science in the West has evolved for the past 200 years. It has traveled down the same path of development that other sciences have taken, formulating logically consistent theories and hypotheses.

Economics is largely following the same path as physics once did. One hundred years ago, physicists also had difficulty defending the need for new theories to explain the physical universe. After all, such theories do little to help build bridges or internal combustion engines. And for 60 years in the Soviet Union, physicists risked their careers — if not their lives — for the right to work on quantum mechanics. By mid-century, Soviet economic thinking had sunk, literally, to the medieval level. If you don’t believe it, try reading “Economic Problems of Socialism in the U.S.S.R.” published in 1952 and bearing Soviet leader Josef Stalin’s signature. It is hard to believe that a country that in the early part of the 20th century gave economic science the basis for the theory of probability, the Slutsky identity in microeconomics, the idea of the input-output balance and the hypothesis of long cycles in economic development could produce such an illiterate and ignorantly written document signed by the most powerful leader of the country.

Economists are like physicians in that nobody pays any attention to them as long as the patient is healthy. But the unprecedented increase in prosperity in the decades following World War II was based largely on achievements made possible by progressive economic thinking. Anyone who would like to enjoy a higher standard of living in the future should reflect for a moment. Maybe the economics textbooks were not so bad after all. Maybe, the real problem is that people didn’t read them carefully enough.

Konstantin Sonin, a professor at the New Economic School/CEFIR, is a columnist for Vedomosti.