Sunday, April 30, 2006

John Kenneth Galbraith, RIP



He died at the age of ninety-seven. Galbraith was an economist, an important one, and one who appears to deserve an obituary from the august New York Times which says things like this:

Mr. Galbraith was one of the most widely read authors in the history of economics; among his 33 books was "The Affluent Society" (1958), one of those rare works that forces a nation to re-examine its values. He wrote fluidly, even on complex topics, and many of his compelling phrases — among them "the affluent society," "conventional wisdom" and "countervailing power" — became part of the language.

An imposing presence, lanky and angular at 6 feet 8 inches tall, Mr. Galbraith was consulted frequently by national leaders, and he gave advice freely, though it may have been ignored as often as it was taken. Mr. Galbraith clearly preferred taking issue with the conventional wisdom he distrusted.

He strived to change the very texture of the national conversation about power and its nature in the modern world by explaining how the planning of giant corporations superseded market mechanisms. His sweeping ideas, which might have gained even greater traction had he developed disciples willing and able to prove them with mathematical models, came to strike some as almost quaint in today's harsh, interconnected world where corporations devour one another.

"The distinctiveness of his contribution appears to be slipping from view," Stephen P. Dunn wrote in The Journal of Post-Keynesian Economics in 2002.

...

Mr. Galbraith was admired, envied and sometimes scorned for his eloquence and wit and his ability to make complicated, dry issues understandable to any educated reader. He enjoyed his international reputation as a slayer of sacred cows and a maverick among economists whose pronouncements became known as "classic Galbraithian heresies."

But other economists, even many of his fellow liberals, did not generally share his views on production and consumption, and he was not regarded by his peers as among the top-ranked theorists and scholars. Such criticism did not sit well with Mr. Galbraith, a man no one ever called modest, and he would respond that his critics had rightly recognized that his ideas were "deeply subversive of the established orthodoxy."

"As a matter of vested interest, if not of truth," he added, "they were compelled to resist." He once said, "Economists are economical, among other things, of ideas; most make those of their graduate days last a lifetime."

Ridiculed with faint praise? It's a very odd obituary, both admitting that Galbraith was immensely read and influential and arguing that he was a charlatan whom no real economist could love. And that he is quite outdated these days.

I'm eagerly looking forward to the next New York Times obituary of a conservative economist. There are loads of them, cartloads, in fact, and I expect every one of them to be discussed as proponents of wingnut policies. Anything less would show media bias.

Why do I bother? In any case, Brad deLong has a good post on Galbraith and the New York Times obituary. If you want to learn more about Galbraith's ideas you can do worse than by reading the Good Society.

The rest of this post I want to dedicate to the question of mathematical modeling in economics and the reasons why Galbraith didn't go that route. And no, this is not going to be boring at all, but very important to understand.

Social sciences have for long suffered from a sort of penis envy. Sciences such as physics and chemistry and mathematics are seen as "hard", whereas the poor social sciences have long been regarded as "soft". Hence the penis envy, or possibly a gendering of scientific fields of inquiry, with the priority given to those which can use mathematical methods. The idea is that numbers make things neutral, objective, true, something that can't be debated. If only we could do the same thing with economics and sociology! Imagine the importance of our cool and neutral findings on the human species!

Economics, the lucky stepdaughter (heh) of hard sciences has more numbers to work with than sociology, and economists have long strived to take advantage of these numbers and to make economics into a Real Manly Science. This has worked so well that now you have to do graduate level mathematics if you want to be an economist, and you can talk in code and have people flee your presence in cocktail parties quite easily. Trust me. I know this for a fact, and I can make a mathematical model of the rate of fleeing as a function of my verbosity.

This mathematizing of economics has had the added advantage of real sibling envy from sociologists, who also would like to be viewed as hard scientists. Even the psychologists have entered the fray from humanities, by deciding that everything in psychology exists because of the primitive caveman and his happy housewife sidekick were programmed in a certain way, easily demonstrable by showing undergraduate American and British young men pictures of female faces and by administering a large number of fancy statistical tests to the results.

Mathematics is a language, and what we say with it will be no better than the original information and assumptions we use. If we start with false assumptions we are going to end up with false conclusions. If we want to use empirical information to test the model we are building we need a simple model in most cases. So a lot of stuff will be cut out or ignored. Reality does not cut out and ignore stuff like this. This does not mean that simple models couldn't be important or that mathematics is useless in economics. Quite the opposite. But mathematics is not a religion and the knowledge we get by applying formal modeling is not superior just because it is based on formal modeling. It may be easier to follow and to criticize than a verbal explanation of a phenomenom, largely because the "words" in mathematics have very precise definitions and the "grammar" of the functions is known to all in the fields. But what the "sentences and paragraphs" say still depends on what we assumed at the beginning and on how good our data are, not just on how eloquent the mathematical language might be that we use.

Galbraith understood this. He was looking at features of the economic markets which did not lend themselves to easy mathematical expressions, and not because of faulty or unimportant reasoning, but because the required mathematics did not exist in some obvious form. Galbraith wanted to look at the complicated reality, the big picture, if you like, and the tools to do this were (and still are) limited to thinking and the use of ordinary language.

I am not opposed to the use of mathematics in economics. It certainly has its place, and there are many great economists who use mathematics skillfully and with benefit. But mathematics shouldn't displace the kind of analysis Galbraith excelled at, because if it does we will end up with a shriveled and juiceless discipline. I'm reminded here of Galbraith's novel about a professional economist who after a lot of dithering decided that it might be safe to branch out from analyzing the refrigerator market to the freezer market. If we can only speak about those things that can be easily modeled, well, then this sort of a career move would be a major step forwards: using the same mathematics but with a new question.

Galbraith didn't want to do that. He wanted to analyze interesting questions, questions which really mattered, and he wanted to convey his reasoning in terms which many readers could understand. If he sometimes failed in his arguments or his clarity, well, he could have always chosen to write about the freezer markets. This would have guaranteed his place as a respected economist.