There are lots of explanations for why economics has become so excessively formalised. Because much of its subject matter is readily quantifyable – because it deals with money and the creation and distribution of standardised things it is certainly possible, and beneficial to quantify and formalise lots of stuff. But then a lot of the ideas are best explored in discussion – or so people thought until around the 1950s.
In the 1950s and 60s lots of disciplines succumbed to the siren song of formalism and mathematicisation. There were people who thought that cliometrics would displace history. But, though obviously enough quantifying things can be very useful in history as in any attempt to get at the truth of things, there are a vast number of questions in history for which quantification is not particularly useful. Today in history there is no presumption that you can’t be doing important work if it hasn’t been formalised.
If I were to speculate as to why this sorry state of affairs exists in economics, I’d say that it has mostly been driven by the professionalisation of academia. PC Chair Gary Banks commented on the lack of academic engagement in contemporary policy issues:
Whether academics could be drawn on more is a key issue. In an earlier era, the involvement of academics was instrumental in developing the evidentiary and analytical momentum for the first waves of microeconomic reform. Examples from the trade and competition policy arena alone include Max Corden, Richard Snape, Fred Gruen, Peter Lloyd, Bob Gregory, Ross Garnaut, Fred Hilmer, among others. Where are the new academic generation’s equivalents in support of the ‘Third Wave’? Only a few names come to mind, for example, of academics making a notable public contribution to policies bearing on human capital development.
I would argue that this is driven to a substantial extent by the need for academics to target publication in top journals. And top journals are unlikely to publish highly context specific applied economic work. Yet I would have thought that, except for some with very specific and high level strengths in theory that’s where economists will be most socially productive.
Anyway all this comes to mind as I read of what’s happened in the academy in marketing. It’s been subjected to a similar process of formalisation – a process which has gone hand in hand with academics writing for each other, rather than for practitioners.
Academics who teach undergraduates and coursework masters programs accept, albeit with qualifications, that their students expect to learn skills that they can sell in the marketplace.
When it comes to research, however, scholars often publish for their peers, producing papers less abstruse than arcane, research that working marketers struggle to understand, let alone utilise.
“Lots of researchers see their audience as other academics,” says the prolific professor Jordan Louviere from the University of Technology, Sydney. . . .
The dichotomy of industry practitioners in business and ‘the discipline’ or ‘the academy’ is not a very happy one. Professional economists working for banks and so on need know very little of economics to be useful at what they do – mostly economy watching. What does matter however is the social utility of the discipline. An obsession with quantification and formalism, the idea that it is OK that you only see what is formalised (what practical activity could survive that kind of assumption?) is profoundly disorienting, whether the discipline lends itself particularly well or not to quantification and formalism. The fact that training which embodies such ideas is seen as unhelpful to industry is a symptom of a problem, rather than the problem itself. The knowhow people in industry need is knowhow that can turn a quid. Lots of very socially valuable knowledge doesn’t turn a quid, so we built public institutions wherein it should be able to thrive. But then they become subject to the neuroses of excessive formalisation.
It’s strange. A marketplace where everyone seeks principally to advantage themselves, will often throw off, as a kind of residue, profoundly useful public goods. Markets generate the public good of price discovery – and other things like commercial precedents and, based on that the gradual evolution of commercial mores. In the market for ideas inside universities however, it seems that those seeking their own gain and glory – the ‘currency’ of the marketplace for ideas is reputation – have somehow managed to create a public ‘bad’, borne of a conversation amongst insiders. Of course for something in which so much time and energy is invested, it throws off lots of highly beneficial things. But I can’t help feeling that it could be a lot more socially productive than it is. A discipline which takes the more extreme versions of the efficient market hypothesis, rational expectations or real business cycle theory seriously is in a bad way.