Don’t Be “a jibbering idiot”: Economic Principles and the Properly Trained Economist

A must read short paper by Prof Peter Boettke of George Mason Univ.  It is actually a speech given at 42nd Annual Meetings of The Association for Private Enterprise, Hawaii.

He calls to bring back history into economics (how many such calls will be made to a profession and yet be ignored):

Economics, properly understood, makes sense out the complex web of historical relations that constitute reality, namely by utilizing economic theory. Economics without price theory is not economic theory, and measurement without theory isn’t empirically meaningful. However, graduate students are being increasingly trained in sophisticated procedures of optimization and statistical testing, remaining largely ignorant of economic theory as a tool to understanding economic history. This address is a renewed call for my fellow economists to continue to instill in their teaching the beauty of economic theory, as well as the empirical importance of economic history. In short, economic teaching and training must instill an understanding of economic forces at work, and properly done, instills the principles that constitute a golden key that unlocks the deepest mysteries in the human experience. Without learning the governing dynamics of human action and the mechanisms that produce the social cooperation under the division of labor, modern civilization will be left undefended against the fallacious claims that market processes are exploitative, monopolistic, and unfair. 

It has some important lessons and comments from late Prof Buchanan as well.

Boettke says given all the noise about economics training, it is basically about 8 basic principles:

  1. Economics is a “science” but not like the physical sciences. Economics is a “philosophical” science and the strictures against scientism offered by Frank Knight and F. A. Hayek should be heeded.
  2. Economics is about choice and processes of adjustment, not states of rest. Equilibrium models are only useful when we recognize their limits.
  3. Economics is about exchange, not about maximizing. Exchange activity and arbitrage should be the central focus of economic analysis.
  4. Economics is about individual actors, not collective entities. Only individuals choose.
  5. Economics is about a game played within rules.
  6. Economics cannot be studied properly outside of politics. The choices among different rules of the game cannot be ignored.
  7. The most important function of economics as a discipline is its didactic role in explaining the principle of spontaneous order.
  8. Economic is elementary.

When you are teaching, think about those 8 points constantly. It is by pursuing them consistently and persistently that you will be able to demonstrate you are a properly trained professional, and you will communicate to your students the intellectual beauty as well as the scientific power of economic theory. You also will avoid being a jibbering idiot in economics who confuses noise for speech in the analysis of human action in all walks of life. And, in avoiding that fate you will be able to communicate to your students how economics is both the most wildly entertaining social science and the most deadly serious. It is, in short, the scientific vehicle by which they can be transformed from ordinary observers to the height of genius capable to making sense of the seemingly senseless and explore the mysteries of man in his ordinary business of life.

Eighth is highly important given the hubris around the subject and its purveyors…

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